TORONTO (miningweekly.com) – Quebec-based Strateco Resources has booked a $87-million impairment charge during the first three months of the year, as its flagship Matoush uranium project lays in limbo following the province’s March moratorium on uranium exploration and mining.

This follows the decision by Quebec Environment Minister Yves-François Blanchet not to issue the certificate of authorisation for the Matoush uranium project, located east of James Bay in a First Nation reserve, until the relevant public hearings committee, the Bureau d’audiences publiques sur l’environnement, better known as BAPE, had submitted its report on the province’s uranium industry.

As at December 31, Boucherville-based Strateco had invested more than $123-million in moving the Matoush project up the value curve.

Strateco charged it was obliged to impair its Quebec uranium properties, deferred exploration and evaluation expenditures and fixed assets associated with the project, owing to its inability to proceed with the underground exploration programme, the absence of significant exploration and evaluation expenditures planned for the year and the overall uncertainty surrounding Quebec's uranium industry.

The impairments have generated a reversal of deferred income tax liabilities for the three-month period ending March 31, and a total deferred income tax recovery of $11-million for the same period.

The net loss for the three months was $77-million.

In April, Strateco started a series of legal actions against the province’s environmental agency to assert its uranium exploration rights.

Strateco said following the moratorium on the issuance of permits for uranium projects, announced late in March by Minister Blanchet, it had served the Quebec Environment Ministry with a notice for damages and interest, set at an initial amount of $16-million.

This sum represented the loss in the company's market capitalisation since the Minister’s announcement.

Strateco held Blanchet liable for damages caused by his “misconduct” up until this time, and said that it had given instructions that legal proceedings to be instituted to obtain compensatory and punitive damages.

Strateco reserved all rights to future claims in the event of undue delays, which were currently set to continue and lead to irreparable losses for the Matoush project, and added that an additional amount would be added to the claim.

It would represent compensation for the loss of value of the project, the amount of which was yet to be determined, as well as the loss of $120-million invested so far.

Strateco also asked the Quebec Superior Court to issue a safeguard order. The company said it believed that the government had upset the balance between the parties. The impact was such that, without a rapid safeguard and recovery order, Strateco was unlikely to be able to maintain its Matoush facilities or cover the costs essential to the viability of this project until the court ruling.

“Considering the urgency of the situation, the balance of convenience, the fact that Strateco would experience serious and irreparable damages and the appearance of illegality of the government's position, Strateco requests that the court orders the government to pay a sum ranging from $420 000 up to $800 000 on the last day of each month beginning on May 31, and until September 30 at minimum,” the company said in a statement.

These amounts represented the shortfall between Strateco's available cash and sums required to cover basic costs to sustain the Matoush project. The safeguard order proceeding was expected to be heard in mid-June.

Further, Strateco also amended its petition for mandamus, which, originally, asked the Quebec Superior Court to order the Minister to make a decision on the issuance of permits.

Strateco now asked that the court ordere the provincial government to issue permits for the project.

"We are of the opinion that the government's position is contrary to the provisions of the Environment Quality Act and that it is irreconcilable with the principles of good faith that must guide it. The government is taking part in an illegal decision," Strateco CEO Guy Hébert said.

The Quebec Minister's announcement of a moratorium, in March, followed ongoing legal proceedings aimed at forcing the provincial government to make a decision on the company’s flagship Matoush project, which is located on The James Bay Cree Nation’s Eeyou Istchee reserve.

Last year, after two years of public hearings, the James Bay Cree Nation enacted a permanent moratorium on uranium exploration, mining, milling and waste emplacement on their territory on the east shore of James Bay, known as Eeyou Istchee.

Despite this moratorium, federal regulators, including the Canadian Nuclear Safety Commission, allowed Strateco’s Matoush uranium project to proceed within this Cree territory. Nevertheless, before this project was given the go-ahead to proceed, provincial authorisation was also required, for which Strateco had already been waiting for two years.

The company in January filed a court order to force the Quebec government to make a decision on its exploration project in the province’s Otish Mountains.

In October, The Canadian Nuclear Safety Commission granted an exploration licence to Strateco, allowing the company to do advanced exploration for uranium at the site.

The company in January said the Cree should not have the power to veto the project, and that it was up to the provincial government to make the final decision.

Strateco said it intended to look into the legality of the Minister's announcement, given that the Superior Court had not yet had the opportunity to rule.