Platinex wins in court; Judge Denies Injunction Against Exploration


Platinex wins in court; Judge Denies Injunction Against Exploration


Alisha Hiyate

Copyright 2007 Business Information Group. All Rights Reserved.


After a 16-month delay due to an ongoing legal dispute with a First Nations band, an Ontario Superior Court ruling will allow junior explorer Platinex (PTX-V) to resume drilling at its Big Trout Lake platinum group elements property, in northern Ontario, on June 1.


But Platinex president and CEO James Trusler says drilling is unlikely to begin so quickly at the project, where exploration was interrupted by protests from members of the Kitchenuhmaykoosib Inninuwug (KI) First Nation in February 2006, just days after drilling started.


"I think it would be folly for us to try to go ahead in the face of First Nations (opposition) if there's no real substantive agreement between us," he says. "I do not want to start drilling if there's going to be opposition there in terms of people coming down and either endangering the crew or endangering themselves."


KI was granted a temporary injunction preventing Aurora, Ont.-based Platinex from exploring its only property, about 600 km north of Thunder Bay, Ont., by Justice Patrick Smith last year. However, the band was denied an interlocutory injunction to keep Platinex out in May.


KI argues that it has not been adequately consulted about exploration on its traditional land — defined as land that is not part of its reserve, but which it has traditionally used to practise court- recognized rights to hunt, fish and trap.


But in his decision, Smith wrote that there had been adequate consultation to allow Platinex to begin drilling, and that the injunction granted in July 2006 was conditional on an agreement being drawn up to that end. He gave the parties — Platinex, KI and the Ontario government — until May 15 to come up with a consultation process, timetable, and a memorandum of understanding (MOU) to allow exploration to resume on June 1. The deadline wasn't met.


At presstime, Trusler could not say if Justice Smith would impose a solution.


The injunction requests are part of a larger legal clash that has Platinex suing KI for $10 billion for its interference in the company's exploration program. KI has responded with a counter-suit against the company and a third-party claim against the Ontario government. It has also launched a separate constitutional challenge to Ontario's Mining Act, which allows companies to access traditional land without consulting First Nations. KI wanted the injunction to prevent any activity on Platinex's claims until its challenge to the Mining Act could be heard.


But Smith wrote that Platinex probably wouldn't survive if it was prevented from accessing its property until that time.


Despite the lack of progress in court-ordered consultations between Platinex, KI and the Ontario government since last year, Smith wrote that he believed all the parties had made bona fide efforts to come to an agreement.


"Consultations have taken place since July and, although not successful in reaching an agreement, have been beneficial in identifying KI's fears and concerns, and in exchanging information," wrote Smith, adding that "significant accommodations have been made."


An MOU proposed in March by the company, and agreed to by the province, was rejected by the band; the proposal included provisions to protect burial grounds, a seat on the company's board of directors for a KI designate, 500,000 warrants to be issued to the band, and a fund — to which Platinex would contribute 2% of its exploration spending — to be set up for the band's benefit.


Smith wrote that KI rejected the offer because it wanted a consultation protocol to be in place first.


Although Smith ruled the talks satisfied the Crown's duty to consult up to this early stage of exploration — Platinex is allowed to drill only 24 holes — the company will still have to proceed slowly, with court involvement along the way to ensure that KI's rights are respected, and that communication between the company, the band, and the provincial government doesn't stall.


"The ruling I think is helping us go in the right direction and I'm sure we'll get there ultimately, but we're not there yet," Trusler says.


KI spokesman John Cutfeet says it's taken a lot to get the province to fulfill its duty to consult, which recent Supreme Court judgments have confirmed.


"If the government had executed their Supreme Court-mandated duty to consult and accommodate us prior to handing out permits, we wouldn't have had to spend all these resources just to get them to sit down with us."


In his decision, Smith wrote that judging from some of the submissions from KI members, they may not have understood that they had no title or interest in the land in question, which was surrendered when the band signed Treaty 9, which covers most of northern Ontario. The sole remaining right is one of consultation if the land is to be used in a way that would affect aboriginal hunting, fishing or trapping rights.


"While it is completely understandable, in view of the aboriginal relationship to land, why KI wishes to proceed cautiously and to have a consultation protocol in place before any drilling begins, the fact remains that the drilling is to take place on Crown land unfettered or unencumbered by aboriginal title," Smith wrote. "The consultation process cannot be used in an attempt to claw back rights that were surrendered when Treaty 9 was signed."


KI spokesman John Cutfeet says the decision isn't completely negative for the band, and will force companies to deal with First Nations concerns.


"We are now at a stage where free entry is no longer free entry," he says. "Justice Smith made that clear, that there are things that now have to be considered."


Cutfeet says potential impacts to burial grounds, the environment, and hunting and trapping, in addition to compensation and funding, are all areas outlined by the judgment that have to be taken into account.


KI is also waiting for a response from the province on adequate funding so the band can engage meaningfully in consultation.


Until it can start drilling, Platinex has some 5,000 metres of old core to examine, drilled by Inco in the 1970s; Trusler says the core was never assayed for platinum and palladium. Platinex plans to go over the core using X-ray fluorescence technology, then to assay it if anything promising is found.


Platinex recently closed a $35,000 private placement at 40¢ per common share. The company, which had hoped to raise up to $200,000, will try to do a larger financing in future.


Platinex has 15.2 million shares outstanding, with shares recently trading at 45¢ in a 52-week trading range of 10¢-56¢.