<SEC-DOCUMENT>0001206774-14-002784.txt : 20150316
<SEC-HEADER>0001206774-14-002784.hdr.sgml : 20150316
<ACCEPTANCE-DATETIME>20140829163854
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001206774-14-002784
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20140829

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MFC Industrial Ltd.
		CENTRAL INDEX KEY:			0000016859
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-METALS, MINERALS (NO PETROLEUM) [5050]
		IRS NUMBER:				131818111
		STATE OF INCORPORATION:			A1
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		SUITE 1620 - 400 BURRARD
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 3A6
		BUSINESS PHONE:		604-683-5767

	MAIL ADDRESS:	
		STREET 1:		SUITE 1620 - 400 BURRARD
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 3A6

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	TERRA NOVA ROYALTY Corp
		DATE OF NAME CHANGE:	20100330

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
		DATE OF NAME CHANGE:	20051103

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MFC BANCORP LTD
		DATE OF NAME CHANGE:	19970313
</SEC-HEADER>
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      <P align=left><FONT face="Times New Roman" size=2>1000 Cathedral
      Place<BR>925 West Georgia Street<BR>Vancouver, British Columbia<BR>Canada
      V6C 3L2 <BR><BR>Telephone: (604) 662-8808<BR>Facsimile:
      (604)&nbsp;669-8803<BR>www.sangramoller.com </FONT></P></TD>
    <TD vAlign=top align=left width="5%">
      <P align=left><FONT face="Times New Roman" size=2><B>Reply Attention
      of:</B><BR>H.S. Sangra<BR><BR><B>Our File No.:</B><BR>6963
      055<BR><BR><B>Direct Line:</B><BR>(604)
      692-3022<BR><BR><B>Email:</B><BR>hsangra@sangramoller.com</FONT></P></TD>
    <TD vAlign=top align=left width="4%" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>VIA EDGAR AND
COURIER</FONT></U></B><FONT face="Times New Roman" size=2></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>SECURITIES AND EXCHANGE
COMMISSION <BR>Division of Corporation Finance <BR>100 F Street,
N.E.<BR></FONT><FONT face="Times New Roman" size=2>Washington, D.C.
20549</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2><U>Attention:&nbsp;&nbsp;&nbsp;&nbsp; Linda Cvrkel, Branch
Chief</U></FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Dear
Sirs/Mesdames:</FONT></P>
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    <TD noWrap align=left width="1%"><B><FONT face="Times New Roman" size=2>Re:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </FONT></B></TD>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>MFC
      Industrial Ltd. (the "Company")</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>Form
      20-F for the year ended December 31, 2013 (the "2013
  20-F")</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>Filed March 31, 2014</FONT></B></TD></TR>
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    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>File No.
001-04192</FONT></B></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2>We act as counsel for the
Company and write in connection with the letter dated August 7, 2014 (the
"</FONT><B><FONT face="Times New Roman" size=2>Comment Letter</FONT></B><FONT face="Times New Roman" size=2>") from the Securities and Exchange Commission
(the "</FONT><B><FONT face="Times New Roman" size=2>Commission</FONT></B><FONT face="Times New Roman" size=2>") commenting on the 2013 20-F. On behalf of the
Company, we provide the following response to your comments.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>For your ease of reference,
we have reproduced the numbering in the Comment Letter and have set out below,
in italics, the text of your question followed by the Company's response
thereto.</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Form
20-F</FONT></U></B><B><FONT face="Times New Roman" size=2></FONT></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Letter to
Shareholders, page I</FONT></U></B><B><FONT face="Times New Roman" size=2></FONT></B></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>1.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Reference is made to the non-GAAP measure, EBITDA. We note
      discussion of the non-GAAP measure in your letter to shareholders
      precedes discussion of net income, the most directly comparable GAAP
      measure. Please be advised that the most directly comparable GAAP measure
      should be presented with equal or greater prominence to the non-GAAP
      measure. In this regard, please revise your presentation and discussion of
      EBITDA to follow net income.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that in
future filings the presentation of EBITDA will be revised accordingly, including
presenting net income with equal or greater prominence.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 2
</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>EBITDA Breakdown,
page VI</FONT></U></B></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>2.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>We note from your
      reconciliation on page VI that impairment is included in the reconciling
      items of Net Income to EBITDA. Please note that by definition, EBITDA
      represents earnings before interest, taxes, depreciation, and
      amortization. Measures that are calculated differently should not be
      characterized as "EBITDA." Please revise your presentation
      accordingly.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that in
future filings the reference to "EBITDA" shall represent earnings before
interest, taxes, depreciation and amortization and shall not include impairment
or other measures.</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Information on the
Company, page 16</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>B. Business Overview,
page 18</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Business Segments,
page 18</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Commodities and
Resources, page 18</FONT></U></B></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>3.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>We note that for
      some transactions, you exchange commodities you purchased for another
      commodity that you will subsequently sell. To the extent material, please
      revise the notes to your financial statements to disclose your accounting
      for such transactions including any gains or losses recognized and where
      you classify such gains or losses in your statement of
      operations.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>For each of the years ended
December 31, 2013, 2012 and 2011, the Company did not engage in any transactions
involving the exchange of commodities purchased for commodities to be sold. In
the future, if any such transactions occur, the Company will disclose the
accounting for such transactions, including any gains or losses recognized and
where such gains or losses are classified within the statement of operations.
