Mining Seminar - History of Mineral Crown Grants in British Columbia

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Dentons’ Mining group discussed Crown grants and their history as well as the anatomy of a takeover deal and the related deal points that you need to be aware of.
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  • 1. History of Mineral Crown Grants in British Columbia December 5, 2017 Brian Abraham 30925466 5 December 2017
  • 2. • 1988 Mineral Tenure Act comes into force combines Mining Placer Act and Mineral Act • it introduced modified grid staking on the cardinal points • retained two-post staking system • Today • mineral claims and leases • placer claims and leases • Ground staking ends December 1, 2004, MTO commences on January 12, 2005 • Exclusivity period applied from January 12, 2005 to July 12, 2005 for mineral tenures and January 12, 2005 to November 30, 2005 for placer tenures 5 December 2017 2 Modern Tenure System
  • 3. • 1600s in Britain, precious metals are owned by the Crown • Sir Francis Drake explores British Columbia coast • Spanish also explore British Columbia coast, evidence in islands such as Saturna, Gabriola, Redonda, Raza, Sonora • Spanish establish fort in Victoria • English settle Vancouver Island in 1843 and Nooka Convention entered into • 1846 Treaty of Washington establishes 49th Parallel extending Oregon territory north • 1849 Vancouver Island becomes a Crown colony, Hudson Bay owned it 5 December 2017 3 Historical Dates
  • 4. • 1849 California gold rush – Sutter’s Mill • 1850 American and potential Russian expansion • 1850s Douglas Treaties with First Nations on Vancouver Island • 1857 • Fraser River / Thompson gold discovery rumors, Americans begin heading north from California, British prospectors arrive as well • British land and mining legislation applies in British Columbia 5 December 2017 4 Historical Dates (cont’d)
  • 5. • 1858 • Hudson Bay Company owned territories west of Rocky Mountains • Barkerville gold rush • Colony of British Columbia established • mining legislation established in British Columbia • Crown grants issued by the Colony of British Columbia 5 December 2017 5 Historical Dates (cont’d)
  • 6. • 1859 • Proclamation: all lands and minerals in British Columbia owned by the Crown • Goldfields Act (7 more proclamations until 1864) • 1861 no land title office 5 December 2017 6 Historical Dates (cont’d)
  • 7. • 1866 full Colony of British Columbia as we know it today established • 1867 • British North America Act established provinces have ownership of property and civil rights within province • United States purchases Alaska for $7.2 million from Russia • 1869 Coal part of Mineral Ordinance • 1870s • Royal Navy converts sail to steamship power • Geological Survey of Canada involved in examining mineral wealth in British Columbia and Dominion Coal blocks in the Kootenays retained by Canada • Plans provided by British Columbia to Canada who transfer portion of lands to Canadian Pacific Railway to build a railway • Prairie provinces also subject to railway belt lands 5 December 2017 7 Historical Dates (cont’d)
  • 8. • 1870 • Manitoba joins Confederation • Northwest Territories annexed as part of Canada • 1871 British Columbia joins Confederation as a colony, unlike prairie provinces, on promise of Canada to build a railroad to tidewater in 10 years • 1874 British Columbia Department of Mines established • 1876 Coal Mine Regulation established 5 December 2017 8 Historical Dates (cont’d)
  • 9. • 1878 • Order in Council Canada gets 40 mile wide strip Yellowhead to Burrard Inlet • secession movement 5 December 2017 9 Historical Dates (cont’d)
  • 10. • 1880s/1890s railway grant legislation • 1880s • Other railway belt lands established by province, E&N Railway, BC Southern Railway • Mineral Crown grants, excluding surface rights based on staked claims, work and payment of $5 an acre granted by the Crown commencing in late 1880s • in most cases includes precious minerals • 1882 to 1884 coal reserved to Crown on grants for agricultural lands 5 December 2017 10 Historical Dates (cont’d)
  • 11. • 1883 • 10,976,000 acres (40 mile swath) less 900,000 acres already alienated by British Columbia • 3,500,000 acres Peace River • 1,900,000 acres Vancouver Island (1930 Canada had sold 4,900,000 acres, British Columbia gets 6,000,000 Railway acres and Peace River land returned) • E&N Railway grant 5 December 2017 11 Historical Dates (cont’d)
  • 12. • 1884 Canadian Pacific receives 6,275 acres of land to extend line from Port Moody to Vancouver 5 December 2017 12 Historical Dates (cont’d)
  • 13. • 1885 Railroad completed at Craigellachie 5 December 2017 13 Historical Dates (cont’d)
