Resource World Magazine

D E C E M B E R / J A N U A R Y 2 0 1 8 www.resourceworld.com 37 Speculations by Leonard Melman W hile the political back- ground has always been of importance to the base and precious metals mining sector, it is difficult to recall a period like the past 24 months when political discourse has so dominated the news background and, in my opinion, when the differences between political parties and philosophies have stood out in such contrast. I also offer the view that these differences matter to the mining world. Many observers believe that the intense interest in politics over the past two years is due to the attention focused primar- ily on Donald Trump; first as candidate Trump and then as President. Seldom, if ever, has there been a divide to compare with the gulf between Trump's detrac- tors and his supporters and this extreme gulf was captured in a recent article by Lawrence Solomon published in Canada's National Post. Solomon first noted that, "…To those on the Left, Trump is a travesty – a white supremacist and sexist Neanderthal who must be impeached." On the other hand, according to Solomon, those on the Right that put him in office, "…correctly sized up Trump last year. Trump is a true con- servative, the genuine article." Most importantly, the article also notes that among his most important policy initia- tives, "…Trump is pursuing unheard of cuts in in the size of the civil service. He has already made unprecedented cuts in the regulatory field." While Trump is an American President, he has had an impact on the rest of the world, given the prominence of the USA, particularly in the important realm of envi- ronmental policy where his most important initiatives were the repudiation of the Paris Climate Agreement and the defunding of the United Nations' Intergovernmental Panel on Climate Change (IPCC). As a direct contrast, Canada's Prime Minister, Justin Trudeau, has seemingly adopted a differing path. Financial Post columnist John Ivison noted this past August that while previous Prime Minister Stephen Harper's goal was, "…to keep the government from growing much bigger", Trudeau's approach appears to be, "… government that is not only bigger, but better." Ivison also points out that, "…capital spending in oil, gas and mining is fore- cast to be down 50% this year from 2014 levels…Investors say government policy has exacerbated the problem by creating 'headwinds' that are making Canada unat- tractive for new spending." Also, many promising mining prospects in North America are located in the Arctic regions of Canada. As such, it is worth noting Trudeau government's Arctic poli- cies include measures which would appear to open the door for substantial increases in government regulation. It is also interesting to note that the number of categories of government regulations has been on the rise for sev- eral decades. Categories of regulations which might apply to mining now include Aboriginal considerations; Department of Fisheries and Oceans regulating upstream and downstream pollution; greenhouse gas emission laws; worker safety regulations; diesel fuel emissions (particularly impor- tant to remote locations where the only credible source of power is diesel fuel); train and truck transportation regula- tions and an expanding host of regulations regarding any factors which may contrib- ute to 'Climate Change'. Of course we need regulations but they need to be based on common sense and not to the point where they make most projects impossible to develop. Then there is the list of groups filing objections to exploration, development and mining that is growing, including environmentalists, First Nations and even government agencies. Many of these groups are well-funded, have substantial numbers of lawyers and have developed effective techniques to stop mining ventures. A recent study authored by financial writer Geoff Zochodne and published in the Financial Post informs us that , "… Canadian gold stocks have been stuck in neutral this year, held down by worries that companies aren't adequately replacing their reserves of the yellow metal." I would suggest a direct connection between regu- lations (over-regulating?) and acquiring reserves. Zochodne quotes Pierre Lassonde, Chairman of Franco-Nevada Corporation as noting, "…they [the mining industry] will only solve it by drilling…the only way to do that is to spend money…" I believe that is the crux of the prob - lem. In order to spend money, the industry must raise it, and if the prospective costs of drilling, delays and other expenses increase to the point where questions are raised regarding profitability of the resource, then investors may shy away from participation, leaving the resource undeveloped. Reports, studies, documents and fees associated with those regulations can be a determining factor in whether a potential resource can be developed. Politics and Mining continued on page 85

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