The Company advises that in future filings the disclosure referenced in the
Commission's comment will be removed if no such transactions occur in the
relevant period. </FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Plants, Property and
Equipment, page 25<BR></FONT></U></B><B><U><FONT face="Times New Roman" size=2>Gas Reserves, page 26</FONT></U></B></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>4.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>Please expand the
      tabular disclosure of your reserves as of December 31, 2013 to provide the
      amounts of your probable developed and probable undeveloped reserves to
      comply with Item 1202(a)(1) and Instruction 2 to paragraph (a)(2) of Item
      1202 of Regulation S-K.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company proposes that
in future filings the applicable tabular disclosure under Item 1202(a)(1) will
disclose the amounts of probable developed and probable undeveloped
reserves.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that
the Third Party Report (the "</FONT><B><FONT face="Times New Roman" size=2>Reserves Report</FONT></B><FONT face="Times New Roman" size=2>") on
Reserves by GLJ Petroleum Consultants Ltd. ("</FONT><B><FONT face="Times New Roman" size=2>GLJ</FONT></B><FONT face="Times New Roman" size=2>"), included as Exhibit 15.4 to the 2013 20-F, reported and disclosed
developed and undeveloped probable reserves separately. </FONT></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>5.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>Please revise the
      tabular disclosure of your reserves as of December 31, 2013 to exclude an
      aggregated total of the proved plus probable reserves. For additional
      guidance, refer to the answer to Question 105.01 in the Compliance and
      Disclosure Interpretations (C&amp;DIs) available on our website at:
      http//www.sec.gov/divisions/corpfin/guidance/oilandgasinterp.htm.</FONT></I></TD></TR></TABLE><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 3
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company proposes that
in future filings the tabular disclosure of reserves will not aggregate proved
and probable reserves as per the above referenced Compliance and Disclosure
Interpretation.</FONT></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>6.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>Please tell us the
      extent to which any of the proved undeveloped reserves disclosed as of
      December 31, 2013 will not be developed within five years since your
      initial disclosure of these reserves. Also, please clarify your disclosure
      in this regard and if applicable provide an explanation for the specific
      circumstances for any material amounts of proved undeveloped reserves that
      remain undeveloped for five years or more after initial disclosure. Please
      refer to the disclosure requirements under Item 1203(d) of Regulation
      S-K.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company's initial
disclosure of proved undeveloped oil and gas reserves was in its Annual Report
on Form 20-F for the year ended December 31, 2012, as it completed its
acquisition of MFC Energy Corporation ("</FONT><B><FONT face="Times New Roman" size=2>MFC Energy</FONT></B><FONT face="Times New Roman" size=2>") (formerly,
Compton Petroleum Corporation) in September 2012. Accordingly, the initial
five-year period referenced in Item 1203(d) of Regulation S-K has not been
completed and we respectfully submit that no disclosure is currently required
under such item. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As disclosed in the 2013
20-F, the Company has not itself carried out any drilling in connection with its
undeveloped reserves since acquisition in September 2012.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>However, as further
disclosed in the 2013 20-F, the Company has entered into a farm-out agreement
with a third-party operator providing for such operator to drill at least 12 new
wells and expend a minimum of C$50 million on drilling portions of the
Company's undeveloped lands. As at June 30, 2014, such third party operator had
drilled two such wells and is in the process of further drilling on the
Company's undeveloped reserves. The Company is currently actively seeking
additional similar arrangements for the development of its undeveloped reserves.
