Pacific Booker: A Win for Junior Mining in BC

bcflagIt’s not very often that a small mining company goes up against the power that has the ultimate say over the future of a potential mine, and wins, so for that reason alone, this week’s victory by Pacific Booker Minerals (TSXV:BKM,NYSE:PBM) in the top court in British Colombia is a cause for celebration, at least in mining circles.

In what may in future be considered a landmark case concerning the environmental assessment process in British Columbia, the plaintiff, Pacific Booker, presented an argument in court that the government of BC erred when it rejected the company’s application for an environmental certificate back in October of 2012, that would have given the go-ahead for the Morrison copper and gold mine in the province’s northern interior.

The court agreed, and issued the following statement on Monday:

“The petitioner is entitled to a declaration that the executive director’s referral of the application for a certificate to the ministers and the ministers’ decision refusing to issue the certificate failed to comport with the requirements of procedural fairness. There will be an order in the nature of certiorari quashing and setting aside the ministers’ decision and an order remitting the petitioner’s application for a certificate to the ministers for reconsideration. The petitioner is entitled to costs.”

What that essentially means is that the government is now obliged to reconsider Pacific Booker’s application for an environmental certificate.

Investors leapt on the news with glee, pushing up the stock 66.7 percent to close at $7.00 on Tuesday. It is enlightening, from an investing point of view, to look at what happened to BKM  after the government made its ill-fated decision to kill the project last fall. On September 28, 2012 the stock was trading at $14.95 a share, after enjoying a steady climb for almost four years, but in the days following the decision, it cratered to $3 — a near 90-degree plunge on the chart representing a loss in value of 79 percent.

Erik Tornquist, Pacific Booker COO, said the company is delighted to have been vindicated in court.

“Obviously we’re very pleased because that’s exactly what we asked for in the petition,” Tornquist told Gold Investing News immediately following the release of the court decision.

According to Tornquist, the company does not need to complete any additional paperwork and will be engaging with its lawyer in coming days to map out the process it needs to follow in order to get its environmental license.

For its part, the BC environment ministry has been tight-lipped about what comes next, saying only that it has received a copy of the ruling and is reviewing it.

How did we get here?

The leadup to the court case surrounding Pacific Booker and its eventual vindication in the eyes of the law is certainly a puzzle.

It all started in 2003, when Pacific Booker submitted a project description to the BC Environmental Assessment Office (EAO) on the Morrison mine, located on the shores of Morrison Lake. In three years, the company spent about $30 million doing feasibility studies and consulting with the local Lake Babine First Nation as it worked through the provincial environmental assessment process — hoping in the end to receive an environmental certificate that would green-light the mine.

But when it came time for the BC Environmental Assessment Office to make a decision on the half-billion-dollar project, the company received a shocking reply. Terry Lake and Rich Coleman, the BC Liberal ministers needing to sign off on the EAO decision yay or nay, said no to the mine — arguing that it posed an unacceptable risk to Morrison Lake and to salmon in the Skeena River.

“The potential for long-term liability for the province and risk to the environment were not acceptable in this case,” the ministers announced at the time.

That had staff at Pacific Booker scratching their heads, especially considering that the company had done a number of things to mitigate environmental impacts of mining, including improving the tailings pond, adding a water treatment plant and various changes to mitigate the impacts on water. The company also signed a memorandum of understanding with the Lake Babine Nation, which had expressed some opposition to the project.

While Lake, then environment minister, said he appreciated the company’s efforts, they weren’t enough to convince him that the mitigation efforts would be successful, Les Leyne, a Victoria-based political reporter, wrote in an October 2012 column:

“We also recognize your proposed project would have provided economic benefits, including the creation of jobs and tax revenue,” Lake told the company. “Despite these positive aspects… we remain of the view that an environmental assessment certificate should not be issued.”

The position of the ministers was all the more strange, considering the BC government’s very public pro-mining stance. Before her government was re-elected last May, in a surprise upset over the opposition NDP that was leading in the polls, Premier Christy Clark promised to build eight new mines by 2015 and expand nine existing ones. Her pro-mining credentials seemed confirmed with her government’s approval of Taseko’s (TSX:TKO) Prosperity mine, also in northern British Columbia, even though the mine plan involved destroying a lake. (That project was later rejected by the federal government and the company is re-applying for an environmental permit).

