Assualt on Democracy

The PC government of Newfoundland and Labrador has completely lost touch with what it means to be living in a democratic society. The Charter of Rights, which safeguards our rights as citizens in Canada, states:

2. Everyone has the following fundamental freedoms:

(a) freedom of conscience and religion;

(b) freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication;

(c) freedom of peaceful assembly; and

(d) freedom of association.

That is everyone. Not just those that go along with the government's agenda, but those that disagree as well. The right to disagree, and oppose, is a fundamental right we all hold dearly, and for which our countrymen have fought to secure.

It seems that this idea of democracy is lost on the Newfoundland and Labrador PC Party. Whether it be Danny Williams firing of a woman from a regional economic development committee for poking fun at the size of his manhood, or Premier Dunderdale's assault on bloggers as "naysayers" for their opposition to the Muskrat Falls project, the Newfoundland PC Party has been waging a war with its own citizens.

Now today we have a new case in point. Fisheries Minister King announced that the provincial government was immediately freezing any further funding to the FFAW (Fisherman's union) because, to quote him:

“And to be frank with you, as I see it in the fishery in Newfoundland and Labrador, you’re either part of the solution or you’re part of the problem. And I see the FFAW right now as part of the problem...The union has received nearly $1.3 million in grant money from the province over the past five years for things like research, seafood marketing and fisheries technology programs.
That ends now...We’re putting a freeze on any further funding of projects for the FFAW until I’m convinced through a personal review that the projects that we support are of value and benefit to the industry in Newfoundland and Labrador, and not just to the FFAW...It’s very, very tough to build a working relationship with a group that continues to criticize...The FFAW can either work with us or stand by the side. We’re going to move forward, and we’re going to make changes that we feel are in the best interests of the industry. But we’re not going to spend much more time, frankly, having public debates every chance Mr. McCurdy gets to bash government because he doesn’t like something that’s happening in the industry."
The full CBC story is here: http://soc.li/AWdK5lb

The Newfoundland government has become the poster boy for undemocratic actions in Canada. Already the PC spin doctors in the social media are getting the message out that the fisheries union deserves to be cut off its research funds as it should have never had them in the first place. While some may agree with that, it does not address the issue of freedom of speech. What it does reinforce is the government's position that freedom of speech is only welcome when it is convenient. That people in Newfoundland only have the right to oppose when the government allows it. To do otherwise is to put yourself up for scorn and/or retribution. Just today the Telegram did an editorial on the very topic of speaking out at your own risk http://tinyurl.com/78v8kl3 .

In a country such as Canada, and in a province such as Newfoundland and Labrador, freedom from government retribution should not even be a topic of discussion. It should be, if anything, a thing of the past that our children study in school. Yet, it continues to be the prevalent attitude of a provincial government that is located in a country that builds institutes to promote democracy around the world. The Newfoundland PC government makes the case that what Canada really needs is a civil rights law, as is the case in the United States, that would allow criminal prosecution for the violation of civil rights. Clearly, this is one government that can not be trusted with the responsibility of exercising power in a mature way, and respecting the rights of its residents. It is a blight on Canada's democratic reputation.

The Tri-colour Dam

Muskrat Falls is about one thing only - money. That's not unusual in business. What makes Muskrat Falls so different from most modern business proposals is the sell. The sell, of course, is aimed at the audience - in this case the people of Newfoundland and Labrador that will be expected to pay for this "business development". The medium for the sell is Newfoundland nationalism.

My great - great -  grandfather arrived in Newfoundland from Ireland in the 1830's - along with many escaping the miseries of Irish life. His name was Micheal O'Meagre. He was from the same family as the man who created the Newfoundland tri-colour (old pinky) - Thomas O'Meagre. Thomas also created the Irish republican tri-colour. At that time it was a romantic notion that these nations would become republics in their own right. In Ireland's case that did become a reality. In Newfoundland's case it did not. Newfoundland went from being a British colony, to representative government, to financial default, to a province of Canada in 1949. Newfoundland was never a republic.

Yet, the tricolour can be found in many places in Newfoundland. Societies such as the "Smiling Land" foundation based in Toronto have it on their logo. When I asked Tim Powers, Newfoundland ex-patriot and VP of Summa, why his Smiling Land group had a republican flag on its logo he said:

"Smiling Land takes its name from the Ode to Newfoundland. That predates the current provincial flag. A connect with our history. "

Which would be fine except the question was:

"@powerstim Wondering why your Smiling Land group uses a republican flag on its emblem rather than the provincial flag? "

To the casual observer it would be an odd response to a specific question to Mr. Powers. However, the truth of the matter is Newfoundland nationalists wrap themselves in a faux history that eerily resembles the Irish blarney of their forefathers. Mr. Powers answer eludes to this: "..predates the current provincial flag."The tri-colour was never an official flag of Newfoundland at any time in it's 500 year history - never. Just like the rest of the rhetoric, the Newfoundland tri-colour never flew over Newfoundland. Never. It is the invention of a man that wished to see Newfoundland as an independent republic. Yet it is perpetuated as having some sort of historical, cultural relevance - which it does not.

Of course we've seen this in Canada before - Quebec. The "quiet revolution", and Quebec nationalization of industries. It really is no different. Quebec was never an independent country - let alone a republic. Yet, Quebec nationalists have perpetuated the myth of nationhood. They fought the federal government on every level, and an appeasing federal mentality allowed a narrow-minded nationalist movement to grow.

Adding to the Newfoundland nationalist mentality was the "humiliation" of having to become a province of Canada. You see Newfoundland only joined Canada after the "confederates" won a second referendum by about 7000 votes - the narrowest of margins. Even more telling was the fact that a massive majority in St.John's voted against joining Canada, while a massive majority in rural Newfoundland and Labrador voted to join Canada. Many historians attribute this vote result to the "Baymen" wanting to rid themselves of the "tyranny of the Townies". Over the years resentment about joining Canada by those opposed has taken on many different angles. Whether it be the devastation of fish stocks, or the lack of federal jobs. The sense that somehow Newfoundland has been wronged has become endemic in these circles.

Successive Newfoundland Premiers have perpetuated this myth through the years in an attempt, ironically so, to imitate the success Quebec nationalists have had winning concessions from Ottawa. This time around the spin is being used to sell Muskrat Falls. Whether it be Danny Williams:

 “This is a day of great historic significance to Newfoundland and Labrador as we move forward with development of the Lower Churchill project, on our own terms and free of the geographic stranglehold of Quebec which has for too long determined the fate of the most attractive clean energy project in North America,”

Or the current Premier, in her attempt to marginalize former Premier Peckford's public criticism of Muskrat Falls:

 "missive from afar...A debate that you have not been engaged in or public information sessions that you haven't participated in, it's difficult for me to deal with."

The message remains the same in Newfoundland nationalist circles: If you don't agree with where we are taking the province you are, to quote former Premier Williams, "traitors". The message is repeated over and over again to the public. Just as the Quebec government has perpetuated the myth amongst Quebecers over the last 40 years that Quebec can separate at any time, the Newfoundland nationalists perpetuate the myth that dissention equals disloyalty. Both are fallacies designed to achieve given ends. Both are a despicable abuse of public influence. In the old days we just called it as it was: propaganda. The latest battlefield of Newfoundland nationalism centres around Nalcor and Muskrat Falls. It won't be the last, and it isn't the first. The government's stated reasoning for the construction of Muskrat Falls is as phony as the tri-colour that they wrap it in.

Danny Williams Fantasy Land

Bill Vander Zalm, former Premier of British Columbia, had his entertainment park named Fantasy Land. Danny Williams has his own development named Glencrest Development - Newfoundland's own version of Fantasy Land.

Williams told the Telegram: “It’s something that I have been putting together for a good 15-plus years,” That would date it back to at least 1997. The Auditor General did an extensive study regarding the use of Crown lands, and the systemic problems with the administration of those lands. The study ended in September, 1999 http://tinyurl.com/7ltlgew . The study concluded many different problems with the lease, sale, and distribution of lands held by the Province - an estimated 95% of the Province's total land mass. Systemic issues surrounded record keeping, follow up on accounts receivable, numerous administrative gaps, and the value the land was being sold for.

The Auditor General's report sums up the change in land policy:

"Prior to 1996, the public could obtain a lease to occupy Crown land at an
established annual rate but normally title to the land remained with
Government. In 1996 Cabinet authorized the Minister of Government
Services and Lands to lease Crown land, with the exception of certain
lands, at 20% of the land value as determined by the Department over a
five year period with title to transfer to the lessee after the five years.
Cabinet also authorized the Minister to offer Crown lands to private
developers based on fair market value. The 1996 Budget Speech indicated
that the move to this new Market Value Pricing System, as well as a fee
increase, would generate approximately $6.2 million in additional
revenue for 1996/97. The Department projected additional revenues for
the five years ending 31 March 2001 at $15 million."

