Sandfire America scores legal win for Montana copper project

Staff Writer | February 27, 2024 |

Site of Black Butte project in Montana. Credit: Sandfire Resources America

Sandfire Resources America (TSXV: SFR) stock soared on Tuesday following a positive ruling by the Montana Supreme Court which reversed a district court decision and reinstated the permit for the company’s flagship Black Butte copper project.


For years, the Black Butte project has divided opinions amongst local communities because of its close proximity to Smith River, one of the state’s most popular recreational rivers. The proposed mine is located on private land some 27 km north of the town of White Sulphur Springs in central Montana.

In June 2020, a lawsuit was brought forward by local conservation groups against Tintina Montana — Sandfire’s subsidiary — as well as the Montana Department of Environmental Quality (MT DEQ) for certain violations against the state’s environmental and mining laws. Specifically, it argued that state officials did not thoroughly study the environmental harm that could result from the mine.

After hearing the plaintiff’s arguments, a district court judge issued a decision in April 2022 to invalidate Black Butte’s copper mining permit, though Tintina was allowed to complete the project’s Phase I construction while it pursues an appeal of the order.

In June 2023, the Supreme Court heard oral arguments on the case, and subsequently granted the company’s request for summary judgement to allow complete construction of its underground copper mine in Montana. Intervenors in support of Tintina and MT DEQ in the suit include Meagher County, Broadwater County and the Montana Department of Justice.

On Tuesday, Tintina won on all counts in the Supreme Court with a 5-2 decision, upholding the 2020 decision of the MT DEQ to allow copper mining at Black Butte, which, according to a 2020 feasibility study, will be underpinned by the large Johnny Lee deposit that is expected to produce 23,000 tonnes of copper a year during an eight-year life.

“The fact is, ours is the most reviewed and examined proposed project in the history of Montana mining. The Court record stands at over 90,000 pages of testimony, information, and analysis,” Sandfire America CEO Lincoln Greenidg said in a press release Tuesday.

“Today’s victory in the Montana Supreme Court is a validation of the thoughtful and deliberate efforts of the Sandfire America team to design a world-class, environmentally safe mining project from the beginning,” he said.

“Over a decade ago, we set out to design a state of the art, environmentally protective underground mining project, and this decision is proof we’ve been successful,” added senior VP Jerry Zieg.

The company now has all the permits necessary to proceed with the Black Butte project. Stipulated agreements regarding water rights granted through the Montana Department of Natural Resources and Conservation (MT DNRC) for the project have been finalized, Sandfire said.

Separately, there is an ongoing challenge to the Montana Constitution’s definition of the “beneficial use of water” related to Black Butte’s water use permit. The company noted that this case does not currently affect its water rights package. The challenge was appealed by objectors after losing a district court decision and will be heard by Montana Supreme Court on March 29, 2024.

Shares of Sandfire America surged 75% to a new 52-week high of C$0.14 by 12:15 p.m. ET on the Supreme Court win for its copper project. The company has a market capitalization of C$143.3 million ($105.8m).

Rio Tinto gets $13 million from Canada to decarbonize iron ore processing

Reuters | February 26, 2024 | 

Credit: Labrador Iron Ore Royalty Corporation

Rio Tinto said on Monday that the Canadian government had awarded it C$18 million ($13 million) to decarbonize iron ore processing in Labrador West.


The funding from the government’s Low-Carbon Economy Fund will enable Rio Tinto’s Iron Ore Company of Canada (IOC) to reduce the amount of heavy fuel oil that is used in the production of iron ore pellets and concentrate.

The government funding represents about 25% of the total cost of the project, with IOC funding the rest of the investment, Rio Tinto said.

Installation of new equipment will begin in the second half of the year and is expected to be completed in the first half of 2025.

One of the world’s largest iron ore producers, Rio expects to reduce about 2.2 million tonnes of greenhouse gas emissions over the lifetime of the project.

($1 = 1.3518 Canadian dollars)

(By Vallari Srivastava; Editing by Maju Samuel)

Group RRSP use rising as retirement savings burden 'largely on employees': experts

Daniel Johnson , BNN Bloomberg

Experts say group registered retirement savings plans (RRSPs) have risen in popularity as employees are increasingly tasked with retirement planning amid a broader decline in pension activity. 

Gren Austin, the head of Wealthsimple Work, said in an interview with BNNBloomberg.ca last week that his organization works with employers across Canada looking to create group retirement savings plans. He said that group RRSPs have become the most popular retirement savings plan among clients.   