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Additionally, the Company
owns varying working interests in many of its undeveloped lands. The Company's
working interest partners also have rights to and may elect to conduct drilling
on such undeveloped lands in which the Company can either elect to participate
in such drilling for its pro rata share or accept a dilution of its working
interest. Further, the Company may in the future determine to carry out
development drilling on its lands with undeveloped reserves in the
future.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As a result of the
foregoing, at this time, the Company is currently unable to quantify or predict
what portions of its undeveloped lands will not be developed prior to April 1,
2018, being the expiry of the five year period referenced in Item 1203(d) of
Regulation S-K. </FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Production, Prices
and Costs, page 27</FONT></U></B></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>7.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>Please revise or
      otherwise expand the tabular disclosure of your sales volumes to disclose
      your production in terms of the total annual quantities, by final product
      sold, for each of the periods presented. Refer to the presentation
      requirements in Item 1204(a) of Regulation
S-K.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The total annual quantities
of natural gas, natural gas liquids and oil for the year ended December 31, 2013
are disclosed on page 27 of the 2013 20-F immediately above the tabular
disclosure of average daily volumes. Annual production quantities for the period
between September 7, 2012, the date which the Company commenced consolidation of
its oil and gas assets, and December 31, 2012 were not included in the 2013 20-F
because such period did not constitute a full fiscal year and would not provide
any meaningful comparative disclosure to readers.&nbsp;</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>
Page 4
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that
future filings will include annual quantities for each of the periods presented
under Item 1204(a) of Regulation S-K. </FONT></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>8.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>The
      footnote to the tabular disclosure of your production and average sales
      prices refers to the inclusion of sulphur. Please clarify for us how
      sulphur relates to the figures presented for the production and average
      sales price of your NGLs. Also tell us the extent to which you incorporate
      revenues associated with the sale of sulphur in the determination of the
      economic producibility of your reserve
quantities.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>Sulphur revenues and
production amounts are included in the tabular disclosure regarding natural gas
liquids on the basis of one tonne sulphur being equivalent to one barrel of
natural gas liquids.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Sulphur volumes were
recognized by GLJ in the Reserves Report. However, sulphur revenues are not
included nor considered in the determination of economic producibility of the
Company's reserve quantities as they do not have a material impact on the
determination of producibility.</FONT><B><FONT face="Times New Roman" size=2>
</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>For the year ended December
31, 2013, the Company's total sulphur production was approximately 55,000 tonnes
(55,000 boe), representing only approximately 1.6% of the Company's total
production of 3,450,000 boe.</FONT></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>9.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>The
      footnote to the tabular disclosure of your average sales prices refers to
      the inclusion of third party processing fees. Please provide us with the
      average sales prices excluding the effect of these fees. Also tell us the
      circumstances and extent to which you incorporate revenues associated with
      third party processing fees in the determination of the economic
      producibility of your reserve quantities.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The average price for the
Company's natural gas, natural gas liquids and crude oil for the years ended
December 31, 2013 and 2012, not including third party processing fees, was
C$29.49 and C$25.23 per barrel of oil equivalent, respectively.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Third party processing fees
were incorporated as revenues by GLJ in the Reserves Report in determining
economic producibility of the Company's reserves. Such fees are included as an
approximation and are declined on the same basis as the life of the reserve.
</FONT><B><FONT face="Times New Roman" size=2></FONT></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Present Activities
and Productive Wells, page 28</FONT></U></B></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>10.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Please
      expand your disclosure to present the expiration dates relating to
      material amounts of your undeveloped acreage to comply with Item 1208(b)
      of Regulation S-K.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company proposes in
future filings to expand the disclosure to provide expiry dates for any material
amounts of undeveloped acreage. </FONT><B><FONT face="Times New Roman" size=2></FONT></B></P>
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  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>11.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>We note
      your reference to iron ore reserves on pages 32 and 112 of your filing.
      Please disclose your iron ore reserves and the material assumptions
      associated with the calculation of these reserves. See the Instructions to
      Item 4.D of Form 20-F.</FONT></I></TD></TR></TABLE><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 5
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The references to
"reserves" at pages 32 and 112 of the 2013 20-F were made to describe an
assumption made by management in assessing whether to recognize an impairment
charge in relation to its royalty interest in a mine. The mine is operated and
owned by an "arm's-length" third party and the Company is not engaged in any
exploration, development or mining operations in connection therewith.
