Section 48 of the Nova Scotia Underground Mining Regulations contains a provision for a "Coal Mine Business Plan and Feasibility Study". This study is required to be submitted whenever the Director of the Occupational Health and Safety Division of the Department of Labour and Advanced Education orders its submission.

Note: Where Director is used in this sheet it is understood to mean the Director of the Occupational Health Occupational Health and Safety Division of the Department of Labour and Advanced Education, unless otherwise stated.

This Info-Sheet answers some questions related to the Coal Mine Business Plan and Feasibility Study.

What is the purpose of an Underground Coal Mine Business Plan and Feasibility Study?

In 1992, the Westray coal mine in Nova Scotia exploded. The Inquiry into that explosion concluded that the operating company may have been constrained in its finances due to operational difficulties. Lacking other ready reserves, these financial constraints may have resulted in the operators being unable to adequately respond to health and safety issues.

To ensure such a situation does not arise again, the Underground Mining Regulations have a provision for a Coal Mine Business Plan and Feasibility Study. The purpose of the study is to determine whether a new underground coal mining company has adequate financial reserves to weather reasonably anticipated upsets in business plans.

When must the study be submitted?

The report must be submitted when so ordered by the Director of Occupational Health and Safety. The report is only submitted once before a coal mine opens. There is no requirement for further submissions.

What must the study contain?

The regulations state that the study must include:

• an analysis of coal markets and production schedules;
• estimated operating supplies and anticipated costs of the supplies;
• financial details, including audited financial statements;
• assets and cash reserves;
• sensitivity analyses, including the anticipated effects of changes in market conditions, supplies, price, timing, production costs, product quality, work force, wage rates, taxes, equipment and maintenance costs, or any other relevant factor, and

any additional factors that, in the opinion of the financial expert, are relevant to the financial viability of the mine.

Who will review the study? What will be their qualifications?

The study will be reviewed by a financial expert (or firm of experts) with expertise in financial and operational planning. The expert will be required to sign a confidentiality agreement and verify that there is no conflict of interest.

Who chooses the financial expert?

The Director. However, companies or other interested parties may suggest experts to use or that should not be used. In all cases, the suggestions should be accompanied by clear rationales.

What will the financial expert be asked to determine?

In general, the expert will be asked to advise the Director on three things:

• are the financial assumptions reflected in the company's information reasonable?
• does the company have adequate financial resources to be able to provide for its ongoing operations based on sensitivity analyses?
• is the business plan and feasibility study robust.

Who pays for the report?

The coal mining company will be charged for the report.

Who gets a copy of the report?

The report will be submitted by the financial expert to the Director. The Director may give the company a copy of the report for their comment.

Can the report by accessed through freedom of information laws?

Anyone can submit a request for information in government files through a process set out in the Nova Scotia Freedom of Information and Protection of Privacy Act. Were such a request to be submitted, it would be treated as any other information request, including reviewing freedom of information requests from the standpoint of unreasonable disclosures of confidential business information.

The Underground Mining Regulations say the study is to be filed "in a manner ordered by the Director." What does this mean?

Due to the sensitive nature of the information contained in the study, the Regulations allow for special filing procedures to better assure the study's confidentiality. The Director may require the submitting company to provide the study directly to the financial expert.

Does the submitting company have to reveal the financial details of a parent company or backer?

The Department is only interested in the financial resources and arrangements of the company mining coal in Nova Scotia. Thus, the financial resources of partners are only of interest if they are directly relevant to the financial resources and arrangements of the company mining coal in Nova Scotia.

Can the Director order changes to a company's finances in response to an unfavourable review?

No. However, the review will provide information that the Director can consider in relation to its impact on health and safety and the Director's response to other regulators on the issuance of the other regulators' approvals.

Contact:

If you have any questions about the Coal Mine Business Plan and Feasibility Studies or any other issue related to the Underground Mining Regulations, please call at 1-800-952-2687 (in Nova Scotia) or the Occupational Health and Safety Mining Engineer at (902)424-0451.