The Federal Court has quashed a mining company's permit to explore on the traditional lands of two Northwest Territories First Nations because they had not been properly consulted.

In a decision dated Friday, Federal Court Justice Michael L. Phelan cancelled North Arrow Minerals Inc.'s land-use permit because the company and the federal government  failed to consult with the Lutselk'e Dene First Nation and the Yellowknives Dene First Nation about the proposed exploration work.

The two Akaitcho First Nations have concerns about the Vancouver-based company's bid to drill for lithium at its Phoenix site near Aylmer Lake, about 340 kilometres northeast of Yellowknife.

Both First Nations have said the exploration work could disturb their ancestral burial grounds.

The Mackenzie Valley Land and Water Board issued the land-use permit to North Arrow on July 16, 2009, but First Nation officials said they had not been consulted before the permit was awarded.

'This is our land'

"This decision sends a clear message to companies who want to operate in Akaitcho Dene territory," Chief Edward Sangris of the Yellowknives Dene First Nation stated in a release Tuesday.

"This is our land," Sangris added. "We are open to working with industry, but companies need to respect us, respect our rights, and respect what we have to say."

Phelan's ruling noted the federal government's duty to "meaningfully consult with and accommodate First Nations" before permits are issued on a development project.

"In this case, no one took responsibility for ensuring meaningful consultation. The duty was not met," Phelan wrote in his decision.

He added that the two First Nations "were not necessarily entitled to all that they would like, but they were entitled to some substantial actual consultation."

Phelan agreed with the First Nations about North Arrow's minimal efforts to consult with community officials about the exploration project.

Refused to negotiate

"There were no face-to-face meetings with chiefs on issues; no real meetings with the communities and no attempt to address any of the communities' or leaders' ideas into North Arrow's proposal," the judge said.

"North Arrow simply refused to negotiate."

But the federal Indian and Northern Affairs Department simply accepted assurances from North Arrow that proper consultations took place, and the Mackenzie Valley Land and Water Board accepted the federal department's assurances, Phelan's decision stated.

Federal lawyers had argued that the First Nations were not specific enough about their concerns, but Phelan said the concerns were "sufficient enough to engage the duty to consult.

"Had that duty been met, either the specifics would have been developed or their inadequacy exposed or any problems settled," the ruling states. "Without real consultation, none of these results could be obtained."

Akaitcho Dene First Nations have developed their own exploration agreement procedure, in which mining companies that want to explore on their lands can work out formal arrangements with affected First Nations.

The Yellowknives Dene and Lutselk'e Dene First Nations said North Arrow rejected exploration agreements that were proposed to the company.