Thursday, May 7, 1992 - 1:30 p.m.
Speaker: I will now call the House to order. We will proceed with Prayers.
Speaker: We will proceed with the Order Paper.
Introduction of Visitors.
INTRODUCTION OF VISITORS
Hon. Mr. Webster: I want to take this opportunity to inform all Members of the House that at noon today we had a very successful ceremony to unveil and launch the Yukon 25-cent coin, which is an event of the Canada 125 program. This coin features a spectacular scene from Kluane National Park. With us today in the Speakers gallery is the federal Minister of Supply Services, the hon. Paul Dick. Mr. Dick hosted this event, along with the Government of Yukon, and of course the artist of the winning design, Libby Dulac, of Haines Junction.
I want to thank Libby Dulac and the hon. Minister for their participation in todays event, and I want to assure them that this is a sure sign that it will be a very attractive coin - a real collectors item. As soon as I returned from the ceremony, I was lobbied quite extensively for individual pieces of this 25-cent coin.
Congratulations to you both on a job well done.
Speaker: Also in the gallery are the grade 8 and grade 9 students from the Teslin school, accompanied by their teachers, David Hett and Sharon Chatterton. I would ask the Assembly to welcome them.
Speaker: Are there any Returns or Documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Mr. McDonald: I have for tabling a guide to the application of the community contracting policy.
Hon. Mr. Penikett: I have for tabling a legislative return, in answer to a question put by the Leader of the Opposition. I also have for tabling, research finding on the question of self-government.
Speaker: Are there any Reports of Committees?
Are there any Petitions?
Introduction of Bills.
Bill No. 10: Introduction and First Reading
Hon. Mr. Penikett: I move that Bill No. 10, entitled Third Appropriation Act, 1991-92, be now introduced and read a first time.
Speaker: It has been moved by the Hon. Premier that Bill No. 10, entitled Third Appropriation Act, 1991-92, be now introduced and read a first time.
Motion for introduction and first reading of Bill No. 10 agreed to
Bill No. 14: Introduction and First Reading
Hon. Mr. Penikett: I move that Bill No. 14, entitled An Act to Amend the Elections Act, be now introduced and read a first time.
Speaker: It has been moved by the Hon. Premier that Bill No. 14, entitled An Act to Amend the Elections Act, be now introduced and read a first time.
Motion for introduction and first reading of Bill No. 14 agreed to
Bill No. 7: Introduction and First Reading
Hon. Mr. Webster: I move that Bill No. 7, entitled An Act to Amend the Wildlife Act, be introduced and read a first time.
Speaker: It has been moved by the Hon. Minister of Renewable Resources that Bill No. 7, entitled An Act to Amend the Wildlife Act, be now introduced and read a first time.
Motion for introduction and first reading of Bill No. 7 agreed to
Speaker: Are there any Notices for the Production of Papers?
Are there any Notices of Motion?
Are there any Statements by Ministers?
College Endowment Lands Act Consultation
Hon. Mr. McDonald: I am pleased to announce that within a few days, we will be beginning public consultation toward the creation of endowment lands for Yukon College.
The proposed endowment is a parcel of undeveloped land, approximately 800 acres in size, adjacent to the Whitehorse Ayamdigut campus of Yukon College, extending to the Alaska Highway, Mountainview Drive and the Porter Creek C subdivision.
Ultimately, the goal is to provide for the orderly growth of the campus, preserve the natural heritage of the land in question, provide an area for leisure and recreational activities, and to control development in the vicinity of the college. The lands would be administered by an independent board, and would be similar to those associated with a number of post-secondary institutions across Canada.
In the latter part of May we will hold a series of informational briefings and public meetings to fully inform the college community, the general public and other stakeholders. These meetings will outline the philosophy behind endowment lands and explain exactly which lands we have in mind.
In June, we will ask for feedback on these proposals, with a view to bringing a draft college endowment lands act to the public in the fall for further consultation.
We look forward in the weeks and months to come to hearing the views of Yukon people on this proposal.
Mr. Devries: I would like to commend the Minister on this initiative. As he knows, this side has been encouraging the government to pursue the creation of these endowment lands. I appreciate the Minister giving us the size in acres rather than hectares, as I am sure most people can relate to an acre better than hectares, although I question whether students can relate to an acre; they likely think in terms of hectares, so perhaps we will have to use both from now on.
We look forward to participating in the consultation process and look forward to debate on the college endowment lands act this fall.
Mr. Nordling: We are pleased that the Minister is undertaking this initiative. We believe that the college endowment lands are important and that this should have been done when it was first decided that the college would be built up there. Thankfully, it is not too late and we have not lost that acreage around the college. I would hope that in the public consultations there is no opposition to it. It is a very valuable thing to have.
Speaker: This then brings us to Question Period.
Question re: Advertising campaign by government
Mr. Lang: I would like to, once again, raise an issue that was brought to our attention yesterday by the Member for Riverdale North. He observed that there is a developing misuse of Government of Yukon advertising. In fact, I should point out that I have had a number of people, who could be characterized as experts in the area, state to me that they feel that there has been a conscious change in focus in government advertising. This has just occurred over the last couple of months.
In the last NDP convention, the Government Leader condemned the local media for not conveying his governments version of events. I want to ask the Government Leader: can he tell this House if he and/or his staff have had discussions with the public affairs bureau in the past number of months about changing the direction and focus of government advertising?
Hon. Mr. Penikett: Not in those terms, but the government has had continual discussions over all the years we have been in office about how to communicate more effectively about government programs and initiatives. Ministers of this government have all had the experience of going into rural communities and discovering that there are citizens who may have benefited from government programs and policies who had no knowledge of them in the absence of government making a special effort to communicate them. That is what we have been doing and what we are doing now.
Mr. Lang: There is a stark difference between providing information and conveying a political, partisan message and that is our concern. This is also the concern of a number of people within the general public, as they see their tax dollars being used in this way.
Can the Minister confirm that it is the policy of his government that the public affairs branch is in charge of the overall layout and general directed of the ads?
Hon. Mr. Penikett: If the question that the Member is asking is, are the layout, design and copy writing of ads done by the Ministers, I will move very quickly to assure him that, like himself, we would want to have professionals doing that work, not Ministers who are clearly amateurs on that score.
Mr. Lang: No one is going to question the definition of amateur, as it applies to the side opposite.
I want to ask the Government Leader again, can he confirm that it is the policy that the public affairs branch is in charge of the overall layout and general direction of the ads in question?
Hon. Mr. Penikett: I would have to go back and ask about every single ad, but I think that is generally the case. Although, I believe that there are advertisements from this government that originate from different departments - the Department of Education, the Department of Renewable Resources, the Department of Justice and others - where I believe the lions share of the work, in fact most of the work, in preparing the copy and the layout is in fact done by people in those departments.
Question re: Advertising campaign by government
Mr. Lang: It was announced about a week ago that the NDP had raised about $10,000 over the course of the last year, and it is our contention that they should be using that money for their own advertising and not the taxpayers money. In our view, the ads, and the question raised yesterday about the ads, show a very serious misuse and misdirection of the public affairs branch and of the advertising dollars voted in this House.
Will the Government Leader undertake to review the overall policy for directing the public affairs branch so that these ads can be corrected so that they do what they are supposed to, which is provide factual information and not convey a political message?
Hon. Mr. Penikett: The Members question assumes that I accept the validity of his criticism, which I do not. The kind of advertising we are doing is perfectly consistent with the advertising we have done for all the years we have been in office, and I believe it may even be perfectly consistent with the kind of advertising that was done by this government for years before we came into office.
The fact that the Members are raising questions about our government advertising only leads me to the assumption that they must believe an election is imminent, because they did not ask any questions last year or the year before about similar ads.
Mr. Lang: I defy the Minister to provide this House with a duplicate of this particular ad that I have in my hand, dated May 1, 1992, which would cost the taxpayer $600. It tells the people of the territory what a good job the government is doing in job training in the future for the Yukon; it does not provide any terms of direction for application or anything like that. I want to ask the Minister this: will the Minister table the current policy - for advertising, both commercially on the radio as well as in newspapers - for the tendering of ads to the various news media?
Hon. Mr. Penikett: First of all, let me say that I know from experience in my own constituency that, if we do not make the public aware of training programs or training initiatives or make them aware of the place where they can get information about those programs or the kind of programs that are available, then there is no point having the programs and, in fact, citizens are going to be quite disappointed about that.
The precise question of the Members as to whether I am prepared to table before the House a policy about advertising - absolutely. I have no problem whatsoever in doing that.
Mr. Lang: There is no question that there has been a change in direction of the advertising. The advertisement that I showed appeared in both newspapers on the same day. I would suggest the cost is well over $1,000 for the one ad. In my judgment this advertisement conveys nothing more than a political message.
How many thousands of dollars, of taxpayers money, are being used for the purpose of putting ads such as this through the local media?
Hon. Mr. Penikett: I can only guess the kind of questions we would have in this House if we put advertisements in only one of the two Whitehorse newspapers. I can just imagine the kind of questions that would be coming from the other side if we did that.
If we were not providing information about government policies and government programs, we would be accused of keeping things secret and not informing the public. It only shows that, perhaps, when you are in government, you cannot win.
I have already answered the question put by the honourable gentleman as to the information about the costs. I would be more than happy to provide that information to the House.
Question re: Advertising campaign by government
Mr. Nordling: I also have a question to the Government Leader. A number of years ago, when the Government Leader was in Opposition, the government of the day decided to publish an information sheet called, Yukon Info. It was described as a source of information on government programs and activities for Yukon residents.
The Government Leader, who was in Opposition at that time, said, What we have, it seems to me, is purely and simply a gratuitous attack upon the media of this town. It seems to me that we are wasting a lot of money on this Yukon Info. It is, I think, a totally unnecessary and rather wasteful expenditure in the first place. It is a gratuitous insult to the media, because it suggests that somehow the one newspaper that is already printing all the press releases, is not printing all the press releases, or is somehow suggesting to that newspaper, a fine old upstanding Yukon...
Speaker: Order please. Would the Member please get to the question.
Mr. Nordling: ...that nobody is reading it."
I have one sentence leading up to my question and it will be a long one because now, a few years later, we have The Source, The Sluice Box, The Yukon Economic News, Of Interest to Women, with the Ministers picture, Municipal Government, Yukon Education, Horizons, News Break, and we have The Yukon Claim. There are also fact sheets and two Making Better Government brochures.
The Government Leaders concern was that Yukon Info took away from small businesses. I would like to ask the Government Leader if he has any idea of how much money these government publications take away from, in his words, small businesses operated by Yukoners who are working hard to serve their community, struggling away to provide a service to the community and meet a payroll and earn enough money to pay their income taxes and their taxes to this ...
Speaker: Order please.
Hon. Mr. Penikett: May I compliment the coalition; they seem to be in fine form today. Let me say that having just heard a set of questions in which we were criticized for assisting small business by buying ads in local newspapers, to now being criticized because we were not helping small business, because we were also try to inform the public, does suggest that there are a few contradictions that the coalition will have work out before they can get together and get the old Conservative coalition back to work.
Mr. Nordling: I think that the Government Leader may have missed my question. How much are these publications costing the taxpayer and the Government of Yukon?
Hon. Mr. Penikett: Last session, we passed a budget and I am absolutely certain, knowing the interest of the Member, that he must have asked at that time and that that information must have been provided.
But if that information was not provided, I would be happy to do the research and come back to the House, because these publications that he has mentioned are not new, and in fact, many of them predate this government coming into office.
