Helping miners focus on what is Important
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.
What is required to secure a reclamation bond?
Surety companies look at a number of items when determining whether or not to provide a reclamation bond. These include the following:
- Financial Statements
- Copy of the Reclamation Plan
- For exploration and pre-production miners, the surety will also look at the asset class and the projections of the mining coming to understand if it is a lower cost producer?
- For exploration and pre-production miners, the surety will also consider the asset class and operational projections to ascertain/determine margins and future financial solvency.
Ultimately – the above items allow a surety to determine if the mining company is financially healthy and has a strong asset that is or has the potential to be a profitable operation.
Who Needs Reclamation Bonds?
Reclamation bonds are required by miners in various jurisdictions throughout the world to guarantee that the requirements of the reclamation plan are met. These bonds are typically required before a miner breaks ground usually during the exploration and development stage. These bonds will usually begin as small dollar amounts but as more work is done and the land is further disturbed the costs of reclamation rise and the bond in turn rises with those costs.
FCA is Canada’s Reclamation Bond Expert Since 1919
FCA has been providing Canadian companies with surety bonds since 1919. We have set the industry standard for turnaround time for both new and existing clients. We pride ourselves in ensuring our clients never miss out on an opportunity.
Why should I choose a surety bond over a letter of credit?
- Cost – surety bonds are often a much cheaper solution vs. a letter of credit. Depending on the underwriting, the cost of these bonds can range from 1-2.5% of the bond’s face value, annually.
- Security – unlike letters of credit, surety bonds are typically based on an unsecured relationship. Depending on the financial strength and track record of the mining company these bonds are secured either on the basis of an indemnity agreement or a combination of an indemnity agreement and a modest amount of collateral in relation to the value of the bond.
The cost for these bonds can range between 1% and 2.5% per year against the value of the bond. Where a miner lands depends on the quality of the asset, their financial strength and track record.
Our team specializes in surety bonds. We have dedicated professionals who understand the product and have underwritten these obligations before. We also partner with all the key reclamation bond sureties in Canada.
Yes, junior mining companies can secure surety bonding capacity and there are markets within Canada that specialize in this class of business.
If all the underwriting information is available we can typically secure these bonds within 72 hours. limits to ensure they can properly service their clients and grow their business.
Why Choose FCA Surety?
Ease of Doing Business
We set the industry standard for turnaround time for both new and existing clients, you can expect excellence.
Trusted by Surety Markets
Outstanding relationships with all of the most reputable surety bond markets in the industry, giving you the power of choice.
Surety is What We Do
Our industry-leading team boasts seven full time dedicated surety professionals with a combined 80+ years of experience.
Our organization has been working with FCA Surety Bonds and Insurance for over 2 years. The team, led by Jamie Collum and Warren Griffiths, exceeds expectation in service, responsiveness and construction knowledge. Our business needs often demand last minute bonding, and we have never been disappointed by FCA. Always going above and beyond to deliver the right solution in a seamless and effortless manner. We highly recommend FCA for all construction insurance needs.
After 6 years in business, our construction company was asked to provide bonding for 3 very important projects that were awarded to us. We had no idea where to start as bonding was something totally unknow to our organization. A quick search online, and let me say, we couldn’t have found a better company to assist us…. FCA! Andrew and his team were quick to explain the intricacies of bonding, all the requirements including processes. They took their time to clearly explain and educate us on all that is bonding. They were patient and they took the time to walk us through the necessary steps to get us started and set up. These days, it is rare to recieve this level of support. I highly recommend FCA!
FCA is one of the best companies we have had the pleasure of working with so far. Very professional, fast and always on time. Looking forward to continue working with them.
Get A Free Consultation Today!
It all starts with a conversation today with one of our surety bonding experts. Once we determine which type of surety bonds you require, we will work tirelessly to expedite these bonds for you.