“We know broadly that pension involvement is down over the decades. And so the onus becomes on the individual, on the Canadian, on the employee, to pay for their own retirement,” Austin said adding that group RRSPs can make a meaningful difference in retirement savings. 

In November of last year, research from Deloitte Canada found that only 24 per cent of private sector workers participated in an employer-sponsored pension plan. 

According to a statement from Wealthsimple on Tuesday, less than one per cent of Wealthsimple Work clients offer a pension plan. The statement said that consumer preferences are changing and employers “are realizing the cost requirements to run a pension are high and opt to follow the demand for group RRSPs.” 

“There is this decades-long historical arc, in that the big pension groups dominated the landscape for a long time in the 60s and 70s. And then those started to fade and things like GRRSPs took over as the main account that sort of dominated the space,” Gren said. 

Julie Petrera, senior strategist with Edward Jones Canada, said in an interview with BNNBloomberg.ca last week that while there is still some level of government assistance for retirement savings, employees take on the bulk of saving responsibilities.  

“The onus is largely on employees to save for their retirement in the absence of good pension plans,” she said. 

Group RRSP matching 

Austin said that group RRSPs often come with a matching component, where some employers will match employee contributions up to a certain level. 

“There's not a lot of other investment scenarios where you can just get that return right away and that's before even the market does its thing and compound interest does its thing. So, it's a really great vehicle to start saving and building up in your RRSP,” he said.

Colin White, the president and CEO of Verecan Capital Management, said in an interview with BNNBloomberg.ca last week that matching components for group RRSPs often range between two and four per cent. He also highlighted that group RRSPs often go unutilized. 

“There's an amazing number of people that don't take advantage of that and they really should. It's free money. If your employer's going to put money into an RRSP plan, you should take that money,” White said.  

Flexibility, transparency

According to White, the rise of group RRSPs has happened for a few reasons, including the difficulties operating pension plans. 

“Pension plans are difficult and complicated to maintain, and they do come with a financial liability that firms have struggled with. And as people have moved around more often in their careers, moving a pension plan is a very difficult and cumbersome thing to do,” he said. 

White also highlighted that traditional pensions are “restrictive from a legislative perspective” and come with liability. 

“So the group RRSP is a far more transparent solution. You know exactly where you stand at any moment in time and you see yourself making progress,” he said. 

White also noted that group RRSP offerings have risen in popularity amid a “more transient workforce” with employees changing jobs more frequently.

According to Petrera, group RRSPs can help employers with recruiting. 

“Group RRSPs are part of a compensation plan. And they’re something that employees would find attractive. So I think there's been a rise in these as employers seek to attract talent to organizations,” she said. 

Cineplex has made almost $40 million from online booking fees in competition case

Tara Deschamps, The Canadian Press

Cineplex Inc. has made almost $40 million from online booking fees at the heart of deceptive marketing claims the country's competition commissioner has made against the cinema chain.

An agreed statement of facts in the case before the Competition Tribunal shows Canada's largest theatre owner made over $11.6 million in the six months after the fees were implemented in June 2022. It made another $27.3 million on the fees in 2023.

Cineplex charges a $1.50 on every ticket purchased online, but Scene+ members get a discount and CineClub members have the fee waived.

Whether the way Cineplex presents the fees constitutes deceptive marketing and drip pricing — when a company displays a price it later tacks fees onto — has been debated in recent weeks before the Competition Tribunal in Ottawa.

Competition Commissioner Matthew Boswell has claimed the fees are deceptive because moviegoers are not presented with the full price of a movie ticket on the very first page they encounter when buying tickets from Cineplex.

Closing arguments filed by the commissioner on Monday claim Cineplex discloses the existence and amount a customer will pay in online booking fees "below the fold" or off the screen for the vast majority of moviegoers, thus misleading people about the final price they will pay.

He added that Cineplex also uses a countdown timer displayed at each stage of the purchase process, which "increases pressure on consumers to focus on completing their purchase, rather than considering transaction details and thinking things through."

When such tactics are used, "consumers tend to underestimate the total price of purchase" because they "pay less attention to additional fees than to base price information."

"The use of these pricing practices has been shown to increase consumer demand — in this case Cineplex has increased demand for its tickets than the demand that would occur if it initially displayed a truthful price of the ticket for a consumer," the commissioner's filing said.