Mr. Nordling: I think that one of the ads predates this government and that is Yukon Info, also known as The Sluice Box.
In 1986, there was concern expressed about government publications being used for partisan, political purposes. On December 10, 1986, the Government Leader said in this House that it will be a clear policy -
Speaker: Order please. Would the Member please get to the supplementary question.
Mr. Nordling: Is it a clear policy of this government that each department would be turned into a propaganda machine for the New Democratic Party?
Hon. Mr. Penikett: Quite the opposite; we would not want to go back to the bad old days before 1985, when that type of thing was going on.
There is public policy. I believe that I have previously described it in the House, but in response to the question from the Member for Porter Creek Wests friend, the close political friend, the Member for Porter Creek East, I have already indicated that I will be providing the information to the House and I look forward to doing so.
Question re: Hazardous waste storage facility
Mr. Phillips: My question kind of follows the question from the Member for Porter Creek East because many of the items he mentioned could fit in to the hazardous waste unit that we are going to build in Whitehorse. I would like to direct this question to the Minister responsible for building that facility.
A committee was struck by the Minister and spent a great deal of time travelling around the Yukon and informed the public that it had identified several potential sites. The process cost several thousand dollars and was fairly extensive. The hazardous waste committee presented its report to the Minister on July 19, 1991 - almost one year ago - and nothing has happened. I would like to ask the Minister why it has taken over 10 months for him to decide on a site for the new facility.
Hon. Mr. Byblow: I do not believe that the Member is completely accurate about when the report was filed with my office, but it was, indeed, some time last fall. The Member knows the answer in general terms. The Member knows that during the last session of the House, in approximately November, I tabled the results of the advisory committees recommendations. I provided a public discussion paper, exposing a number of questions, relating a number of the issues that had been dealt with in the previous two years by the advisory committee, and I tabled their recommendations. The Member will recall that, following that, we held a number of public meetings. There was a mild outrage respecting the site selection put forward by that committee and, since that time, we have been dealing with the group of people who raised particular objection to the recommendation. We have been investigating the issue in some greater detail, and it is my intention to come forward with a final decision shortly.
Mr. Phillips: The public, of course, knows that it was the Government Leader who put a stall on the project because one of the first choices, evidently, was to be located in the Government Leaders riding. This is a facility that is long -
Speaker: Order please. Would the Member please get to the supplementary question.
Mr. Phillips: This facility is long overdue. I would like to ask the Minister what he means by shortly. Does he mean another 10 months, or is the Minister going to make a decision in the next couple of weeks?
Hon. Mr. Byblow: To correct the inaccuracy in the Members preamble, if the Member had attended any of the public meetings through last December, January and February, he would have recognized that the objection to the site selection put forward by the advisory committee had nothing to do with anybodys riding. It had everything to do with proximity to the people who were living nearby.
With respect to when I am planning to come forward, we are currently in the final stages of an analysis that has been done since February, because we have gone out and done more site testing. We have looked at other sites, and we have spent considerable time with a special committee reviewing the results of those studies ...
Speaker: Order please. Will the Minister please conclude his answer.
Hon. Mr. Byblow: It is still my intention to come forward this spring and ensure that the facility begins construction this summer.
Mr. Phillips: We have just heard that the government was not happy with the original recommendations. Now, it is looking at other sites and has some other special committee. I would like to ask the Minister if the site chosen will be one of the three sites that the original committee recommended. Is that what the Minister is considering, or is he considering others? Will he tell the public in this House today which other sites he is considering?
Hon. Mr. Byblow: I am sure the Member has been reading reports in the media that have kept the public posted on discussions that have been going on since January. Since January, we have examined several sites, including the site recommended by the advisory committee. We have done more testing. We have engaged more expertise to help us review those results.
Currently, I am in the position of reviewing the options that have been put forward as a result of the last round of examinations. Yes, the site that the advisory committee has recommended is one of the options before me.
Question re: Hazardous waste storage facility
Mr. Lang: This is getting fairly confusing. About a month ago, we had a report from the Yukon Fish and Wildlife Management Board with respect to predator control. There were certain recommendations put forward. That was not acceptable, so they set up another committee. Of course, this time around, we had a facilitator, not a chairperson. Subsequently, the recommendations were not what the government wanted to hear.
On the second question posed by the Member for Riverdale North, the Minister talked about another special committee. Could the Minister clarify to the House who is on the special committee, what their mandate is, who they are directly reporting to, and where the City of Whitehorse fits in?
Hon. Mr. Byblow: The structure of the committee evolved from the public meetings held during December and January. This was an ad hoc committee, consisting of representation from the department, the City of Whitehorse and area residents surrounding the site, recommended by the advisory committee. It was a working group to help us examine the objections to the site selection made by the advisory committee. As an ad hoc group, it worked with my officials and the experts who were retained to analyze the data and review the tests that were done.
Mr. Lang: No wonder the government becomes a laughingstock to the general public. We have a committee examining the committees report. No wonder government becomes so confusing to the man on the street.
In the Ministers earlier response, he indicated there were some recommendations from the committee to the committee. Could he provide this House with those various options and the report that has been brought forward by what is now referred to as the ad hoc committee?
Hon. Mr. Byblow: In response to the Members preamble, I do not know what is particularly confusing when this government responds to a genuine public interest. Is the Member suggesting that if there is vociferous objection to something happening, the government should go and do it anyway?
We are only ensuring that a very sensitive decision is made with the best information available, with the broadest consultation that can occur and with the soundest decision that can be made. That is what is occurring, and that has been the style of this government.
With respect to tabling documents, in my last meeting with the ad hoc committee, I recall that a document that was two or three inches thick was filed. It is a public document, and I would be glad to provide the Member with a copy of it later this afternoon. It summarizes the results of the work that was done since -
Speaker: Order please. Would the Minister please conclude his answer.
Hon. Mr. Byblow: It summarizes the work of the ad hoc committee and the department since the advisory committee reported.
Mr. Lang: In view of the fact that obviously there is further information and obviously the government is redirecting much of the efforts of the first advisory committee that hundreds of thousands of dollars were spent on, and in view of the fact that the ad hoc committee has not had public meetings, is it the position of the government that there will now be further public meetings with respect to where this particular hazardous waste project is going to be located?
Hon. Mr. Byblow: I cannot advise definitely on the Members question. I now have before me several options that have come forward in the last several months. I am in the process of making a final decision and making a recommendation for a site to my colleagues. That will occur some time in the next few weeks.
Question re: McLean Lake rezoning
Mr. Phelps: I am struck by the irony that, when we have a few objections over the location of a hazardous waste facility in the Government Leaders riding, we have a committee to study the findings of the committee; yet when the people in my riding and the Speakers riding are having their fundamental democratic rights violated, this same group across the way will not strike a committee to study the report of the Electoral District Boundaries Commission.
It is interesting that we do these special favours for people in the Government Leaders riding.
That aside, I am more curious about what is happening with respect to another area in the Government Leaders riding, namely McLean Lake, and I am interested in what is occurring about the wish of the city to have that area rezoned from country residential to urban residential. Has there been any movement at all on that, and what is the governments position?
Hon. Mr. Byblow: It has to be a liberal interpretation of House rules to have a three-minute preamble and then a question that has nothing to do with the preamble.
The point should be made, respecting the electoral boundaries committee that this House contemplated striking, that the most severe objection has come from the Member about striking that committee.
With respect to the desire of this government to conduct adequate consultation on major decisions affecting residents of the city, it is interesting that Members opposite would object to us taking the time to talk to people.
On the one hand, you cannot have an objection to consultation and then, in another breath, suggest that you do not do enough of it. The point should also be made about the hazardous waste sites that had been recommended: they have all been in the Premiers riding. It is not a case of any specific Members riding; the fact is, the four sites that have been examined and put forward are all in that particular riding.
Some Hon. Member: (Inaudible)
Hon. Mr. Byblow: With Mr. Speakers liberal permission, I will now undertake to answer the question.
With respect to the McLean Lake rezoning issue, the matter has been discussed on two occasions with the new city council. Currently, city council and my department are examining areas for country residential. McLean Lake is currently zoned country residential -
Speaker: Order please. Would the Member please conclude his answer.
Hon. Mr. Byblow: In conclusion, McLean Lake rezoning is going nowwhere at this time.
Mr. Phelps: I apologize for the roundabout way in which I approached the question put to the Minister, but I had some assistance from his leader. I was really trying to ask questions in the way that the Minister answers questions and I thought that might work for a change.
I am curious about whether or not the Minister has received any communications or representations from the MLA for the McLean Lake area, namely the Government Leader, with regard to the wishes of the city to rezone the McLean Lake area.
Hon. Mr. Byblow: I have not had any representations from anyone recently. I did receive representations approximately one year ago when I was dealing with the municipal boards recommendations. I received numerous recommendations from residents of the area as well.
Mr. Phelps: I understand that the Yukon municipal board approved the rezoning. Is that not a fact?
Hon. Mr. Byblow: The municipal board did put forward a recommendation for rezoning. Prior to putting forward that recommendation, it also put forward a recommendation for a number of further studies to be made in order to determine whether the region should be rezoned. Those studies were not done. I have considered the municipal boards recommendations to be inconsistent.
Until the further studies are done, I am not taking any action.
Mr. Phelps: On a point of order.
Speaker: Point of order to the Member for Hootalinqua.
Mr. Phelps: On the subject of the Yukon municipal board, I am wondering whether or not he wants to debate that?
Speaker: Order please. I find there is no point of order.
Question re: Advertising campaign by government
Mrs. Firth: I would like to get back to the issue of the great communications extravaganza that this government carries on.
Since this government has been in office, the public relations staff has nearly tripled in size. Those are the 10 media massagers, or apologists, as they are referred to in the public affairs department, each earning approximately $50,000 each.
I was looking at the government contracts list that was tabled in the House a few days ago. On one page I noted that there was $27,000 worth of communication strategies that were developed. On another page there was $21,250 worth of communication consulting, and on another there was $24,000 worth of public communication services. I kept going through the book and noted communication planning for $20,000. The list goes on and on, with the total well in excess of $100,000 in extra consulting communications contracts.
Why is it necessary to spend this amount of money on additional communications costs when they have the biggest public relations and communications staff in this government that the government has ever had?
Hon. Mr. Penikett: Based on long experience, I will not accept the Member opposites assertion without the numbers as fact until I have checked them.
Clearly, what the Member opposite is objecting to is this government making reasonable efforts to communicate with the citizens we serve about programs and policies that they want. It may surprise the Leader of the Official Opposition - although it does not surprise those of us who have been in rural Yukon - that there are a great many people in rural Yukon who do not read either of the papers published in Whitehorse. One does have to communicate using a variety of means if one is to reach citizens about programs that would benefit them.
Let me use an example: I can recall being in one of the rural communities some months after this House had put in place a measure for the benefit of placer miners and being asked by placer miners at the meeting why the government had not done anything about this. When I explained that they had done it several months before, a typical complaint was made that no one had told them about it. That is why we have to advertise, as the previous government had to advertise. I would be quite happy to compare our communication budget with our predecessors if the Member for Riverdale South thinks that would be useful in debating this matter.
The Members opposite spend public money communicating. They do not seem to find that objectionable-
Speaker: Order please. Will the Minister please conclude his answer.
Hon. Mr. Penikett: I apologize. The preamble to the question was so long, I have almost forgotten what the question was.
Mrs. Firth: If the Government Leader wants to challenge the information, I would be quite prepared to stand here and give him the details, but I know you will not allow me to do that, Mr. Speaker. I will be brief.