Accordingly, the Company submits that Item 4.D of Form 20-F is not applicable to
such royalty interest because the Company's royalty interest does not constitute
an "extractive enterprise" that would trigger disclosure requirements under Item
4.D of Form 20-F. </FONT><B><FONT face="Times New Roman" size=2></FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company's royalty
interest was established pursuant to a mining sub-lease with the operator in
1955. Pursuant to such sub-lease, the Company does not have any access to the
information, including reporting activities at the mine, operations, drilling
results, reserve reports or other information, which would be necessary to
complete a reserve estimate or provide the requested disclosure. Specifically,
the Company has no current legal rights to enter the property, conduct testing
or be provided with reserves reports, assay results or other data.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Pursuant to the terms of
its royalty interest, the Company only receives the shipping and pricing related
data for the purpose of calculation of the amount of royalty payments. As a
result, the Company has disclosed specific risk factors at pages 1 and 8 of the
2013 20-F, stating that it has limited access to technical or geological data
relating to the mine, including as to reserves, and that the Company can provide
no assurances as to the level of reserves at the mine.</FONT></P>
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    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>12.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>We note
      your disclosure of mineral resources for the Pea Ridge Mine. Our
      understanding of section 2.2 of National Instrument 43-101 is that mineral
      resource categories should be disclosed separately. Please modify future
      filings accordingly.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that
disclosure of mineral resources in its future filings will include separate
resource categories.</FONT></P>
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  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>13.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Please
      tell us the assumptions associated with your mineral resource cut-off
      grade that were used to determine the reasonable prospect of economic
      extraction. In future filings disclose the cut-off grade and these
      assumptions.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The mineral resource
estimates referenced in the 2013 20-F were based on a technical report dated
August 13, 2012 prepared by Behre Dolbear &amp; Company (USA), Inc. and titled
"Technical Report on the PRR Mining (Pea Ridge) Property, Washington County,
Missouri USA". In completing the report, the authors thereof determined
reasonable prospects of economic extraction and the reasonableness of the
cut-off grades of 40%, 45% and 50% based on their review of historical
production data for the mine, which was actively in production between 1964 and
2001.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that in
future filings it will include the cut-off grade and assumptions respecting the
mineral resource estimate for the project.</FONT></P>
<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014<BR>Page 6
</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Operating and
Financial Review and Prospects, page 29</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Liquidity and Capital
Resources, page 35</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>14.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>We note
      from page XII in the letter to shareholders that you expect to incur
      substantial additional expenditures in order to determine the feasibility
      of the project at Pea Ridge. In this regard, please revise MD&amp;A to
      quantify such expenditures, if possible, and disclose material capital
      expenditures expected for your upcoming
year.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The above referenced
disclosure was included to disclose to readers that there will need to be
significant investments to determine feasibility of the project or achieve
operations over the long-term. Given the early stage of the project, the Company
does not currently have a specific estimate for the total cost to determine
feasibility or to re-open the mine.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that
proposed expenditures for the fiscal year ended December 31, 2014 are not
material. We note that for the six months ended June 30, 2014, the Company only
incurred approximately $0.2 million in expenditures in relation to the project
(as set forth in the Company's Form 6-K dated August 14, 2014).</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Financial Statements,
page 68</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Notes to Consolidated
Financial Statements, page 77</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 3. Acquisitions
of Consolidated Entities, page 98</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>15.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Your
      disclosure on page 100 indicates that the purchase price is subject to
      adjustment and the fair value of certain real property is provisional.
      Given that your acquisitions of ACCR and Possehl occurred in November
      2012, please tell us how you plan to account for any adjustments upon
      finalization of the purchase price in light of the one year measurement
      period that has lapsed. Your response should address how your treatment
      will comply with paragraph 50 of IFRS 3.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that
the purchase price has been finalized and there has been no adjustment to the
purchase price in connection with the acquisitions of MFC Resources Inc.