He wants the tribunal to order Cineplex to stop drip pricing, remove the countdown timer from its website and app and pay a financial penalty equal to the amount Cineplex gained from "misleading conduct."

Cineplex has argued the commissioner's claims are without merit and should be thrown out, with costs awarded to Cineplex, because moviegoers are told about fees they may face from the start of the purchase process.

Cineplex spokeswoman Michelle Saba said in an email to The Canadian Press that the business would not comment on the matter while it is being heard by the tribunal.

The company's closing arguments were posted on the tribunal's website Tuesday evening.

In the documents, Cineplex says the commissioner's assertion that it engages in so-called drip pricing is a mischaracterization. It says there is nothing misleading about how it displays online booking fees and total online prices for customers purchasing on its website. 

However, the commissioner's submission said the fees Cineplex charges are a product of its efforts to grow its online ticket business that stretch back many years.

The submission said the chain started using reserved seating in 2017 and had expanded it to all theatres by June 2020, when the COVID-19 pandemic hastened online purchasing.

By 2021, the commissioner said roughly two-thirds of Cineplex's tickets were sold online or through its website.

The commissioner said the online booking fees applied in June 2022 came about "as part of a direction from Cineplex’s chief operating officer for Cineplex to consider different revenue-generating ideas."

By then, Cineplex had grappled with several health measures meant to quell the spread of COVID-19, including theatre closures and social distancing protocols, which weighed on its finances along with a failed sale to U.K. theatre giant Cineworld.

The fees were implemented the same month Canadian laws were changed to deem drip pricing to be false or misleading.

Prior to the fees, tickets booked online were advertised by Cineplex as carrying "no service fee," the commissioner said.

"As Cineplex readied itself for launching the fee, it ordered the removal of any signs that referred to the fact that Cineplex did not have service fees," the filing said.

"It sought to do so in a manner that would not arouse suspicion amongst staff in theatres that the policy might be changing."

This report by The Canadian Press was first published Feb. 27, 2024.

  

High living costs 'jeopardizing' financial security of renters, mortgage owners: survey

Daniel Johnson , BNN Bloomberg\

A new survey says that Canadians, particularly those with rent or mortgage payments, are delaying retirement savings to deal with higher living costs. 

The new survey from Co-operators, released Tuesday, found that higher living costs had a larger impact on renters saving for retirement. In total, 77 per cent of renters indicated they either have not yet started saving for retirement or have not saved as much as they had planned. More than half of respondents with mortgage payments, 51 per cent, indicated they had saved less than planned for their retirement. 

“Canadians are facing a precarious and challenging situation as they try to prioritize their spending. As a result, many are putting their retirement at risk, especially those who pay a mortgage or rent,” Rob Wesseling, the president and CEO of Co-operators, said in the release. 

“This is a clear signal that today’s economic strain is jeopardizing the long-term financial security of most Canadians.” 

The survey found homeowners without a mortgage found it less difficult to accumulate retirement savings, with 76 per cent indicating they have met their retirement savings goals, the survey found. Additionally, 32 per cent of respondents in that demographic indicated they have exceeded their retirement savings expectations. 

More than half of homeowners without a mortgage, 57 per cent, said they believe their registered retirement savings plan (RRSP) and savings will be sufficient to fund their retirement. However, the survey found that only 28 per cent of mortgage owners and 22 per cent of renters believed their savings and RRSP would be enough to cover their retirement costs. 

“These survey results show that Canadians are facing a tough choice – paying for living expenses today or putting some money away for tomorrow,” Jessica Baker, the executive vice-president of retail wealth at Co-operators, said in the release. 

Amid higher living costs, 43 per cent of renters and 23 per cent of mortgage owners indicated in the survey that they are unsure about how they will fund their retirement. Meanwhile, 13 per cent of mortgage-free homeowners face uncertainty about funding their retirement plans. 

Methodology:

Results were derived from an online survey with 1,500 participants across Canada between Jan. 24 to Jan. 30. 

Most Canadian mortgage owners concerned about payments, survey finds

Mitchell Consky, BNN Bloomberg

Canadian homeowners are struggling with an increase in mortgage costs as interest rates surge. (Photographer: SeongJoon Cho/Bloomberg)

A new survey found the majority of homeowners share concerns about making their mortgage payments due to increased interest rates.

According to the data from Ratehub.ca, 67 per cent are worried about paying their mortgage once their next renewal comes up, while 69 per cent of homeowner respondents reported that their mortgage has been generally more challenging to pay in the last two years. 