Public affairs had over $600,000 in personnel costs. Communications advisors have spent over $300,000 in costs. Communications consultants, in this book, come to well over $100,000. That is $1 million.
I would like to ask the Government Leader why we have to be providing all these communications consultants with more business when he has a department and staff that costs in excess of almost $1 million? Why does he have to go out and get more communications consulting done? Why can the present complement of staff not handle that?
Hon. Mr. Penikett: There is a strange irony in the question. The numbers that the Member is reading out come from public information put out by this government in an effort to provide details to the public about such expenditures. Now, the Member will object, but when they were in government, they never did put out that kind of information, and they saved a lot of money. Well, they may have saved a lot of money, but they did not provide the information to the public. We are doing that. There is a cost to providing the information. They chose to spend money on Cabinet cars, $60-per-day wine and aspirin expense accounts, opinion polls, which they never informed the public about; which they kept secret. They did all of these things. That was -
Speaker: Order please. Would the Minister please conclude his answer.
Hon. Mr. Penikett: The Cabinet cars and the secret polls and the special expense allowances were all done for their benefit - not for the public. What we are trying to do is provide information to the public in a form that the public wants to receive it.
Mrs. Firth: Touchy and sensitive. No matter how long and hard the Government Leader tries to stretch it, he cannot hide the fact that this government is spending hundreds and hundreds of thousands of dollars trying to make itself look good. That is the way people see it. I would like to ask the Government Leader if he will bring back to this House all of the costs associated with this governments great communications extravaganza - the costs of the personnel, the costs of the advertisements for the papers that have been asked for, the costs of the public -
Speaker: Order please. Would the Member please get to the supplementary question.
Mrs. Firth: I am nearly at the end of the question, Mr. Speaker. Will he make a commitment to bring that information back to the Assembly?
Hon. Mr. Penikett: Unlike the previous government, we have already made a commitment. We have tabled the contract documents; we have brought the budgets to the House; we discussed the budget in the last session. We spent several weeks doing that.
I understand why the Member opposite was touchy because she was the one who stood here and defended how she needed $60 per day for wine and aspirins and nylons - something the public thought was a disgusting expenditure. I am proud to say that when we came into office, we did away with that expense account.
Some Hon. Members: (Inaudible)
Hon. Mr. Penikett: Let me just say that the expense account today - seven or eight years later - is still less than when the Member was a Minister.
Question re: Campbell Highway weight restrictions
Mr. Devries: I would like to carry on with that area, but I think we are getting the Minister too primed off. I will have to talk to the Minister of Highways.
From discussions I had with the Minister yesterday, I learned that he is considering a further weight restriction on the Campbell Highway, which would double the truck traffic to get the ore from the Sa Dena Hes mine to the Watson Lake terminal.
In the report that was done by Clayton Sparks, and the way I read it - I am referring to the graph on page 8 on gravel roads - further restrictions would have more impact on the road than if the restrictions were left the way they are, as the increased traffic has significantly more impact on the road than restrictions.
What is the rationale for recommending these further restrictions?
Hon. Mr. Byblow: The rationale for contemplating further weight restrictions is fundamentally to preserve the road. The Clayton Sparks report that the Member refers to, and which I provided to the Member, suggests that weight restrictions that do not exceed 10 to 15 percent have no measurable difference on the impact on the road.
The study also says that that analysis was drawn from an assumption of uniform road conditions throughout. Our technical analysis supports the view that, because of our variable road conditions, that is not entirely correct. We took the view that putting on an 85-percent road restriction, on the one hand, did less damage to the road than 100 percent, because of conditions. The second view was that an 85-percent road restriction would still permit loads to travel, as opposed to prohibiting the industry from using it at all.
Mr. Devries: It is important to all of us that the roads be maintained in the most efficient manner. In discussions with Curragh and some of the others, there was the suggestion that speed is also a major factor in the destruction of roads. Did the Minister consider reduced speed limits in the Rancheria-Swift River area, rather than reduced loads?
Hon. Mr. Byblow: The short answer is yes. Reduced speed has been considered. The problem with placing a reduced speed is one of monitoring. That does not necessarily mean that people will travel at that reduced speed. In our judgment, we have tried to address the severe conditions that occur by trying to find the balance between economic common sense and preserving the road, and to determine from those general factors what we could best do to ensure that we can maintain the road and not allow it to be destroyed.
Mr. Devries: In the Ministers assessment of the spring damage to the Alaska Highway, I am seeking assurances that he will also consider the impact of the 100 or so export log trucks that were hauling logs during this critical break-up period. Is the Minister considering increased load permits during the winter season as a tool to perhaps encourage both logging and mining companies to limit their activities during the critical break-up season?
Hon. Mr. Byblow: To some extent, we already permit that. I do not have any specific recollection of logging trucks asking for overload permits in the winter time, that is, through the bulk haul process. For fuel truck purposes, we already have allowed special overload permitting in the winter time; when the road can withstand the extra weight. I have no recollection that any logging company has approached us on it but, by precedent, we are already open to that suggestion.
Speaker: The time for Question Period has now lapsed. We will now proceed with Orders of the Day.
ORDERS OF THE DAY
Speaker: Government Bills.
Bill No. 44: Second Reading
Clerk: Bill No. 44, standing in the name of the Hon. Ms. Joe.
Hon. Ms. Joe: I move that Bill No. 44, entitled An Act to Amend the Liquor Act, be now read a second time.
Speaker: It has been moved by the Minister responsible for the Liquor Corporation that Bill No. 44, entitled An Act to Amend the Liquor Act, be now read a second time.
Hon. Ms. Joe: The amendments to the Liquor Act address the following three matters: they will better define or clarify the role of the Yukon Liquor Board, address the housekeeping matters identified by the office of the Auditor General, and allow the corporation to undertake some good corporate citizen initiatives.
Several months ago, the board requested that we clarify their areas of responsibility. The board has traditionally only exercised its authority in the area of issuing, cancelling and suspending licences and permits. The addition of clause 7(2) to the act clearly sets out that the boards sole jurisdiction is in the licensing area and states their right to operate as a quasi-judicial or regulatory body free from political interference. Traditionally, the corporations day-to-day operations have rested with the president of the corporation, with the Minister providing policy direction.
These amendments provide the legislative framework so that the board and corporations traditional roles are maintained and are in keeping with the findings of a number of commissions and task forces that have examined the roles and relationships between governments and their regulatory agencies.
The Lambert Royal Commission reported that an agency is accountable when its non-adjudicative functions are subject to the guiding control of the Minister, who is, in turn, responsible to the Legislature for the policy and administrative decisions of the agency.
In the commissions final report, the commissioner stated that because Crown agencies are instruments of public purpose, just as are departments, ultimately the doctrine of the individual and collective ministerial responsibility must be preserved.
In 1979, the Economic Council of Canada stated, We would agree with the Lambert Commission as a matter of general policy that all Crown agencies, including shared enterprises, as they are instruments of declared public policy, must be ultimately subject to the direction of the government, though less directly than from departments.
Ten years later, the task force revealed Ontarios regulatory agencies, in its examination of a relationship between agencies and the government, and suggested that the proper perspective is to understand that agencies operate at arms length in their decision-making role, but are accountable to a particular ministry and to the Legislature for their operations and policy functions.
As already stated, these amendments adopt the principle that the boards adjudicative functions must be free of ministerial government interference and that the Minister not only has the responsibility to direct and exercise control over the corporations policies and operations functions, but will be held accountable for the actions of the corporation.
The bill also contains two minor amendments, which address the issue of capital assets. The legislation currently gives the corporation the right to spend money in order to carry out its operations. The office of the Auditor General has suggested that the corporations authority, in relation to capital asset expenditures, be clearly defined.
The corporation has received legal advice that the act is adequate; however, because this clarification of a concern has been raised, we are suggesting that it be addressed in these amendments.
The section of the act authorizing corporation expenditures has been expanded to provide for good corporate citizen expenditures. Some areas that the corporation will be looking at are programs and initiatives that look at promoting moderation and maturity and the consumption of alcohol, beverage products, and promoting awareness about alcohol abuse and the consequences of over consumption.
Motion for second reading of Bill No. 44 agreed to
Hon. Mr. Webster: I move that the Speaker do now leave the Chair and the House resolve into Committee of the Whole.
Speaker: It has been moved by the Hon. Government House Leader that the Speaker do now leave the Chair and the House resolve into Committee of the Whole.
Motion agreed to
Speaker leaves the Chair
COMMITTEE OF THE WHOLE
Deputy Chair: I will now call Committee of the Whole to order. We will take a short recess.
Chair: I will now call Committee of the Whole to order.
Notice of motion re appearance of witnesses
Hon. Mr. Penikett: I give notice of motion
THAT at 4:00 p.m. until 5:25 p.m., Mr. Colin Benner, president of operations of Curragh Resources and Mr. George Whyte, vice-chairman of Curragh Resources, will appear as witnesses before Committee of the Whole, during debate on Bill No. 52, Faro Mine Loan Act.
Chair: Today, Committee will be dealing with Bill No. 33, No. 47, No. 19 and No. 52.
Bill No. 33 - Registered Nurses Profession Act - continued
Chair: We will proceed with Bill No. 33.
On Clause 22 - continued
Hon. Ms. Joe: There was some question yesterday as to whether or not there was a typo in clause 22. There should have been an is there. We agreed yesterday that it was a typo.
Clause 22 agreed to
On Clause 41 - continued
Hon. Ms. Joe: Under clause 41(2)(c) there was some question as to whether or not direct should have been direction or directive. I am told by the people in the department who drafted this, that the word should have been direction and not direct.
If possible, I would like to correct that with unanimous consent.
Chair: To clarify: direct in clause 41(2)(c) should read direction.
Is there unanimous consent?
All Hon. Members: Agreed.
Clause 41 agreed to
Title agreed to
Hon. Ms. Joe: Madam Chair, I move that you report Bill No. 33 out of Committee without amendment.
Motion agreed to
Bill No. 47 - Yukon Advisory Council on Womens Issues Act
Hon. Ms. Joe: This bill, as I mentioned in second reading, is to establish the Yukon Advisory Council on Womens Issues. I have indicated that we felt that this was necessary. It had been requested for a number of years by the Advisory Council on Womens Issues, and this bill will allow that to happen.
On Clause 1
Clause 1 agreed to
On Clause 2
Clause 2 agreed to
On Clause 3
Clause 3 agreed to
On Clause 4
Clause 4 agreed to
On Clause 5
Clause 5 agreed to
On Clause 6
Clause 6 agreed to
On Clause 7
Clause 7 agreed to
On Clause 8
Clause 8 agreed to
On Clause 9
Clause 9 agreed to
On Clause 10
Clause 10 agreed to
On Clause 11
Clause 11 agreed to
On Clause 12
Clause 12 agreed to
On Clause 13
Clause 13 agreed to
On Clause 14
Clause 14 agreed to
On Clause 15
Clause 15 agreed to
On Clause 16
Clause 16 agreed to
Title agreed to
Hon. Ms. Joe: Madam Chair, I move that you report Bill No. 47 out of Committee without amendment.
Motion agreed to
Chair: We will proceed to Bill No. 19, Miscellaneous Statute Law Amendment Act, 1992.
Bill No. 19 - Miscellaneous Statute Law Amendment Act, 1992
Hon. Ms. Joe: Madam Chair, this bill allows us to make corrections in a number of acts, including the Fine Option Act, the Income Tax Act, the Insurance Act, the Mental Health Act, the Public Service Act and the Summary Convictions Act. The majority of these corrections are typos, grammatical errors and things like that. I do not know whether or not there is anything that could be of a controversial nature, but that is what they are.
