Jennifer Traub didn t set out to be a mining

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1 FEature Mining: Old Resources, New Frontiers No other sector has seen comparable volumes or growth rates in Canada. But the experts agree it takes a lot of commitment to build a mining practice. By Marzena Czarnecka Jennifer Traub didn t set out to be a mining lawyer. And at just about any other law firm, she would be identified first as a corporate finance or a securities lawyer. At Cassels Brock & Blackwell LLP, being interested in finance and securities and being mentored by, among others, mining law legend Paul Stein meant getting immersed in mining. Today, Traub s practice is 100 per cent mining and she couldn t be happier... or busier. Usually, either the corporate finance side of the practice is busier, or the M&A side, she says. Right now, everything is firing. She s got a prospectus on the go, another in the pipe, a bought-deal financing wrapping up, not to mention a new mandate from a slightly panicked client who s just received a takeover proposal and doesn t know what to do with it. They ve been offered a certain amount of shares, and the big question of course is, is that reflective of real value, Traub says. Mining s weathered the 2008 financial meltdown better than any other industry sector but some companies and some commodities have recovered less than others. Cassels practice and thus Traub s runs the full spectrum from the largest North American gold producers, such as Goldcorp Inc., through to leading investment banks, such as GMP Securities L.P. and BMO Capital Markets, all the way to the juniors that are going to market constantly so they can raise the funds necessary to build their mine, Traub explains. While mega-billion dollar plays by mega-producers, like domestically headquartered Goldcorp and Barrick or foreign-based Mittel-Arcelor and Newmont Gold, tend to hog the headlines, activity by the juniors can be more indicative of the health of the sector and more important to a mining lawyer s level of activity (and her law firm s bottom line). Right now, the cash-hungry juniors are hopping. Those that can are going to the markets and raising money. Those that can t are pondering offers, or actively looking for them. All are trying to make tough decisions, says Traub to raise money or to sell to a competitor, to bulk up with another junior to become a more attractive target for an opportunistic major, to wait, to act now... It s an exciting time to be a mining company and a Canadian mining lawyer. And everybody in the Canadian legal industry s recognizing this. It wasn t always like this. A decade ago, most leading Canadian law firms, if not precisely dissing mining, certainly didn t promote it as a key strength. The Cassels Brock platform on which Traub is building her career grew to its current clout in part because Cassels focused on mining early, and continued to focus on mining when the industry was moribund and too old-school and dusty for Canada s emerging national law firm cadre. In the late 1990s, an IT practice was hot. Mining? Not so much. Today, everybody wants to be a mining lawyer. Just about every Canadian law firm that likes transactions that likes to work is tripping over itself in a rush to put forth its mining credentials. Mining today, worldwide and in Canada, couldn t really be any hotter. World financial crisis notwithstanding, the decade set record upon record. The post-crisis 2010 year showed astounding recovery, and 2011 is poised to be even better. According to Ernst & Young LP, global mining deals doubled in value in the first half of 2011 compared to the perfectly respectable US$47.9 billion in the equivalent first two quarters of 2010 hitting US$96.3 billion by June 30, 2011, with some US$33 billion worth of deals accounted for solely by June 2011 itself. E&Y posited the trend would continue to year s end, and the third quarter of the year delivered as promised, featuring the closing of Barrick Gold s massive $7.68-billion bid for copper producer Equinox (see Marquee Mining Mandates, p. 86) and the announcement, among others, of the US$5.1-billion play by world giant ArcelorMittal and US coal miner Peabody Energy Corp. Australia s Macarthur Coal Ltd. The most cursory look at only the above two deals illustrates why mining has Canadian firms so excited. Barrick s a Canadian company, already with operations around the world. It s buying an Australian one with assets in places like Zambia and Saudi Arabia. A client to die for a file that, even barring the background excitement (see Marquee Mining Mandates, p. 86), would make a lawyer s and law