The survey also found that homeowners made major shifts in their financial decisions to compensate for the higher interest rate environment. 

Penelope Graham, director of content at Ratehub.ca, says homeowners continue to look for numerous options to mitigate the impact of the challenging rate environment. 

“It’s evident that mortgage holders facing a more challenging rate environment (and) upon renewal are exploring options to mitigate the impact – notably, nearly 29 per cent say they plan to refinance their mortgage loans,” she said in a statement sent to BNNBloomberg.ca. 

The data found that 24 per cent of surveyed homeowners considered downsizing their home, while 29 per cent considered refinancing their mortgage. Other major decisions included tightening other areas of their budget (54 per cent) or considering a switch to an alternative lender to help cover costs (17 per cent).

“This can prove to be an effective way to offset higher rates, either by switching to a lender with more favourable term features, extending their amortization, or pulling out built-up equity in order to help with higher monthly payments,” Graham said in the statement. 

She added that higher mortgage rates are “reducing borrowers’ spending power.” 

The survey found that the majority of respondents (65.1 per cent) have a fixed mortgage rate, while 34.9 per cent have a variable mortgage rate. 

Rateshub.ca also reported that 62.6 per cent of respondent homeowners will get a fixed mortgage rate at renewal, and 37.8 per cent will get a variable mortgage rate. 

“Fixed mortgage rates continue to be the most common choice for borrowers, even as rates have soared since early 2022,” Graham explained. “This reflects borrowers’ desire for stability in a volatile marketplace, even as expectations grow for lower variable rates in the near future.”

Methodology: 

Ratehub.ca’s 2023 Mortgage Survey of 2,651 adults was conducted December 3, 2023 - December 31, 2023 by Ratehub.ca. Adults 18 years of age and older residing in Canada were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices.

Rising loan delinquencies bring pain to BMO, Scotiabank results

Christine Dobby, Bloomberg News

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Earnings at Bank of Montreal and Bank of Nova Scotia were marred by increasingly cash-strapped consumers and businesses amid a challenging economic landscape.  

The two Toronto-based banks — the first of the big Canadian lenders to report fiscal first-quarter results — diverged in their results, with BMO missing estimates on lower capital-markets, insurance and corporate-services revenue and Scotiabank topping expectations. Still, both lenders set aside more money for potentially bad loans as higher interest rates continue to hurt credit quality, with missed payments beginning to mount.

Scotiabank’s provisions for credit losses rose to $962 million (US$713 million), more than the $922 million expected by analysts, while BMO’s provisions totaled $627 million, far more than the $514.2 million forecast.

Scotiabank pointed to higher impaired provisions in its international business as well as for Canadian auto loans and unsecured lines of credit, while BMO detailed an increase in impaired provisions for consumer loans, credit cards and business and government loans. 

“Higher delinquencies across most of our retail portfolios this quarter reflect the challenging macroeconomic environment,” Phil Thomas, Scotiabank’s chief risk officer, said on a conference call with analysts. 

His counterpart at BMO, Piyush Agrawal, said the ongoing impact of tighter monetary policy is to blame for an increase in impaired loan provisions.

“Consumer loan losses, in both Canada and the U.S., reflect higher delinquencies in credit cards and other personal loans, reflecting increases in customer insolvencies, which in Canada are now above pre-pandemic levels,” Agrawal said.

Still, executives at both lenders said they continue to see the credit situation as manageable for their Canadian clients, noting that many households still have savings to draw on and have trimmed their discretionary spending.

Clients whose mortgage payments have already gone up “are selectively choosing to prioritize those payments,” BMO Chief Financial Officer Tayfun Tuzun said in an interview. “That’s the reason why I think, in some segments, you are seeing higher card delinquencies, and spend levels are also declining.”

An eventual lowering of interest rates by both the Federal Reserve and the Bank of Canada as soon as this year should ease pressure on consumers, Tuzun said.

“But, in the meantime, we will probably be in this environment where delinquencies will be a bit higher,” he said.

BMO shares fell 4.6 per cent to $120.99 at 2:10 p.m. in Toronto after earlier slumping as much as 5.8 per cent, their biggest intraday decline since December 2022. Scotiabank shares climbed 3 per cent to $65.81.