It further states:

"In response to this new pricing policy, the Department commenced a

process of reviewing all existing leases as the lease term expires with a

view to converting these leases to grants within the next five to ten years.

The Department established a pricing policy for residential leases for

$1,500 a lot, and recreational cottage leases for $2,500 a lot or $3,000 for a

waterfront lot. Lessees had to avail of this option by October of 1996 or

after this date the lessee would be required to pay fair market value. Fair

market values were determined based on such factors as selling of nearby

properties and professional independent appraisals conducted mainly by

the Municipal Assessment Agency and Departmental staff...

Since the new pricing policy came into effect in 1996, a total of 177 commercial leases have been issued. Commercial leases which exceed 20 hectares must be referred to Cabinet for approval. There have been 6 commercial leases of this type since 1996 all of which were approved by Cabinet."

Of course, the clincher in the Auditor General's Report was:

"The Department has also developed several recreational cottage lot areas

since 1996. We were informed that pricing policies for recreational

cottage lots are established at fair market value with a minimum price of

$2,500 a lot or $3,000 for a waterfront lot plus development costs. The

Lands Division could not readily provide us with a listing of cottage lot

developments with the number of developed lots, status of lots, associated

costs and revenues."

Contrast the Auditor General's comments in his study of land use policies, and the departments own established pricing guides for lots, to the price Danny Williams paid. The Business Post puts it like this:

"Williams obtained the first parcel, some 557 hectares, in October 1998

for the sum of $425,000. That works out to just over $300 an acre.
Another parcel of 44.6 hectares, or 110 acres, was conveyed to a numbered company owned by Williams called 10801 Nfld. Inc. for $64,030. That equates to $581 an acre and happened on November 5, 2003, just weeks after Williams led the Progressive Conservatives to his first majority victory in a fall election."

The obvious question is how did Williams manage to purchase 601.6 hectares of Crown land for an average of $329 an acre - not lot, acre. To put the enormity of this deal in perspective, consider that even removing 50% of the land for infrastructure use, the sale of this property today by individual building lots alone could realize Williams $600 million dollars. That is quite the profit in just over 12 years. Then there is his potential cut from developer Kevin King.

The answer to Williams getting approval of his land purchase was Brian Tobin. Brian Tobin, Liberal Premier at the time, presided over the massive land grab - which required Cabinet approval. On July 2, 1998 then Municipal Affairs Minister Ried announced the sale. The Business Post contacted him recently for an interview on the issue. He had this to say:

"That went to cabinet and I can’t say who did what or what the procedure was, I have no idea. All I know was it came to cabinet and that’s where it was approved. No minister at the time had the right to do that… You’d never find yourself in a situation where you’d put yourself in a conflict like that. It was a deal and the deal went through cabinet and it was sold to Danny Williams.”

Of course Williams has to get provincial approval to develop the land as it is over the 190 contour. Essentially, land this high requires special pumping systems for water and waste, because forced gravity systems do not function at this elevation. That is the reason why the province has banned such developments. However, as Williams himself noted, Mount Pearl and Paradise are both above these contours, so he doesn't expect any impediments to approval.

As if to reinforce that belief, St. John's Mayor Dennis O'Keefe states:

“The second meeting I came away again equally confident that the amendment would be forthcoming and that there would be development above the 190. Kevin (O'Brien) indicated to me he probably would have to take it to cabinet because it would be a change in policy and rather than sign off on the amendment himself, which he had full rights to do, that his preferred way of dealing with it would be to take it before cabinet. And I said well that was fine, I was quite happy with that, but I hoped that it would be done in time to allow development toward the end of March. And he felt, yeah that could be done and he would prepare a cabinet paper on the issue very quickly and bring it before cabinet and he felt that would be done in a timely fashion to allow developmentostart around the end of March."

Of course, in keeping with Newfoundland politics, Mayor O'Keefe freely admitted he received political donations from Williams old law firm, and Williams own son of over $10,000 for his mayorality campaign. Even Kevin King chipped in as well.

In so far as the former Premier's war cry of "no more giveaways" of Newfoundland's natural resources goes, well, I guess that doesn't apply to Danny Williams' Fantasy Land.

The Real Muskrat Falls - Conclusion

"All that is necessary for the triumph of evil is that good men do nothing." Edmund Burke

The real truth about hydro power in Newfoundland and Labrador is it's not where it's needed. According to the Manitoba Hydro Report, just released, on the Muskrat Falls project fifty percent of the power consumed in Newfoundland and Labrador is residential in nature  http://tinyurl.com/6q7hyns  It is insightful, therefore, to know that this province is undergoing an aging tsunami like no other place in the western world has seen yet - but will.

During the period between 1985 to 1995 well over 150,000 Newfoundlanders under the age of 23 left the province. It created a massive hole in the demographics of the province, and it was inevitable that such a loss would reverberate in the future. The future is now. Using normal/average population loss/gain trends and a very optimistic birthrate of 1.3 Newfoundland and Labrador's population will decline to approximately 430,000 people within the next 19 years. If birthrates continue to decline, which is almost a certainty, the population could easily drop to 400,000 in the same period. Unfortunately, Nalcor has used population projections provided by the Newfoundland government that are nowhere near correct, and in fact show an ever growing population into the future.

Given the reality that the population will decline, as it must with such an exodus in the 1980's and 1990's, it is prudent to assume that residential power consumption will also decline - drastically. Also, given the fact that over 90% of the population lives on the island of Newfoundland, and not in mainland Labrador, that power consumption decline will be most radical in Newfoundland itself.

The strategic problem for Nalcor, and the provincial government, is that the island has a surplus of power generation capacity and declining consumption, while Labrador has a minor surplus but potentially exploding demand. In 2010 Nalcor negotiated an agreement with Hydro Quebec to "wheel" its recall power from the Upper Churchill to the US market place for five years, rather than use that power in Labrador where there is currently no overriding demand. In a possible rehearsal of the Muskrat Falls deal, Emera is receiving that power and selling it into the marketplace. The first quarter's results of this practice were large financial losses and Nalcor has not released any further numbers since.

The problem for the Newfoundland and Labrador government, like that of the Quebec government (ironically), is how to open up the northern areas of the province for key mining developments. Newfoundland has its Upper Churchill dam "captured" by Hydro Quebec until at least 2041, and will not negotiate with Hydro Quebec despite the fact Hydro Quebec had a surplus capacity of 5000MW of power in 2010. An obvious strategic alternative for the government of Newfoundland and Labrador would be to enter into a long term agreement, say to 2041, with Hydro Quebec to supply roughly 700-800 MW of power to future mining operations in Labrador. That would eliminate the need for the province to go into any further debt over hydro, and would establish the infrastructure for mining operations going into 2041 and the repatriation of the Upper Churchill to the province. Is it a case of cutting your nose off to spite your face?

Or is it a case of vested interest close to the government not making enough money personally off that kind of arrangement. As detailed, in previous parts to this series, political and business families interests have been interlinked between the development of Nalcor as a crown corporation, the development of the Lower Churchill, and development of the Labrador mining industry. In each and every case these individuals, regardless of political stripe (yet they are all very political), have become wealthy on this process. Whether it be through stock options, appointments to chairs of boards, or often secretive, but real non-competitive government contracts, these circles have managed to grossly enrich themselves. The kicker is it often, if not always, comes at the expense of the people of Newfoundland and Labrador.

The financing of the Muskrat Falls project will be no different. To be clear, I have requested Nalcor supply me with the proposed financing strategy for the project. They have refused. I requested the same information from Minister of Natural Resources Jerome Kennedy, and have been refused. So what I'm about to put together here is from the information known, the business practices of those involved, and the project itself.

In 2005, at the request of then Premier Danny Williams, and announced by his chosen Chair of Nalcor Dean MacDonald, the province requested Expressions of Interest (EOI) for development of the Lower Churchill. It accepted separate proposals for actual construction and financing of the project. Three proposals for financing were accepted for further scrutiny. Two were foreign based and one was Newfoundland based. That was the last we heard of it. There has been no further public release of information, despite the earlier releases. The internal Nalcor process for project decision making has past "Gateway 2", by which time a decision narrowing the project financing options was to have occurred - yet no public release of information.