2 firm s year. The Equinox representation was nothing to sneeze at either the Australian copper producer was listed on the TSX as well as its home exchange, and most of the target-side legal work was Canadian in nature. The TMX s mining clout globally cannot be overstated. It raises some 60 per cent of the world s mining capital annually. Between the TSX and the TSX-Venture, it s home to more than 1,500 mining issuers. In the first half of 2011, these issuers have engaged in more than 1,200 financings, raising some $8.28 billion. It s hardly surprising that in such an environment mining expertise thrived. There is such a wealth of experience in Canada with respect to mining issuers, it is the destination of choice for entrepreneurs and explorers who find deposits anywhere in the world says Kevin Thomson, a senior partner with Davies Ward Phillips & Vineberg LLP. The first place in the world they think of if they want a vehicle to go public is Canada. The access to capital for mining ventures is incredible in Canada. It s not just about money, either. Canada s also exporting regulatory expertise. As an example, Thomson points to National Instrument , the guideline issue by the Canadian Securities Administrators for the public disclosure of information relating to mineral properties in Canada: I ve heard being discussed intelligently by Australians, Europeans, mining executives in Southeast Asia, he says. Everybody knows the instrument. Most people understand how the instrument works and use it to guide their investment practices and govern their disclosure decisions. So there you have it: a stock exchange used to resource issuers, a well-designed regulatory regime, an enormous amount of liquidity, experienced investment bankers, experienced analysts, experienced lawyers what Thomson calls the perfect cauldron for mining enterprises around the world that may have no connection to Canada except that they use Canada as a home base. Thomson s representation of Min- Metals Resources Ltd. in its would-be bid for Equinox Minerals is a case in point: We acted for a Chinese enterprise trying to buy a company incorporated in Canada but with management in Australia and assets in Zambia and Saudi Arabia, he says. Thomson is, really, an M&A lawyer who s acted for a slew of mining companies. As a result, his firm s mining credentials, particularly in the M&A sphere, are strong: a long-time relationship with Canada s Barrick and Switzerland s Xtrata; deals and wouldbe deals for China s MinMetals, Tongling Nonferrous Metals Group Holdings Co. Ltd., and Baosteel Resources International Co., Ltd. (for more on China and mining trends, see Spotlight on China, p. 88). He may be an M&A lawyer first, but he loves the mining space. There are so many great stories there, he says. The very best one the clients take you around the world. Canada s just another jurisdiction we do business in, says Marvin Singer, a partner with the Toronto office of Macleod Dixon LLP. It just happens to be where we live, but from our firm s perspective, it s just another jurisdiction. Macleod Dixon s stronghold and original office is in Calgary, but the firm has followed a strategy of international offices in frontier areas under-served by First World law firms: Almaty, Moscow, Rio de Janeiro, Caracas, Bogota. In other words, ripe ground for global mining expertise. The payoff has been mandates for often TSX-listed but globally active clients, such as African Aura Mining Inc., Anglo American Corporation (in South Africa), CIC Energy Corp. (in Botswana), Gran Colombia Gold (in Colombia), Kola Mining Corp. (in Western Russia) and UrAsia Energy (in Kazakhstan) and recognition by Who s Who Legal as 2010 s Mining Law Firm of the Year. Everything we do involves at least three jurisdictions, echoes Sander Grieve, a partner with Fraser Milner Casgrain LLP in Toronto and national Co-Chair of the firm s mining group. Among FMC s recent mining mandates: Consolidated Thompson Iron Mines Limited in its $4.9 billion acquisition by Cliffs Natural Resources Inc. (Cassels represented the transactions committee, and Blake Cassels & Graydon LLP is for Cliffs) and Australia s Andean Resources Inc. in its $3.6-billion acquisition by Goldcorp (Cassels is on for Goldcorp). Mining deals valued in millions rather than billions almost too numerous to list. If Canadian firms have any real competition in terms of reputation, clout and reach, it may be in their Australian counterparts: also English-speaking, common law-educated, brought up in a culture of resource development and outward-looking in terms of their business scope. Australia s the gateway into Asia; Canada s kitty-corner to the US and a metaphorical stone s throw from South America. The TMX has been keeping tabs on Australia: there are 37 Australian companies inter-listed on the exchange 12 of them listing in 2010 with a combined market cap of $30 billion. A notable number of global mergers over the past half-decade have involved Canadian and Australian companies (e.g., Goldcorp/Andean, Anatolia/Avoca) six mergers larger than $100 million in 2010 alone. There are more connections: both Australia and Canada have recently kiboshed certain transactions to protect either their national resources (Potash) or symbols of sovereignty (Singapore s run at Australia s stock exchange), but companies from both countries have been gaining stream as global acquirers. PricewaterhouseCoopers LLP reports that in 2010, Canadianowned entities completed 236 acquisitions of foreign targets worth US$8 billion and Australian-owned entities completed 109 acquisitions of foreign targets worth US$9.7 billion. This symmetry is not lost on certain Canadian firms. Stikeman Elliott LLP, arguably Canada s first law firm to go global its London office opened more than 40 years ago is the only Canadian law firm with an on-the-ground presence in Australia, with partner Brian Hansen practising out of Sydney since In August 2011, the firm moved mining partner