(formerly ACC Resources Inc.) and Possehl Mexico S.A. de C.V.</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 16. Interests in
Resource Properties, page 111</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>16.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>We note
      from page 112 the operator of the Wabush iron ore mine announced in
      February 2014 that it will idle the mine at the end of the first quarter
      of 2014. We also note from disclosures provided elsewhere in the filing
      that you receive minimum royalty payments from the operator not less than
      C$3.25 million per annum and are required to make payments of C$0.22 per
      ton of iron shipped to the lessor of the mine. To the extent material,
      please revise to disclose the minimum payments, if any, you are required
      to pay to the lessor per annum within your commitments and contingencies
      footnote beginning on page 128.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company advises that
the payments to the lessor of the mine are based on the actual tonnage of iron
shipped and there is no minimum payment from the Company to the lessor of the
mine. Accordingly, no payment is required if the mine is idled and there are no
shipments of iron from the mine.</FONT></P>
<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 7
</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 19. Deferred
Income Tax Assets and Liabilities, page 117</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>17.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>We note
      from page 118 that in November 2012 you received an assessment from the
      Canadian Revenue Agency that may require you to make a material payment
      for which you have not recorded a liability. Please revise to disclose the
      amount of the assessment and the progress of the deliberations with the
      CRA given that over a year has passed since the original
      assessment.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company respectfully
submits that its disclosure of deferred income tax assets and liabilities in the
audited consolidated financial statements for the year ended December 31, 2013
(the "</FONT><B><FONT face="Times New Roman" size=2>2013 Financial
Statements</FONT></B><FONT face="Times New Roman" size=2>") in the 2013 20-F was
in compliance with International Financial Reporting Standards </FONT><FONT face="Times New Roman" size=2>("</FONT><B><FONT face="Times New Roman" size=2>IFRS</FONT></B><FONT face="Times New Roman" size=2>") requirements,
namely International Accounting Standards ("</FONT><B><FONT face="Times New Roman" size=2>IAS</FONT></B><FONT face="Times New Roman" size=2>") 12, </FONT><I><FONT face="Times New Roman" size=2>Income
Taxes</FONT></I><FONT face="Times New Roman" size=2> and 37, </FONT><I><FONT face="Times New Roman" size=2>Provisions, Contingent Liabilities and Contingent
Assets</FONT></I><FONT face="Times New Roman" size=2>. These provisions include:
</FONT></P>
<UL style="FONT-SIZE: 10pt; TEXT-ALIGN: justify"><LI><FONT face="Times New Roman" size=2>IAS 12.88 requires that an entity
  discloses any tax-related contingent liabilities and contingent assets in
  accordance with IAS 37. Contingent liabilities and contingent assets may
  arise, for example, from unresolved disputes with the taxation
  authorities.<BR>&nbsp;</FONT>
  </LI><LI><FONT face="Times New Roman" size=2>IAS 37.27 states that an entity shall
  not recognize a contingent liability.<BR>&nbsp;</FONT>
  </LI><LI><FONT face="Times New Roman" size=2>IAS 37.28 provides that a contingent
  liability is disclosed, as required by paragraph 86, unless the possibility of
  an outflow of resources embodying economic benefits is remote.</FONT> </LI></UL>
<P align=justify><FONT face="Times New Roman" size=2>In determining whether
disclosure was required under IFRS, the Company, among other things, reviewed
the assessment, the material facts related thereto and the subject transaction
and consulted its advisors. Based on such review, the Company's management
determined that the probability of the Canada Revenue Agency assessment being
successful in court was remote. Accordingly, pursuant to IAS 37.28, the Company
respectfully submits that further disclosure of the contingent liability amount
in connection with this assessment is not required.</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 25.
Decommissioning Obligations, page 122</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>18.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Please
      tell us the nature of the events that gave rise to the significant change
      in estimates during 2013 of $24,499.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The change in estimates
during the year ended December 31, 2013 referenced in Note 25 of the 2013
Financial Statements is comprised of:</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>a)</FONT></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>$22.9
      million resulting from changes in risk-free discount rates during the
      current year (average discount rates of 2.61% in 2013 versus 1.57% in
      2012); and</FONT></TD></TR>
  <TR>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top colSpan=3></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>b)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>$1.6
      million resulting from changes in estimates of abandonment costs for the
      Company's hydrocarbon properties.</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 8
</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 33. Commitments
and Contingencies, page 128</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>19.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Please
      clarify for us what is meant by your statement on page 129 that of the
      maximum guarantees of $51,393, &#147;$43,354 has been used and outstanding and
      has not been recorded as liabilities in the consolidated statements of
      financial position.&#148;</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The $43.3 million amount
referenced in Note 33 of the 2013 Financial Statements represents: (i)
guarantees on discounted promissory notes (i.e., sold to a financial institution)
issued in the ordinary course of business; and (ii) guarantees on orders to
certain raw material suppliers and financing partners in the ordinary course of
business. Such amounts were not recognized as liabilities of the Company as at
December 31, 2013. The Company proposes to clarify the above disclosure in its
future filings. </FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 41. Recast of
Consolidated Statements during the Measurement Period and Correction of
