CZN has an agreement with Deh Cho"If I were the Deh Cho I would not let this mine go ahead unless I had an equity stake in the operation. If an equity stake is given/sold the band will not only support the development of the mine but will realize the long term benefits that all CZN shareholders hope to see."
On December 10, 1996 the Issuer completed the negotiation of the Prairie Creek Development Cooperation Agreement with the Nahanni Butte Dene Band (the "Band") of the Deh Cho First Nations in the Northwest Territories. The agreement provides that in consideration for the Band providing financial assistance, quiet enjoyment, access easements, potential cost savings as a result of the Band's involvement, support for the project and assembly and provision of the Band's traditional knowledge in support of the project, the Issuer will:
pay the Band 5% of after tax net profits after repayment of the aggregate costs incurred in constructing access and bringing the project into production;
grant the Band an option to purchase 10% or 15% of the project for $6,000,000 or $9,000,000 respectively subject to adjustment for inflation and additional development costs, exerciseable within three months following delivery of a Bankable Feasibility Study and receipt of all major permits for the project; and
give the Band preferential access on providing contract services; being competitive as to price, delivery, capability, performance and quality.
Following commencement of production, the Band and the Issuer will jointly fund (a) the establishment of an education centre to a maximum of $150,000 and annual operating costs up to $50,000; and (b) a scholarship fund of $20,000 per year increasing to $30,000 per year following payback of all capital costs. In addition, the project will contribute $25,000 per year to a trust on commencement of construction of access to the project, to compensate traditional harvesters who are negatively affected by the project and the access.
The overall intent of the Agreement was to establish and maintain a positive and cooperative working relationship between the Company and Band in respect of the further development and operation of the mine, while at the same time supporting an economically viable and environmentally sound operation and maximizing economic opportunity and benefits to the Band and other DCFN. This Agreement foresaw the many benefits, which could accrue to the Band and the DCFN in conjunction with development of the road and mine, and made provision for maximizing opportunities to realize these benefits. To this end, the Agreement provides employment and contracting opportunities as well as equity participation for the Band and the DCFN.
On November 28, 1996 the Nahanni Butte Dene Band issued a Band Council Resolution stating that the Band on behalf of its membership "does fully ratify and endorse the Prairie Creek Development Cooperation Agreement" in which the Nahanni Butte Dene Band proclaimed its support for the Prairie Creek mine and the establishment of an all weather access road to the mine in recognition of the significant benefits to Nahanni Butte and the DCFN communities as a whole. The Agreement was supported as well by the DCFN by Tribal Council Resolution.
In the Agreement, the Band proclaimed its support for the mine and the establishment of the access road in recognition of the significant benefits to the Band and the DCFN communities as a whole, and undertook to assist the Company in procuring permits, approvals and licences necessary to bring the mine into production, as well as grants, guarantees or other financial assistance from Government towards the establishment of the access road.
The Nahanni Butte Dene Band issued a Band Council Resolution on May 18, 2000 in support of protecting the South Nahanni watershed, stating that "the Nahanni National Park Reserve was created without the consent or participation of the Deh Cho First Nations" and that the "Final Agreement should provide for the recognition of Deh Cho First Nations jurisdiction over the entire Nahanni watershed, including the Park or Park Reserve". On January 29, 2001 the Band issued a further Resolution rescinding their support for the Protected Areas Strategy for the Nahanni National Park Reserve watershed.
On January 17, 2002 the Band issued a further resolution reconfirming their support for the Prairie Creek Mine Project.
The problem is this
On October 10, 2003 an appeal to the Federal Court was filed by the Nahanni Butte Dene Band, Pehdzeh KI First Nation and the Deh Cho First Nations, against the Mackenzie Valley Land and Water Board and the Company seeking judicial review of the decision of the Water Board to grant the Water Licence to the Company. Filing of these proceedings by the Nahanni Butte Dene Band is in breach of the Co-operation Agreement. The Nahanni Butte Dene Band informed the Company that the Nahanni considers the Agreement terminated. Such termination is not in accordance with the provisions of the Agreement.