3 Quentin Markin to Sydney. Markin s move gives Stikeman two full-time lawyers in Sydney not much compared to Australia s local firms (or Norton Rose Group s 600 lawyers across Brisbane, Canberra, Melbourne, Perth and Sydney). But the strategy s not about building a big presence in Sydney. We practically run our Asia practice out of Sydney, says Jay Kellerman, the partner who leads Stikeman s Global Mining Group. We see huge opportunities in China, across Asia, and in Australia, both on the mining front and others. Kellerman notes that certain Canadian financial mining powerhouses, including GMP Securities, all have made a beeline for Australia. Where the Canadian investment banks go, a savvy law firm follows. Stikeman s recent Austro-Asian mining mandates have included acting for Korea Resources Corp. in its co-acquisition (with Capstone Mining Corp.) of Far West Mining Ltd., Anatolia Minerals Development Ltd. merger with Australia s Avoca Resources Ltd., China s CNNC Overseas Uranium Holding Ltd. in a run at Khan Resources Inc. and acquisition of Western Prospector Group Ltd. Of course, for Stikeman, Asia is just one part of the mining mosaic. The firm s highest-profile recent mining mandate is perhaps defending Potash Corp. of Saskatchewan Inc. in the US$38.6-billion run at the company by BHP Billiton Ltd. In 2010, smaller deals and financings, mining-related banking and joint ventures abound. The firm s mining practice strong M&A coupled with strong corporate finance is one that other Bay Street firms may be looking to as a model. Blake, Cassels & Graydon s is similar: it was BHP s law firm in the Potash run, and it s on for Cliffs Natural Resources Inc. in its $4.9-billion run at Consolidated Thompson Iron Mines Ltd. And for Quadra FNX Mining Ltd. in its US$3-billion joint venture with Sumitomo Metal Mining Co. Its resumé of smaller deals and financings is also impressive. Firms such as Osler, McCarthys and Torys may not be top-of-mind when one talks about a mining practice but they want to change that. Osler has had the lead mandate on two of Canada s biggest mining deals: Equinox in this year s Barrick acquisition, and in 2010 the firm was on for Kinross in its $7.2-billion sale to Red Back Mining (Blakes had Red Back s back). Where there are mining companies and money, there is litigation. A lot of mining projects are joint ventures so there is a lot of scope there for contractual disputes between partners, says Osler litigator Mark Gelowitz. The high incidence of M&A in the sector contributes to active litigation as well, he adds. Osler is on for Goldcorp in one of the mining world s highestprofile court battles right now, the El Morro litigation between Barrick and Goldcorp, which also involves Xtrata and New Gold Inc. Osler is representing Goldcorp, a long-time Cassels client, on the corporate side. At McCarthys, an impressive litigation portfolio is put front and centre of its mining practice, and includes representing Xtrata in the El Morro war. (The other El Morro warriors: Paliare Roland for Barrick and Goodmans LLP for New Gold.) The firm has also done work for Rio Tinto plc, China Minmetals Corp. as well as Hanlong Group, and Anglo American PLC. At Torys, the firm is building out a mining practice under the leadership of corporate partners James Scarlett and Kevin Morris. One recent deal includes representing Northgate Minerals Corp. in its $370-million deal with Primero Mining Corp. (McMillan LLP is on for Primero). Other clients in the mining space have included Gerdau Armisteel, China Investments Corporation, and Inmet Mining. Meanwhile, Fasken Martineau DuMoulin LLP, like Cassels Brock, has always been all about mining. It s always been one of the drivers of the firm, says Chuck Higgins, counsel with Faskens in Toronto. The Fasken brothers who founded the firm's Toronto office were active mining promoters, and the growing firm continued to build on that platform. In each of our offices, mining is an important thing, Higgins says. MIning Faskens mining practice is a good reminder that a mining practice is more than just M&A. The firm perhaps does not do as well in M&A rankings as some of its competitors and doesn t have the profile of a Stikeman, Blakes or Davies on mega-billion mining mergers although it has a respectable batch of recent M&A transactions, including representing Brazil s Vale S.A. in the US$1.1-billion bid for Metorex; Gammon Gold in the US$420-million acquisition of Capital Gold; Uranium One in its US$1.5-billion deal with JSC Atomredmetzoloto; and First Quantum Minerals in the $460-million acquisition of