Then in 2011/2012 we saw key players of Danny Williams, himself included, leave the government and Nalcor to become directly involved in Alderon's mining prospect Kami. The same Alderon that is 40% owned by Altius. The same Altius that had the one known funding proposal for the Lower Churchill that was based in Newfoundland. The same Alderon and Altius that accompanied Premier Dunderdale to China on a recent trade mission. The same Altius that required a bailout for its failed Newfoundland and Labrador Refining Corporation and then Premier Williams, and Natural Resources Minister Kathy Dunderdale, tried to get investors for in the Middle East - in person no less. You see the trend?

Some further political context can illustrate the self-interest, or perceived self-interest, that is rampant amongst Newfoundland's "ruling class". There is the case of Danny Williams' old law firm, which he was a founder and was, according to the Business Post, still listed as a creditor to, and at which he still has an office, being awarded an untendered contract to be a US law firm's Newfoundland representative in a multi-billion dollar lawsuit against tobacco corporations - potentially the largest by far legal action in Newfoundland's history. Then there was the case of Williams appointing John Ottenheimer as Nalcor's Chair despite the fact that Ottenheimer was related to the co-founder of the Ottenheimer and Baker law group - the same law group that is listed as having the Department of Natural Resources as a major client, and whose other co-founder is a principle of Altius. Yes, the same Altius that had a proposal to fund Muskrat Falls being scrutinized by Nalcor. Williams government also gave Dean MacDonald's company, Persona Communications, an untendered contract worth $15 million just prior to its sale. http://tinyurl.com/85j7x5w Yes, that's the same Dean MacDonald that Williams appointed to Nalcor, and the same one that left the job when former Premier Grimes tried to get an agreement with Hydro Quebec on the Lower Churchill. Now you can really start seeing the trend.
Williams and company are now officially a part of the team that likes to take its cut for expediting projects. Altius, The Exploration Group, Forbes and Manhattan all have a singular business practice in common: find the opportunity; provide initial seed capital; take it public; manage it to takeover; establish a percentage ongoing royalty; and leave. This is how I see the financing of Muskrat Falls happening.

Despite the fact that Altius, and the government of Newfoundland and Labrador, have kept the details of this financing proposal mostly secret, some particulars have been stated. Interestingly, in the official government press release and Nalcor's, no mention was made of the other two corporation's financing strategies http://tinyurl.com/7gm4wgb . Altius proposed, in their words, to create a Royalty Trust which would be non-competetive with those seeking to physically construct the project, and would guarantee them a 3% royalty on gross hydro sales of the Muskrat Falls project. One is left assuming, in the absence of disclosure by either Nalcor or the provincial government, that Altius' proposal is still on the table - the Royalty Trust.

A royalty trust is a type of corporation, mostly in the United States or Canada, usually involved in oil and gas production or mining. However, unlike most corporations, its profits are not taxed at the corporate level provided a certain high percentage (e.g. 90%) of profits are distributed to shareholders as dividends. The dividends are then taxed as personal income. This system, similar to real estate investment trusts, effectively avoids the double taxation of corporate income. http://en.wikipedia.org/wiki/Royalty_trust .

Judging from the high degree of self interest involved in this project, it is likely that a Royalty Trust would be established along the lines of the Pengrowth Energy Trust. Pengrowth had an unlimited number of trust units, essentially shares, that were divided into class A and B units. The difference between A and B shares was place of residency. While class A shares could be held by anyone residing in any part of the world, class B shares could only be owned by residents. There was a further stipulation that class A shares could never outnumber class B shares so that out of country interests could never control the trust fund. Another potential twist is the value of a trust solely based on revenue from Muskrat Falls. Given the amount of financing required to build Muskrat Falls it seems unlikely a trust formed for that purpose could raise the necessary cash. It would therefore not be surprising to see other assets added to the mix to boost such a trusts returns. Some definate candidates could be the equity positions the government of Newfoundland and Labrador has secured in the off shore. 

This type of arrangement makes sense given the business practices of those pushing the project ahead. In each case that I have studied Altius, The Exploration Group, and Forbes and Manhattan's principles have taken a large share position personally, and in the interim corporately as well. Given that there is limited wealth in Newfoundland and Labrador amongst the general population, and a very small percentage of people that are informed on market economics, such an instrument is open for exploitation primarily by the few. As Danny Williams has said many times, with a grin: "It's such a good deal I would put my own money in if I could."

The real money to be made on a Royalty Trust though would be the 3% royalty on gross hydro sales. As an example, if the Muskrat Falls project were to produce, on average, $300 million per year over its 100 year lifetime the payout would be a staggering $900 million. That's $9 million per year of guaranteed revenue for a corporation like Altius to use elsewhere in leveraging further assets. That is more than they make on Voise's Bay - which will not last 50 years.

The bottom line is some people in Newfoundland stand to make a lot of money, and continue to effect the governance of the province. Those that will be paying the bill on the island of Newfoundland won't be so lucky. The real kicker is power prices in Labrador are a third of the prices in Newfoundland. That means that Muskrat Falls power will be subsidized heavily by people who will see no ongoing benefit from it - like the Upper Churchill. Quebec's Plan Nord appears to be shaping up in similar terms. The real tragedy of the real Muskrat Falls story isn't the insiders who are aiming to win, or even the massive debt that will be incurred for the project and the mines. No the tragedy of the real Muskrat Falls is that the people of Newfoundland and Labrador are being sold a bill of goods by insiders who could care less about their own, and being led down the garden path by the pied pipers of Newfoundland and Labrador. That is the real tragedy.

The Real Muskrat Falls - Part 3

One phrase: Mines for a Dam. Two words: Twin Falls. Twin Falls are waterfalls located on the Unknown River, Labrador. During the 1950's British Newfoundland Development Corporation (Brinco) had the power development rights on  the river. In partnership with Wabush Mines Limited and the Iron Ore Company of Canada, the two mining corporations operating in Western Labrador, Brinco created the Twin Falls Power Corporation to deliver power 115 miles (185 km) west to the two mining operations being developed near the Labrador-Quebec border.

When the dam was finished in 1963, the station had a total capacity of 225 MW with two 115-mile (185 km) long transmission lines at 230,000 volts (or 230 kV), with remote switching at the far end from the station. Twin Falls power was essential to the later power development at Churchill Falls. It helped open up the area and supplied the power required during the construction phase of the project. So a 225 MW dam was built to essentially run two iron ore mines, and infrastructure. Curiously, Brinco was also the corporation that signed the much lamented 1969 Power Contract with Hydro Quebec for the Upper Churchill.

Fast forward almost 50 years, and here we are again - building a dam for mining. Today there are 17 some mines being developed in the Labrador Trough. A few American. A few European. One Brazilian. Two Indian. The remaining six or so Chinese. Its a virtual microcosm of the developing world's strangle hold on the New World financial order of things. The problem for the developers, read juniors and their merchant backers, is the lack of necessary infrastructure to convert promising mining deposits to full scale operations in their own right.

Traditionally, in Newfoundland and Labrador, private businesses have to arrange their own power for such activities as mining. The Twin Falls dam is one example, but there are many others. The problem with that approach for the developers is it adds a massive cost onto the bottom line of each tonne of ore mined, and makes the mining of these deposits unprofitable. That was Credit Suisse's analysis as well when they did a direct comparison to Consolidated Thompson's mine and the developing Kami project which is owned by Alderon http://tinyurl.com/79ey28b . Yes, the same Alderon that has Danny Williams as its "special advisor" to the Chairman of the Board. Credit Suisse essentially says that Alderon- and you could put all the mines developing in Labrador on the same page- is an attractive deposit but lacks the necessary infrastructure to make it profitable. Therefore, they rate it as "speculative".

Alderon is a good example of what is happening with the mines in Labrador, and their connection to the Muskrat Falls development. For starters, here is a look at the insiders who have an ownership interest in Alderon Iron Corp from SEDI, System for Electronic Disclosure by Insiders, Listed Below. Now have a look at the insider report on ownership for Altius, which sold its rights to the Kami project to Alderon for a roughly 40% stake in Alderon Iron Corp, Listed below .

The first thing you are likely to notice is that Altius' directors have their own interest in Alderon - apart from Altius' corporate share of Alderon's ownership. You will also recognize names there from both the Progressive Conservative Party and Liberal Party of Newfoundland. You will notice the recent purchase by Liberty of Alderon shares for $40 million, which will allow the Kami project to be further developed. You will notice the shares held by Mark Morabito -  a large number of shares. Mr Morabito is the Chairman and Chief Executive Officer of The Exploration Group, a privately held company headquartered in Vancouver. If you check the Exploration Group's web site you will notice it lists Alderon as one of its companies. Mr. Morabito also sits on the Board of Alderon as its Executive Chairman.

