NRC seeks bigger slice of pie

Nunavut Resources Corporation, an Inuit-owned corporation created a little over a year ago, is making considerable progress toward achieving its bold vision of becoming a viable option for direct Inuit participation in non-resource development in Nunavut.

Canada's largest territory, Nunavut has an estimated population of about 33,000 spread over an area the size of Western Europe.

The NRC is the brainchild of Kitikmeot Inuit Association President Charlie Evalik. It aims to give Nunavut's 30,000 or so Inuit more involvement and decision-making power in rapidly expanding resource development activities underway in the territory.

"Inuit are at risk of becoming the last people to benefit from resource development on their own lands. Indeed, there are recent examples of people from other parts of the world benefitting more from Inuit-owned lands than Inuit through the acquisition and sale of Inuit-owned lands for mineral development. That means the real gains, including capital gains, from development in Nunavut go to others. It is time for Inuit to enhance their participation in development on their lands and in Nunavut," Evalik has said.

Formally organized about a year ago, the NRC is the product of months of groundwork, including soliciting advice and support from individuals and organizations across Canada's political, financial and industrial spectrum.

Evalik conceived the concept of the NRC in May 2009 and brought together a team of individuals, including the Hon. Peter Lougheed, former premier of Alberta, and David Elliott of Haywood Securities, to assist in development of the corporation.

"I had help in moving the vision forward," Evalik told Mining News April 14.

The help also included support from Indian and Northern Affairs Canada's Major Resource and Energy Development Program, followed by CanNor in 2010. These agencies, along with Nunavut Tunngavik Inc. and the Government of Nunavut, provided assistance to the Kitikmeot Inuit Association for the technical elaboration of the concept.

Bringing benefits home

Structured to empower Nunavut's Inuit residents to achieve direct equity participation in resource development projects, the NRC's long-term objective is to improve the capital position and economic situation of the Inuit, many of whom are plagued with health problems and socioeconomic ills that accompany exposure to Western culture.

Evalik contends that Nunavut's Inuit can get jobs, contracting opportunities and royalties from current benefit arrangements with mining and other development projects, but they still depend on others to make key development decisions.

"I needed to take Inuit interests to the next level on (the) economic chain," he said.

Since unveiling the plan to create the NRC in a report to the Kitikmeot Inuit Association at its annual meeting in Cambridge Bay in November 2009, Evalik has canvassed widely for support, from Iqaluit to Ottawa and Toronto.

In the process, the fledgling corporation identified a key role for itself as a catalyst for fostering regional infrastructure development by forming strategic partnerships in Nunavut and by serving as a management and investment vehicle that is capable of moving infrastructure development the Kitikmeot region forward.

The Kitikmeot is Nunavut's westernmost region, which borders Northwest Territories. Nunavut, separated from the N.W.T. in 1999 by the Nunavut Land Claims Agreement Act, has two other regional Inuit associations - the Kivalliq in the East and the Qikiqtani in the North.

The NRC recognizes that the development of Nunavut's mineral-rich areas, such as in the Kitikmeot, is constrained by a lack of infrastructure.

"These areas require ports and marine-loading facilities, roads, and improved landing strips to fulfill their potential," Evalik said.

In 15 months, the corporation has won key financial support from local, territorial and federal institutions and agencies and attracted a high-level board of directors and technical advisory team with expertise in hydrocarbon and hardrock mineral resources and equity, tax and finance as well resource development and project agreements.

NRC also initiated discussions with Canada's major banking institutions and investment house and private equity sources; secured significant contracts with governments; and delivered a policy statement to the Standing Committee on Northern Development in Canada's Parliament.

Favorable tax ruling

After a year of research and dialogue, the corporation reported a successful tax ruling last fall by the Canada Revenue Agency that could have a profound effect on all Inuit organizations in Nunavut.

The federal agency clarified that certain public bodies, such as Nunavut's Inuit associations, are exempt from paying income tax under Canada's Income Tax Act.

There are two major implications of the ruling. First, it may act to reduce the income tax liability of subsidiary corporations, such as Kitikmeot Corporation or the NRC, which could result in income tax savings that may be re-invested into new business opportunities or provided as a dividend to the parent organization to provide for additional programs and services to Inuit beneficiaries. Second, the ruling could allow the regional Inuit Associations in Nunavut, to accept donations from third parties, while affording the donor the income-tax equivalent of a donation to a registered charity.

"This could be very relevant in future relationships with commercial and resource development interests, according to the NRC. Inuit development corporations, which are positioned to be major suppliers of goods and services in Nunavut's accelerating resource development economy, may benefit significantly if their businesses are structured with the tax ruling in mind," Evalik wrote in the corporation's January 2011 newsletter.

