What is a Reclamation Bond?
A reclamation bond is typically required by a government entity. The bond ensures that when a mine is closed or it reaches the end of its useful life, that the land is then returned to its original condition and any monitoring required under the reclamation plan is carried out. If the mining company fails to carry out the reclamation plan then the government can claim against this bond to have the surety complete the required work. In many jurisdictions in Canada, bonds are an acceptable form of security for these obligations. However, miners usually also have the option to provide letters or credit or cash as security for these obligations as well.
These surety bonds are issued by licensed insurance companies that specialize in reclamation bonds.