You will also find a gentleman by the name of Stan Bharti as Vice Chairman of Alderon. In reality, Stan Bharti runs the privately owned Forbes and Manhattan Group. A Toronto-based merchant bank specializing in identifying resource projects around the world, providing them with seed capital, taking them public, often arranging foreign capital acquisition of them, and then getting out. Mr. Bharti is a world class player, and his Advisory Board backs that up : General John Abizaid (ret) US Army; General Jay Garner (ret) US Army; General Ron Hite (ret) US Army; General Lewis MacKenzie (ret) Canadian Army; General Sir Michael Rose (ret) British Army (SAS); Larry King (ret) US entertainment legend; Hon Pierre Pettigrew (ret) Canadian Federal Liberal politician; Bernard Wilson; and Peter Boot.

In reality, Forbes and Manhattan appear to run The Exploration Group, which in turn runs Alderon. As an example, the press release announcing Danny Williams appointment to Alderon's Board listed a Toronto office that in reality is the office of Black Iron Inc, a subsidiary of Forbes and Manhattan. Its Vancouver office is in fact the corporate office of The Exploration Group. You get the idea. These companies are one and the same. The bottom line to these gents is "increasing shareholder value". In this case, as there are no shareholders in The Exploration Group and Forbes and Manhattan, they mean "increase the share value so we can make an astronomical return when it gets off the ground." Fair enough. That is what business is about, and the gents at Forbes and Manhattan are doing it all over the world.

What is interesting on the Newfoundland and Labrador level is the politicization of Alderon's management team. I was present at the October PC convention when Danny Williams took the stage to give an emotional presentation on the service of one Garry Norris. He let it be known that Norris was the go to guy for any research or any problem, and that he had served the Party well over the years. Williams let it be known then that Norris was leaving public service and gave him a present from the Party for his service. Norris' retirement was officially announced on November 30, 2010 and took effect on December 3, 2010 - the same day as Danny Williams last day in office. Norris was Deputy Clerk of Executive Council under Brian Tobin and Clerk under Beaton Tulk. Roger Grimes removed him from that position when he became Premier. Norris took on the position of Executive VP of Government and Community Affairs at Alderon effective July 4, 2011 - barely 6 months after retiring from the government. Three days later he is registered as holding 250,000 options/shares in Alderon at a value today of over $800,000.00.

The same announcement from Alderon appointed Todd Burlingame as Executive VP for Environment and Aboriginal Affairs. He also received the 250,000 share handshake two days after he signed on. His duties are described in the release: "Mr. Burlingame will be responsible for all environmental permitting aspects to develop the Kamistiatusset (”Kami”) Project through to production, including acquiring all required environmental approvals. He will also have a lead role in Aboriginal Relations." Just so happens that Burlingame's previous position, that he left to take this one, was Manager of Environment and Aboriginal Affairs with Nalcor.

The Board at Alderon is really reflective of what is at work in Labrador. We've already covered the real power behind the group - Stan Bharti. We have covered his head of The Exploration Group - Mark Morabito. You have Matt Simpson who also doubles as Forbes and Manhattans man in Toronto heading Black Iron Inc, and who is working with the famous Larry King on a mine in the Ukraine (Maybe that's how Danny Williams got that spot on the Larry King show). There is Bruce Humphrey who is a Forbes/Exploration Group man and sits on several of its subsidiaries boards - including Cross Hair Exploration and Minerals which is currently developing an uranium project in Labrador (the
Nunatsiavut Assembly just lifted a ban on uranium exploration there). There is Brad Boland who was Brian Tobin's right hand man at Consolidated Thompson. Then of course there is Brian Dalton and John Baker from Altius. That is the same Dalton and Baker that headed the failed Newfoundland and Labrador Refining Corporation. The same two that were involved in Aurora Energy that is also developing a uranium property in Labrador. The same John Baker that owns Ottenheimer and Baker that has the Newfoundland and Labrador Department of Natural Resources as its key client.

That brings us to the Board's latest addition - Danny Williams. The Danny Williams that went to the Middle East with Kathy Dunderdale to try and get investors to bail out Dalton and Baker's Refining Corp. The same Williams that placed MacDonald as Chair of Nalcor. The same Williams that while in office refused to do a deal with Hydro Quebec on the Lower Churchill, but endorsed Altius' bid to fund it as one of three. The boss of Kathy Dunderdale, who as the new Premier took a trade mission to China to promote junior mining companies. Three of those should sound familiar: Alderon; Altius; and Century. Knowing the players one big question remains: Why do they need Danny Williams as a "Special Advisor" to the Chair? The Forbes and Manhattan/Exploration Group really needs special advice from Danny Williams? Is Danny part of the deal? Hard to say with a public company that sells shares to anyone on the exchange. Surely it's not a political necessity to have the former Premier on the Board. There is his connection to the Muskrat Falls deal. They do need the power. He does have business connections in St. John's, but do they really need him?

The truth is Forbes and Manhattan has done something similar to this before - except it was with former Liberal Premier Brian Tobin. In 2005 Stan Bharti and a group of investors raised a private placement of $1 million to get then Thompson Consolidated - Lundmark Gold Mines off the ground. Mr. Bharti then took over briefly as President. Despite Brian Tobin's recent comments that his old political contacts in China saved the mines bacon http://tinyurl.com/6n5h77n it was a determined effort by Bharti's Forbes and Manhattan Group that kept the struggling company alive. They outline this as one of their accomplishments:

Recent Successes

Forbes & Manhattan Builds Assets

Consolidated Thompson Iron Mines
(Created)

• Incubated Consolidated Thompson in 2005 as a grassroots exploration stage iron ore company with assets in Northern Quebec
• Completed scoping study, 3 feasibility studies, and secured financing and off-take with China
• Raised approximately $1 billion in development capital over 5 years
• Consolidated Thompson was acquired by Cleveland Cliffs in May 2011 for $4.9 billion or $17.25 per share representing a return of over 7700% to shareholders

In 2006 Tobin was appointed as the Chair of Thompson Consolidated. He had previously served on a number of boards including Dean MacDonald's Persona Communications, and Canadian Imperial Ventures - a Danny Williams interest. Bernard Wilson was appointed to Thompson Consolidated's Board at the same time. When WISCO (China) invested over $200 million in the corporation Bharti and Bruce Humphrey stepped down from its Board and Chief Financial Officer Brad Boland resigned his position as well. If you check the team at Alderon you will see these three gentlemen now play key roles in this corporation.

The three big problems holding back mining development in Labrador have been power, rail, and ports. In 2010 the rail question was answered to some extent by the completion of the Bloom Lake Railway. A creation of Thompson Consolidated the $100 million railway was described by Tobin: "We have developed our infrastructure, in this case the railway, and we said from the get-go, 'this railway will be available to other users if and when other mining projects are brought to reality.'" Of course the railway is now owned by US based Cliff Resources, and operated by long term agreement with US based Genesee and Wyoming. There remains considerable debate regarding the ability of Quebec's ports to handle projected iron ore originating in Labrador and shipping to Asia and/or Europe.

The power part of the equation is still in question.


 ALDERON INSIDERS
Insider Information by Issuer - View Results
Issuer name : alderon ( Starts with )
Date range : January 1, 1995 - January 27, 2012
2012-01-27 22:40 ET
Issuer Name: Alderon Iron Ore Corp.
Legend: Insider's Relationship to Issuer: 1 - Issuer, 2 - Subsidiary of Issuer, 3 - 10% Security Holder of Issuer, 4 - Director of Issuer, 5 - Senior Officer of Issuer, 6 - Director
or Senior Officer of 10% Security Holder, 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6), 8 - Deemed Insider - 6 Months before
becoming Insider.
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: 2009-12-08
Algie, Anita Young
Insider Relationship: 4 - Director of Issuer
2006-12-30 Common Shares 88,000
2006-01-25 Options (Common Shares) 50,000 50,000

