Investors can take advantage of the fact that Quebec mining companies appear to have an advantage compared to other mining companies in Canada and globally. The Quebec government's extensive support to these mining companies allows them to grow and make significant economic contributions. This strong support, combined with the quality of resources, makes Quebec one of the premier mining destinations in the world.
As a mining investor, there are not many places in the world where you'll find ample resources in a politically stable country and an industry backed by strong Government support. It's a region worth your investment consideration.
The Quebec government's energy and natural resources department is committed to the province's mineral development, providing valuable resources to mining companies to support exploration and development. These resources include specialised research and development centres, an in-depth database with over 150 years' worth of geological data, and several geoscientific data banks. In addition to which they provide financial support in the form of equity and debt packages to act as a cornerstone for mining companies.
Such comprehensive government support provides significant benefits to Quebec mining or exploration companies. This may seem like it confers an unfair advantage over other Canadian or global mining regions, but that’s the point.
To better understand the strength of the Quebec mining industry, we spoke to a panel of Canadian mining and investment experts. Our panel included:
- Jose Vizquerra, President and CEO of O3 Mining.
- Justin Reid, CEO of Troilus Gold Corporation.
- Pascal Hamelin, CEO of Bonterra Resources.
- Barry Allen, Managing Director, Research, and Senior Mining Analyst at Laurentian Bank.
Meet the panel
Laurentian Bank Securities
Laurentian Bank Securities is a full-service investment bank offering research, sales, trading, and investment banking. The company aims to source investment ideas that will generate higher returns for its clients. It provides value added services to corporate and institutional investors, analysing companies to identify emerging investment trends and those that offer sustainable growth. The company currently covers six sectors considered to be an integral part of the Canadian economy. One of these is base and precious metals.
Barry Allen is the Managing Director of Research for the company. He holds BSc and MBA degrees from Dalhousie University and is a Canadian Institute of Bankers fellow. He joined the company in 2007 as a Mining Analyst and has over 30 years of experience in capital markets and investment research.
Barry has consistently ranked within the top ten precious metal analysts in North America. Before his career in capital markets, Barry worked as an exploration geologist for various mining companies.
O3 Mining, part of the Osisko Group, is a gold explorer and mine developer aiming to produce high-quality gold from its prospective gold camps in Quebec.
The company is well capitalised, owning 100% interest in several multi-million-ounce deposits in Quebec. With plans to become a gold producer, O3 Mining benefits from the extensive support and previous mine building success of the Osisko team. Its Marban project offers considerable exploration potential with aims to be in production by 2026.
Leading the company is President, CEO, and Director Jose Vizquerra. He holds an MSc in Mineral Exploration from Queen’s university and a BSc in Civil Engineering from UPC Universidad Peruana de Ciencias Aplicadas.
Recognised as a Young Mining Professional of the year by the Young Mining Professionals, Vizquerra worked at Oban Mining Corporation. Here, he played a vital role in forming Osisko Mining from a combination of Oban, Corona Gold Corporation, Eagle Hill Exploration Corporation, and Ryan Gold Corporation. He was Vice President of Strategic Development for Osisko Mining before becoming CEO and President.
He also serves as a director of Sierra Metals Inc. and as an advisor to Discovery Metals Corporation and Palamina Resources.
Troilus Gold is a Toronto-based, Quebec-focused advanced stage exploration and early mining development company. The company focuses on mineral expansion and the potential mine restart of the former gold and copper Troilus mine. Troilus holds a strategic land position of 142,000 hectares producing more than 2,000,000 ounces of gold between 1996 and 2010. The mine continues to offer considerable expansion potential.
Leading the company is President, CEO, and Director Justin Reid. Justin is a qualified geologist and holds a BSc from the University of Regina, an MSc from the University of Toronto, and an MBA from the Kellogg School of Management at Northwestern University. He has more than 20 years of experience focused on mineral resources.
Before becoming President and CEO, Justin was the Managing Director of Global Mining Sales at National Bank Financial and the Executive General Manager at Paladin Energy. Most recently, he acted as the President and Director of Sulliden Gold Corporation.
Bonterra Resources is a Canadian gold exploration company with a vast range of exploration and mining assets, including the Gladiator, Barry, and Moroy deposits, the Urban-Barry Mill, and other highly prospective exploration projects. The company is located in Quebec, with its operation located within the Abitibi greenstone belt. It controls the only permitted gold mill in the region with a large land deposit of more than 38,000 hectares in the Urban Barry Camp.
Leading the company is CEO Pascal Hamelin. He holds a Mining Engineering Degree from Polytechnique Montréal and is a member of the Ordre des ingénieurs du Québec and Professional Engineers of Ontario. He has over 30 years of mining project management experience acquired mainly in the Sudbury and Abitibi camps.
Pascal joined Metanor Resources as General Manager in 2010. Bonterra Resources acquired Metanor in September 2018, with Pascal becoming Vice President of Operations and eventually Chief Operating Officer. He became CEO in 2020.
Quebec’s Mining Advantage
An Investment Company’s Perspective
Asked whether Quebec miners receive unfair advantages, given the government's strong support, Barry Allan responded,
"There's no doubt they do."
