Satisfying “Financial Responsibility” under the NWT Waters Act is about proving reliability: Wek’eezhi Land and Water Board clarifies section 26(5)(d).

On August 18, 2026, the Wek’èezhìı Land and Water Board (the Board) granted Fortune Minerals (Fortune), a junior mining company, a renewal of its water licence for the use of water and deposit of waste for its NICO Mine (the Project) in the Hislop Lake area of the Northwest Territories. In it’s decision, the Board concluded that the activities, land and water use, and waste disposal associated with the Project can be completed while providing for the conservation, development, and utilization of waters in a manner that will provide the optimum benefit for residents of the Mackenzie Valley and all Canadians. Accordingly, the Board has recommended that the Minister approve Fortune’s water licence in accordance with the Board’s decision.

 The Board, for the first time, took the opportunity to extensively consider and apply section 26(5)(d) of the Waters Act. This provision requires the Board to be satisfied of an applicant’s “financial responsibility” before it can issue or renew a licence.

The Waters Act 26(5)(d) reads:

“If an application for a licence is made, the Board shall not issue a licence unless the applicant satisfies the Board that: … (d) the financial responsibility of the applicant, taking into account the applicant’s past performance, is adequate for (i) the completion of the appurtenant undertaking, (ii) such mitigative measures as may be required, and (iii) the satisfactory maintenance and restoration of the site in the event of any future closing or abandonment of that undertaking.”

While Board decisions do not set binding precedents in the same manner as a court of law, this decision is nonetheless bound to have significant impact on water licensing applications before the Mackenzie Valley Land and Water Boards (LUBs) going forward, both for applicants within the mining sector and beyond. Historically, LUBs have interpreted section 26(5)(d) as requiring applicants to ensure that adequate security is posted prior to commencing various phases of a project. This was the reasoning that the Board adopted in Fortune’s initial water licence application for the Project in 2014.

Fortune’s renewal application began as any other water licence application. Prior to the public hearing, Fortune received interventions from government, First Nations, and other interested parties, and responded to those interventions. The Board held a public hearing in respect of Fortune’s application in April 2025 (the Hearing), during which financial responsibility became a key issue. Tłı̨chǫ Government, in particular, raised concern with the need for responsible mining, given the impact that past mining reclamation failures have had on the environment and its traditional territory.

During the Hearing, the issue of financial responsibility became contentious. The Board issued an undertaking to Fortune, requiring it to disclose a long list of detailed financial documents and information to assess its financial responsibility. It also issued an undertaking to the Government of Northwest Territories (GWNT) requesting a legal opinion on whether a water licence condition could require an applicant to provide additional information on financial responsibility after licence issuance.

On grounds of procedural fairness, Fortune objected to the undertaking, and the Board withdrew the request. However, the same detailed financial disclosure was then requested of Fortune by way of an information request after the Hearing, which Fortune complied with.

Along with the relevant financial documents, Fortune submitted that Project construction was contingent on receiving adequate financing and financing was contingent on, among other things, receiving its feasibility study and the required permits (including the renewed water license) to proceed.

Fortune’s concern stemmed from the reality that junior mining companies are routinely unable to finance the entirety of a project at the permitting stage. This is the reality of mineral exploration in the NWT and in Canada generally. Junior mining companies account for 65% to 70% in the NWT and just over half of Canada’s total exploration and deposit appraisal. Imposing onerous financial disclosure requirements in the licence (as well as potentially seeking board approval of a company’s financial responsibility down the road as the project progresses) could create a significant barrier to project advancement and could raise uncertainty for potential investors. Fortune also argued it is also not the Board’s role, nor in its jurisdiction or expertise to regulate or supervise a mining company’s financial affairs.

Fortune also argued that imposing a future requirement for proof of financial responsibility would be inconsistent with s. 26(5)(d), which requires the Board to assess Fortune’s financial responsibility as part of the decision on licence issuance or renewal.