  • 14. • 1890 Crown reserved iron and slate • 1891 all minerals, precious and base, reserved to the Crown on Crown grants • 1896 August 17 Skookum Jim, Tagish Charlie and George Carmack discover gold on Rabbit Creek off the Klondike River • 1898 • Klondike gold rush starts • Veteran Land Act grants made in the Peace River country • 1858 Crown grants issued for surface and mineral rights, water rights and timber rights • note precious metals not included as part of mineral definition • Trumpf fortunes founded 5 December 2017 14 Historical Dates (cont’d)
  • 15. • 1899 coal rules apply to petroleum • Canadian Pacific Railroad establishes Cominco Mining and Smelting and Pacific Logging for minerals in southeast British Columbia and forestry on Vancouver Island • Note Cariboo Wagon Road Acts also grants surface and subsurface rights • Veteran’s Land Act, Peace River District, established for WWI veterans, mineral rights also included • 1905 Alberta and Saskatchewan join Confederation • Canada Mining Regulations, applied to the prairie provinces when they joined Confederation since they did not join as colonies 5 December 2017 15 Historical Dates (cont’d)
  • 16. • 1911 • Canadian Northern Railway – Yellowhead to Vancouver • Grand Trunk Railway to Prince Rupert • Pacific Great Eastern Railway to Quesnel • 1924 provincial legislation dealing with Act respecting coal, petroleum and natural gas passed • 1936 Coal and Petroleum Act becomes law • 1957 last mineral Crown grant issued • 1973 Mineral Land Tax Act 5 December 2017 16 Historical Dates (cont’d)
  • 17. • East coast area of Vancouver Island from Nanaimo north to Campbell River, known coal area, historic collieries located at such communities as Fanny Bay, Collier Bay, Union Bay • Note coal is excluded in most of the Crown grants • Mineral Crown grants issued from staked claims • homesteads • ranches (Kamloops and Merritt areas) • railways • wagon roads • Veteran Land Act grants • Railway belt lands subject of litigation on precious metals cases, Privy Council rules unless the precious metals were specifically granted they were not included within definition of minerals 5 December 2017 17 Historical Dates (cont’d)
  • 18. • Railways sell much land keeping surface and reserving such things as coal, iron and fire clay for their economic importance • Crown grants issued, however, Crown retains 5% for public use, use of existing roads, sand and gravel for public works • Water rights retained as Crown ownership as well • Mineral Crown grants have the right to use the surface for mining, timber for mining and water for mining purposes • Crown grants revert to the Crown for non-payment of taxes in large numbers during the World War I period and the 1930s depression • Mineral Crown grants known as “Reverted Crown Grants” reissued under the Taxation Act whereas original Crown grants issued under Mineral Acts 5 December 2017 18 Historical Dates (cont’d)
  • 19. • Review original Crown grant • Review all transfers • Review taxation matters • Review data regarding issuance of Crown grant • Examine definition of “mineral” at the time both statutory and vernacular at time grant issued • Note cases such as Crow’s Nest Pass, Western Industrial Clay, and Imasco decisions • Review titles in old mining camps carefully 5 December 2017 19 Practice Points
  • 20. • Review date of issuance of the Crown grant as to mineral ownership • Many original Crown grants lost because of fire in government buildings • Review mineral land tax (1973) effect • Note mineral land tax records are paper • Mineral land tax results in many surrenders of mineral rights and six volumes of surrender documents are located in Victoria Land Title Office • Examine Crown grants issued in similar areas if original Crown grant not available • Some 4,000 Crown grants left 5 December 2017 20 Practice Points (cont’d)
  • 21. • 3-year grace period for non-payment of taxes • cell claims pick up reverted mineral rights • note potential apex and lateral rights may exist on mineral Crown grants issued prior to 1892 • conduct full land title searches and historical root title searches • coal, petroleum and natural gas may be included in some ancient Crown grants 5 December 2017 21 Practice Points (cont’d)
  • 22. Thank you Dentons Canada LLP 250 Howe Street 20th Floor Vancouver, British Columbia V6C 3R8 Canada 5 December 2017 22 Dentons is the world's largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons' polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work. www.dentons.com © 2017 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This document is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. We are providing information to you on the basis you agree to keep it confidential. If you give us confidential information but do not instruct or retain us, we may act for another client on any matter to which that confidential information may be relevant. Please see dentons.com for Legal Notices.
