Kam Kotia base metal property given new lease on life

In early 1992, after four years of negotiations, Falconbridge signed an agreement with the Ontario government which permits exploration to occur on the old Kam Kotia mine property near Timmins, Ont. The property had been withdrawn from staking for more than 12 years because of environmental problems.

Currently, much of the land in Ontario with strong exploration potential is tied up in leased and patented claims which contain old mine hazards. With passage of Ontario’s new Mining Act, the liability for these hazards appears to be transferred to new optioners or purchasers of these claims. Also, under Bill 220, which is a recent amendment to the Environmental Protection Act, anyone in occupation of a piece of ground with an environmental liability can be ordered by the government to clean it up. These orders can be issued to an occupant whether or not the problem was caused by that occupant. In addition, Bill 220 has a retroactive clause that may require an occupant to clean up sites that were operated in full compliance with the then existing laws.

These liabilities have served as a disincentive for the mining industry to acquire and explore much of the high priority land in Ontario. With declining reserves at the Kidd Creek mine, Falconbridge began searching for new sources of copper and zinc to supply its operations in the Timmins area. The company felt that the Kam Kotia area had good potential to host additional massive sulphide deposits.

Mining was first carried out on the Kam Kotia property in 1942 to supply copper for the war effort. Production ceased in 1944 after some 172,000 tonnes of ore were mined. During this initial period of production, there was no regard for tailings containment, which created a major acid mine drainage problem.

From 1961 to 1972, the mine produced more than 65,000 tonnes copper, 71,000 tonnes zinc, 174,000 grams gold and 20.6 million grams silver. The site was eventually abandoned to the Crown for back taxes and the property was withdrawn from staking in 1978 because of major environmental problems.

Since the property had been withdrawn from staking, Falconbridge applied for a licence of occupation which would allow for acquisition of the mining rights under special circumstances. Instead of issuing the licence, the government called for bids to carry out exploration on the property. Falconbridge was the successful bidder, but it was not awarded the right to explore the property, rather it was given the right to negotiate the terms of the licence of occupation.

Because of the possible problems related to Bill 220, the company decided that it needed a much more comprehensive guarantee from the government than a simple licence of occupation. The main concern was that the company could inherit a liability of unknown magnitude with no guarantee of finding an economic orebody with sufficient revenues to offset the liability. Negotiations to reach a more comprehensive agreement took some 21 months to complete and involved four different government ministries. The entire process cost Falconbridge about $200,000.

Under the agreement, Falconbridge must make significant exploration expenditures during the next 20 years, provide annual work reports, and be responsible for current exploration reclamation. The Ontario government is responsible for all past hazards until the property is brought to lease, and is undertaking environmental studies to help find solutions to the current problems.

Falconbridge recently commenced a surface drill program on the Kam Kotia property.

Details regarding the negotiation of the agreement were recently discussed in three presentations at the 1992 Ontario Mines and Minerals Symposium in Toronto.