After the Hearing, the Board asked the Parties to file submissions on the legal interpretation and application of section 26(5)(d). The Board reviewed these submissions and the parties’ closing arguments and found that it was satisfied that Fortune’s financial responsibility was adequate for licence renewal. The Board issued extensive reasons on the proper interpretation of section 26(5)(d). As no Court has interpreted this section, the Board’s reasons here will likely play an instrumental role in how LWBs assess financial responsibility moving forward.

Applying statutory interpretation principles, the Board found that section 26(5)(d) serves a “protective function” within the broader statutory scheme and is “intended to reduce the risk of licensed undertakings proceeding without adequate financial capacity to complete the undertaking, implement required mitigation measures, and satisfy obligations relating to the maintenance.”

The Board agreed that section 26(5) is a “mandatory precondition to the issuance of a licence”. The Board must assess the evidentiary record as a whole and determine whether the record provides a sufficient basis upon which satisfaction of financial responsibility can be reached and explain why it has reached those conclusions. The applicant bears the burden of satisfying the Board that, on a balance of probabilities, its financial responsibility is adequate for each of the statutory requirements in 26(5)(d).

Importantly, the Board found that section 26(5)(d) does not require certainty, recognizing that the provision requires the Board to assess an applicant’s financial responsibility in respect of obligations that arise through the lifespan of a Project before those obligations have materialized. To address this gap, the Board found the section 26(5)(d) assessment must be undertaken based on the information reasonably available at the time of the Board’s decision. That said, the Board cautioned against speculation, finding that the relevant question is “whether the record presently before the Board is sufficient to establish that the requirements of section 26(5)(d) have been met at the time of issuance”.

Central to the understanding of the obligations under section 26(5)(d) is the interpretation of the phrase “financial responsibility” itself. In its reasons, the Board adopted an interpretation of the term “financial responsibility” as meaning an applicant’s reliability to meet the financial obligations associated with each of the statutory requirements throughout the life of the Project.

Significantly, the Board interprets section 26(5)(d) “as not requiring it to undertake a free-standing assessment of an applicant’s financial affairs or regulate or supervise a proponent’s finances generally. The Board’s inquiry is confined to the statutory question assigned by sections 26(5)(d): whether the evidentiary record demonstrates that the applicant has adequate financial responsibility for each of the three statutory requirements. Any financial information considered by the Board must, therefore, be relevant and proportionate to the statutory inquiry.”

Applying its reasoning to Fortune, the Board found that it was satisfied of Fortune’s financial responsibility under all three heads in the section.

While the Board assessed each of the three heads separately, it placed significant weight in its analysis of each on Fortune’s evidence regarding its inability to begin construction until it received adequate financing. Fortune’s evidence was that it would not and could not proceed to construction until adequate financing was obtained, and this reduced the risk that the Project would proceed without adequate financial resources in place. Coupled with providing updated technical information and Board-approved management plans as the Project progressed, the Board found that Fortune’s evidence of delayed construction demonstrated a realistic pathway by which mitigation measures may be identified, financed, and implemented as the Project advances. The Board similarly concluded that the fact that security will be posted before construction commences, is staged as the Project develops, and remains subject to regular review and approval throughout the Project’s life, satisfied Fortune’s financial responsibility requirement with respect to the maintenance and remediation of the site.

The Board also considered Fortune’s, and specifically its management team’s, past performance as referred to in section 26(5)(d), but noted that past performance alone was not sufficient to demonstrate Fortune’s financial responsibility.

The Board’s extensive reasons on financial responsibility in this application represent a clear change in its approach to the requisite analysis under section 26(5)(d). This shift reflects a growing concern with the risks associated with inadequate financing of mining projects – the Board’s express reference to several recent mining project failures is demonstrative of this. That said, it remains to be seen whether the Board’s assessment of Fortune’s financial responsibility was a unique exercise in order to address this concern once and for all, or whether LWBs will require extensive financial responsibility information and submissions from applicants in the future. Regardless, this decision suggests that applicants should be prepared to provide evidence of and defend their position on financial responsibility in LWB proceedings going forward.

Lawson Lundell’s Environmental, Regulatory, and Indigenous Litigation team successfully represented Fortune Minerals in respect of its Water Licence application. For assistance with a water licence application before one of the Mackenzie Valley Land and Water Boards, please reach out to the authors of this post.