Chair: Should we do each one?
On Fine Option Act
Mr. Nordling: The Minister was going to check to make sure the surcharge on territorial offences would be eligible under the Fine Option Act. Did she check on that? Can people work off their surcharge under this act?
Hon. Ms. Joe: We had a bit of a problem dealing with that situation, because we were dealing with two different drafters. I just found out before I came in here that that information had not been dealt with. I was given the information that, under the Fine Option Act, we could not deal with the surcharge under the Victim Services Act. The Members question was quite appropriate.
I had instructed my office to look at whether or not that could be included in the Miscellaneous Statute Law Amendment Act, 1992. I found out just minutes ago that that had not taken place. We do have a problem with that act in this bill.
Mr. Nordling: If we stood this clause aside, could we get that little provision added, so it is dealt with in this sitting? I am sure we can pass the rest of the act and stand that clause over until next week. If we can make that addition here, we should; if not, we will have to leave it for another sitting.
Hon. Ms. Joe: I have no problem with that. If there is a problem that can be dealt with in this sitting, and it is not going to cause a lot of extra work, I do not mind putting this section aside. Right now, we are dealing with a grammatical error. If we were to include another change, and it could be done under the miscellaneous statute act, I would like to do that during this session.
Chair: We will stand it over.
Fine Option Act subsections and Title of Bill No. 19 stood over
Mr. Nordling: That is agreed. I know that in the Miscellaneous Statute Law Amendment Act back in 1987, we did change the definition of fine to include court costs. I think it is appropriate under the Miscellaneous Statute Law Amendment Act rather than having to amend the act itself.
On Income Tax Act
Hon. Ms. Joe: This section is just to correct some typographical errors.
Mrs. Firth: I am just looking to see whether or not the correction is correct. I have the page from the Act to Amend the Income Tax Act and it refers to this particular number as being in subsection 17(2), not 17(1) of the Income Tax Act. It was an amendment, so the amendment referred to all of these numbers. I wonder if they want it changed in subsection 17(1) as well as 17(2).
Mr. Nordling: I do not know if the Minister understood that. The bracket we are seeking to insert is in subsection 17(2) of the Income Tax Act, not subsection 17(1), as indicated in this clause.
Hon. Ms. Joe: I do know which one he is talking about here. I did plan to have someone in my office sitting down here, but I guess we moved too fast with the Yukon Advisory Council on Womens Issues Act. I do not have a copy of the Income Tax Act on my desk. I would have hoped that it would have been here beside me with the official. That has not happened.
Income Tax Act section of Bill No. 19 stood over
Mr. Nordling: That can be checked, too.
On Insurance Act
Insurance Act agreed to
On Mental Health Act
Mental Health Act agreed to
On Public Service Act
Public Service Act agreed to
On Summary Convictions Act
Summary Convictions Act agreed to
Mr. Nordling: While the Minister has her officials checking this, perhaps she could check under the Public Service Act, to see if that had already been done in the 1986 revised statutes. It may need to be done, but I think that could also be checked.
Hon. Ms. Joe: I will definitely check that, if there is some question. What I would like to do - I do not know what else is proposed for this afternoon, because these bills are moving pretty fast - is go to my office on a break and come back with the information so that we can deal with this bill today, rather than bringing it back in on Monday. Would that be okay with the side opposite?
Mrs. Firth: I think that would be fine. It is 3:00 p.m. now and I know that Curragh is not due to appear until 4:00 p.m. I believe that we have no further business to address in Committee of the Whole. Perhaps the Minister could have her department check those matters and ring us back in the House when she has them done, and we could come in prior to Curragh appearing at 4:00 p.m. to tidy this up, if that is all right with the House Leader and the Opposition House Leader.
Chair: I will declare a brief recess. We will take a 15-minute break.
Chair: I will now call Committee of the Whole to order. We will continue to discuss Bill No. 19, entitled Miscellaneous Statute Law Amendment Act, 1992.
On Fine Option Act - continued
Hon. Ms. Joe: The question was with respect to whether or not a victim surcharge could be dealt with under the Fine Option Act, that allows us to use the fine option program to collect fines. I am told that you are not allowed to do that under the Fine Option Act, because the surcharge is not a fine, so the surcharge under the territorial offences or under the Criminal Code does not apply in here. It is not our intention to change that at this time, because I think that it requires a lot more review in order to do that.
Fine Option Act agreed to
On Income Tax Act
Hon. Ms. Joe: There was an error in this act, as pointed out by the Members opposite and I would like to make a motion.
Hon. Ms. Joe: I move
THAT Bill No. 19, entitled Miscellaneous Statute Law Amendment Act, 1992, be amended in the clause entitled Income Tax Act, subsection (1) at page 1 by deleting the numbers 17(1) and substituting for them the numbers 17(2).
Amendment agreed to
Income Tax Act agreed to as amended
On Public Service Act - continued
Hon. Ms. Joe: With regard to the Public Service Act, there was a question as to whether or not that might have been included in 1986. It was dealt with in 1987. This clause is not necessary. I guess we just delete it.
Mr. Nordling: Perhaps we should leave it. It does not do any harm. There was some question of a certified copy not having the change made, although the printed versions do have the correction made. To be safe, we should leave it in.
Public Service Act agreed to
Title agreed to
Hon. Ms. Joe: I do apologize for the confusion that this bill has caused us. I move that Bill No. 19, entitled Miscellaneous Statute Law Amendment Act, 1992, be reported out of Committee with amendment.
Motion agreed to
INTRODUCTION OF VISITORS
Hon. Mr. Penikett: Let me first call attention to the presence in the public gallery of a former Member for Whitehorse West and Administrator of the Yukon Territory, Mrs. Flo Whyard.
Also, if I may, I gave notice earlier today of intention to bring witnesses before Committee of the Whole at the hour of 4:00 p.m. One of the two witnesses who was scheduled to appear was unable to be with us. Accordingly, I would hope that it could be treated as a friendly amendment, but I would like to move an amended version of the motion, as follows:
Motion re appearance of witnesses
Hon. Mr. Penikett: I move
THAT at 4:00 p.m. until 4:45 p.m., Mr. Colin Benner, president of Curragh Resources, appear as a witness before Committee of the Whole during debate on Bill No. 52, the Faro Mine Loan Act.
Motion agreed to
Hon. Mr. Penikett: Appropriately, at second reading debate of this measure, there were a number of observations by Members on all sides of the House about the mining industry and about the health of that industry in the territory and, indeed, the health of the largest single operator in the mining industry in Yukon; namely, Curragh Resources.
As I explained at the time, while the government can provide information about matters of public finances, there are a whole series of questions having to do with internal affairs, or financial affairs, of Curragh Resources, and I indicated at the time that only an officer of Curragh Resources could make the decision as to what kinds of information it was prepared to make public, and only an officer of Curragh Resources could answer some of the questions that were indicated.
Accordingly, following discussions with the House Leaders, we have invited Curragh Resources to be present today. I received a communication from Mr. Clifford Frame, chairman of Curragh Resources, some days ago that indicated that, while he would have liked to have been here, he was in Asia, unfortunately, and it was not possible. He had asked his able number two man, Mr. Colin Benner, to be here in his stead.
Mr. Benner is intimately acquainted with the operations in the Yukon, both the mine at Faro and Sa Dena Hes. I am sure he can answer any questions Members put to him.
Members may reasonably have other questions of me or the government, but perhaps we should use another occasion to put those forward and use the time we have with Mr. Benner exclusively to enable him to provide some information to the House about Curragh Resources, Curraghs operations, the mine at Faro, and the importance of this financial instrument to its operations.
With that, I would like to introduce Mr. Benner to Members of the House.
Chair: We would like to welcome Mr. Benner to the House. We will now proceed with Bill No. 52.
Bill No. 52 - Faro Mine Loan Act
Chair: Is there any general debate?
Mr. Lang: I would like to welcome the witness before the House. We appreciate him taking the time to come forward and make himself available in the public forum to answer specific questions on the operations of Curragh Resources. I appreciate the efforts of the government in doing everything it can to bring the necessary expertise here to provide us with information to consider the bill before us.
Does the witness have any opening remarks he wishes to make, or would he prefer to proceed with questions?
Mr. Benner: No, other than just to say I appreciate the opportunity to be here today. It is unfortunate that Mr. Whyte was unable to attend with me. It was the chairmans wish and intent that he do so, but unfortunately he got called away on some very pressing business at the last minute.
I have no prepared statement, but I am prepared to answer any questions you may have.
Mr. Lang: I have a couple of questions that I wish to start out with, and then at that stage we can turn it over to other Members as well.
This is an observation, first of all: we have already expressed the view that we feel it is too bad that it is a requirement for Curragh to come to the government for financial assistance. Recognizing some of the financial problems, and whatever, that your organization has, it seems that it is becoming a habit of a lot of the larger corporate citizens across the country to be coming to government for assistance - I mean, you do have lots of company.
But that aside, now we are at the stage where Curragh has approached the government for some assistance.
Our concern, in large part, is that it is our understanding of the project that the total for the stripping program required is in the neighbourhood of $60 million; that figure has been cited publicly. Is that correct? Is that the amount we are looking at in total to completely remove the overburden?
Mr. Benner: The amount required to strip phase 1 and phase 2, and to start on phase 3 of the stripping program is about $60-65 million; that is correct. In going back to address your earlier remark, it was the companys intention not to come to government. We made valiant efforts in 1991, recognizing our cash position at that time, to raise monies through the public-funding process. We did a share issue; unfortunately at that time it fell on very uninterested parties - the mining industry was in an extreme lull, the metal markets were extremely soft, and it was not the time to do an equity issue. We approached five or six financial institutions and they advised against it. Nevertheless, we had one institution that thought it would be worth the effort and we felt we wanted to go that route before we went to any other means of raising the necessary funding. It was not successful.
We then embarked on the program of liquidation of assets. We have done so since then to the tune of the Asturiana de Zinc ownership and cross ownerships being unwound. Unfortunately, we had to sell Canadian stock of a major company in Canada at a substantial price reduction from the original purchasing price.
All this was done in the best interests to continue the cash funding for the Faro operations.
The intent, with regard to the $60 million, is essentially to derive as much as we can from the cash flow that will be generated from the Faro operations, we hope, as the metal prices improve and the Canadian dollar softens, because, as you know, we sell in U.S. dollars. These are major factors on our positive or negative cash flow.
Mr. Lang: Perhaps we could have a breakdown among phase 1, phase 2 and phase 3. Exactly what is phase 1 estimated to cost and what is it going to do for the operation?
Mr. Benner: Phase 1 will essentially, upon its completion, bring us into full production capacity from the Grum pit to the Faro mill. Phase 2 will be a push back of the overburden to extend the life of the operations. Phase 3 is, of course, the final phase. The completion of phase one will get us into full production.
As I am sure the hon. Member knows, the Faro open pit essentially will be exhausted of its reserves in an open pit mining mode by the end of this week or early next week. The only other ore contributions to the mill from Faro will then come from the underground operations, which will essentially be completed in July or August of this year.
Following that, we will be totally dependent on the contributions of the ore reserves from the Van Gorda deposit, which essentially will be exhausted by the end of 1992 or in the first quarter of 1993.
We will be right to the wall, if you will pardon the expression, with respect to releasing ore from Grum to sustain the operations at the required levels.
Mr. Lang: Perhaps the Minister, the Member, the witness - I guess I can call him anything I want - could tell us exactly how much has to be spent to get phase 1 underway?
