www.pwc.com/ca/plannord Destination Plan Nord Capturing the mining potential of Northern Quebec

Nochane Rousseau Partner and Quebec Leader, Mining and Plan Nord Initiative

PwC’s Americas School of Mines May 15, 2012 • Population: 8 millions • Mainly French speaking What is Plan Nord?

PwC 2 Agenda

1. The Quebec Mining Industry 2. Why Plan Nord? 3. Infrastructure Needs 4. Société du Plan Nord and Investissement Québec

PwC 3 The Quebec Mining Industry

PwC 4 Mining industry Driving Northern Quebec development

• Accounts for over 34,000 jobs in Quebec, of which 10,000 are located in the Plan Nord territory • Quebec ranking in Fraser Institute Survey: 5th place (2011 – proposed new mining act), 4th place (2010 – changes to the mining duties) and 1st place (2009) • Territory comprises four regions well-known for their geological features: • James Bay region: gold, diamonds, uranium, zinc and copper • Nunavik: nickel and copper • North Shore and Labrador Trough: iron, copper, zinc and nickel • Saguenay–Lac-Saint-Jean: niobium and tantalum

PwC 5 Mining industry Driving Northern Quebec development (cont’d)

27 Active mines: $8.1B – value of deliveries in 2011

37 Projects in evaluation and development

PwC 6 Quebec is competing with the major mining regions across the world

• Skilled labor • Global expertise • Geological database • Economic and political stability • Size of the territory • Large and diversified mineral potential • Clean and affordable energy (hydro) • Abundant water • Plan Nord!

PwC 7 Why Plan Nord?

PwC 8 “Plan Nord has been elaborated to take a stance in this new world, further broaden Quebec’s approach centred on openness to the world and strategic alliances, and develop our economic potential through a sustainable development partnership that respects First Nations, the Inuit and local communities.” Jean Charest Premier of Quebec

PwC 9 A unifying vision

“Plan Nord must be an exemplary sustainable development project that integrates energy, mining, forest, bio-food, tourism, and transportation development, the development of wildlife, environmental protection, and the preservation of biodiversity. It will foster development for the benefit of the communities concerned and Quebec overall, in a spirit of respect for cultures and identities.”

PwC 10 Why Plan Nord?

• Economic development project • Develop Quebec’s resource potential and respond to China and India demands • Decrease Quebec dependency to its principal business partner (US) • Plan Nord may be an antidote to economic slowdown (e.g. 2008) • Strategic occupation of the territory • Arctic (high potential for natural resources) • Northwest Passage

PwC 11 Quebec’s Development

Locality Mines (M) Airport Hydroelectricity (H) Hydroelectric station Hydroelectric lines Forestry (F) Roads Agriculture (A) Northern limit for commercial attribution of wood Next 100 years (M)

Actual (MH)

100 years (MHF)

200 years (MHFA) JM Lulin, Azimut Exploration, 2010

PwC 12 Area covered by Plan Nord

• North of the 49th parallel • 1.2 million km2 – Almost twice the size of Texas! • 72% of Quebec’s geographic area • Less than 2% of Quebec’s population

PwC 13 A vast territory to discover

A bright future with promising projects for Aboriginal and local communities: • Over 120,ooo people (including 33,000 Aboriginals) • 4 Nations: Inuit, Cree, Innu and Naskapi • 32 Communities located in the James Bay, Saguenay and Côte- Nord regions

PwC 14 Development of economic potential

• Energy Broader economic activity will • Mining impact Quebec as a whole • Forest • Over $80 billion in public and private • Wildlife investment in the Plan Nord territory: • Tourism – $47 billion from Hydro-Québec (HQ) in renewable energy development • Bio-food  Develop an additional 3,500 megawatts of clean, renewable energy  Connected and not connected projects to the HQ power grid – $33 billion in mining and public infrastructure sectors

