The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50801
PHOTO: COURTESY PAN AMERICAN ENERGY LLC financing and/or merger and acquisition of resource-based compa- nies and their assets in the region. "We've seen a real interest for resource properties there," says Stuart Olley, a partner in Stikeman Elliott LLP's corporate securities group in the firm's Calgary office. Olley works almost exclusively with Canadian public companies in- volved in mining. "It's mostly oil and gas, but also mining." Although Stikeman Elliott doesn't have an office in South America, Olley says it hasn't prevented the firm from getting work in the area — through occasional visits to attend conferences and, more often, through referrals from other law firms and clients with assets in the re- gion. Earlier this year, for example, he did a disposition for Trafigura, a private European company and one of the world's biggest base-metal traders (its crude oil assets in Alberta led to a relationship with Stikeman Elliott), as part of a $200-mil- lion sale of its mining assets in Peru to Toronto-based Iberian Minerals Corp. Because Stikeman Elliott is not registered in South America either, Olley relies on local counsel to perform the legal tasks related to such deals, like the registration of documents and conveyance. "We only go [to South America] for due diligence and to meet [clients]," he says, adding the major problem with these types of deals tends to be getting disclosure of foreign assets, such as reserve reports, in a format that meets Canadian standards. "From a practical standpoint, that's the biggest hurdle." Things have improved greatly, however, since Fred Pletcher first started represent- ing Borden Ladner Gervais LLP on transactions involving mostly mining properties in Chile, Brazil, Peru, and Argentina back in 1993. "It used to require a lot of due dili- gence [and] work on the ground," recalls Pletcher, a partner at his firm's Vancouver office, where he practises in the areas of securities and capital markets, M&A, mining, and corporate-commercial law. "A lot of transactions involved option arrangements with local owners of mining concessions [or] maybe mine sites or companies were family-owned. There used to be a lot of private companies because the capital mar- kets are not as developed down there." Despite speaking what he calls "pretty horrible" Spanish and Portuguese, Pletcher says he has never encountered any serious language-related problems in South Amer- ica. "Pretty much every mining lawyer worth their salt down there speaks excellent English." He notes that as the volume and intensity of his relationships have grown with local firms, which tend to be smaller than in Canada and located in big cities, so too has his confidence in the level of service they provide. "Business transactions have become routine. I only go down there now if we're moving to a jurisdiction where we have no previous experience, or if there are quirks that require more hands-on attention from Canadian lawyers." To be sure, quirks can arise unexpectedly in South America, like the mining man- date proclaimed by Ecuador's left-of-centre government last spring, in which it de- clared an outright moratorium on mining projects for six months (until a new min- ing code is issued) and imposed a limit of three concessions for every mining project, cancelling many concessions overnight. "It was basically expropriation," says Don Collie, a corporate lawyer and partner in Davis LLP's Vancouver office who has ex- tensive experience representing all levels of public companies, as well as a local prop- erty owner and prospector in Ecuador who has dealings with a Canadian company in copper and gold projects. "It threw the entire industry into a tizzy [and] was a big shock to stock prices." He adds that such unexpected events, together with fears of corruption and influ- ence-peddling in some South American countries, are among the big reasons why most Canadian, and even many South American companies, choose Canadian, U.S., or British jurisdictions and laws to govern contracts involving properties in the re- gion. "They have indicated to me that they prefer the stability of our court system in case of disputes," says Collie. Despite the risks, he predicts South America will continue to be a hot spot for Canadian investors and, as a result, Canadian lawyers. "Money goes where the resources are; [and] where investments go, lawyers go," he www. C ANADIAN Law ye rmag.com OC T OBER 2008 35 PHOTO: COURTESY TECK COMINCO LTD. Top: Pan American Energy's gas plant in Tartagal, Argentina. Bottom: Teck Cominco's Quebrada Blanca copper mine in Chile. "Money goes where the resources are; [and] where investments go, lawyers go." — DON COLLIE, DAVIS LLP