Insider Name:
Ceased to be Insider: Not Applicable
Altius Minerals Corporation
Insider Relationship: 3 - 10% Security Holder of Issuer
2010-12-15 Common Shares 2260761 Ontario Inc. 584,000
2011-02-11 Common Shares Altius Resources Inc. 0
2010-12-15 Warrants (Warrants) 2260761 Ontario Inc. 150,000 150,000
Insider Name:
Ceased to be Insider: Not Applicable
Altius Resources Inc.
Insider Relationship: 3 - 10% Security Holder of Issuer
-1-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
2011-02-11 Common Shares Altius Investments
Limited
32,285,006
Insider Name:
Ceased to be Insider: Not Applicable
Amisano, Terry Michael
Insider Relationship: 3 - 10% Security Holder of Issuer
2003-11-14 Common Shares 0 0
Insider Name:
Ceased to be Insider: 2011-11-28
Atwal, Sonya
Insider Relationship: 5 - Senior Officer of Issuer
2011-09-16 Common Shares 25,000
2010-12-29 Options (Common Shares) 120,000 120,000
2011-05-24 OTC Calls (including Private
Options to Purchase) (Common
Shares)
0 0
Insider Name:
Ceased to be Insider: 2005-04-29
Bachman, Richard Lynn
Insider Relationship: 5 - Senior Officer of Issuer
2004-02-05 Common Shares 840,000
Insider Name:
Ceased to be Insider: Not Applicable
Baker, John
Insider Relationship: 4 - Director of Issuer, 6 - Director or Senior Officer of 10% Security Holder
2011-02-09 Options (Common Shares) 400,000 400,000
-2-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Bharti, Stan
Insider Relationship: 4 - Director of Issuer
2011-12-20 Common Shares FORBES &
MANHATTAN
2,100,000
2011-02-09 Options (Common Shares) 900,000 900,000
Insider Name:
Ceased to be Insider: Not Applicable
Boland, Brad James
Insider Relationship: 5 - Senior Officer of Issuer
2010-03-03 Common Shares 250,000
2011-02-09 Options (Common Shares) 300,000 300,000
Insider Name:
Ceased to be Insider: Not Applicable
Burlingame, Todd
Insider Relationship: 5 - Senior Officer of Issuer
2011-06-13 Common Shares 0
2011-06-13 Options (Common Shares) 250,000 250,000
Insider Name:
Ceased to be Insider: Not Applicable
Dalton, Brian
Insider Relationship: 4 - Director of Issuer, 6 - Director or Senior Officer of 10% Security Holder
2011-02-09 Options (Common Shares) 400,000 400,000
-3-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: 2009-09-22
Doctors Investment Group Ltd.
Insider Relationship: 3 - 10% Security Holder of Issuer
2009-12-04 Common Shares 0 0
Insider Name:
Ceased to be Insider: Not Applicable
Dunn, Christopher Noel
Insider Relationship: 4 - Director of Issuer
2012-01-13 Common Shares 0
2012-01-13 Options (Common Shares) 0 0
Insider Name:
Ceased to be Insider: 2010-03-03
Durno, Jeff
Insider Relationship: 4 - Director of Issuer, 5 - Senior Officer of Issuer
2010-02-16 Subscription Rights (Common
Shares)
Natgar Capital Corp. 20,500 20,500
Insider Name:
Ceased to be Insider: Not Applicable
Eldem, Tayfun
Insider Relationship: 5 - Senior Officer of Issuer
2011-09-07 Common Shares 0
2011-09-07 Options (Common Shares) 1,000,000 1,000,000
Insider Name:
Ceased to be Insider: 2010-03-03
Emprise Capital Corporation
Insider Relationship: 3 - 10% Security Holder of Issuer
2009-11-25 Common Shares 3,500,000
-4-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: 2010-12-13
Gleeson, Patrick James
Insider Relationship: 5 - Senior Officer of Issuer
2010-03-03 Common Shares 250,000
2010-11-08 Options (Common Shares) 200,000 200,000
Insider Name:
Ceased to be Insider: 2004-02-09
Hanson, Kevin R.
Insider Relationship: 3 - 10% Security Holder of Issuer
2004-02-09 Common Shares 0 0
Insider Name:
Ceased to be Insider: Not Applicable
Humphrey, Raymond Bruce
Insider Relationship: 4 - Director of Issuer
2010-03-03 Common Shares 500,000
2011-02-09 Options (Common Shares) 500,000 500,000
Insider Name:
Ceased to be Insider: Not Applicable
Jardine, Gerald Levelle
Insider Relationship: 3 - 10% Security Holder of Issuer, 4 - Director of Issuer, 5 - Senior Officer of Issuer
2004-02-09 Common Shares 6,730
-5-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: 2008-01-01
Kowalchuk, John
Insider Relationship: 4 - Director of Issuer
2006-01-25 Options (Common Shares) 50,000 50,000
Insider Name:
Ceased to be Insider: Not Applicable
Lawson, Edward Martin
Insider Relationship: 4 - Director of Issuer, 5 - Senior Officer of Issuer
2006-09-05 Common Shares 359,312
2006-04-28 Common Shares Minera Sucunduri 0
Insider Name:
Ceased to be Insider: Not Applicable
Lewis, Benjamin Gerard
Insider Relationship: 6 - Director or Senior Officer of 10% Security Holder
2011-02-04 Common Shares 0
Insider Name:
Ceased to be Insider: Not Applicable
Liberty Metals & Mining Holdings, LLC
Insider Relationship: 3 - 10% Security Holder of Issuer
2012-01-13 Common Shares 14,981,273

Insider Name:
Ceased to be Insider: Not Applicable
Marcotte, Simon
Insider Relationship: 5 - Senior Officer of Issuer
2010-12-13 Common Shares 101,000
2010-12-29 Options (Common Shares) 325,000 201,000
-6-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities

Insider Name:
Ceased to be Insider: 2009-12-08
Mohammed, Reza Ahmed
Insider Relationship: 5 - Senior Officer of Issuer
2008-01-10 Common Shares 610,000
2005-11-09 Common Shares Tellford Management
Ltd.
267,500
2006-01-25 Options (Common Shares) 420,000 420,000 420,000
Insider Name:
Ceased to be Insider: Not Applicable
Morabito, Mark Joseph
Insider Relationship: 4 - Director of Issuer
2012-01-26 Common Shares 3,095,000
2010-11-01 Common Shares Morabito Family Trust 0
2011-02-09 Options (Common Shares) 900,000 900,000
2012-01-26 OTC Puts (including Private
Options to Sell) Common Shares
(Common Shares)
-425,000 -425,000
Insider Name:
Ceased to be Insider: Not Applicable
Norris, Gary
Insider Relationship: 5 - Senior Officer of Issuer
2011-07-04 Common Shares 0
2011-07-04 Options (Common Shares) 250,000 250,000
-7-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Paine, Sheila Margaret
Insider Relationship: 5 - Senior Officer of Issuer
2012-01-27 Common Shares 0
2012-01-26 Options (Common Shares) 100,000 100,000
Insider Name:
Ceased to be Insider: 2011-12-01
Penney, Brian
Insider Relationship: 5 - Senior Officer of Issuer
2011-05-07 Common Shares 0
2011-10-03 Options (Common Shares) 500,000 500,000
Insider Name:
Ceased to be Insider: 2010-12-13
PONTIUS, Jeffrey A.
Insider Relationship: 4 - Director of Issuer
2010-03-03 Common Shares 200,000
2010-11-08 Options (Common Shares) 200,000 200,000
Insider Name:
Ceased to be Insider: Not Applicable
Porter, David James
Insider Relationship: 4 - Director of Issuer
2011-02-09 Options (Common Shares) 300,000 300,000
-8-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Potvin, Bernard
Insider Relationship: 5 - Senior Officer of Issuer
2011-11-14 Common Shares 0
2011-11-14 Options (Common Shares) 250,000 250,000
Insider Name:
Ceased to be Insider: Not Applicable
Santorelli, Keith
Insider Relationship: 5 - Senior Officer of Issuer
2011-11-28 Common Shares 0
2011-11-28 Options (Common Shares) 300,000 300,000
Insider Name:
Ceased to be Insider: 2005-03-04
Schellenberg, Gary David Albert
Insider Relationship: 4 - Director of Issuer
Insider Name:
Ceased to be Insider: Not Applicable
Sherk, Susan Bradley
Insider Relationship: 6 - Director or Senior Officer of 10% Security Holder
2010-12-09 Common Shares 460
Insider Name:
Ceased to be Insider: Not Applicable
Simpson, Matthew James
Insider Relationship: 4 - Director of Issuer
2010-09-20 Common Shares 0
-9-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
2010-12-29 Options (Common Shares) 550,000 550,000
Insider Name:
Ceased to be Insider: Not Applicable
Strauss, James Digby Ronald
Insider Relationship: 6 - Director or Senior Officer of 10% Security Holder
2011-02-10 Common Shares 20,000
Insider Name:
Ceased to be Insider: 2005-03-01
Torresan, Raymond
Insider Relationship: 5 - Senior Officer of Issuer
2004-02-16 Common Shares Threefold Ventures
Inc.
10,000
Insider Name:
Ceased to be Insider: Not Applicable
Tough, Thomas Robert
Insider Relationship: 4 - Director of Issuer
Insider Name:
Ceased to be Insider: Not Applicable
Warr, Donald James
Insider Relationship: 6 - Director or Senior Officer of 10% Security Holder
2011-12-16 Common Shares 39,000
2011-09-22 Common Shares Spousal RRSP 15,000
-10-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Wells, Chad
Insider Relationship: 6 - Director or Senior Officer of 10% Security Holder
2011-04-07 Common Shares 35,000
2010-12-08 Common Shares RESP 3,500
Insider Name:
Ceased to be Insider: Not Applicable
Winter, Stephen Lawrence
Insider Relationship: 8 - Deemed Insider - 6 Months before becoming Insider
2011-10-05 Common Shares 42,000
2011-10-05 Common Shares Spousal 2,800


