Existing mineral claims in the Peel watershed have little value, according to a report released by Mining Watch Canada.
The document details the financial records of the publicly traded companies with claims in the area, showing that of $168 million dollars spent developing those claims, all but $6 million has been written off.
The report, commissioned by the Yukon Conservation Society, asserts that the government should have to compensate companies little or nothing if the region becomes protected from development through the land use planning process.
But a mining lawyer and geologist says that conclusion is inaccurate.
“This is one of the most misleading releases that you could possibly have,” said Brian Abraham, a Whitehorse-born and B.C.-based lawyer who is also a member of the Law Society of Yukon.
The fact that the existing claims have been written off reflects that companies have not been spending money in recent years developing them, and not that the claims are worthless, he said.
“No one in their right mind is going to be spending money on a project within the Peel watershed when they know there’s a strong chance that they’re not going to be able to develop it.”
Under new accounting requirements, it makes sense that companies are taking a cautionary approach and writing off the claims, said Abraham.
But the Yukon Conservation Society’s executive director, Karen Baltgailis, disagrees.
Public companies are required to disclose any factors that significantly affect the value of the company.
The report author was able to find no references to the Peel planning process in explanations for why the claims had been written off in the companies’ financial statements.
Instead, they pointed to “a difficult financing environment for junior resource companies,” and “the ongoing volatility of the global financial and commodity markets,” according to the report.
Of course, the mining companies would argue that their claims still have value and try to seek compensation for them if the Peel becomes a protected area, said Baltgailis. But either they have failed to report a significant factor in their financial statements, or the Peel planning process has not been a major factor in the devaluing of the claims. “The bottom line is that if the Yukon government was not renewing those claims for free during the moratorium it is highly unlikely that any of those claims would be active,” said Baltgailis.
Furthermore, about one-third of the claims that Mining Watch was able to obtain information for are uranium claims.
Both the downturn of uranium markets following the Fukushima disaster and the strong public sentiment against uranium mining have made uranium-development prospects unfavourable both in the Yukon and around the world, said Baltgailis.
The claims in the Peel were staked during a brief boom in the uranium industry several years ago, but prices have continued to drop since then.
It is unsurprising that the mining companies have written off those uranium claims, and highly unlikely that it would ever be financially or politically feasible to develop them, said Baltgailis.
The report was written by Ramsay Hart, the co-ordinator for Mining Watch Canada. The section describing what a write-off is and when it is done was reviewed by a specialist in mining law who is a practising lawyer and university instructor, according to the report.
“A write-off is an indication that the holder of a mineral property sees little or no value under present conditions,” the report states. The conditions of the write-off “could be used as justification for not giving compensation for the expropriation of the mineral rights for properties that are written-off.”
Contact Jacqueline Ronson at