Mr. Benner: I am not sure the Member can call me anything he wants, but, today, I guess he can. To complete phase 1, it will cost in the range of $40-45 million, somewhere in that neighbourhood.
Mr. Lang: The witness made reference to the sale of some assets in his opening comments, other than anything that the company held outside of Yukon. As I recall, there was quite a substantial amount of dollars involved in the sale of the assets.
Is the witness telling us that, with the loan of the $5 million dollars and the sale of company assets in the east, it is the position of the company that they will be able to get phase 1 totally completed, borrowing only $5 million from the government?
Mr. Benner: No, that is not correct. The sale of the assets at the end of 1991, coming into the first quarter of 1992, was essentially to protect the stakeholders in the company, by maintaining a reasonable position of liquidity. The only assets that we had that were liquid, were Asturiana de Zinc and the stock holding we had in Gordon Operations, and we have one other, Westray Coal.
The Yukon operations are the foundation and building stone of our corporation, and it is the intent of our corporation to maintain them and go forward. For that reason, we looked at all our other peripheral assets, if you will, outside of the Yukon prior to anything else.
We are now in a position to show on our balance sheet some liquidity so that we can go forward in search of new financing to derive the necessary funds to complete the stripping of Grum.
Mr. Lang: Primarily, the question that I have is with respect to the $5 million, accepting the principle that the government lends the company the $5 million. Is it safe to say then, that with all of the known variables today, that this will be the only amount of money required of the government with respect to getting phase 1 into a position of being able to pay for the stripping program as well as the mining of the new deposit?
Mr. Benner: The $5 million contribution from the Yukon territorial government, matched by $5 million from Curragh Inc. - as of two days ago, we have had a change of name - accommodates about four months of the stripping program. The purpose of the venture going forward was to enable Curragh, by way of a loan from the government, to show the outside potential investors that there was confidence in the project.
This would allow us to be in a position to move forward and seek further financing and funding.
Mr. Lang: Is Curragh going to be back here for more money in four months? Is the $5 million going to be sufficient to meet the objectives Mr. Benner has just outlined?
Mr. Benner: The answer is that $5 million will not be sufficient to complete the phase 1 stripping of Grum. Further financing is required. We are currently having discussions with the federal government with respect to financing.
Mrs. Firth: I would like to go back to the first comments that were made with respect to liquidation of assets, and so on, when they were initially trying to raise the money.
When they went to the lending institutions, what rate would they have had to pay at the bank?
Mr. Benner: I would have to beg ignorance on that question. I cannot recall the precise number, but I will undertake to get it, if you wish.
Mrs. Firth: It would probably be prime plus something. I believe the loan agreement we have here is prime plus one-half percent. I would not mind having that, if the witness would bring that back for me.
With respect to the belt-tightening initiatives the company may have taken to put themselves in a healthier financial position, what initiatives were taken within the operation of the Curragh Resources business itself? I am specifically talking about salaries, management of staff, operation and maintenance costs, and so on.
Mr. Benner: With respect to the operation initiatives that were taken, it is no secret that there were major cuts in our staffing levels at our Faro operations. There were major cuts in our staffing levels in the corporate offices and natural attrition and some minor lay offs in the production and maintenance workers levels were also undertaken. In addition to that, there were salary freezes in the Toronto office, our corporate office, and there were salary freezes at the operational sites for staff. The hourly rated wages are, of course, subject to collective bargaining, and there is a contract in place.
Mrs. Firth: Is it possible for the witness to tell us, without revealing any confidential information that he does not wish to reveal, the impact of that kind of initiative? Was it substantial in savings? Perhaps he could compare it to the liquidation of assets.
Mr. Benner: That is a very good question: comparing it to the liquidation of assets - that is a very complicated question. I am not sure that I can answer that readily. With respect to the overall impact of salary freezes and reductions, the numbers were in several millions, in the $2-3 million range and -
Mrs. Firth: No, it is all right.
Mr. Benner: I had failed to answer one other aspect of the hon. Members questions earlier, and that was with respect to productivity. At the Faro site, the company has undertaken to contract the services of a specialty firm, which is currently at the site working with not only our staff, but our workers as well, to develop systematic programs in the mining operations and in the maintenance of the equipment to service the mining operations in order to enhance the performance of not only the people, but also the equipment.
Mrs. Firth: I would like to ask about the other side of the equation. We have established some of the belt-tightening initiatives that were taken. I would like to know if the witness could indicate to us some of the extra costs which were incurred by Curragh because of government policy. I am talking specifically about the financial impact of changes that are proposed to the Employment Standards Act, the Workers Compensation Act, the electrical rates, wage trends - are government policies affecting the operations of your company, and could you indicate what kind of impact they are having on your ability to do business here?
Mr. Benner: With respect to the Employment Standards Act, I understand it is being considered, so it has no impact. We could speculate. We have done some calculations. In the large realm of things, I think it is a question of how we manage the impact of such a standards act. We are governed by a collective bargaining agreement onsite with our workers and that collective bargaining agreement covers essentially a number of matters that are addressed by the Employment Standards Act, which are already in our collective agreement, so it nullifies any impact with regard to that.
I am sorry I did not make notes. I think you mentioned electrical rates. Yes, there was an impact. We had to renegotiate our contract last year with YEC/YECL and the results were a rate hearing under the Public Utilities Act. Most certainly, that has had an impact on our operating costs, but to what extent I cannot really comment because meetings have been ongoing throughout the Yukon Territory for, I believe, the last five weeks in the various communities on a cost-of-service study. I do not know what the outcome of those cost-of-service study hearings is going to be.
Mrs. Firth: I would like to ask the witness a question about the talks with the federal government. He mentioned today that those talks were ongoing. I had understood from a newspaper article that perhaps they were on hold. I wonder if the witness could bring us up to date on those discussions. Is it still a $17 million loan guarantee? Is it before Treasury Board? Could he provide us with information? And could he also indicate whether or not there has been discussion with respect to the federal government guaranteeing loans in conjunction with loan guarantees by the territorial government?
Mr. Benner: I think it would be inappropriate for me to comment on that to the hon. Member at this time. The discussions are in a very early stage. There is nothing concrete and nothing solidified with respect to those discussions, and it would be inappropriate for me to comment on any of the government undertakings. I am not in a position to be able to do so.
Mrs. Firth: The answer then is that the discussions are active and that dispels the concern I had and that the newspaper article was alluding to - that they had stopped. Is that correct?
Mr. Benner: Yes. The hon. Member is correct. The discussions are active.
Mrs. Firth: I thank the witness for that answer.
I would like to ask about the status of the Cassiar thing. We hear various stories about what its position is. Is Curragh Inc. making a bid for the Cassiar mine?
Mr. Benner: No. Curragh has not made a bid for the Cassiar mine. That is the simple answer. If I would be allowed to elaborate a bit I would like to.
Mrs. Firth: Yes.
Mr. Benner: I have a past association with the Cassiar operations. I was contacted by some people who thought there might be a possibility of keeping the Cassiar operation going. In addition to that, our firm was also contacted, because they thought we had, as a company, the mining wherewithal to perhaps keep it going. There was a great deal of interest in us looking at it.
In addition to that, it made eminent good sense for us to look at it, because it is a sister operation, if you will, to the Sa Dena Hes operations, in that it is located very close to Watson Lake.
We saw the synergies being quite strong between the Sa Dena Hes in the Watson Lake area and the Cassiar operations. We looked at the operations on the basis of assessing its assets, because we have some minor purchases to make in mining equipment in the next little while, and also to see if there was anything that could be done to keep Cassiar going.
We had to deposit $100,000, which is refundable. It is non-interest bearing, unfortunately, but it is refundable. We spent several weeks making assessments with our own people and some outside people.
On April 24, the interested parties were required to submit their bids. We did not tender a bid; we tendered an opinion.
Mrs. Firth: Thank you. I have a quick question about the name change. Since the witness made reference to it, perhaps he could tell us why their name has been changed to Curragh Inc.
Also, we have been talking about this $10 million: the $5 million contribution from Curragh and the $5 million from YTG. This will last for approximately one-quarter of the time period, or, a three-month period. I would like to ask the witness when they will run out of time again before they need a commitment with respect to financing. When will it become the eleventh hour and they will have to shut down operations? When is the deadline for active discussions with the federal government or for any discussions that may follow with the Yukon government or the financial institutions with respect to additional funding?
Mr. Benner: I will answer the last one first. With respect to a deadline, there is none. As a corporation, we are concerned that the money we have, as cash in hand, to do the Grum stripping does not run out before we have the other financial arrangements in place. We have three to four months of stripping at Grum, following which time we will have some decisions to make.
Given that, it would not mean an automatic closure. It is not like the door opening or closing. It just puts us against another set of circumstances and challenges to which we have to rise.
We do have time until the end of the year, by way of augmenting the production with low-grade ore. Unfortunately, there would be insufficient quantities of higher grade ore to blend with that to substantiate the operations to the levels we consider to be economically desirable. In essence, I am saying that we would be able to maintain the operations and bide some time, but it would be a tremendous cash draw on the company, because we would not be doing it unless we had a huge spike in the prices.
We anticipate that the $10 million and the time it allots us would take us through to the end of the summer. So, we are working on our own schedule with regard to how quickly we can get other matters into place.
On the name change to Curragh Inc. and the dropping of the word Resources: quite honestly, I would have preferred to leave it Curragh Resources Inc. It was recommended by someone in the company that the term resources might be associated with a company that was going to be venturing off into other endeavours, other than just mining. Our company is a mining company, and we intend to stay in the mining business. It has no significance, other than that.
Mr. Nordling: I would like to ask the witness to comment on a rumour and a concern. The rumour is that Curragh spent $1 million on renovations to their Toronto offices in the last year or two.
The concern is that the salary freeze did not apply to Mr. Frame, as his salary was over $700,000 for the past year, and $200,000 to $300,000 of that was a bonus.
Mr. Benner: With respect to the renovations, $1 million was not spent on renovations to our corporate offices. The only renovations over the last year is a tremendous amount of empty space, as our corporation staff reductions were in the order of 30 percent.
With regard to the chairmans salary, it was incorrectly addressed in an article in Macleans magazine. My understanding of that article was that the writer had clearly used the annual information form for 1990, and compared it with the chairmans income in the annual information form for 1991.
The company went public in 1990, so the chairmans salary and other remunerations were shown only for a partial year; therefore, the comparison between the two years was made with one full year to a partial year.
Consequently, the writer arrived at the conclusion that the chairman had made a significant increase in his income. In fact, I can assure that you the chairmans income was reduced. In 1991, his income was less from Curragh than it was in 1990.
Mrs. Firth: The article that appeared in a local newspaper was accurate. I believe the interview was conducted with Mr. Frame and representatives of Curragh, so the information that was presented in that article was accurate information with respect to the salary and the bonuses.
Mr. Benner: I have to apologize to the hon. Member, but I do not know what article that was. I would be more than happy to review the article and substantiate the right and wrong points of it through the Premiers office, if the Member wishes.
Mrs. Firth: If I could just put it on the record: it was an article that appeared in the Whitehorse Star with respect to the salary issue and, for the record, I believe it was George Whyte, the companys vice chair and corporate secretary, who was interviewed. So if he was to have been todays witness, I think we can safely draw a conclusion that the information that was given was accurate. Everyone can make ones own interpretation with respect to the article - the date of the article was April 30, 1992.
I state this just so that we have this on the record. I will let my colleagues ask questions now.
Mr. Lang: To go back to the viability of the mine, it is a concern in respect to the observations made that the $5 million is being requested here, and Curragh is still going to the federal government for loan guarantees or for the borrowing more money, and we will not know until three or four months down the road whether or not we can put a financial package together that can meet the productivity as well as the profitability of the mine.