ALTIUS INSIDERS
Insider Information by Issuer - View Results
Issuer name : altius ( Starts with )
Date range : January 1, 1995 - January 27, 2012
2012-01-27 22:58 ET
Issuer Name: Altius Minerals Corporation
Legend: Insider's Relationship to Issuer: 1 - Issuer, 2 - Subsidiary of Issuer, 3 - 10% Security Holder of Issuer, 4 - Director of Issuer, 5 - Senior Officer of Issuer, 6 - Director
or Senior Officer of 10% Security Holder, 7 - Director or Senior Officer of Insider or Subsidiary of Issuer (other than in 4,5,6), 8 - Deemed Insider - 6 Months before
becoming Insider.
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Altius Investments Limited
Insider Relationship: 2 - Subsidiary of Issuer
Insider Name:
Ceased to be Insider: Not Applicable
Altius Minerals Corporation
Insider Relationship: 1 - Issuer
2012-01-24 Common Shares 0
Insider Name:
Ceased to be Insider: Not Applicable
Baker, John
Insider Relationship: 4 - Director of Issuer
2011-08-24 Common Shares 515,300
2011-08-24 Common Shares Brightsun Holdings
Inc.
50,000
2011-08-24 Options (Common Shares) 62,500 62,500
2011-10-13 Rights DSUs (Rights) 9,069 9,069
-1-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: 2010-03-18
Butler, Roland Wayne
Insider Relationship: 4 - Director of Issuer, 5 - Senior Officer of Issuer
2010-01-15 Common Shares 735,450
2003-06-03 Common Shares Lauren Exploration
Ltd.
250,000
2009-12-08 Options (Common Shares) 250,000 250,000
Insider Name:
Ceased to be Insider: Not Applicable
Dalton, Brian
Insider Relationship: 4 - Director of Issuer, 5 - Senior Officer of Issuer
2011-09-14 Common Shares 968,073
2003-01-02 Common Shares 10587 Newfoundland.
Ltd.
250,000
2005-04-07 Common Shares RRSP Account 177,702
2011-09-14 Options (Common Shares) 125,000 125,000
2010-09-21 SARs (cash) 250,000 250,000
2005-06-28 Warrants (Common Shares) 0 0
Insider Name:
Ceased to be Insider: 2004-08-31
David W. Tice & Associates, LLC
Insider Relationship: 3 - 10% Security Holder of Issuer
2004-08-31 Common Shares Prudent Bear Fund 1,894,700
2003-07-14 Warrants (Common Shares) Prudent Bear Fund 578,500 578,500
-2-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Lewis, Benjamin Gerard
Insider Relationship: 5 - Senior Officer of Issuer
2011-09-07 Common Shares 10,000
2009-10-09 Common Shares RRSP 3,050
2011-09-07 Common Shares Spousal Account 18,000
2011-09-07 Options (Common Shares) 75,000 75,000
2010-09-21 Rights SARs (Rights) 150,000 150,000
Insider Name:
Ceased to be Insider: Not Applicable
Mifflin, Frederick James
Insider Relationship: 4 - Director of Issuer
2011-11-28 Common Shares 15,716
2011-11-28 Options (Common Shares) 62,500 62,500
2011-10-13 Rights DSUs (Rights) 9,069 9,069
Insider Name:
Ceased to be Insider: Not Applicable
Sherk, Susan Bradley
Insider Relationship: 4 - Director of Issuer
2011-11-28 Common Shares 9,029
2011-11-28 Options (Common Shares) 47,500 47,500
2011-10-13 Rights DSUs (Rights) 9,069 9,069
-3-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Strauss, James Digby Ronald
Insider Relationship: 4 - Director of Issuer
2010-10-27 Common Shares 24,340
2011-10-13 Rights DSUs (Rights) 6,776 6,776
Insider Name:
Ceased to be Insider: 2010-10-27
Thurlow, John Geoffrey
Insider Relationship: 4 - Director of Issuer
2010-10-12 Common Shares 15,640
2010-09-17 Common Shares Bacchus Holdings Inc. 1,163,512
2010-09-20 Options (Common Shares) 87,500 87,500
2004-10-07 Warrants (Common Shares) 0 0
Insider Name:
Ceased to be Insider: 2004-01-01
Tognetti, John
Insider Relationship: 3 - 10% Security Holder of Issuer
2003-07-15 Common Shares -9,400
2003-06-27 Common Shares noelle tognetti 1,465,000
-4-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
Insider Name:
Ceased to be Insider: Not Applicable
Warr, Donald James
Insider Relationship: 4 - Director of Issuer
2011-11-28 Common Shares 84,816
2008-10-29 Common Shares RSP 8,900
2011-11-28 Options (Common Shares) 62,500 62,500
2011-10-13 Rights DSUs (Rights) 9,069 9,069
Insider Name:
Ceased to be Insider: Not Applicable
Wells, Chad
Insider Relationship: 5 - Senior Officer of Issuer
2011-11-28 Common Shares 43,500
2010-02-26 Common Shares RRSP 34,900
2011-11-28 Options (Common Shares) 75,000 75,000
2010-09-21 Rights SARs (Rights) 150,000 150,000
2005-07-10 Warrants (Common Shares) 0 0
Insider Name:
Ceased to be Insider: Not Applicable
Winter, Stephen Lawrence
Insider Relationship: 5 - Senior Officer of Issuer
2011-08-09 Common Shares 30,000
2011-08-09 Common Shares RRSP Account 2,100
2011-08-08 Options (Common Shares) 75,000 75,000
-5-
Date of Last Reported
Transaction(YYYY-MM-DD)
Security
Designation
Registered
Holder
Closing Balance Insider's calculated balance Closing balance of equivalent number
or value of underlying securities
2010-09-21 Rights SARs (Rights) 150,000 150,000
-6-

The Real Muskrat Falls - Part 2

In this, a record winning year for Canadian Olympians, I think the motto of the Olympic movement says it best, “Citius, Altius, Fortius” – “Faster, Higher, Stronger”. Premier Danny Williams, St. John's Board of Trade, Wednesday, September 8, 2010.

The ending of Williams speech says it best - Altius.


Altius is an exploration corporation based in St. John's, Newfoundland. It has for years staked claims in various areas throughout the province. Its primary business plan is to identify potential mineral deposits, stake claims to them, build small exploration companies to represent the individual claims and then sell them for shares in any company interested in taking over these claims. It generally takes those newly acquired shares and essentially builds its net worth as a corporation on their value. Often it will then liquidate these shares for cash. One practice it always maintains is keeping an ongoing royalty in the projects it sells. It may be a gross sales fee, a net smelter return, or both - as was the case with its Aurora project.

Altius was co-founded by Brian Dalton and Roland Butler, Jr and in October 1997 it went public. Roland Butler, Jr has since left the company to serve as a director of Millrock Resources Inc which hopes to emulate Altius' success as a company  focused on generating metallic mineral projects for joint venture exploration and development. Its Board of Directors is an interesting group covering both the Liberal and Conservative political spectrum. Of particular interest is the involvement of John A. Baker, QC. Mr Baker looks to be the sole surviving founder of the law firm Ottenhiemer and Baker in St. John's. It calls itself : "the largest independent law firm in Newfoundland and Labrador."

Ottenhiemer and Baker was run by both the late Senator Gerry Ottenhiemer (PC), who passed away in the late 1990's  and John Baker - from the Liberal Baker family. Other prominent members of the Ottenhiemer family include John Ottenhiemer who received his QC while he was a sitting Minister in Danny Williams government in 2004 (and would go on to become Chair of Nalcor in 2007), and Ed Byrne who would be named Danny Williams first Minister of Natural Resources (and held it until charged with influence peddling in 2006).

Ottenhiemer and Baker was in fact covered by the publication Canadian Lawyer http://tinyurl.com/7wq7ob9 . Canadian Lawyer actually brought out some interesting points on the firm during their coverage. Most notably: "Key Clients: Bank of Montreal; Government of Newfoundland and Labrador (Department of Natural Resources); Altius Minerals..."
Ordinarily this would not raise many eyebrows. However, consider that Altius directors Fred Mifflin (Liberal) and Jamie Strauss both had affiliations with the Bank of Montreal. Then there is Brian Dalton and the presidency of Altius.