On the mortgage front, soaring interest rates led to a wave of ultra-long home loans in Canada, hitting borrowers who have fixed monthly payments but variable interest rates. Many of those clients are no longer paying down any principal, extending the length of time it would take to repay their loans. When homeowners go to renew their mortgages, typically after five years, they are expected to face significantly higher payments.

BMO said Tuesday that clients with so-called negatively amortizing mortgages have dropped to 24.7 per cent of the bank’s book in the first quarter from 32.4 per cent a year earlier.

Scotiabank doesn’t allow for negatively amortizing mortgages, but said Tuesday that its customers with variable-rate home loans have already seen an average increase in monthly payments of more than 50 per cent since the Bank of Canada began its rate-hiking cycle in early 2022. 

 

Identity, mortgage fraud on the rise as economic pressures mount: Equifax survey

The Canadian Press

A monitor displays Equifax Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Sept. 8, 2017. , Photographer: Michael Nagle/Bloomberg

A new Equifax Canada survey finds people are increasingly worried about a potential rise in fraudulent activity as economic pressures build. 

"Any time you see financial stress or an economic downturn, inevitably ... the motivation to commit fraud increases," said Cherolle Prince, Equifax Canada’s head of fraud and identity management consulting.

While overall fraud rates have slightly declined from a 2022 peak, identity fraud has surged. It now accounts for roughly three-quarters of all fraudulent applications across all sectors in the fourth quarter, up from about 65 per cent the previous year, the credit reporting firm said.

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Prince said fraudsters tend to take advantage of economic vulnerabilities, by applying for more credit or taking on various identities to borrow more money from financial institutions. The survey found identity fraud was most pervasive in the banking sector. 

Equifax Canada also says fraud is on the rise in mortgage applications — up 9.9 per cent in the fourth quarter, compared with the same period in 2022 — with Ontario seeing the highest amount.

Prince said first-party fraud — where a person provides false information — is becoming more common because people want to qualify for a house purchase they may not be able to afford.

She added the company has also seen a slight rise in true-name fraud, where someone steals a real person's identity to commit fraud.

First-party fraud is also widespread in the auto industry. Eight in 10 fraud cases in the auto industry are first-party instances, where people lie about their income or misrepresent financial statements for a car loan, Equifax application data suggests.

The report suggested the proportion of identity fraud in auto applications has doubled since 2019, with secured lending institutions especially vulnerable to these attacks.

Canadians also feel they may be paying a higher price for auto insurance because of growing fraud, the survey shows.

About 74 per cent of respondents believe insurance fraud impacts their car insurance premiums.

"Overall, fraud impacts premiums and we're seeing a lot of theft in cars (and) that does impact the insurers," said Prince.

Prince says the cost of the increased number of insurance claims eventually gets passed down to consumers.

The survey questioned 1,614 Canadians aged 18 to 65 between Feb. 2 and Feb. 4 online in partnership with Leger. The survey carries a margin of error of +/- 2.5 per cent, 19 times out of 20.

Prince said lenders and businesses need to be more careful to avoid fraudsters.

She suggested lenders follow market trends to strengthen their internal strategies and look closer at red flags among applicants.

"Anything that may propose a certain level of risk, take a closer look and validate that information immediately," she said. "I would also recommend going beyond simply trusting that the document you've received or the information you've received in the application is 100 per cent correct."

Validating information would include verifying income and employment among other measures.

This report by The Canadian Press was first published Feb. 27, 2024.

 

Ottawa freezes merger notification threshold, funds housing innovation projects

Nojoud Al Mallees, The Canadian Press

Ottawa is freezing the threshold at which the Competition Bureau must be notified of a merger. 

The federal Liberal government is also providing $123 million to eight homebuilders it says are driving innovation and will help build more than 5,000 affordable homes.

The announcements came Tuesday during Finance Minister Chrystia Freeland's weekly economic update alongside other ministers.

Federal law requires that mergers that exceed a certain value are flagged to the Competition Bureau in advance so it can assess the potential impact.

Ottawa says the amount usually increases along with gross domestic product — but instead, it will be frozen at $93 million, the threshold since 2021. 

Had the threshold been increased at the rate of economic growth, the federal government says it would have been around $120 million by now. 

The home funding is being allocated through the Affordable Housing Innovation Fund, which finances rent-to-own schemes and other innovative projects.

Housing Minister Sean Fraser outlined some of the projects targeted for support, including ones focused on modular housing and lower energy costs. 

This report by The Canadian Press was first published Feb. 27, 2024.