an</FONT></U></B><B><FONT face="Times New Roman" size=2> </FONT></B><B><U><FONT face="Times New Roman" size=2>Error, page 141</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>20.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>We note from your
      footnote that during the measurement period the fair values of the assets
      and liabilities of MFC Energy were finalized, and also revised as a result
      of an error correction. In this regard, please tell us the nature, facts
      and circumstances surrounding the error as it is not apparent from your
      current disclosures. As part of your response to us, please describe your
      accounting treatment prior to the error correction and the accounting
      guidance you relied upon to correct the error. Please revise your footnote
      to include the disclosure required by paragraph 49(a) of IAS
    8.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>In connection with the
acquisition of MFC Energy, the Company measured the identifiable assets acquired
and the liabilities assumed at the acquisition-date fair values, which included
the deferred tax assets comprising the carry-forward of unused tax losses,
unused tax credits and all deductible temporary differences to the extent that
it was probable that future taxable profit will be available against which the
unused tax losses, unused tax credits and deductible temporary differences could
be utilized.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In December 2013, the
Company discovered that certain resource properties underlying a tax pool with a
tax effect of $6.5 million had been sold prior to the acquisition of MFC Energy
by the Company in September 2012 but the 2011 and 2012 tax returns of MFC Energy
had not been updated to reflect such dispositions. As such, the deferred tax
asset of MFC Energy was reduced by $6.5 million. Accordingly, the bargain
purchase and net income for the year ended December 31, 2012 were reduced by
$6.5 million, or $0.10 per share on basic and diluted basis. The deferred income
tax assets and retained earnings were reduced by $6.5 million as of December 31,
2012. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company proposes to
expand the disclosure regarding the error correction in future filings
commencing with its report for the quarter ended September 30, 2014. Please find
enclosed herewith (hard copy only) a copy of such proposed amendments redlined
against the original disclosure, which sets forth the additional proposed
disclosure. </FONT><B><FONT face="Times New Roman" size=2></FONT></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>21.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><I><FONT face="Times New Roman" size=2>We note from the
      bottom of page 141 you disclose pursuant to IFRS 3, comparative
      information for prior periods presented in the financial statements has
      been revised to account for the adjustments, including the correction of
      an error, retrospectively. We further note you have marked 2012 financial
      statements and related footnotes in the filing as &#147;recast&#148; as a result of
      such adjustments. In this regard, we do not believe it is appropriate to
      characterize the adjustments as &#147;recast&#148; when they include correction of
      an error to the 2012 financial statements. Please amend your filing to
      label 2012 financial statements and related disclosures, where
      appropriate, as restated rather than
recast.</FONT></I></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 9
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company proposes in
future filings to amend the financial statements for the year ended December 31,
2012 to be reflected as "restated" instead of "recast". </FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>22.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Reference is made to the reconciliations on page 142 and 143. We
      consider your footnotes to the reconciliation at the bottom of each page
      describing the reason for the measurement period adjustment to be overly
      general. In this regard, please clarify for us in greater detail the
      nature, facts and circumstances surrounding each measurement period
      adjustment included in the reconciliations on page 142 and 143. For each
      measurement period adjustment, please explain to us the reason why the
      initial amount was recognized provisionally in the financial statements,
      where applicable, and the new information obtained regarding facts and
      circumstances that existed as of the acquisition date and if known, would
      have affected the measurement of the amounts recognized or resulted in
      recognition of additional assets or liabilities. We may have further
      comment upon receipt of your response. Assuming a satisfactory response,
      your footnote should be revised to include all relevant disclosures
      outlined in B67 of IFRS 3.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The measurement period
adjustments were made pursuant to IFRS 3.45. </FONT><FONT face="Times New Roman" size=2>The Company acquired MFC Energy on September 6, 2012 and, therefore, the
measurement period (the "</FONT><B><FONT face="Times New Roman" size=2>Measurement Period</FONT></B><FONT face="Times New Roman" size=2>") under
IFRS 3.45 ended on September 6, 2013. The financial statements for the year
ended December 31, 2012 reflected provisional amounts and adjustments were made
after new information was obtained regarding the acquired business during the
Measurement Period. The adjustments related to three main areas, being:
</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>1.</FONT></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>land
      values;</FONT></TD></TR>
  <TR>
    <TD vAlign=top></TD>
    <TD vAlign=top colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>2.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>gas cost
      allowance accrual; and</FONT></TD></TR>
  <TR>
    <TD vAlign=top></TD>
    <TD vAlign=top colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>3.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>the term
      financing relating to the Company's Mazeppa processing facility
      ("</FONT><B><FONT face="Times New Roman" size=2>MPP Term
      Financing</FONT></B><FONT face="Times New Roman" size=2>").</FONT></TD></TR></TABLE>
<P align=justify><I><FONT face="Times New Roman" size=2>Land Values
</FONT></I></P>
<P align=justify><FONT face="Times New Roman" size=2>At the date of the
acquisition of MFC Energy, its land base included land with leases that had
expired or that were expected to expire in 2013. Upon acquisition, these lands