My concern has to be the long-term viability of the mine. I appreciate the work Curragh Resources have done over the years. I think they did a good job in dealing with the various levels of government in getting the mine reactivated. For the record, I can say that I am the only one in the House here who was there the day they hit the sulphides in Faro. It goes back a long time.
Previously, to get the mine going - and I think the witness knows the individuals - Pierre Lassonde and Peter Steen were commissioned by the Government of Canada in conjunction with YTG to do an independent evaluation of the long-term viability of the mine and what has to be done to get it reactivated. What public documents does the witness have that can be made available that indicate the long-term viability of the mine? In view of the fact that Curragh is requesting a $5 million loan, what does the company have to give us for comfort that it has a long-term prospect?
Mr. Benner: Before I answer the hon. Members questions, I would refer back to the previous question with respect to the newspaper article that was put before me. I am familiar with it. The numbers that are stated in there, if that is the specific intent of the question, are correct. I would add that one might want to compare those numbers to the incomes such as those enjoyed by a gentleman who was mentioned here today, Mr. Peter Steen, who is in charge of International Corona, and who makes substantially more than that in a company with fewer responsibilities. For that matter, we could compare them to Mr. Peter Monk, of American Barrack, and his income.
I feel obligated on this particular point, because it seems that the chairmans salary has come into question. I feel obligated to make further comment on that. The chairman is a substantial shareholder of this company - a substantial shareholder. As the company succeeds, so does he; as the company takes losses, so does he. If they are substantial losses, as we experienced in 1991, he obviously takes the brunt of those.
In addition to that, it has been his policy for some time, and one that we are constantly debating, that there be a no-dividend policy. Obviously, the persons who reap the greatest reward from dividends from a company are the ones who hold the most shares. That speaks for itself.
With regard to the Mr. Langs questions on the long-term viability of the operation, I bow to your experience with Faro. It is far greater than mine. I have only been with the company for two years. Perhaps we should have longer chats over that.
With respect to the Grum operations, we see that as clearly giving the Faro concentrator an eight- to nine-year extension of life. There are about 27 million tons of high-grade reserves. The simplest way would be to provide you with copies of the annual information form, the AIF of the company, which has all the reserves stated in it. It has all the financial information stated in it on the corporation, including copies of the 10Ks and the 10Qs, which we have to file with the securities commission in the United States, because we are registered on the New York Stock Exchange.
That would be the most enlightening public document anyone could get their hands on with respect to Curragh.
Going forward, beyond the Grum, is the Dye deposit, which is another 25 million tons of mineable reserves of world-class quality. Of course, not explored to the degree we would like it explored yet, but we have it in our sights, is the Swim deposit. In all, Curragh has some 94 million tons in situ geological reserves in the Van Gorda Plateau.
It is a world-class lead/zinc deposit of a substantial quantity. The economics, with respect to the viability, are the cyclic swings of the lead/zinc prices and our ability, as operators, to produce with operational costs in a globally competitive range.
Mr. Lang: I would like to pursue the globally competitive range a little further. It is a question of the concentrates and the long-term purchase commitments. For how long, and with whom, are Curraghs contracts? Is the witness satisfied that there are long-term commitments for the sale of the concentrate?
Mr. Benner: Most of our contracts in Asia are of a one-year duration. They are negotiated every year, but are constantly renewed. They are long-term security on the basis of relationships and the ability to deliver on a timely basis. The most serious concern any smelter operator has is that he finds himself unprepared for a shortfall in delivery. That creates tremendous havoc with them, so they have to be able to rely very heavily on the operators producing and delivering on schedule, as planned.
You may be aware that one of the most important events in the resurrection of the Faro operations in 1985 or 1986, I believe, was the securing of contracts in Japan, for which the Yukon territorial government - I believe, by way of the present Premier - and Mr. Frame made tremendous efforts to secure long-term contracts, which are still in place. At that time, the operations were reeling from the unfortunate set of circumstances that left a lot of smelter consumers with a very, very short 30-day notice, and they were caught. Of course, they were then at the beck and call of the other producers and the pricing. To put it into simple terms, they had to pay the piper to fill the shortfall.
We have unwound our arrangements with Asturiana de Zinc. The purpose of that originally was to secure longer-term contracts, align ourselves with the zinc smelter in Europe and to go forward on an international marketing basis.
Unfortunately, it did not go the way both parties had envisioned that it would. However, the parting was amicable and, as a result of that, we secured a long-term contract with Asturiana de Zinc for zinc concentrate for some years to come.
Mr. Lang: Could the witness tell us what he means by long-term: two, three, five years?
Mr. Benner: One contract is for a five-year period; of course, with renewable clauses in it. Some of the contracts are one-year periods for negotiation purposes, but all contracts have renewable clauses in them.
Mr. Lang: I would like to discuss another area of concern, one which has been heard before. This concern has to do more with the people side of the situation that we are facing.
In my constituency, for example, I have a number of people who have certain expertise in the mining field; specifically, underground miners who are unemployed. It seems that when they apply for a position at the Faro mine, they are given what you would call short shift.
This causes me concern. Would the witness outline to us his companys policy as far as local or regional hire is concerned? I understand that most of the miners - I may stand to be corrected on this - if not all of them, are from outside the territory.
Mr. Benner: Was the hon. Member referring specifically to underground miners?
Mr. Lang: Yes, I am referring specifically to underground miners.
Mr. Benner: We have two underground operations. There is the one I referred to in Faro, which will be wound down at the end of this summer. That operation, because of its short-term duration, was only envisioned to operate for two years, because it had a very limited, well-defined reserve.
That work was done on a contract basis with a contract miner. Quite frankly, we did not want to secure employees in a short duration mode. We felt that it was unfair to them and to the company and, at the same time, we did not want to secure ourselves into some involvement to purchase mining equipment for something that was going to last only two years. That was the reason behind the approach that was taken in Faro.
At Sa Dena Hes, the arrangements on the property were to contract out the underground mining with a contract firm that was a subsidiary of our joint-venture partner. We have since elected to unwind that contract with the underground contractor and have absorbed the underground miners into our workforce. We will be directly controlling that through our own hiring here in Whitehorse and in Watson Lake.
However, prior to this, the contractor hired through Watson Lake and the Brampton office in Toronto, because they had had a number of people working for them for many years all over the country who were very experienced and talented.
We have a socio-economic agreement with the Town of Watson Lake, with the Kaska Dena and, of course, with the Yukon government. We intend to honour that agreement. We will be making strong endeavors over the next three or four months, certainly by the third quarter, to ensure that our levels of hiring out of the Yukon, from the experienced underground mining force and by way of training inexperienced personnel, is given the highest attention and the highest priority. We have recently had, I believe, eight or nine graduates of a joint-venture training program, funded in part by YTG and by us. I think that was about one week ago. Five of those have elected to take job offers at the Sa Dene Hes mine.
I also believe that, this fall, when we cancel our fly-in/fly-out arrangement in Watson Lake and move the people out of the existing bunkhouse facilities and into the Town of Watson Lake, that will create some shift in the demographics, if you will, and we will inevitably have more of the Yukon population employed as underground miners in the Sa Dene Hes operation than outsiders. By outsiders, I mean people from outside of the Yukon territory.
Mr. Lang: I am just trying to get this clear from the witness, because it is very important to the people of which I am speaking who are presently unemployed. Unfortunately for us, the two operations seem to be the only show in town with an immediate future for them and for the territory, as far as operating mines are concerned. We have the problem of these people having to pay mortgages and various other things for the period of three or four months the witnesses spoke of. Is there any way that time could be shortened so that, if the jobs become available, they could make the necessary applications for them? I wonder why we have to wait four months for that. Perhaps the witness could expand on it?
Mr. Benner: There is no reason for anyone to wait four months to file an application. We have a number of applications on file now. I am only speculating the three or four months, because we anticipate that the contract personnel will probably not want to move to Watson Lake and we will be replacing these people as they choose to leave and go back to wherever it is they currently reside.
Three or four months is the outside; I would think there will be replacements ongoing - actually, we started as early as last week. A number of the fellows who were here with the contractors and have now been seconded by us are choosing to leave. They are on a six-week-in/two-week-out rotation. We have to honour that rotation basis, and they have to honour it as well, because the most important thing in the operation in Watson Lake is living up to our objectives and to our responsibilities and our commitments to our debtors. The project has only just recently, in the last three or four months, reached full production levels, and we are now concentrating very diligently on trying to fine tune it and get the costs down and into line. They are somewhat higher than we had originally anticipated and, of course, with the weaker prices, we have not been operating in the black as we had expected we would.
I am digressing from the manpower situation. Certainly, there is a commitment on our part and I can assure the hon. Member that we will put that as our highest priority.
Mr. Lang: I can appreciate that. I can assure the witness that I will be pursuing that shortly on behalf of those people I represent who are presently unemployed.
I just want to impress upon the witness that the individuals I am talking about are very experienced and very good employees. I do not see why the jobs are not being made available to them.
The witness outlined the problem of not having direct control of the organization, because there was a contractor and, obviously, the contractor has certain rights as a direct employer, as well. There have also been some complaints about the very significant stripping project - providing all the finances are in place, obviously. It has some long-term consequences for employment. What is in place there in terms of local hire, because a number of us have had complaints that the local people are not getting the job opportunities?
Mr. Benner: I take it the hon. Member is referring to the Pelly Construction contract in Faro. Of course, we contract these services out because of the short duration. The contractor takes on the job on a bid basis for a fixed dollar. He has to achieve a profit out of that bid and accomplish the objectives he said he could accomplish. In so doing, certain pieces of equipment are involved in the stripping operations that require very specific and unique skills. I understand that the contractor has had to seek outside assistance through a firm that brokers people with those skill dimensions to come in on a contract basis, but it is also a Whitehorse-based, long-time Yukoner who has been awarded that contract. He is making every effort to employ any and all that he can from the Yukon. I would hasten to add that, both in our and his situation, one always has to temper their enthusiasm for hiring people just because they are local with the fact that the people have to be competent.
We concluded the negotiations for the contract for the Grum stripping project in March 1991. At that time, with our assistance, the contractor procured equipment that has been sitting out there at rigid attention for over a year. We have all been anxious to see it get going, including our employees. We have a lot of catch-up to do now, because we have lost a considerable amount of time on that stripping project. Every day we lose puts us that much further out and causes us problems and agony at the other end.
We are putting the emphasis on the contractor to meet these objectives. If he is able to, and perhaps do even better than what he said he could do, it would be in the long-term interest of Faro.
I do not like to enter into personalities, but I can speak to this one individual who controls that company. I have nothing but the highest regard for his credentials, both technically and from an integrity standpoint. I am sure that he will do the best for not only the Yukon, but for Faro and for Curragh.
Mr. Lang: While I share that view of the company and the owner of the company, because I know him personally, I also want to register our concern: the importance of giving the opportunity to local people. I am sure that the concern has been expressed to Members on that side as well. I want to make it very clear that all they want is the opportunity. There have to be the necessary skills to accompany the individuals so that they can do a competent job. If the job opportunities are not made available, then there are people, such as myself, who are put into the position of this kind of having to ask you questions. Quite frankly, I would prefer not to have to do that.
I just want to conclude my portion of the discussion on this item by impressing upon you how important it is to the territory, especially if we are being asked to provide direct financial assistance through loans, and that type of thing, for the project.
Mrs. Firth: I would like to ask the witness a question about the wording in the agreement. I believe it refers at all times to the stripping program as a pre-stripping program. Could the witness tell us exactly what that means. Is there any difference?