But Pacific Booker wasn’t about to give up without a fight, and in April of this year it informed the government it would “see them in court“. The company’s case was buttressed by the fact that in December of 2012, the Canadian Environmental Assessment Office released a draft report concluding that the Morrison mine “is not likely to cause significant adverse environmental effects.”

But it was only when a mysterious envelope, postmarked from Victoria, arrived on Tornquist’s desk shortly before the trial was to start, that Pacific Booker realized it had a strong case against the government.

The envelope contained a draft report to the government by Derek Sturko, executive director of the provincial Environmental Assessment Office, that seemingly supported the Morrison mine.

According to an affidavit filed in court, in the draft report, Sturko clearly stated his preference for an approval:  “I note that the draft recommendations do not recommend that Pacific Booker’s application for an environmental assessment certificate be denied.”

The document, obtained by Gold Investing News, included two scenarios: in the first, a recommendation to issue an environmental assessment; and in the second, a recommendation that Cabinet “adopt a risk/benefit approach” while considering a set of broad factors, “such as economic benefits versus First Nations’ land claims and the potential risk to sockeye salmon.”

As we now know, ministers Lake and Coleman adopted just such a “risk /benefit” approach, and a week later, turned down the project, rationalizing that the risks to the environment outweighed the economic benefits, which included some $2.5 billion in expenditures during the life of the project, 1,117 jobs during two years of construction, along with $71.6 million in tax revenue.

Concerns were addressed

Regarding the “risk/benefit” test, Tornquist noted that the government approved two projects after the Morrison mine rejection without using such criteria. According to Pacific Booker’s affidavit, the Roman Coal mine was approved by the EAO despite the project having one adverse environmental effect; while the Kitsault mine was approved without consideration of a risk/benefit approach.

Tornquist also referred to a number of technical documents and press releases to indicate that the government’s concerns about water quality, the tailings pond and the impacts on salmon were addressed by the company.

“PBM believe that they have accommodated all of the concerns of MEM [Ministery of Energy and Mines], MOM [Ministry of Environment] and First Nations and propose a project that uses unprecendented measures to be protective of the environment,” he wrote in an August 2012 letter to the Environmental Assessment Office. “PBM will construct and operate the Morrison mine in compliance with industry best practices, using proven technology and in full compliance with all permit requirements.”

Importance of fairness

Those who speak for the industry are looking at the court decision as not only a vindication of Pacific Booker, but the environmental assessment process that the government is expected to follow when examining new resource projects.

Gavin Dirom, president and CEO of the Association for Mineral Explorers BC, said he sees the Morrison mine rejection in 2012 as “an anomaly” for a Liberal government that has for the most part supported the industry — pointing for example to its Mineral Exploration and Mining Strategy released in the same year.

At the time, Dirom reflected industry disappointment when he wrote,

“The recent decision to not issue an Environmental Assessment Certificate to Pacific Booker Minerals for their Morrison copper-gold mine project… does not appear to represent a science-based decision making process that was transparent, logical or clear.”

Fast forward a year, and Dirom is sounding a lot more upbeat after hearing of Pacific Booker’s victory in court:

“I think it’s really a significant decision because it reinforces due process, the importance of procedures, of fairness,” he told Gold Investing News, adding: “As a Canadian I’m proud to say that we have rule of law here, we have consistency and we redress things as we need to. That’s pretty uncommon around the world. ”

Asked what signal the decision sends to juniors, Dirom was also positive:

“I think it’s going to reinvigor confidence to a prospector, a midtier company, investors that in British Columbia fairness is important and it’s upheld in the court,” he said.

The Morrison mine contains a deposit of copper, gold and molybdenum, and is located within 29 kilometers of two past-producing copper mines, Bell and Granisle. A feasibility study on the project shows recoverable metal of 1.37 billion pounds of copper, 685,090 ounces of gold, and 10.047 billion pounds of molybdenum. The proposed open-pit mine would run 30,000 tonnes per day through the mill, for a minelife of 21 years.

 

Securities Disclosure: I, Andrew Topf, hold no investment interest in any of the companies mentioned. 

Editorial Disclosure: Pacific Booker Minerals is an advertising client of the Investing News Network. This article is not paid-for content. 

Related reading:

Pacific Booker Vindicated as Court Rules Against BC Government