The Province of Saskatchewan recently enacted new legislation to regulate Crown permits and leases for extraction of potash and salt. These changes followed a period of industry consultation and the final regulations differed from previously circulated versions. Holders of permits or leases have been provided copies of the new regulations directly from the Ministry of the Economy and should carefully review the new regulation to familiarize themselves with the new provisions, which are currently in force. This post draws attention to a few of the more significant changes. Effective March 26, 2015, The Subsurface Mineral Regulation, 1960 (“SMR”) was replaced in large part, with The Subsurface Mineral Tenure Regulation (“SMTR”). While the new regulation applies to all permits and leases, including those issued pursuant to the previous regulation (respectively, “legacy permits” and “legacy leases”), it contemplates a transitioning period for legacy permits and leases to bring them into the new framework. The SMTR increases rental rates for both permits and leases. Rates are now calculated on the basis of hectares rather than acres. In the renewal term of a lease, the rental rate for non-producing leases doubles. The new rental rates will be payable on all applicable dispositions with anniversary dates after March 26, 2015. The SMTR has shifted work expenditures away from leases and entirely to permits. In order to provide a transitioning period to the SMTR, however, legacy permits will not be subject to the new work expenditure requirements for permits.  On conversion to lease, however, legacy permits became legacy leases, and will be subject to the expenditure requirements pursuant to the SMR during the first lease term. Under the SMTR, permit holders may be eligible to consolidate work expenditures over adjoining permits.  This eligibility is not available to legacy permit holders. Upon the enactment of the SMTR, the ability to consolidate permits was removed. The SMRT no longer includes a mandatory reduction in lease lands. It introduces the concept of target land utilization rate (“LUR”), which will be used as one factor to determine the eligibility of lease lands for renewal after the first lease term. Upon a first renewal, a lessee that does not meet the “target LUR”, or whose lands are not mined or do not form part of a unit agreement, may post a performance deposit to avoid any reduction in the lease block. Upon subsequent renewals, however, there is no option of the lessee to post a performance deposit and leases that do not meet the target LUR or other prescribed requirements will see the lease lands reduced accordingly. Lessees in their first term or first renewal terms should review these rules carefully as the lease terms are carried over into the new regime. The SMRT also provides that lessees may, where the target LUR is exceeded, apply to expand the lease lands within a development zone, as defined in the SMRT. In response to industry comment, this expansion can be requested at any time. While the bulk of the SMR has been repealed and replaced by the SMTR, the SMR still remains in force and continues to set out the applicable Crown royalty rates, which remain unchanged. The foregoing sets out only some of the important changes affected by the SMTR. It is not intended to provide a comprehensive summary and does not constitute legal advice. Additional information relating to the changes can be found on the Ministry of the Economy’s website here. About the author: Chris is an associate in the Saskatoon office practicing in the area of corporate and commercial law. About McKercher LLP: McKercher LLP is one of Saskatchewan’s oldest, largest law firms with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have made us a top ranked firm by Canadian Lawyer magazine (2011, 2013). Expertise, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions.