Strategies for Impact Benefit Agreement Success

1. Strategies for Impact Benefit Agreement Success Cherie Brant CCAB Aboriginal Entrepreneurs Conference October 24-25, 2011, Ottawa

2. Outline • Case Study – Detour Gold Mine Milestones • Key Strategies for IBA Procurement • Key Strategies for IBAs

3. Case Study-Detour Gold Mine Ontario • Detour is reopening an open-pit gold mine 185 km northeast of Cochrane dubbed “Canada’s largest pure gold play” • Detour needs to build a transmission line to service the mine • The project is in territory where three (3) First Nations (TaykwaTagamou Nation, Moose Cree First Nation and Wagoshig First Nation) exercise traditional practices, and the project may impact those practices

4. Case Study Continued • In recognition of Aboriginal and Treaty rights protected under s.35 of the Constitution Act, Detour negotiated an IBA with TTN, Moose Cree First Nation and Wagoshig. • The Métis also declared an interest in the lands affected by the Project.

5. Milestones: TTN IBA2007-2009 • Detour acquires mine and discovers potential in 2007 • Detour conducts Pre-Feasibility Studies in 2009 • TTN signs MOU with Detour September 2009

6. Milestones: TTN IBA 2009 • MOU in Sept 2009 signaled commencement of: • Traditional Ecological Knowledge Study • IBA negotiations • Employment and training and business data base • Environmental peer review

7. Milestones: TTN IBA 2010 Permitting • Feasibility Study/Permitting • Notice of Commencement to Cdn Environmental Assessment (CEAA) January 2010 • Prov. Environmental Assessment (EA) for permitting 2010 • Transmission line Leave to Construct OEB hearing May 2010

8. Milestones: TTN IBA2010 Procurement • Construction Tenders begin • Joint Ventures Fall 2010 • IBA ratified November 2010 • TTN, MCFN, Kiewit sign Transmission Joint Venture December 2010

9. Milestones • OEB grants Leaves to Construct transmission line Dec 2010 Phase I (138 km) • Detour commences Comprehensive Study under CEAA – January 2011 • OEB grants Leaves to Construct transmission line Sept 2011 Phase II (38 km)

10. Summary – Milestones Detour Acquisition/pre-feasibility/EA Comp Study TTN Prep/Planning TTN Procurement JV (Dec) MOU(Sept)IBA (Nov) 07 08 Sept ‘09 Sept ‘10 Sept ‘11

11. Mine Status: 2011-2013 • CEAA approval /public comment process is on-going • Transmission line commission April 2012 • Detour expects mine to go to production in 2013 • Procurement opportunities on-going

12. Key strategies for procurement

13. Key Strategies - Procurement • Significant opportunities exists to benefit from procurement opportunities arising from projects where IBAs are negotiated. • Challenge is to be ready.

14. Threshold considerations • To be effective in procurement negotiation: • Need to be ahead of the game. Understand how to participate in procurement before it happens. • Aim to establish the big picture understanding of the timing and construction of the project. Easy to loose sight as IBA negotiations are complex. • Due diligence is critical.

15. Procurement 101 • Procurement/Tendering • manner of retaining contractors to complete construction and operation. • Typically competitive although limited tenders are increasingly becoming more common in connection with IBAs.

16. Procurement 101 • Multiple Phases of Procurement in Mining projects • General Construction • Transmission Construction • Site Construction • Operations Phase • Decommissioning Phase

17. Procurement 101 • Methods include: RFI, RFQ, RFP, Tenders, Bids, Conditional Awards • Type of Processes: • Open (most competitive) • Limited • Sole source (least competitive) • Criteria/Evaluation • Consider Post Mortem

18. Key Considerations • Negotiating Party • Type of Joint Venture • Decision Making • Managing multiple interests (comm, FN, and corp) • Consider the business risks to shareholder/FN • Evaluation Economic opp.

19. Key Strategies - Procurement • Be Ready to: Decide who will negotiate business/JV agreements and take charge of FN procurement. • Consider having an economic dev plan to address this specifically. • A Terms of Reference for decision making or Communications Protocol can be an invaluable for transparency • Avoid challenges that can be faced when parties don’t have a clear understanding of who can bind the FN.

20. Key Strategies - Procurement • Be Ready to: Have business structures in place • FNs will need to receive tax advice up front in order to ensure that business structures are tax effective. • Tax ruling on structure may be prudent depending on type of joint venture • Consider obtaining funds to put these structures in place at the MOU stage • Don’t forget about training for brd/members on corp. governance

21. Key Strategies - Procurement • Be Ready to: know/define relationship between the FN and the corporate entity that you create for contracting. • The “run away” company • Industry wants to know that they are dealing with a corp. entity that has proper governance in place. • The buck stops at the Shareholder but often in implementation this understanding gets lost.

22. Key Strategies - Procurement • Be Ready to: understand liability exposure for each JV • Partnerships can put passive partners at risk unless steps are taken to mitigate • Limited Partnerships are prone to loose liability protection if “partners” take part in day to day affairs. • Some JVs by nature will have limited risk and in some cases a contract with FN direct will be sufficient

23. Steps to facilitate negotiations • Develop Economic Development Strategy centered on targeted and competitive procurement • Consider Policies to promote resource develop. • Consider economic development zone through on-reserve leasehold arrangement

24. Key strategies for Impact benefit agreements

25. Put a good team in place • Chief and Council will want to identify: negotiators, environmental peer reviewers, financial advisors, legal advisors • Ensure that the community gets to know and trust the team

26. Ensure balanced agreement • Address all community interests • Ensure that the Traditional Knowledge/environmental peer reviews, and employment, training and procurement aspects are addressed at the same time as the IBA is being negotiated • This will mean that peer review consultants are retained, community liaison people are hired, employment and business opportunities are identified, joint ventures signed - even before the IBA is ratified

27. Avoid the “bare cupboard” syndrome • A significant amount of benefits for most projects will be from wealth generated for FN businesses from construction and spin off services • Ensure that procurement aspects are addressed at the same time as the IBA is being negotiated • This will mean that joint ventures may be signed - even before the IBA is ratified • Otherwise the IBA could be ratified too near to the construction phase with fewer contracts available for FN

28. Ensure Successful Ratification Process • Communicate progress with community early and often • Document all concerns of community members and ensure that members are shown how concerns have been resolved in the IBA • Plan carefully for the meetings and ratification vote – venue, presentations, time for questions, who to attend, sufficient time

29. Ensure Effective Dispute Settlement • An effective dispute resolution process: • Starts before the dispute with effective communications to keep parties working together • Encourages collaboration • Starts with senior representatives • Moves to mediation with a neutral third party mediator, usually with experience of Aboriginal culture • Is drafted to involve community traditions and input as appropriate

30. Plan for Implementation • Include an implementation plan as part of the IBA • Identify persons responsible in both Parties for implementation • Effectively pass off knowledge from negotiators/lawyers/financial advisors to staff

31. Aboriginal Practice Group Juli Abouchar Cherie Brant Katherine Koostachin