  • 23. Anatomy of a Takeover Bid Current Takeover Bid Regime in Canada Dentons Canada LLP 5 December 2017 Presented by: Eric Lung
  • 24. • Introduction • Pre-Bid Considerations • Commencing the Bid • Duties of the Target Board • Defensive Tactics 5 December 2017 24 Agenda
  • 25. • Statutory Framework • National Instrument 62-104 - Take-Over Bids and Issuer Bids • National Policy 62-202 - Take-Over Bids - Defensive Tactics • Most recently amended in May 2016 • Key Changes (“105-50-10”) • 1) Minimum deposit period of 105 days (subject to exceptions) • 2) Minimum tender condition of 50% • 3) Obligatory 10 day bid extension upon meeting all bid conditions (including minimum tender condition) 5 December 2017 25 Introduction – Legal Framework
  • 26. • Definition of a “Takeover Bid” “an offer to acquire outstanding voting securities or equity securities of a class made to one or more persons, any of whom is in the local jurisdiction (or whose last address as shown on the books of the offeree issuer is in the local jurisdiction), where the securities subject to the offer to acquire, together with the offeror’s securities, constitute in the aggregate 20% or more of the outstanding securities of that class of securities at the date of the offer to acquire but does not include an offer to acquire if the offer to acquire is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders.” • Relevant Considerations • Beneficial ownership or control • Right to acquire within 60 days • Parties acting "jointly or in concert" 5 December 2017 26 Introduction – Trigger for a Takeover Bid
  • 27. • “Friendly / Solicited” vs. “Hostile / Unsolicited” • Advantages of a Friendly/Solicited Bid • Time for Target board response • Access to information • Deal Protections • Preservation of relationships • Advantages of a Hostile/Unsolicited Bid • Control • Avoid difficult management • Control of information 5 December 2017 27 Introduction – Types of Takeover Bids
  • 28. • Most common exemptions from a formal Takeover Bid: 1. “Private agreement” exemption 2. “Normal-course purchases” of up to 5% 5 December 2017 28 Exemptions from Takeover Bid Rules
  • 29. • Toehold Position / Early Warning Requirements • Pre-bid Integration Rules • Lock-up Agreements 5 December 2017 29 Pre-Bid Considerations
  • 30. • Initiating the Bid • Formal offer to all shareholders • Advertisement or Offer Document • Bidder’s Documentation • Takeover Bid Circular • Friendly Bid - Support Agreement • Deal Protections • No-Shop and Go-Shop Clauses • Breakup Fees • Target’s Response • Director’s Circular 5 December 2017 30 Commencing the Bid
  • 31. • Mandatory Requirements for a Bid • Bid Consideration: Shareholders must be offered identical consideration • Minimum Deposit Period: Bid must remain open for 105 days, but may be shortened to a minimum of 35 days in certain circumstances • Minimum Tender Condition: 50% or more of the outstanding shares • Mandatory 10-Day Extension: Bid must be extended by 10 days once the Bid conditions are satisfied or waived. • Bid Conditions: Conditions are generally allowed (other than a financing condition) 5 December 2017 31 Commencing the Bid
  • 32. • Must mail a Notice of Variation or Change • Bid must remain open at least 10 days following the variation or change • Notice must be delivered to all securityholders (other than those whose securities have been taken up) 5 December 2017 32 Changes to a Bid or Bid Information
  • 33. • Shareholders may withdraw at any time before shares are taken up • If a Bid has been varied, tendered share which have not been take up may be withdrawn during the 10 days following the Notice of Variation or Change 5 December 2017 33 Withdrawal Rights
  • 34. • Purchases during the Bid • Prohibited for the most part while the Bid is in effect • Limited exception for market purchases • Purchases after the Bid • Prohibited for a period of 20 business days after the Bid expires • Limited exception for market purchases 5 December 2017 34 Purchases Made Outside a Bid
  • 35. • Bidders must take-up and pay as soon as possible (but no later than 3 business days after take-up) • Bidder must issue news release disclosing that minimum tender has been satisfied. 5 December 2017 35 Completing the Bid
  • 36. • Generally, acquiring 100% of a Target’s shares pursuant to a Bid is unlikely • If Bidder acquires 90% of the Target shares, a Compulsory Acquisition is available • If Bidder acquires less than 90% but more than 66 2/3%, of the Target Shares, a Squeeze Out transaction is available • Appraisal rights for objecting shareholders 5 December 2017 36 Second Step Transactions
  • 37. • Exercise due care and act honestly and in good faith with a view to the best interests of the corporation • Formation of a Special Committee • Effect of May 2016 Amendments 5 December 2017 37 Duties of the Target Board
  • 38. • Conduct a complete and careful investigation and analysis of any proposed transaction • Maintain a majority of independent directors or consider forming a special committee • Seek a fairness opinion from a financial expert • Keep records of the process 5 December 2017 38 Practices for a Target Board
  • 39. • Effect on Poison Pills / Rights Plans • “Formal” Takeover bids • “Exempt” Takeover bids 5 December 2017 39 Defensive Tactics
  • 40. Thank you Dentons Canada LLP 250 Howe Street 20th Floor Vancouver, British Columbia V6C 3R8 Canada 5 December 2017 40 Dentons is the world's largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons' polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work. www.dentons.com © 2017 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This document is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. We are providing information to you on the basis you agree to keep it confidential. If you give us confidential information but do not instruct or retain us, we may act for another client on any matter to which that confidential information may be relevant. Please see dentons.com for Legal Notices.
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