Resurrecting Jericho

During the 2011 Mineral Exploration Roundup held in Vancouver n January, the NRC finalized its first agreement with a resource company operating in Nunavut. The corporation signed a mutual cooperation agreement with Shear Diamonds Ltd., a junior explorer with several projects in Nunavut, including the former Jericho Diamond Mine, which it purchased in August.

Shear Diamonds is focused on aggressively expanding the resource and examining the future economic potential of Jericho, which closed due to numerous operating challenges in 2008 about a year and half after it started production.

The NRC said the agreement with Shear sets out as the corporation's initial priority, specific provisions for cooperation in the examination of infrastructure development opportunities associated with the mine. These provisions closely align with the NRC's mandate to finance and operate key support infrastructure that can generate revenues through means such as user fees or lease-back arrangements.

In signing the agreement, Shear Diamonds President and CEO Pamela Strand said, "We are delighted to be able to work closely with the NRC in a spirit of cooperation to maximize mutual benefit at the Jericho Mine and wherever Shear Diamonds operates in Nunavut."

The Kitikmeot Inuit Association, through its development arm, Kitikmeot Corporation, made substantial investments into the Jericho Mine when it was first constructed. The closing of the mine in 2008 was a significant financial blow to the organizations and for Inuit workers who were directly or indirectly employed by the mine.

"Needless to say, the Kitikmeot region would very much benefit from the jobs and the investment that a redeveloped Jericho Mine will bring," Evalik said. "Beyond jobs and business contracts, a successful mining operation could create opportunities for direct equity investment, in addition to meeting the NRC's initial interests in developing key support infrastructure."

Sabina signs MOU

In March, the NRC reported signing a memorandum of understanding with Sabina Gold & Silver Corp. that prepares the way for an NRC-Sabina agreement intended to evaluate, and ultimately finance, develop and own regional infrastructure that supports the non-renewable resource sector operating in the Kitikmeot region of Nunavut.

In addition to its Nunavut exploration projects, Sabina is advancing development of the silver-rich Hackett River deposit located in the West Kitikmeot's greenstone belt. Hackett River is one of the largest undeveloped volcanogenic massive sulphide deposits in the world. Its development would require construction of an all-weather road and deepwater port. A proposed mine plan currently estimates that mining the polymetallic deposit would provide about 600 full- and part-time jobs over a 16-year mine life.

Through the MOU, Sabina will provide financial support the NRC with up to C$2 million as seed funding for mutually agreed upon investigation of proposed joint infrastructure projects in the Kitikmeot. Such investigations will likely require the completion of economic, engineering and environmental feasibility studies necessary to identify and evaluate the most promising infrastructure development opportunities in the remote region.

"It is no secret that lack of infrastructure and access in the Arctic are challenges for large deposits such as Hackett River," said Tony Walsh, Sabina's president and CEO. "Working together with (the) NRC provides Sabina with Inuit support and influence, opportunities for access to potential news sources for private and federal funding and opportunities for win/win investments for both Inuit and industry in Nunavut. We believe the MOU will initiate a process (that) will pave the way for a more formal relationship to evaluate, finance, develop and own regional infrastructure that supports not only the Hackett River Project but other resource projects in the Kitikmeot region."

In addition to Sabina's contribution, the NRC will seek to secure further investments from private and public-sector funders to promote infrastructure development.

Evalik called the NRC-Sabina MOU "an important precedent that sets the stage for future partnerships with Nunavut's resource companies."

"We consider this to be an important step forward for the economic development of the Kitikmeot Region and for Nunavut. Sabina is a welcome participant in this process," he added.

Recognition for Evalik

The NRC's early success is due largely to Evalik's persuasive vision, according to Ron Wallace, a director and the NRC's operations officer.

Typically, when aboriginal groups "talk about becoming partners with mining companies, the companies think it's time to grab their wallets," he said.

But Evalik, from the outset, expressed a desire for the NRC to "walk with the companies" as partners rather than being "confrontational," said Wallace, who is also a former CEO of a Canadian company.

"What Charlie has demonstrated with Sabina is that working with the landowners as co-investors can be mutually beneficial," he said. "Investing in mining development can be risky, but investing in the infrastructure, such as roads, bridges and ports, needed for resource development provides benefits for everybody."

Wallace said he believes the NRC is unique in North America in many ways and has the potential to offer a great deal in benefits to the Inuit of Nunavut.

The University of Alberta, meanwhile, announced April 14 that it will bestow an honorary doctorate of laws degree on Evalik at its mid-June Convocation to be held at the university's Augustana Campus in Edmonton, Alberta.

"Charlie Kakotok Evalik champions a transformative vision for Canada's North," the university said in a statement. "A central contributor to the settlement of the Nunavut Land Claims Agreement and the creation of the new territory of Nunavut … He is a strong advocate for leadership roles for Inuit as decision-makers in development that respects both the land and its people."

Wallace said news of "the honor to be bestowed upon a Canadian Inuit leader is receiving quite widespread recognition and joy across the Canadian Arctic."