were included in the amounts recognized as at the date of acquisition. However,
during the Measurement Period, the Company's expiring land base was reviewed by
the Company's management and it was determined that such lands would not be
renewed based on the Company's plan at the time of acquisition not to conduct
drilling on such lands. As a result, the provisional amounts recognized at
September 6, 2012 were adjusted for "hydrocarbon unproved lands" and "assets
held for sale".</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In addition, at the date of
the acquisition of MFC Energy, its land holdings included certain lands in
Montana, United States that had leases which were expected to expire in 2017. At
the time of the acquisition, the values attributed to such lands were based on
values utilized, without more in-depth study, by MFC Energy's prior management
using industry standard methodology and based on proximate land sales. Such
values were viewed as reasonable by the Company's management and utilized as a
provisional amount. </FONT></P>

<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014<BR>Page 10
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>During the course of the
Measurement Period, the Company's management discovered that drilling in the
region prior to the date of the acquisition did not support the expected land
values and that there were insufficient land transactions in the area to
establish values for MFC Energy's lands in Montana. The Company's management
conducted a review of information and regional drilling results available as of
the date of acquisition and values from sales of proximate lands. After such
review and consideration of the Company's plan not to drill such lands in the
short-term, it was determined that the provisional amount be adjusted and a
lower value per acre applied. </FONT></P>
<P align=justify><I><FONT face="Times New Roman" size=2>Accrual of Gas Cost
Allowance </FONT></I></P>
<P align=justify><FONT face="Times New Roman" size=2>At the date of acquisition,
the Company based values for gas cost allowance accruals on those utilized by
MFC Energy's prior management based on the assumption that the calculations by
prior management were reasonable. Such amounts were not adjusted for the year
ended December 31, 2012 as the information at the time did not indicate that a
material adjustment for gas cost allowance was likely.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>During the Measurement
Period, the Company's management reviewed the gas cost allowance accruals and
determined that the accrual was insufficient and its preliminary analysis
indicated that the accrual should be adjusted. When the gas cost allowance was
received in the third quarter of 2013, it was approximately C$2.6 million. Based
on the foregoing, the Company's management determined to adjust the gas cost
allowance accrual during the Measurement Period in 2012 to C$2.6 million.
</FONT><B><FONT face="Times New Roman" size=2></FONT></B></P>
<P align=justify><I><FONT face="Times New Roman" size=2>MPP Term Financing
</FONT></I></P>
<P align=justify><FONT face="Times New Roman" size=2>At the date of the
acquisition of MFC Energy, the Company's management utilized expected cash
payments and discount rate carried forward from MFC Energy's prior management in
connection with the MPP Term Financing. During the Measurement Period, the
Company's management conducted an analysis of the MPP Term Financing, including
the assumptions of prior management regarding expected cash payments and the
discount rate utilized and determined to adjust the expected cash flows in light
of their analysis and reduce the discount rate utilized after comparing the MPP
Term Financing to other financing sources of the Company. As a result the value
of the early purchase option under the MPP Term Financing was amended.
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Company proposes to
expand the disclosure of Note 41 of the 2013 Financial Statements in future
filings commencing with its report for the quarter ended September 30, 2014 to
provide additional disclosure under B67 of IFRS 3. Please find enclosed herewith
(hard copy only) a copy of such proposed amendments redlined against the
original disclosure, which sets forth the additional proposed disclosure.
</FONT><B><FONT face="Times New Roman" size=2></FONT></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Exhibits, page
144</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>23.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>We note
      the discussion of credit facilities and other indebtedness on pages 37 and
      118-20, but do not see any such agreements listed in the exhibit index.
      Please confirm to us that you will file all material credit agreements as
      exhibits to your next Exchange Act report, or that you have already filed
      all material credit agreements as exhibits to Exchange Act reports. In
      addition please confirm to us that you will file or incorporate by
      reference all material credit agreements as exhibits to your next Form
      20-F.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Company confirms that
any material credit agreements will be filed with the Company's next Annual
Report on Form 20-F. </FONT></P>
<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 11
</FONT></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Form 6-K filed May
15, 2014</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Financial Statements,
page 31</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Selected Explanatory
Notes to Condensed Consolidated Financial Statements, page 38</FONT></U></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Note 13. Subsequent
Events, page 44</FONT></U></B></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><I><FONT face="Times New Roman" size=2>24.</FONT></I></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp; </TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2>Please
      tell us how you have accounted for the remaining 40% interest in Possehl.
      Please tell us the amount recognized for the remaining interest and how
      the amount was valued or determined.</FONT></I></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>In April 2014, the Company
entered into a share purchase agreement with the minority interest holder in
Possehl whereby the Company acquired his 40% interest in Possehl. This
transaction was disclosed in the Company's unaudited financial statements for
the six months ended June 30, 2014, which were included in the Company's Form
6-K dated August 14, 2014. Upon execution of this agreement, the previously
disclosed puttable interest relating to such minority interest was terminated.