The big one though has to be Mr. Baker himself. Consider for a moment that Mr. Baker's law firm of Ottenhiemer and Baker represents the Department of  Natural Resources, Newfoundland and Labrador and he is also a director of Altius. Consider that Altius has been directly involved with the Department of Natural Resources, over many years, on projects ranging from Alderon's Kami project to the Royalty Trust proposal for the financing of the Lower Churchill.

Take the Newfoundland and Labrador Refining Corporation for starters. It was a project started by Altius to create a refinery near the existing Come-By-Chance refinery in Eastern Newfoundland. Altius held a 39.6% controlling interest in it and Brian Dalton was the managing director. On February 8, 2006 the NL Refining Corporation announced it was starting a feasibility study on the project. That same day somebody else had this to say:

"We know there is tremendous potential to expand and develop many areas of our resource industries, including the oil and gas sector. Worldwide, oil refining capacity needs expansion, and Newfoundland and Labrador is a prime location for a new refinery. With our province's oil and gas expertise and growing industry, expanding our oil refining capabilities will further enhance and strengthen the sector."
- Premier Danny Williams, Feb. 8, 2006

The refinery project received the environmental green light from then Environment Minister Clyde Jackman on October 5, 2007 http://www.releases.gov.nl.ca/releases/2007/env/1005n02.htm  - during the 2007 provincial election period. On November 27, 2007 Altius issued a press release announcing  participation in the project by SNC Lavelin and Japan's IJK consortium. http://nlrefining.com/files/pr_1196877398.pdf  SNC Lavelin had been working on the project with Altius since 2006.

One year later, on October 6, 2008 SNC Lavelin announced it was suing the Newfoundland and Labrador Refining Corporation (NLRC), and Altius Minerals (including its directors) for $20.6 million dollars it claimed was owed to it for work completed on the project thus far.  The SNC Lavelin suit claims that by October 2007, three European investors — including Scottish billionaire Harry Dobson — "had decided to no longer fund their proportionate share" of the refinery's expenses, unknown to the engineering firm. In fact, SNC Lavelin had applied to place the refining corporation in bankruptcy in June, 2008. SNC claimed in court that Altius had "deceived" them. SNC failed to have NLRC placed into bankruptcy with the Supreme Court granting a stay of proceedings, which gave NLRC time to find a buyer/new investors or liquidate assets to pay their creditors. That stay ended in November, 2011. In March, 2010 Dalton and company sued to be excused from personal responsibility in the $20.6 million lawsuit. On March 24, 2011 Nalcor announced that SNC Lavelin was awarded the engineering, construction and procurement management for components of the Lower Churchill development.

During the same period of time Altius, at the open request of the provincial government, submitted a proposal for a Royalty Trust to fund the construction of the Lower Churchill. Although the details of that agreement have been kept relatively confidential, some aspects of it have been admitted to. For instance, as is part of their way of doing business, Altius intends on charging an ongoing royalty on gross power sales from the dam for as long as it operates. Judging from previous projects Altius has been involved in that royalty could range from 2 - 3 %.

In a 2005 interview Danny Williams gave some interesting statements:
"As well, from the original 25 submissions, we have also chosen an additional three proposals as potential financing options," Williams said.

"These three financing options will also move into the next phase of assessment as we continue to explore the best option for developing this resource," Williams said in noting "all six proponents have accepted our invitation to move into phase two."

Of the three financing options, two are potential equity investors.

Once the development concept is further defined, the province will be considering equity participation including: Cheung Kong Infrastructure Holdings Limited and Borealis Infrastructure Management Inc.

Finally, an innovative financing option in the form of a royalty trust has been proposed by Altius Minerals Corporation, which will be explored later in the process, Williams said.

The one financing option without an equity participation was Altius'. Their proposal amounts to an ongoing royalty for arranging financing of the project. Of course Altius could not arrange that kind of financing itself, but that story comes later.

Brian Dalton had this to say about the proposal in 2007:
"We're pretty happy to be there," said Brian Dalton, president of Altius. "I think we can provide a really competitive source of financing here and also a financing source that's based here. We think we've got a reasonable shot." Dalton said royalties are a common method of financing mineral projects. "We've proposed to create a royalty trust that would acquire a royalty interest in the project in exchange for financing. So, we wouldn't look for an actual ownership interest in the project, nor would the province or whomever have to take on additional debt. It's just a third option in the financing world."

In a Special Situations Report, Hayward Securities Inc had the following to say about Altius' plan to fund the Lower Churchill: "In August, 2005, the government announced that three firms had made the shortlist for financing alternatives from the twenty-five expressions of interest entered for the development and financing options. Among the three was a proposal by Altius to buy a $200 million plus gross royalty stake and to create a trust entity that would be structured to offer high benefits to Newfoundland and Labrador based investors, including Altius.

In May, 2006, Premier Danny Williams announced that Newfoundland and Labrador would lead development of the site. He stated that having an external partner join the province would result in "less-than-acceptable" benefits to the province. Given Altius' position as a Newfoundland-based firm with deep local roots and an intriguing financing proposal, we believe this decision is positive for the company. We believe this royalty would provide significant upside to the company's long-term performance. There is no better stream than that from hydro, as cash flows may be generated until the next ice age!"

Now you have an idea where the money will be going locally, and who is involved at that level. Next will be the Labrador/Toronto/China tie in.

The Real Muskrat Falls I

"If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; and may posterity forget that ye were our countrymen."
Samuel Adams

The real story of Muskrat Falls is not the romantic, nationalistic ballad that the government of Newfoundland and Labrador portays it as. It is not a noble effort to enhance the environment. It is not an attempt to join Newfoundland and Labrador to the North American electrical grid. It is not a project to replace the foul airs of Holyrood. It most definately is not a project to rid us of the territorial stranglehold Quebec imposes. Indeed, it is not even a project to make us "masters of our own house".

It is a project to facilitate the creation of wealth in Labrador, and to profit those ambitious enough to be in the right place for the opportunity. It is a story of far flung claims stretched around Labrador, and in some cases the island of Newfoundland. It is a story of boardrooms large and small. It is a story of corporate battles, and international markets. It is a story of wealthy families and favoured friends. It is all of these things, yet it is sold as none of them.

Although ambitions for the Lower Churchill date back decades it started taking a decidedly interesting turn in 2002 when then Premier Grimes proposed to develop the Gull Island and Muskrat Falls hydro dams in partnership with Hydro Quebec. Then President of Newfoundland and Labrador Hydro Dean MacDonald, a Liberal, resigned in protest days before the agreement was announced. MacDonald, a former bagman for Brian Tobin, believed the deal was not in the province's interest - or so he said. MacDonald's history to that point in time included responsibilities at Roger's Communications, and a business partnership with Danny Williams in Cable Atlantic with an ownership of 4.5%. With Danny Williams, then leader of the PC Party and Leader of the Official Opposition in the House of Assembly, cheering on the sidelines Dean MacDonald effictively killed the Hydro Quebec deal - despite the fact that it had the backing of the majority of the Board of Directors.

During this time a small exploration company named Altius was busy securing a 3% net smelter return royalty, as part of a limited partnership, over the Voisey's Bay nickel-copper-cobalt project in Labrador that is owned and operated by Vale INCO NL. Altius was also involved in the Central Mineral Belt project in 2003 which later would result in Aurora Energy. More on that later.

Significantly, 2003 saw the election of Danny Williams as Premier of the province. A monumental event in more ways than one. It was also in that year that Dean MacDonald was approached by institutional investors to join them in the purchase of Persona Communications. In September, 2004 Danny Williams announced the birth of the Nalcor concept and appointed Dean MacDonald as Chair of  Newfoundland and Labrador Hydro. Significantly, he also replaced two other directors with Ken Marshall and Craig Tucker. Significant because Ken Marshall worked with Williams at Atlantic Cable, and had a minority interest in that company. Also, Craig Tucker who was a vice-president at M5 Marketing Communications and its group of companies - the parent company of the polling firm that conducted weekly unsolicited polling during the 2011 provincial election. Interestingly, both Dean MacDonald and Ken Marshall were listed as directors of companies held in blind trust created when Williams took office as Premier.