Mr. Benner: Yes, it is a technical-terminology difference. Pre-stripping is the actual stripping that takes place before one actually gets into mining operations. The term stripping is used when one is into operations and mining ore and stripping waste at the same time. It is a rather moot difference.
Mrs. Firth: That is what I anticipated. I guess the $10 million - $5 million and $5 million - is really just paying for a pre-stripping program, so we are not actually mining yet. The real mining would take place after the summer. How long is the pre-stripping going to take?
Mr. Benner: The mining has commenced. There is a very minute difference between pre-stripping and stripping, but the stripping of the Grum deposit has already commenced. It is currently ongoing at about 35 to 45 thousand tons a day.
The project actually started on or about April 16. They are now moving earth and rock. Prior to that, they were doing some ramping construction, de-watering, moving snow, and things of that nature.
It is very clearly defined in this agreement with the Yukon territorial government that all monies that come forward in the $5 million loan are specifically for the purpose of stripping Grum. These funds are not to be used for any other ancillary services, if you will.
Related to that are such items as the trucks and camps for the people who are doing the stripping, but it is specific to stripping Grum.
Mrs. Firth: Could the witness tell us how much concentrate is sitting around at any given time, and what the value of that would be, because that is what our security is supposed to be?
Mr. Benner: For example, I can use last month, where there was in the order of 120,000 tons of concentrate sitting either at the site or at the docking facilities in Skagway.
At any given point in time, we have probably between 10 and 20 thousand tons of concentrate at the site itself.
On average, we have 50 to 60 thousand tons of concentrate sitting at Skagway, waiting for shipment.
Our forecasts over the next year and one-half indicate that it will be as high as 103,000 tons at the port and as low as 25,000 tons, with a nominal amount of 10,000 tons, at the site.
Of course, there is the amount of concentrate in what we call a pipeline, in other words, it is being moved out from Skagway and being shipped overseas. There is also a certain quantity on the trucks.
Mrs. Firth: It is reasonable to see why you cannot put a dollar value on it, because there are various amounts. However, if the witness could provide us with this information, we would appreciate it.
I would also like to ask some questions about the payback plan. Perhaps I will let the witness answer that one question first, and then I will get into a series of other questions.
Mr. Benner: I apologise for not answering the second part of the question. It can easily be seen that the receivables could run from $15-20 million up to $70-80 million, or even $100 million.
Mrs. Firth: With respect to the payback plan, the loan YTG has given to Curragh is a demand loan and it is at prime plus one-half percent, as I said before. I am sure they have other outstanding debts with higher interest rates and, if this one is a favourable interest rate, I would like to ask what the incentive is to pay YTG back first. I would also like to ask the witness if he could give us some indication of exactly what the payback plan is - when do they plan to start, when do they plan to have it finished - or are they just going to wait for the government to demand it?
Mr. Benner: It is the companys intent to pay back the loan as quickly as possible. It is not our intent to be carried on the YTG books in any way, shape or form if we do not have to, and I think that can be demonstrated by the companys performance in the past with respect to previous government loans.
As I mentioned earlier at the outset, we did not wish to go to the government, cap in hand, for the Grum stripping funding. We seriously exercised all options with respect to financing by other means, but unfortunately they did not support us.
With regard to the interest rate, we have one major loan. There are no debts on the Faro operation. We have about $130 million U.S. unsecured in a general debenture; not in a mortgage form.
Mrs. Firth: Could the witness indicate to us why it was a loan and not a loan guarantee?
Mr. Benner: If I may, I think that question may more properly be answered by representatives of the government.
Mrs. Firth: Perhaps the witness could indicate to us whether Curragh approached the government, asking for a loan or a loan guarantee. We were under the impression that it was a loan guarantee that bad been requested.
Mr. Benner: We initially approached the government for a loan. Upon reflecting on that, we reapproached for a loan guarantee.
Mr. Lang: There is $5 million being requested here, with an additional $5 million being provided by Curragh Inc. That will be a total of $10 million. I was under the impression that once the $10 million was spent and that portion of the stripping of the deposit had been done, there would then be access to ore that could be processed and, conceivably, the cash flow from that ore would pay for the continuation of the stripping project. Can the witness confirm or add something to that? That was my initial understanding.
Mr. Benner: The $10 million will substantially get us underway in the stripping of the Grum deposit. The initial program will probably release very quickly about 200,000 tons of ore, because of the configuration of the deposit in the Grum area. However, after that, it will be an extensive period of time before we release ore on a basis that substantially will fill the needs of the concentrator on a 400,000- to 420,000-tons per month basis.
The $10 million will only release that 200,000 tons of ore, and then they will stockpile that material with the intent of running it on a campaign basis through the mill while we are continuing to strip until we release the top of the ore at a level that will substantiate the mills requirements at full levels.
To answer your question directly, no, the $10 million will not get us into a full production mode where the Grum, as a deposit on its own, would be able to generate sufficient cash to continue forward with the balance of monies for the stripping funded by that deposit.
Mr. Nordling: I would like to go just a bit further with the five and the five. The relationship with the Bank of Nova Scotia is not clear to me. Perhaps I will ask a series of short questions, rather than go on and lose my train of thought.
The $5 million provided by Curragh Inc. is coming from the Bank of Nova Scotia. Is that correct?
Mr. Benner: No. The $5 million from Curragh Inc. is money that is coming from Curragh Inc.
Mr. Nordling: What is the relationship between the Bank of Nova Scotia agreement and the loan agreement with the Yukon government?
Mr. Benner: Again, I will have to show my ignorance with respect to this agreement. The relationship is essentially the collateral and support that is required, but I cannot explain it to you in detail. I would again undertake, if the Members so require, to provide you with the detailed information through the Premiers office.
Mr. Nordling: Perhaps, when we discuss it further, I will get that information from the Premier. My reading of the agreement is that there is a credit agreement with the Bank of Nova Scotia, and Curragh can request a maximum of $20 million from the Bank of Nova Scotia under this agreement. I do not know whether the witness is aware of that specific clause, or whether he knows the agreement that well, but I just looking at the worst-case scenario.
We talked about having $15 million to $20 million worth of concentrate available at any time and, if the Bank of Nova Scotia has first claim to $20 million, then the $5 million loan by the territorial government really would not be secured by any concentrate. I do not know whether the witness can answer that or not.
Mr. Benner: If that hypothetical situation were to occur, there are additional securities on the property for the YTGs monies in the body of the agreement by way of the stockpiled ore, which can be processed to supply the funds through the concentrate that results from the processing of that ore.
Mr. Nordling: I understand that, and I see that there is another line that speaks about a maximum of 65 percent of the value of the net amount of eligible concentrate. My understanding is that this is secure enough with respect to concentrates, so that the security for the government is concentrates.
If Curragh Inc were to be unable to pay the loan and we seized the concentrates, what could the Yukon government do with those concentrates to recover our cash?
Mr. Benner: I would suggest that you would sell them to any one of our customers.
Mr. Nordling: We do not know how these things work. The witness talked about the efforts that had to be made by Mr. Frame and Mr. Penikett to secure contracts - the need to deliver on schedule and these amounts. It does not seem to me that someone without much expertise, but with a pile of concentrates in Faro, would be able to unload them anywhere if these smelters are dependent upon operating on a schedule with a certain and secure supply.
Mr. Benner: I am certainly sure that there would be a number of interested parties who would be more than happy to brokerage the concentrates for you. They have more than the expertise necessary. In addition, this whole agreement is embarked upon on a basis of going forward in the Yukon. It is in the best interests of the Yukon, and you have my assurance that Curragh Inc. will do everything in its power to ensure that that would be marketed correctly for the YTG.
Mr. Lang: I would like it perhaps a little mre clear if I could, because I want to get it clear in my mind, and on the record, exactly what we are speaking about here.
First of all, I have to agree with the witness, I prefer Curragh Resources to Curragh Inc., but I gather that is history, in any event.
From what I understand, the witness is telling us that after the $10 million has been spent, we will be at a stage in the deposit where some ore can be stockpiled, but we are not in a situation where that particular amount that has been stockpiled can continue to pay for the continued advancement of the stripping project. Is that correct?
What I want to know is: what money must be spent before Curragh can pay back the loan while operating the mine? Are we talking about $40 million, $30 million, or something else?
Mr. Benner: We are estimating at this time something in the order of $40 million. Now, all of these factors are dependent on prices. The prices have certainly taken a little bit of an up-tick in the last couple of weeks, and we hope that trend continues.
We have gone forward in our expectations, based on certain prices. We have forecasted that certain prices would take us to a certain point in the stripping.
In 1992, in our mine plan budget, we estimated that after a $40 million expenditure level, with pricing in the 55-cent range for zinc, and in the 25-cent to 27-cent range for lead, we could then continue the balance of the stripping with the cash that is generated from the operations. In essence, the $40 million is going to take us into the range that is required to be self-supporting.
Mr. Lang: To get it clear in our minds, the $5 million - the $10 million in total, but the $5 million from this particular body - is just 25 percent of the full amount that has to be spent. My question has to be this: I understood negotiations were actively taking place last fall with the Government of Canada; then it was announced, approximately two months ago, that they were discontinued and that there were no more negotiations. Are the actions being asked of the Legislature the reason negotiations with the federal government have started again?
Mr. Benner: Firstly, to the best my knowledge, there were no active negotiations last fall. To be more specific to the hon. Member, we commenced discussions with the government groups in the middle of December, because it took us until then to realize that all the efforts we were making to raise the necessary financing were not going to take place in the time required. We had some serious time constraints approaching us, in that we should start our stripping on January 1, 1992 in order to get a full balance between 1992 and 1993 without any shortfalls or gaps in the ability to produce the ore for the mill.
With regard to the questions on the discontinuance and then the recommencement of discussions with government, discussions between my company and the federal government have been ongoing since about the middle of December 1991. With regard again to the state of those discussions, I do not believe it is my place to comment at this time.
Mr. Lang: Hypothetically, in a worst-case scenario, if the federal government decides they are not going to provide any loan guarantees or loans for the stripping project, my concern is that we, in this Legislature, will be approached for more money.
Mr. Benner: With all due respect, was that a question or a statement? Was that a question put to me?
Mr. Lang: Yes.
Mr. Benner: We are currently undertaking to look at several means and ways of raising the financing necessary to complete the stripping. Certainly, we have expectations and hopes that we will be able to do it through government backstopping, and we are looking at other avenues. We are not confining our energies to one source of support. However, it would be purely speculative to say that, and it is not for me to say.
Mr. Lang: I just want to explore this a little further. A concern I have is that, obviously, it is an interim step that is being asked of us here. As I said, 25 percent of the project will be completed with an expenditure of $10 million. There is a certain amount of risk involved here, because we have not arrived at the objective - namely to get the stripping done so you can mine the deposit.
My concern is the fact that we do not have a full package together to see the end of the project. When you talked about the time lines in reference to the questions from the Member for Riverdale South, you said the $10 million would be for roughly four months to just do the stripping. What time line are we looking at for you to have your financing in place to continue after the fourth month? Are we talking about the fourth month, or 60 days from now, at which time you will be in a position to announce to us and the public - as you are vital to our economy - what is going to take place after September?
Mr. Benner: There was quite a bit in that statement. I am not sure that I can sort it all out. If I understand your questions, on the first point, I would say that there is no risk to the present loan. It is well-secured and is founded on a non-revolving basis and a demand note. There is sufficient concentrate inventory on an ongoing basis, and there is a sufficient stockpile inventory at the mine, in raw feed, to adequately cover the loan by a factor of five.