The purchase price under the transaction consisted of: (a) 509,820 common shares
of the Company issuable upon certain triggering events; and (b) 50,000 common
shares in each of the years from 2014 to 2025 if Possehl achieves certain annual
net income milestones in such year (the "</FONT><B><FONT face="Times New Roman" size=2>Contingent Shares</FONT></B><FONT face="Times New Roman" size=2>"). The
fair value of the common shares issuable under the transaction were measured at
$2.5 million in the aggregate as of the date of the underlying agreement. A
generally accepted financial valuation model was utilized, which took into
consideration the illiquidity and restrictions attached to the common shares,
the expected timing of events triggering share issuances, the probability of
issuing the Contingent Shares and discount rates. As a result of the foregoing,
the carrying amount of the puttable interest financial liabilities of $4.1
million and the non-controlling interest of $1.3 million were derecognized and a
credit of $2.9 million was recognized in retained earnings directly. As a result
of this transaction, the Company holds a 100% equity interest in
Possehl.</FONT><B><FONT face="Times New Roman" size=2> </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>As per the Commission's
request set forth in the Comment Letter, we enclose a letter from the Company to
the Commission acknowledging that: </FONT></P>
<UL style="FONT-SIZE: 10pt; TEXT-ALIGN: justify"><LI><FONT face="Times New Roman" size=2>the Company is responsible for the
  adequacy and accuracy of the disclosure in the filing;<BR>&nbsp;</FONT>
  </LI><LI><FONT face="Times New Roman" size=2>staff comments or changes to
  disclosure in response to staff comments do not foreclose the Commission from
  taking any action with respect to the filing; and</FONT> <BR>&nbsp;
  </LI><LI><FONT face="Times New Roman" size=2>the Company may not assert staff
  comments as a defense in any proceeding initiated by the Commission or any
  person under the federal securities laws of the United States.</FONT> </LI></UL>
<HR align=center width="100%" noShade size="2">

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>August 29, 2014 <BR>Page 12
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>We trust the foregoing to
be in order, but should you have any questions or concerns, please do not
hesitate to contact the undersigned at (604) 692-3022 or Rod Talaifar of our
office at (604) 692-3023.</FONT><FONT face="Times New Roman" size=2> </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Yours truly, </FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="10%" border=0>

  <TR>
    <TD noWrap align=left width="99%" colSpan=2><P align=justify><B><FONT face="Times New Roman" size=2>SANGRA MOLLER LLP </FONT></B></P></TD></TR>
  <TR>
    <TD noWrap align=left width="16%">&nbsp;</TD>
    <TD noWrap align=left width="83%"></TD></TR>
  <TR>
    <TD noWrap align=left width="16%">&nbsp;</TD>
    <TD noWrap align=left width="83%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"><FONT face="Times New Roman" size=2>Per:&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD noWrap align=left width="83%"><I><FONT face="Times New Roman" size=2>/s/ H.S. Sangra</FONT></I></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"></TD>
    <TD noWrap align=left width="83%"><FONT face="Times New Roman" size=2>H.S.
    Sangra</FONT></TD></TR>
  <TR>
    <TD width="99%" colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"><FONT face="Times New Roman" size=2>Per:</FONT></TD>
    <TD noWrap align=left width="83%"><I><FONT face="Times New Roman" size=2>/s/ Rod Talaifar</FONT></I></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"></TD>
    <TD noWrap align=left width="83%"><FONT face="Times New Roman" size=2>Rod
      Talaifar</FONT></TD></TR>
  <TR>
    <TD width="99%" colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"><FONT face="Times New Roman" size=2>Per:</FONT></TD>
    <TD noWrap align=left width="83%"><I><FONT face="Times New Roman" size=2>/s/ Eileen Uy</FONT></I></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"></TD>
    <TD noWrap align=left width="83%"><FONT face="Times New Roman" size=2>Eileen
    Uy</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="16%"></TD>
    <TD noWrap align=left width="83%"><FONT face="Times New Roman" size=2>California
      State Bar No. 245585</FONT></TD></TR>
  <TR>
    <TD width="99%" colSpan=2>&nbsp;</TD></TR>
  <TR style="LINE-HEIGHT: normal" vAlign=bottom>
    <TD vAlign=top noWrap align=left width="16%"><FONT size=1 face="Times New Roman"><FONT face="Times New Roman" size=1 >cc.</FONT></FONT></TD>
    <TD vAlign=top noWrap align=left width="83%"><FONT size=1 face="Times New Roman"><FONT face="Times New Roman" size=1 >MFC Industrial Ltd.<BR><U>Attention: Samuel
    Morrow</U></FONT></FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade size="2">

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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