Antares Minerals. But it is its project development and corporate finance legs that are extremely strong, and include a recent mandate for BHP Billiton. Litigation, government relations and Aboriginal law expertise rounds out the package. It is the project development focus of his practice that has Higgins noticing a mining trend that hasn t been particularly active over mining s megaactive decade. As his colleagues repeatedly note, mining is a global practice area and by comparison, Canadian development has been pretty quiet. That may be changing. I ve been doing a lot of work in Canada recently, he says, and I really hadn t for the longest period of time. Africa, yes. South America, yes. Ontario? Not so much. But in the past year, he s been acting for clients pursuing opportunities in Ontario, Québec, Manitoba and the territories. Why? The unrest and unpredictability of certain frontier mining jurisdictions may be at play Canada may kibosh the sale of Potash, but it won t take your mine away just because but Higgins also believes there are other agents of change at work. He points to Québec s Plan Nord as a beacon of opportunity for domestic miners and international miners with Canadian investments. Also, given the importance of Aboriginal relations in Canadian mining, he sees the appointment of Glyn Norm, the first Aboriginal head of the Developers and Miners Association of Canada, as positive for

4 relations between First Nations and project proponents, and as a contributor to the increased attractiveness of mining in Canada. Rod Snow, a partner with Davis LLP who practises out of the firm s Whitehorse office, agrees. There are a lot of places here still where the rocks have not been turned over, he says. Davis s mining practice nationwide includes work such as representing Far West Mining Ltd. in its $700-million sale to Korea Resources Corporation and Capstone Mining Corp.; Rubicon Minerals in a strategic investment by Agnico-Eagle Mines Limited; and Abacus Mining in a joint venture with KGHM Polska Miedz S.A. You don t have to sell Chris Baldwin, head of the mining group at Lawson Lundell LLP in Vancouver, on the attractiveness of Canada as a mining destination or the high level of activity in domestic project development. Canada s two mining capitals are Vancouver and Toronto (Cassels Jennifer Traub calls Vancouver her satellite office, and spends at least a week a month there). There may not be as many global M&A deals getting done in Vancouver as there are in Toronto, but domestic work is thick on the ground for clients who call Vancouver home and for international giants. In the past 12 or so months, the Lawson Lundell mining team has provided all external legal support for the development and operation of mines in Nunavut, Northwest Territories, Yukon and British Columbia, including the Hope Bay gold mine owned by a subsidiary of Newmont Mining Corp. and the Diavik diamond mine in the Northwest Territories, in which Rio Tinto plc has a 60-per-cent interest. More recently, the firm has begun work on developing the Mary River iron ore mine in Nunavut, owned by a subsidiary of ArcelorMittal SA. The only challenge mining faces domestically, as Baldwin sees it, is the capacity of regulators to cope with the workload. The capacity of local firms to service the client demand? It s very sophisticated, with a huge amount of expertise and capacity in Vancouver, Baldwin says. What you have here is a very well-established, very sophisticated community of professionals who support the mining industry. For the most part, the same professionals or shingles that you had here 10 years ago. It s largely the same law firms, says Baldwin. But here, as in Toronto, law firms that haven t promoted themselves as mining experts in the past are rejigging their marketing. We ve never hung on our shingle that we know something about mining, says Mitch Gropper, senior corporate partner with Vancouver s Farris LLP. Farris s positioning has been about business law, transactions. Today, they re emphasizing mining and they re not alone. I don t think there is in Vancouver a law firm of decent size that doesn t have mining as part of their practice, Gropper says. Farris s mining mandates include financing the Copper Mountain Mining joint venture in southern British Columbia with partner Mitsubishi Materials Corporation, and representing Potash One in the $434-million acquisition of the company by K+S Aktiengesellshaft. But Gropper tips the hat at those law firms who have been more focused on mining feast or famine : Faskens, Blakes, DuMoulin Black, fellow independent law firm Bull, Housser & Tupper LLP (a recent mandate there includes acting for Corriente Resources Inc. in its $680-million sale to two Chinese SOE, represented by Toronto s Davies Ward) and Lang Michener. Lang Michener, of course, is now McMillan LLP. Among the things Lang Michener brought to the 2010 merger? Mining. Vancouver partner and head of the firm s mining group Darrell Podowski explains, McMillan had a reasonable mining related practice, but Lang Michener a much larger one. As per the Cassels formula in Toronto, the firm has a client base that runs the full gamut of cashhungry, always-looking-for-financings juniors through to opportunity-hungry, always-looking-for-acquisitions seniors. The result? Mandates such as acting for Primero out of the Vancouver office opposite Torys in the Northgate acquisition (see Marquee Mining Mandates, p. 86). Another result is that they re keeping an eye on China. We re doing a lot of listings in Hong Kong, says Podowski, such as their representations of underwriters in China Gold International Resources Corp. Ltd. s US$309-million public offering of common shares on the HKSE. And keeping up with South America. Podowski s own practice includes mining acquisition work for South American clients. The economic downturn didn t really affect them, he says. For the few months that domestic work dried up, we still had South American companies doing deals, and that helps the firm. And that is what makes mining such an attractive practice area. If the juniors are in trouble, the majors are acquiring. If the majors are digesting, the juniors are financing. If Canada is quiet, some other place in the world is hopping. That s one of the reasons McMillan wanted to merge with us, Podowski says frankly. The reasons behind the deal between UK s Norton Rose LLP and Canada s Ogilvy Renault were complex. The impact on how the firm formerly known as Ogilvy Renault markets its mining practice? Substantial. Like most Canadian law firms, we did a lot of work for mining companies, although we generally didn t talk about ourselves as a mining-sector law firm, says Dawn Whittaker, Canadian leader of Norton Rose s mining and commodities practice. As Ogilvy Renault, the firm focused on transactions. We talked about our expertise in corporate finance or in M&A, although it happened to be a deal for a mining company. Norton Rose, conversely, already marketed itself as a mining firm it s no coincidence that two of its recent acquisitions included South African and Australian firms. Part of what joining Norton Rose does for us, not just with

5 mining, is it refocuses our branding on industry sectors instead of practice groups. That s an important change. So is the post-norton Rose ability to service mining clients just about everywhere. We were doing the Canadian work for mining clients, the corporate finance or the M&A, but when it came to acting for clients in terms of their properties health and safety, commercial transactions, joint ventures in other jurisdictions we didn t have that capability because we were a Canadian law firm, says Whittaker. Now, Norton Rose opens up a world to us that is truly enormous and we ve already seen the impact of that. She points to opportunities such as acting for Allied Gold Group s on its restructuring and triple listing in Canada, Australia and the UK, and the mandate for ArcelorMittal on its $590-million takeout of Baffinland Iron Mines Corporation (Stikeman was on for Baffinland; Davies for ArcelorMittal s co-bidders Nunavut Iron Ore Acquisition Inc. and The Energy and Minerals Group). And, perhaps most pertinently, Norton Rose getting the Canadian representation on the Barrick acquisition of Equinox (see Marquee Mining Mandates, p. 86). With everyone in Canada chasing mining, how the Norton Rose alliance plays out over the long term is of paramount interest to established mining players and even to the higher-profile in the sector of smaller players, such as Toronto corporate finance law firm Wildeboer Dellelce LLP. But for the most part, mining players aren t too concerned about newcomers. It takes a lot commitment to build a mining practice, says Faskens Higgins. You ve either got to make a long term commitment or not. You can t take an ordinary securities lawyer and say, Be a mining lawyer tomorrow. Well, you can. But a sophisticated client will notice. Higgins calls it lawyers learning at the clients expense, and the mining cognoscenti all have stories of mining wannabes making deals, financings or other transactions more difficult by virtue of their incompe... lack of experience. Still, you can t fault the competitors for trying. In 2010, PwC identified 2,693 mining deals worldwide, worth US$113 billion. The total for the decade? More than 11,000 transactions and a value close to US$785 billion. According to PwC s John Nyholt, no other sector has seen comparable volumes or growth rates. And, arguably, no other sector has seen such an incredible recovery from the 2008 near-death experience of the capital markets. After hitting an unprecedented peak in 2007, the sector fell with the rest of the markets over late 2008 to early But by 2010, mining was setting records again. There were a couple of months of people holding their breath. Then they got back to doing what they know, agrees Baldwin. People in mining industry are not faint of heart, they are optimistic and confident and not afraid of a challenge. Another reason why they re such a desirable client. Marzena Czarnecka is a freelance writer and a regular contributor to Lexpert.