2003 also saw several other key appointments. First up was Ed Byrne. Byrne, the son-in-law of the late Senator Gerry Ottenhiemer, stepped aside as PC Party leader in 2001 to allow Danny Williams to assume the leadership. He was appointed as Williams first Minister of Natural Resources and placed in charge of overseeing the development of Muskrat Falls. Another member of the Ottenhiemer family, Senator Gerry Ottenhiemer's half brother John Ottenhiemer, was appointed as Minister of Education. His role as Chair of Nalcor doesn't evolve until 2007 - although he does become Minister of Natural resources for a period in between.

In the same press release of 2004 http://tinyurl.com/7cmdbjw , in which Williams announced his appointments to NL Hydro's Board of Directors, he let his intentions on the Lower Churchill project be known:

"Premier Williams stated his government’s priority for the immediate future is to advance the development of the Lower Churchill and he has full confidence in Mr. MacDonald’s ability to assist government in reaching its objectives on this major development."

Shortly afterward Newfoundland and Labrador Hydro issued a public call for Expressions of Interest (EOI) in developing the Lower Churchill.

“We are open to considering all proposal concepts, including the use of power in Labrador, on the Island, for export or some combination of these options in terms of achieving maximum economic and employment benefits for this province,” Williams said.

The subsequent submissions were narrowed to three, with only one being a Newfoundland based plan - that of Altius http://tinyurl.com/3xs9cf

 

A Time for Courage

There has been so much said about Muskrat Falls. Various experts have tossed out numbers, proposed alternatives, and vetted the costs associated with this project. Political hacks from each Party have tried to destroy their opponents. The media has dutifully reported on each twisting and turning curve like a soap opera. Instead of factual contemplation many have centered their focus on marginalizing each other. Yet in all the chaos that has made up the Muskrat Falls debate one thing has been clearly missing - the bottom line. Who will make the money. Which corporations are driving it. Who are the players quietly maneuvering the project from behind the scenes. What is the payoff, and who will be getting it.

The nasty, dark side of what is being spun as some sort of nationalistic mission to revenge the Upper Churchill. and as one player would say, "be masters of our own destiny". Rock Solid Politics will be releasing a series of blogs this week on the corporate history, and the players. Enriching oneself has never been reserved for any particular political party, and the Muskrat Falls story is no different.

This week in the Telegram Editor Russell Wangersky scribed what I believe is one of the most courageous and overdue editorials I have seen describing politics in Newfoundland and Labrador today. I call it courageous, because to shine a light on the banana republic - feudal politics of Newfoundland and Labrador is to immediately invite scorn and marginalization. I call it overdue, because it is so truthful that it amazes me other press outlets have not done the same. The real story of Muskrat Falls starts Monday, but please take a moment and read a very special column by Russell Wangersky reproduced below:


Williams proves the point

Somewhere, the gods of irony are having themselves a great big chuckle, or maybe even a belly laugh. Late last week, former St. John’s city manager Ron Penney and former Public Utilities Board head David Vardy wrote a letter to The Telegram talking about Muskrat Falls.

It was a letter that was relatively moderate in tone. The guts of it? “What we need is the most robust and thorough review possible, and the consumer advocate should be given all the tools he needs to ensure this is the case and that the public interest is protected.”

Seems reasonable.

Vardy and Penney also chided those who have private concerns about the massive project, but prefer to keep those thoughts to a gentle backroom murmur: “We know there are many knowledgeable people who have strong reservations about this project but, who, for personal reasons, are reluctant to make their concerns public. It is now vitally important that they make their concerns public while there is still time to influence this decision.”

Once again, seems reasonable. If you’ve got something to say, say it publicly, while it still has some kind of chance to have an effect.

But apparently that’s not reasonable at all, according to former premier Danny Williams, the original architect of the Muskrat Falls project. The CBC tracked him down

to get a comment or two, and Williams was obligingly offensive.

“I’m very disappointed in Dave Vardy's comments, and the kind of nonsense that he’s getting on with,” Williams blustered.

“Basically (they are) saying that it’s a small community and people are afraid to speak out. What kind of garbage is that?” Williams said. “To try and sort of taint it with some insinuation that people don’t want to speak out on this is absolutely absurd and it’s irresponsible.”

Oh, and, by the way, it’s true.

Because if you do speak out, you’re speaking, um, irresponsible garbage and absurd nonsense.

I’ve spoken to a series of business people in this city who are unsure about the project as a whole, decidely concerned about the current process that seems to trundling along with all the decisions effectively already made, and yet are absolutely determined not to say one single public word.

They’ll phone and tell you issues they’d like to see addressed, they’ll ask questions and explain their concerns, but they start every conversation setting the ground rules — not one single thing they say is to be attributed to them in any way.

Their fears?

That they’ll be singled out and publicly lambasted — something we all know happens, and which Williams himself, even in premierial retirement, is once again living proof of — and more sinisterly, that their businesses will be affected.

Will their businesses be affected? The fact is, the provincial government has a long arm in this economy and no business person worth their salt will harm their own opportunities if there is even the appearance that speaking publicly will bring corporate repercussions.

Does that appearance exist? Well, it must: otherwise, companies doing consulting work for the provincial government would not feel it necessary to buy whole tables of seats at party fundraisers. The same business people who aren’t talking publicly about Muskrat Falls also aren’t talking publicly about being telephoned by party representatives — telephone calls where the business people are told how many seats they are expected to buy for specific events.

Clearly, there must be some concern that there’s a direct line between your actions and corporate repercussions.

It may not be a legitimate fear that if you speak out against Muskrat Falls, your business will be affected.

But one thing is for certain: if you do speak out on Muskrat Falls, there’s a good chance you’ll be publicly roasted.

It’s ironic that Williams not only decided that the Vardy/Penney letter was more strident than it actually was, but that he also had to then go out and prove that what they hadn’t really said was actually true.

You could not make this stuff up.



Russell Wangersky is The Telegram’s editorial page editor. He can be reached by email at rwanger@thetelegram.com.

Battlefield Labrador - the Ore Race.

The big announcement last week of Danny Williams appointment as "Special Advisor to the Chairman" of Alderon Iron Ore Corp certainly turned heads in the Province. Until that point the exploration business in Labrador was essentially cruising along under the radar for most of the Province, and perhaps it will return there again. Just for now though a big spot light has been placed on Newfoundland and Labrador's version of the "Gold Rush".

On the face of things Labrador, and to some extent Newfoundland, are being swarmed by what have been commonly referred to as "penny stocks" or "juniors". They've been scouring the Labrador trough, staking claims as they go. Selling their stocks on the OTC (Over the Counter), and TSE venture exchanges. Predicting massive deposits of iron ore, or other such minerals. Their stocks rise and fall on every new announcement. Like Generals they search for an advantage over their adversaries.

That is on the face of it. Dig a little deeper and something else appears. Take for instance New Millennium Iron Corp. established as a junior exploration company, a one man outfit, to pursue an iron ore deposit in Labrador. The company was named LabMag Mining Corp. (LMC). The corporation was first incorporated as New Millennium Capital Corp. on August 8th, 2003. On June 8th, 2011, with the approval of shareholders, the company's name was officially changed to New Millennium Iron Corp. In October 2008, NML signed a strategic partnership contract with Tata Steel who as part of the transaction purchased 19.9% percent of NML's shares for about C$23.0 million. That is Tata Steel of India.

Tata Steel has "captured" mines in India for its operations there, but found itself without captured mines for its European operations. In an effort to change this strategically, Tata decided to get involved in the Labrador Trough. Geographically, Labrador is far closer to Europe than Brazil - an export leader in raw iron ore. Tata took an ownership position in tiny New Millenium, and directorships on its Board. Tata has taken over control of New Millenium's Taconite and DSO projects with exclusivity agreements involving sliding exploration investments and percentages of control http://tinyurl.com/7jg9pny .

In a similar play, there is Century Iron Mines Corp (CIMC) - read China. Whether they are partnering with Quebec juniors like Augyva Mining Resources Inc, or "Newfoundland" based juniors like Altius, the pattern remains the same - finance the exploration for a controlling interest and then gently push those pesky juniors out of the way for an ongoing royalty of between half a percent and three percent of gross production.

The result is a wild wild West atmosphere. The kind of atmosphere that surrounded the great rush to riches of the Gold Rush days. This time though its about the big boys. This time it is country vs country. Corporation vs corporation. Sure their are some wanna bes sprinkled in for good measure, and surely they will get a little sprinkle. Even Danny Williams and his inside people have managed somehow to work their way into the action, but make no mistake, they are tiny little fish in a very large bowl swimming with giants. The real action here is control of Labrador's resources from uranium to iron ore, and everywhere in between. Will the North Americans come out on top? Will China and/or India rule the day? Will they co-exist? Right now it's hard to say. In the end they are like Generals on the battlefield - battlefield Labrador.