He feels that although there are several mining-friendly jurisdictions within Canada, Quebec has heavily invested in the region's infrastructure. This investment includes roads, power facilities, and even airstrips in the northern part of Quebec to support Quebec's well-endowed northern mineral terrain. These areas include Abitibi, James Bay, the Ungava Peninsula, and the Detour Belt.
The province also provides a favourable investment environment for mining companies, with some of Canada's best tax incentives for mining companies in early-stage exploration projects. Other benefits include the Plan Nord economic development strategy launched by the government of Quebec in 2011. This plan promises a government spend of CAD 80 billion over the next 25 years on the promotion of energy.
Despite this, Barry emphasises that the Quebec government is like any other institutional investor, requiring a return on its investment. Before investing, it investigates the project's viability, possibility of success, and the long-term implications. This due diligence includes social and technical research and full environmental impact studies.
These due diligence processes can be complicated, with Barry believing they are probably more complex than typical. He says the reason for this is that the government is an investor and a partner that wants to see the mining company grow and succeed.
As a result, the government will let companies know if anything is not to their liking. And if there is, they'll do something about it. As Barry says,
"It's nice to have the money, but sometimes that money does come with more baggage in the sense that you've got more eyeballs focused on it."
So, contrary to what many people believe, the government won't invest in a project that promises little to no return. In his words,
"If you have a bad asset, you still have a bad asset…. Thus, to think that this is free money sitting there on the shelf to be invested is far from the truth. You've got to have the asset."
Asked whether the government provides incentives to investment companies investing in mining, Barry states they do not. However, his organisation does favour Quebec-based companies if they are a good investment.
As he says,
"We look internationally as well, but our focus on Québec is driven more by the better knowledge base that we have of some of the companies, the terrain and the issues that we've touched on ...that allow ...mining companies to do well within that jurisdiction and have a better chance of potentially finding something."
A Mining Company's Perspective
Justin Reid echoes Barry's sentiments and believes that there are advantages to mining in Quebec. The mining companies and the people they employ bring tax revenues to the province, which explains why an institutional framework exists to promote asset development. However, Reid emphasises that building a successful mining company takes hard work, despite the opportunities offered by Quebec.
The institutional framework set up by the Quebec government provides capital to mining companies during their development. However, this funding is not easy money. Troilus Gold went through an intensive five-month due diligence process as the government considered every aspect of the company before investing.
Although obtaining funding requires time and effort, Justin believes it's worth the investment. It allows mining companies to establish a solid foundation in Quebec. Other jurisdictions don't offer this support to mining and exploration companies.
A further benefit of government funding is the stability it provides to mining companies. Companies have capital available even when there's a downturn in the market, while the long-term view taken by the government on their investment eliminates volatility.
As a result of the long view, once the government invests in a mining company, it commits to its growth. As Reid puts it,
"They've committed to see that first bar of gold poured."
Jose Vizquerra adds that one should not underestimate the rule of law regarding opportunities, believing that operating in a stable jurisdiction infers massive benefit. Barry Allen feels the political stability in Quebec provides certainty. When compared to other international jurisdictions, it is a good province in which to operate.
An Exploration Company's Perspective
With the extensive support the Quebec government offers to mining companies, does the same apply to explorers? Pascal Hamelin considers it does. He notes the extensive database available to you when you begin exploration activities in Quebec. The government offers in-depth geological data, including geophysics maps and geological mapping. Such data ensures exploration companies don't start with insufficient information.
Hamelin also emphasises that the government provides support at different levels. The government SIDEX institutional fund invests in exploration companies engaged in mineral exploration in Quebec. Through Sidex, it provides support to early-stage exploration projects. With a team of professionals, it reviews the project and its potential profitability. If positive, the company may then access further support.
Ultimately, the government provides support through each stage of the process because they understand a project's contribution to the economy. As Pascal puts it,
"So you get the support right through all the phases. They want you to be a success because they know it's going to bring employment and wealth to the province, so they support you through that process."
A Contrary View
Jose Vizquerra believes that Quebec mining companies don't have an unfair advantage compared to other regions. Yet, he does appreciate the government's understanding that supporting miners supports a nation. He states,
"I have the best products in the world. I want them to be better, and I'm going to serve others in a much better way."
The Quebec region of Abitibi is a prime jurisdiction for gold mining, producing more than 200Moz of gold. Acknowledging the region has produced significant resources, Vizquerra believes that there is still gold to be found. For this reason, many mining companies will want to mine here. As he puts it,
"If you are going to look for elephants, go to a country full of elephants."
Therefore, it's understandable the Quebec government will support such companies; in doing so, it ensures growth to benefit Quebec's people.
Pascal believes that there will be mergers and acquisitions in the future with existing companies amalgamating and new entrants to the region. He bases this not only on the opportunities the region offers but also on historical facts. As he puts it,
"The juniors find the deposit, and then the majors build it and produce, and that's been the case for 80 years."
That is why the support the Quebec government provides to junior mining companies is so vital. It allows the juniors to develop the assets, continue de-risking them, and get the permits and resources in place before being acquired by a major mining company.
Jose Vizquerra agrees, believing the industry in the region is built on mergers and acquisitions. He feels that mining companies are comfortable operating in the region due to the opportunities and government support.
Now it’s up to you.
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