Anyone following junior mining in B.C. — and by extension the Mineral Titles Office — may have caught an interesting bit of drama in April courtesy of Carmax Mining and Chief Gold Commissioner Mark Messmer. The episode offers a valuable lesson on mineral title and a look at how the Mineral Tenure Act (MTA) handles claim forfeitures.
Carmax’s flagship asset is the Eaglehead copper project, 48 km east of Dease Lake, B.C., which it has been working on since roughly 2002. The company has invested $5.3 million in the project, and it amalgamated the 34 mineral concessions that constitute Eaglehead in March 2015, into claim No. 1034634, which covers 134 sq. km.
It appears that someone at Carmax neglected to read the fine print: when you merge claims, the combined land package inherits the earliest expiration date of all the individual tenures.
The result was that the rights to the amalgamated land package were default-scheduled to lapse on April 11, 2016. Unfortunately, the company didn’t know this, or they forgot, and on April 12, Eaglehead became openly available on B.C.’s Mineral Titles Online system.
The timing was especially bad, since Carmax had just finished a flow-through financing to fund its 2016 exploration work at the project. Naturally, within 24 hours of the land package becoming openly available for staking, 42 new claims totalling 107 sq. km were registered.
At this point the outcome would seem pretty straightforward. Under B.C.’s mineral tenure laws Eaglehead was available, and the individuals who filed the new claims were now the rightful holders. Carmax would be left with $1.5 million in orphan exploration dollars for a project it no longer owned.
But that scenario doesn’t account for a wrinkle in B.C. legislation that allows the chief gold commissioner to void “intervening claims,” and essentially reset the entire claim block. So Carmax president and CEO Jevin Werbes called Messmer on April 13 to request he exercise that authority under Section 67 of the MTA.
In a letter dated April 22, Messmer opted to return Eaglehead to Carmax, with major factors in the decision including: “the long-standing claim history and development, the significant investment to date, the extraordinary prejudice to Carmax compared to the relatively minor impacts to the intervening claim holders, and the inadvertent nature of Carmax’s error.”
One apparently important concept that Messmer considered was that the new mineral claim holders would “reap the benefit” from the project for “little apparent effort.” So the situation really didn’t amount to much, but it opens up intriguing questions on mineral title and the discretionary powers of the gold commissioner under the MTA.
The Northern Miner’s Vancouver office received numerous emails questioning whether the ruling was actually legal. Technically, the claims were available on the MTO. So shouldn’t the new holders have rights? What is the “investment” threshold that gives company leniency in terms of tenure forfeiture? According to filings, Carmax spent $800,000 in “exploration expenses” at Eaglehead in 2015.
First, Messmer does have the authority to exercise discretion on title forfeitures, so it’s perfectly legal to give the claims back to Carmax. The new claim holders who picked up pieces of the project after the lapse will question the integrity of the MTO system, and point out that Carmax had over one year to figure out the expiry date had changed on the amalgamated land package.
Carmax’s vice-president Jeff Poloni apparently tried to re-stake the Eaglehead package after the forfeiture. He is one of 11 names on the new claim holder list, but reported that the areas he staked online were “mostly peripheral to the main exploration targets and location of inferred resources.”
On April 25, Poloni tendered his resignation and withdrew his consent to stand for re-election to Carmax’s board of directors.
It’s pretty clear what Messmer was thinking. Assuming the forfeiture was upheld, the impact on Carmax would have been catastrophic. There would likely have been lawsuits and a legal mess. Eaglehead probably has a better shot of advancing as a mineral project under its amalgamated state.
All the Mineral Titles Office had to do for the new claim holders was refund the staking money. The situation isn’t great for the new holders who legally registered Eaglehead claims due to Carmax’s error, but that’s what discretionary government powers are all about.
So remember, if you’re combining a land package in B.C., check the earliest expiry date on the claims. But if that fails and you forget, make sure to have the Chief Gold Commissioner’s office on speed dial. Maybe they’ll give them right back.
What a debacle!
This was all planned along and if you are not happy about it you can sell your shares!
This case highlights the inherent risk with the automatic reopening process favoured by B.C. Other provinces do differently: Saskatchewan let claim lapse automatically, but the reopening is manually triggered by the minister and announced 2 weeks in advance, at least. This usually allows the former owner to identify the issue before the land is acquired by a third party. Eventual correction remains at the discretion of the minister.
Mike Detharet, Former Director Mineral Tenure, Saskatchewan
No way Carmax should get their property back. “You snooze, you lose”, simple as that. Carmax had over a year to file a bit of paperwork to keep their ground in good standing. The whole basis of the free entry staking system is that the first person who stakes open mineral lands in the approved manner, gets the mineral rights. In my opinion, the Chief Gold Commissioner made the wrong decision here.