PwC 15 Mining industry Driving Northern Quebec development

At least 11 new projects are under development: • Generate over $11 billion in investments • Create 11,000 jobs in the construction phase, and nearly 4,000 jobs a year once in operation

PwC 16 Mining industry Driving Northern Quebec development (cont’d)

11 New projects Location Mineral ore Investment

Xstrata Nickel Nickel, Northern Quebec (Nunavik) $500M Raglan Mine, phase 2 Copper (Press release, August 2011)

MDN Saguenay– Niobium, $275M - $325M Crevier project Lac-Saint-Jean Tantalum (Preliminary Economic Assessment, March 2010) New Millennium Iron Corporation Côte-Nord Iron $360M DSO project (Feasibility study, February 2011) ArcelorMittal Mines Canada Mont-Wright and Port-Cartier Côte-Nord Iron $2.1B projects (Press release, March 2011)

Strateco Resources Northern Quebec Uranium $340M Matoush project (James Bay/Eeyou Istchee) (Preliminary Economic Assessment, April 2010)

PwC 17 Mining industry Driving Northern Quebec development (cont’d)

11 New projects (cont’d) Location Mineral ore Investment

Stornoway Diamond Northern Quebec Corporation Diamonds $800M Renard project (James Bay/Eeyou Istchee) (Feasibility study, November 2011) Canadian Royalties, a subsidiary of Nickel, Jien Canada Mining Northern Quebec (Nunavik) $800M Copper Nunavik nickel project Mine Arnaud Arnaud project (Yara International) Côte-Nord Apatite $750M (Website)

Xstrata Zinc Northern Quebec Zinc, $160M Bracemac-McLeod project (James Bay/Eeyou Istchee) Copper (Feasibility study, September 2010)

Metanor Resources Northern Quebec Gold $40M Bachelor Lake project (James Bay/Eeyou Istchee) (43-101 Technical report, April 2011)

Mines Opinaca, a subsidiary Northern Quebec Gold $1.4B of Goldcorp Éléonore project (James Bay/Eeyou Istchee) (Press release, February 2011)

PwC 18 Mining industry Driving Northern Quebec development (cont’d)

Other projects Mineral ore Attikamagen (Champion Minerals Inc.) Iron B-Zone (Quest Rare Minerals) Rare earths, yttrium, zircon Belleterre (Conway Resources Inc.) Gold BlackRock (BlackRock Metals Inc.) Iron, titanium, vanadium Duncan (Ressources minières Augyva inc.) Iron Eastmain/Rose (Critical Elements Corp.) Lithium Great Whale Iron (Niocan Inc.) Iron James Bay Lithium (Lithium One Inc.) Lithium KéMag (New Millenium) Iron, titanium, vanadium

PwC 19 Mining industry Driving Northern Quebec development (cont’d)

Other projects Mineral ore Lac à Paul (Ressources d’Arianne) Apatite MacLeod Lake (Western Troy Capital Resources Inc.) Gold, copper, zinc Lac Otelnuk (Adriana Resources Inc.) Iron Lac Tio (Rio Tinto Fer et Titane Inc.) Iron, titanium Langlois (Nyrstar Canada) Gold, copper, zinc Oceanic Iron Ore Corp. Iron PD1 (Xstrata) Gold, copper, zinc Vezza (N. A. Palladium Ltd.) Gold Whabouchi (Nemaska Exploration Inc.) Lithium

PwC 20 Infrastructure Needs

PwC 21 Plan Nord in numbers Actual transportation infrastructure in the Plan Nord territory

Type Infrastructures

1,190 km of rail lines making up the railway network Rail 5 private rail networks

4 of Quebec’s 10 largest ports by tonnage handled Marine Port of Sept-Îles is the third largest in Canada by tonnage handled

46 airport infrastructure elements, including 26 airports and 6 heliports Air (government administered)

51 000 km of logging roads Roads West region – concentrated within the James Bay/Eeyou Istchee region East region – Routes 138, 389 and 385

