Management and Finance Day spurs discussion of project risks and capital costs

Management and Finance Day audience

Experts at the fifth annual Management and Finance Day, held on May during the 2013 CIM Convention in Toronto, addressed complex and overlooked issues, and provided helpful advice to developers who can sometimes be caught unaware. The event, organized by CIM’s Management and Economics Society (MES), brought together mining professionals from a range of disciplines, including engineering and business, to discuss finance issues the industry faces.

Presentations addressed legal issues faced by companies developing projects, examined aspects of project risk analysis and also delved into problems companies have keeping to their capital cost estimates. Jane Spooner, vice-president with Micon International and chair of the risk analysis session, said the sessions focused on project risks and capital costs are particularly relevant, considering how companies are reviewing project and development strategies in the face of tight financial markets.

Dave Evans, senior associate with CSC Management Services; Lawrence Smith, Barrick’s senior manager of project evaluation; and Jason Mewis, president of ENGCOMP, all gave presentations detailing risk analysis and took questions from the audience.

The Read the Fine Print (Get Yourself a Lawyer) session, chaired by Steve Suarez, partner with Borden Ladner Gervais LLP, highlighted the need for companies to consult with lawyers that are familiar with the mining industry. “I think fundamentally, it’s really important to have experienced counsel with mining industry experience,” said Suarez. “Not just commercial guys generally, but mining guys who have been around the block, have seen this before, know what to work for, think three or four steps ahead.”

The session looked at potential concerns arising from confidentiality agreements and obligations that can come out of joint ventures.

"Who doesn't like a good secret?" asked Anthony Zoobkoff, senior counsel for Teck Resources. The problem, he explained, is that confidential information can be a heavy burden. Zoobkoff urged attendees to be diligent in defining the terms and scope of confidentiality agreements and the information that is received in confidence. He highlighted a pair of legal decisions that showed that the protection of disclosed information can be broader than the terms specified in an agreement or even when the two sides have no signed agreement.

Fred Pletcher, Borden Ladner Gervais partner, spoke about how right of first refusal (ROFR) clauses can vary depending on which jurisdiction a company is operating within. He went over some examples of how insufficient clarity in these clauses has resulted in multi-million dollar lawsuits. Pletcher said that while past ROFRs have been boilerplate contracts, they need to be tailored to the circumstances of each project.

Steve Vaughan, a partner with Heenan Blaikie LLP, counseled participants to discuss all aspects of a joint venture before coming to an agreement. Vaughan also said companies must ensure they are co-venturing with honest and reliable partners.

Later in the afternoon, independent advisor Mauro Chiesa spoke about rationing capital, while Augusto Patmore and Brad Watson, both from KPMG, responded to questions about avoiding cost overruns. The event ended with a panel discussion, moderated by David Jennings, senior vice-president of mining practice with Marsh Canada Ltd.