Beyond that, and where we will be four or five months from now, is a very good question. I would have to say, as I have said several times this afternoon, that it is our hope - and all our energies are going into seeing that this hope comes to fruition by way of hard work - that we will be able to secure the financing. Through whom, and by what mechanism, is not entirely clear. Without trying to evade your question but, at the same time, being confidential about certain things - discussions that are ongoing in Asia, et cetera - there are other ways and means that we are exploring.
Dare I say that I have to introduce the subject that one of our other assets - a very valued asset - is still currently for sale. We do not choose to do that but, if necessary, it would be the next item to be liquidated in order to ensure that the Yukon project goes forward. I am referring to Westray Coal. Our intent is to continue to operate in Faro and in the Yukon.
Mr. Nordling: Can the witness tell us any more about the credit agreement that Curragh signed on December 20, 1991, with the Bank of Nova Scotia which, according to the agreement, sets out terms and conditions under which the bank would lend money to the borrower? I would like to know what role the Bank of Nova Scotia is playing in this pre-stripping of the Grum deposit, or is that credit agreement for something like an operating loan?
Mr. Benner: Without having the specific agreement in front of me, I can only talk in general terms. The credit agreement is essentially to allow for an ongoing line of operating credit with very specific covenants and restrictions upon us. I am afraid that I cannot get involved with the details that surround all of that. Again, I would be more than happy to give an undertaking to provide information.
I am not the chief financial officer of the company and I do not possess within my head, all of the facts, figures and various covenants.
Mr. Nordling: Perhaps, the Government Leader will have that information and we will not need to bring it back.
I would like some clarification of the relationship between the YTG loan and the credit agreement with the Bank of Nova Scotia, how they interrelate and which takes priority in the event that things do not work out as we hope that they will.
Hon. Mr. Penikett: I will say very quickly, we would not be in a position to make available a contract or an agreement between Curragh and its bank. Curragh would have to agree to provide that information; the government cannot agree to provide that information.
Mrs. Firth: I would like to ask a question of the witness. The way that the negotiations started and were perceived to be between Curragh and YTG without other Members of the Legislature having any access to the information, until after the fact, was a rather controversial issue.
In the event that Curragh is going to approach the government again with respect to perhaps obtaining more loans or more loan guarantees, would the witness be prepared to come back and make a presentation to our Assembly, prior to any arrangements being made so that we have an opportunity to participate firsthand in the process.
Mr. Benner: Being ignorant of the way business is conducted in the House - if that is even the proper term, referring to it as the House - I can only say that Curragh would undertake to explain whatever and whenever it can at the bequest of the government.
Mr. Phillips: I just have a couple of questions. They go back to the witness description of Curraghs overall viability. He talked earlier about liquidating some assets to make the operation more flexible. I am wondering if, in some of his considerations, the witness has considered liquidating the Sa Dena Hess project at all? I know it is a newly opened mine, but all these things cost money, and I wonder whether that alternative has been examined and whether there are any plans in the future to liquidate that project?
Mr. Benner: It is not our intent to liquidate any assets we have in the Yukon. By way of a more detailed explanation with regard to the Sa Dena Hess operations, it is a new deposit that has just been opened up; it is very early in its development; it has technically been very, very successful. There are some economic strains on it currently, but I believe that, given the right set of circumstances, we will overcome those. It is a short-duration operation at the outset; it is a project financed by the Bank of Nova Scotia through a project financing arrangement so it has some very strict covenants attached to is. Because it is of short duration - eight years - although I have to add a caveat to that, which is that we feel there is sufficient mineralogy in the area to lead us to believe we will have many, many years beyond the eight in Watson Lake; nonetheless, it would not be in our best interest to liquidate that asset. It is not our intent, at this time.
Mr. Phillips: The witness says that the life of the Sa Dena Hes mine is eight years. Is that taking into account the concentrate they are mining now? Some people have said that the mine is into some fairly high grade concentrate and that near the end of the eight years it will be getting into lower and lower grade concentrate. Is that the overall projection of that mine? Will it run for eight years with the existing projected prices of lead and zinc as they are today?
Mr. Benner: The life expectancy of the mine, of course, is dependent on the economics of the situation but more fundamental to the life expectancy of the mine is the ore reserves. The reserves that are in the four deposits, as we know them today, in the Sa Dena Hes joint venture area, are sufficient to sustain operations from eight to nine years.
Of course, we intend to do more exploration work and more definition on those reserves. We are quite hopeful that we will be able to expand the reserves and sustain the life of the operations. It is ore reserve dependent.
Mr. Phillips: The witness indicated that the costs were a little higher than expected at the current time. Can he tell us if the mine is actually drawing down on the corporation? Is the mine actually making money at this time? If it is not making money, when does he expect it to turn the corner and provide income to Curragh so that it will not draw down on all of Curraghs resources?
Mr. Benner: Our most official statement would be the first quarter results of 1992. These results will clearly indicate that it is drawing on Curraghs resources, and we hope we see the light. We are better than half-way through the second quarter, and things appear to be coming into focus. However, until the end of the first quarter of 1992, it was a drain on Curraghs resources.
Part and parcel to that was the running of a camp and a fly-in arrangement. However, as you know, we have made a commitment to move toward housing in Watson Lake, and that is part of the reason for the higher costs, but only part of the reason.
Mrs. Firth: I have some final comments to make as a follow-up on the request of the witness to come back to the Legislature prior to any arrangements or deals being made.
I have to say that I think Curragh has a good reputation with respect to providing information to the public. Curragh has made itself accessible to the media and the Legislature, if we have questions. I would like to encourage Curragh Resources to continue with that kind of open, cooperative relationship, so we are able to easily access information from them.
Does Curragh have any specific policies with respect to communication or public relations programs? Do they have any policies with respect to dealing with the local media and people regarding local issues?
Mr. Benner: That is a loaded question, when it comes to the policies of corporations in dealing with the media. As I am sure Members no doubt know, we have our fun moments with the media - I guess we all do - but in the last six or seven months we have tried to open up the lines of communication. We were, I understand, criticized in the past for perhaps not being as informative as we should be. We have moved one of our human resource people - our most senior human resource person in the Yukon - into Whitehorse to serve as district director of human resources. This particular person has a multi-answering role, in that he responds to me and also to the vice-president of administration, who looks after public relations in Toronto, and to the site operations managers for human resource needs. It was our intent by making that move to ensure that that person would open up the lines of communication with the government, the communities and with the press.
Chair: Order please. We are running out of time. Does any other Member wish to ask a question?
Hon. Mr. Byblow: I was providing the opportunity for Members to raise all the concerns and questions they had, but I do have a couple of questions that are in follow-up to those raised by my colleagues across the floor. I want to say also that the Curragh mine is in my riding, which is of uppermost importance to my constituents, as well as of importance to the territory, so I want to extend a special welcome to Mr. Benner.
Going back to the witness earlier remarks: he talked about liquidating assets and referred to the Sherritt Gordon and to Asturiana de Zinc, the smelter. Mr. Benner talked about the funds that were raised from that being required to maintain the stakeholders in some measure of liquidity. In more layman terms, what happened to the money from that sale?
Mr. Benner: I will talk in round numbers. Something in the order of $60 million was injected back into the company. To put things back into perspective, what we are really talking about is working capital - and that is cash - to sustain operations.
At the commencement of January 1991, Curraghs cash position was in the order of $80-85 million. That was the working capital that we had. At the termination of 1991, and just prior to the conclusion of the Asturiana de Zinc deal, the company was down to $8 million. To put that in perspective, that $8 million represents about 72 percent of the operating budget for one month in Faro or, in simpler terms, about three weeks. That is a little tight to the line, so to speak.
The monies that came back in through the unwinding of Asturiana de Zinc have put us in a working capital position in the order of about $80 million again. Those monies have to be protected and safeguarded for the purposes of seeing that the operations in the Yukon are sustained.
It will protect us against any possible further price failure or softening of the price - which is perhaps a better term - or anything else that comes up that is unforeseen. It is protection that we believe is required for our stakeholders. Our stakeholders would be debtors, employees, communities of the Yukon, our customers and our shareholders. It is a host of people. Our debt-to-equity ratio was, at the end of 1991, 1.4. That is probably 10 times greater than any of the other major mining firms in the country. For example, the debt-to-equity ratio for Placer Dome was probably between, I do not know, 0.2 or 0.3. Ours is 1.4. It is probably one of the highest of the major mineral producers in Canada.
The purpose of retaining that liquidity and working capital is to ensure the sustained operations in Faro. In 1991, Curragh consumed a tremendous amount of cash, as I just mentioned, by continuing to operate in a very low price period. The price was extremely low.
We lost some $30-odd million on operations in Faro alone. It may have been an easy way out - from a pure business, dollars-and-cents standpoint - to put the operations into a state of abeyance, send everyone home, lay everyone off and wait for the prices to come back up, open up the operation and go forward.
In essence, mining an ore body in a low price period is using that reserve and getting very little in return, so one could say that we have been wasting the reserve. It is not a renewable reserve; you get it once and that is that.
We had many debates within our own offices in the corporation, as to whether or not we were doing the right thing, and I have to say that ultimately, the decision came down to one person and that person was the chairman. It was the chairmans wish to ensure that the operations in the Yukon were kept open.
Hon. Mr. Penikett: I would like to thank the witness, Colin Benner, president of Curragh Inc. for appearing before the Committee of the Whole today and answering questions of Members. He will no doubt take interest in the continuing discussions on this matter in Committee.
I would like to ask that we excuse the witness and report progress on Bill No. 52.
Mrs. Firth: Before the Government Leader makes that motion, I would like to extend our thanks, on behalf of the Opposition Members, to Mr. Benner, the president of Curragh Inc., for appearing as a witness today.
I found some of the information provided to us to be extremely valuable.
Hon. Mr. Penikett: Mr. Chair, I move that you report progress on Bill No. 52.
Motion agreed to
Hon. Mr. Webster: I move that the Speaker do now resume the Chair.
Motion agreed to
Speaker resumes the Chair
Speaker: I will now call the House to order.
May the House have a report from the Chair of Committee of the Whole.
Mr. Joe: The Committee of the Whole has passed the following motion:
THAT, at 4:00 p.m. until 5:25 p.m., Mr. Colin Benner, president, Curragh Resources, appear as a witness before Committee of the Whole during debate on Bill No. 52, Faro Mine Loan Act.
Further, Committee has considered Bill No. 33, entitled Registered Nurses Profession Act, and Bill No. 47, entitled Yukon Advisory Council on Womens Issues Act, and directed me to report them without amendment.
Further, Committee has considered Bill No. 19, entitled Miscellaneous Statute Law Amendment Act, 1992, and directed me to report it with amendment.
Further, Committee has considered Bill No. 52, entitled Faro Mine Loan Act, and directed me to report progress on same.
Speaker: You have heard the report from the Chair of Committee of the Whole. Are you agreed?
Some Hon. Members: Agreed.
Speaker: I declare the report carried.
Speaker: The time being 5:30 p.m., this House now stands adjourned until 1:30 p.m. Monday next.
House adjourned at 5:30 p.m.
The following Sessional Papers were tabled Thursday, May 7, 1992:
Community Contracting Policy: How to Apply (McDonald)
Self-Government: Qualitative Research Findings - April 1992, Report by Viewpoints Research (Penikett)
The following Legislative Return was tabled Thursday, May 7, 1992:
Severance package re: Former Deputy Minister of Economic Development (Penikett)
Oral, Hansard, p. 11