Hydroelectric 21 hydroelectric stations

2 400 public housing units (often overpopulated and require renovation) Housing Few owner-occupants in Nunavik (high construction and occupancy costs)

Source: Plan Nord, Building Northern Quebec Together, The Project of a Generation. Government of Quebec. 2011

PwC 22 Transportation infrastructures Hydroelectric infrastructures

24 Mining industry’s infrastructure needs

• At the beginning of Quebec’s new mining boom (around 2008– 2009), mining companies used the existing transportation infrastructure, mostly built during the 1950s to 1970s • This “historical” infrastructure is now being used at almost full capacity • The mining industry’s continued development in Quebec depends on the provision of new infrastructure • Contribution from public and private partners to fund investments for transportation infrastructure

PwC 25 Making Northern Quebec accessible

Projects already under way or This year, Quebec government will be pending: spending $51 million mainly on studies: • upgrading of northern airports • $10 million for Hydro-Quebec to • construction or rebuilding of four evaluate the feasibility of extending major roads the hydroelectric network towards Nunavik • studies for new deep-water port • $30 million for Gaz Metro to analyze • studies of possibly opening up the the possibility of extending its gas Northwest Passage pipeline to the North Shore • Caisse de depôt to work with Canadian National on a railway projet aimed at linking the port of Sept Iles with Kuujjuaq

PwC 26 Making Northern Quebec accessible (cont’d)

Examples of a public-private partnership between Stornoway and the Quebec government – Renard Diamond Project • Owned 37% by the Quebec government • $331.6 million for the construction of the Route 167 extension • Two separate agreements executed, Stornoway has agreed to: - Contribute $44 million, amortized over a ten-year period, starting in July 2015 and financed by Quebec at 6.3%. Partly conditional on: ◦ completion of the road on schedule ◦ receipt of all regulatory approvals for the construction of the Renard project ◦ successful completion of Renard project financing - Contribute a maximum of $5,000 per km, or $1.215 million per year, to the maintenance of the road during operation. • Other partners may also be called upon to contribute to the financing of this infrastructure

PwC 27 Société du Plan Nord and Investissement Québec

PwC 28 Société du Plan Nord

• To be created in 2012 • Proposed Bill n°27 : An Act respecting the Société du Plan Nord is currently under consideration by the Assembly • A government corporation to coordinate implementing Plan Nord by: • coordinating public investment in infrastructure and the social sector • coordinating the implementation of projects included in the action plan • negotiating financing packages for the projects it’s responsible for • acting as a key partner for local and Aboriginal communities

PwC 29 Plan Nord financial framework

Creation of Fonds du Plan Nord: • A special-purpose fund devoted to the Plan Nord • Innovative funding: • Will be funded by a portion of the tax revenues generated from economic activities carried out in Northern Quebec. These tax revenues will be collected from new mining projects, new Hydro-Québec projects and public infrastructure projects • Contributions that will be required from private and public partners to fund infrastructure built for their own use will also serve as a source of revenue for the Fund

PwC 30 Expected financing structure for Plan Nord

Source: Plan Nord, Building Northern Quebec Together, The Project of a Generation. Government of Quebec. 2011

PwC 31 Investissement Québec

• Investissement Québec is both a financial institution and an economic development agency of the Quebec government • $1.2B available for mining projects allocated to Investissement Québec for equity interest: - Capital stock - Convertible debenture - Joint ventures - Etc.

PwC 32 PwC Plan Nord Team

Engineering and Leader, Construction Plan Nord initiative Sonia Boisvert Mining 514 205 5312 Nochane Rousseau 514 205 5199

Infrastructure and Sustainability Project Finance Janice Noronha Richard Deslauriers 514 205 5693 514 205 5045

Government and Inuit and First Nations Public Services Marc-Stéphane Pennee Daniel Cadoret 514 205 5006 418 691 2433

Energy Client Relationship Marc Fournier Management 514 205 5201 Dominique Fortier 514 205 5150

PwC 33