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. Prism Resources Inc. v. Detour Gold Corporation

In Prism Resources Inc. v. Detour Gold Corporation (Ont CA, 2022) the Court of Appeal considered when mining royalties are an 'interest in land':
[2] The motion judge granted summary judgment, concluding that Prism’s royalty interest was an interest in land under the principles of law set by the Supreme Court in Bank of Montreal v. Dynex Petroleum Ltd., 2002 SCC 7, [2002] 1 S.C.R. 146, as explained by this court in Third Eye Capital Corp. v. Dianor Resources Inc., 2018 ONCA 253, 141 O.R. (3d) 192.


[10] It is common ground that Dynex changed property law in Canada, and that Prism and Conquest were both aware of that change when they negotiated the 2004 Letter Agreement.

[11] At para. 22 of Dynex, Major J. noted that Canadian common law should recognize that a “royalty interest” or an “overriding royalty interest” can be an interest in land under two conditions: first, if “the language used in describing the interest is sufficiently precise to show that the parties intended the royalty to be a grant of an interest in land, rather than a contractual right to a portion of the oil and gas substances recovered from the land”; and, second, if “the interest, out of which the royalty is carved, is itself an interest in land”.

[12] The motion judge was well-aware of the reasoning in Dynex, noting, at para. 18: “The ruling in Dynex specifically changed the law to bring it in line with industry practice, to permit a royalty that consists of a right to payment of profits to be an interest in land”. After specifying the two-part test in Dynex, the motion judge said, at para. 19: “There is no issue in this case that the second part of the test set out in Dynex is satisfied in that the property interest claimed by Prism has been carved out of Conquest’s property interest”. This finding was not appealed, and is incontestable in any event because Prism’s interest in the lands owned by Boliden was registrable although never registered. The 1999 Agreement provided that: “A party will be entitled to register this Agreement or notice thereof against the Property, subject in the case of the Leases to the consent of the Ministry, and each party will cooperate in effecting the registration of any such notice and execute any documentation required in connection therewith”.

[13] Writing for this court in Third Eye, in glossing Dynex, I made several statements that are pertinent to this appeal. I noted that the Supreme Court had upheld the approach of the Court of Appeal of Alberta in Dynex, which was that “[t]he parties’ intent could be inferred”: at para. 46. About the application of Dynex, I noted, at paras. 54-55:
Several points in the decision are of continuing importance. Justice Major noted, at para. 6: “For substantially the same reasons as the Court of Appeal, I conclude that overriding royalty interests can be interests in land.” He added, at para. 19, that he much preferred that court’s “compelling insight into the evolution of the law”. In my view, this language gives continuing relevance to the approach and the ruling of the Court of Appeal of Alberta, especially its statement, at para. 73, that a court must “examine the parties’ intentions from the agreement as a whole, along with the surrounding circumstances, as opposed to searching for some magic words.”

I also note that Major J. approved the holding of Laskin J. in dissent in Saskatchewan Minerals. He noted, at para. 11, that: “[t]he effect of Laskin J.’s reasons was to render inapplicable, at least insofar as overriding royalties, the common law rule against creating interests in land out of incorporeal interests.” He described Laskin J.’s holding, at para. 12: “[T]he intentions of the parties judged by the language creating the royalty would determine whether the parties intended to create an interest in land or to create contractual rights only.” This was the Supreme Court’s ultimate holding in Dynex.
[14] This analysis led me to conclude, at para. 65 of Third Eye, that “contractual terms are not necessarily determinative of whether an interest in land was intended; the language does not require magic words to demonstrate the parties’ intention”. The New Brunswick courts took a similar approach in Blue Note Mining Inc. v. Fern Trust (Trustee of), 2008 NBQB 310, 337 N.B.R. (2d) 116, aff’d 2009 NBCA 17, 342 N.B.R. (2d) 151.
. Attawapiskat First Nation v. Ontario

In Attawapiskat First Nation v. Ontario (Div Ct, 2022) the Divisional Court sets out basics of the Mining Act regime in Ontario:
The Regulatory Framework for Early Exploration Activities

[13] The Mining Act regulates mining in Ontario. Early mineral exploration activities are regulated by ss. 78 to 78.6 of the Mining Act and O. Reg. 308/12: Exploration Plans and Exploration Permits (the “Exploration Regulation”.)

[14] The purpose of the Mining Act is “to encourage prospecting, registration of mining claims and exploration for the development of mineral resources, in a manner consistent with the recognition and affirmation of existing Aboriginal and treaty rights in s. 35 of the Constitution Act, 1982, including the duty to consult.” In addition, s. 2(b) of the Exploration Regulation requires early exploration proponents to conduct early exploration activities in a manner consistent with the protection provided for existing Aboriginal and treaty rights in s. 35 of the Constitution Act.

[15] Generally, under the Exploration Regulation, some exploration activities only require a ‘plan’ while more intrusive activities require a ‘permit.’ Applications for exploration permits require information about the nature, dates, and locations of the proposed activities, as well as maps showing both regional and more specific locations of proposed exploration activities.

[16] After an exploration permit application is submitted to the Ministry, it is circulated to First Nations whose asserted or established Aboriginal and/or treaty rights may be adversely affected. They may provide written comments to the Director and the proponent (s. 14). Where concerns are raised regarding potential adverse effects to Aboriginal or treaty rights, Ministry staff usually will liaise with the proponent and the First Nation in an effort to address the concerns.

[17] Under s. 15 of the Exploration Regulation, if the Director is satisfied that appropriate consultation has occurred, the Director shall make a decision within 50 days of the permit being circulated. Section 16 of the Exploration Regulation allows the Director to put a temporary hold on the permit for the enumerated reasons, including concerns raised by a First Nation.

[18] Once granted, the permits authorize early exploration activities for three years from the date of issuance. Such activities are intended to gather further data about potential mineral occurrences.

[19] In addition to the requirement under s. 2(b) of the Exploration Regulation that early exploration activities be conducted in a manner consistent with the protection of existing or asserted Aboriginal and treaty rights, certain standard terms and conditions apply to all early exploration permits and must be complied with by the permit holder in carrying out exploration activities. Those requirements are found in Schedule I to the Exploration Regulation and the Ministry’s Provincial Standards for Early Exploration. Pursuant to s. 17(2) of the Exploration Regulation, the Director may also stipulate any other terms and conditions in an early exploration permit, including mitigation of potential adverse impacts to a First Nation’s rights, as identified through consultation.

[20] Additionally, when the Exploration Regulation came into force in 2012, Ontario developed an implementation policy, the Consultation and Arrangements with Aboriginal Communities at Early Exploration Policy (the “Consultation Policy”). The Consultation Policy was intended to provide guidance to proponents and communities about the Ministry’s approach to consultation, as well as guidance to proponents to whom aspects of the duty to consult was delegated. The Ministry states that its approach to consultation has evolved, and that it no longer delegates any procedural aspects of consultation to early exploration proponents.[2]


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