Assessment work allocation changes proposed

If proposed changes to Ontario’s Mining Act become law, claim-stakers with small blocks of ground will gain an advantage and those who stake large blocks will lose one.

Exploration expenses on a block of claims can be used to keep adjoining claims (where no work is performed) in good standing. Under the current act, the amount of expenses which can be spread around to adjoining claims is limited to $12,000 per unit claim.

Since only $400 worth of exploration work is required to keep a unit claim in good standing, this means that by spending $12,400 on just one claim, a prospector could keep 30 adjoining ones in good standing.

The inequity of this system arises when a prospector or company holds an even larger block of claims. By spending $192,000 on just 16 unit claims, for example, a company could earn enough assessment credits to keep 480 additional adjoining units in good standing.

Under the proposed changes, a cap would be placed on the number of unit claims a company can keep in good standing by spending money on only a small portion of a claim block.

This and other changes to the act were adopted in principle at a committee meeting last December. The vote was taken after each Ontario prospectors group had reviewed the draft document. The committee spent considerable time examining alternative proposals to the inequitable way spreading can occur under the current act.

The proposed change does not eliminate the inequity entirely. However, it would increase to $24,000 the amount which can be spread from a single-unit claim and reduces to $96,000 the amount which can be spread from a 16-unit claim. The net effect of this would be to reduce the spreading generosity available to those who stake large-unit blocks and increase the generosity to those holding single-unit claims.

The proposed change would read: “The maximum value of the assessment work that may be assigned from an unpatented claim to any contiguous unpatented claims . . . in any assessment year is $24,000 times the number of 16-hectare units to a maximum of $96,000 in the claim from which the work is to be assigned.”

For example, a 1-unit claim would be able to spread $24,000 worth of work to 60 units whereas a 4-unit claim and larger would be able to spread the $96,000 to 240 units. This can be compared to the present system in the following table:

Units Present Proposed

System System

1 $12,000/30 units $24,000/60 units

2 $24,000/60 units $48,000/120 units

3 $36,000/90 units $72,000/180 units

4 $48,000/120 units $96,000/240 units

8 $96,000/240 units $96,000/240 units

16 $192,000/480 units $96,000/240 units

In practical terms, this means that in future staking, the only advantage to claims larger than 4 units will be in the reduced cost of staking rather than a significant spreading advantage.

Coupled with this will be a change which permits the same amounts to be transferred from any leased or patented mining claim in any year. As well, the issue of direct and indirect costs has been addressed by excluding totally the concept of indirect costs from consideration. All costs as defined in the regulations will now be applicable as direct costs with a slight change in definition to exclude mobilization and demobilization charges outside the province. This simplifies the administration of these costs.

Other changes include improvements to staking procedures, eligibility of prospecting work at industry standards rates rather than set amounts, inclusion of assays in assessment reports, and alteration of the way drill-core submissions may be applied for assessment credit. The committee also realized that a period of adjustment will be required to enable prospectors to adapt to the new changes. A 1-year transition period will occur, during which time a prospector will be able to choose either the old rules or the new, depending on which are more beneficial at the time. Once the transition period ceases, only the new rules will be in effect. — Adopted from an article by Dennis Prince in a recent issue of the PPDA’s “The Explorationist” newsletter.