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Part B: Mineral Rights - Part B-5: Development Minerals - 30. Development Minerals Exploration Licence | 30.12 Surrender of Licence

A provision in which the licence holder gives up the mining right voluntarily before the term of the licence has run out is referred to as surrender of the licence. Surrender of an exploration licence may be total or partial. Partial surrender or relinquishment of area subject to the licence might require the issuance of a new exploration licence for the area not surrendered. Surrender/relinquishment may be automatic at the option of the licence holder upon notice to the Regulating Authority, or it may require a decision of the authority.

An exploration licence holder may wish to surrender all or relinquish part of the licenced area when it has satisfied itself that the area in question does not contain a commercial deposit of the minerals sought, or because the holder lacks the funds or does not wish to allocate further funds to continue exploring for minerals in the area, or to reduce the amount of the annual fee that it must pay in order to maintain the licenced area in subsequent years, or to reduce its aggregate licenced area holdings in order to qualify for a licence in a more attractive area that has become available in the same jurisdiction.

It is considered to be in the interest of the State to facilitate surrender or partial relinquishment of areas held under exploration licences in order to encourage exploration licence holders to focus their exploration efforts and investment expeditiously, and to make areas available for other investors as soon as no further exploration activity in the area by the existing licence holder is to be expected. Therefore, the procedure for surrender or partial relinquishment of licenced exploration areas may be simpler and faster than the corresponding procedure for the surrender or relinquishment of a licence or licenced area for exploitation. However, such procedures tend to be similar across types of licences.

The mining law provision on surrender should (a) cover both total and partial surrenders of licenced area, (b) require that any partial surrender be of blocks or segments that comply with the cadastral rules of shape and dimensions, (c) indicate whether an administrative approval is required in order for the surrender to become effective, (d) clarify the consequence of a surrender with respect to responsibility for area-based fees paid or to become due, (e) clarify the consequence of a surrender with respect to liabilities or responsibilities of the licence holder under the mining law and other laws, in particular environmental laws, and related agreements, and (f) clarify the status and availability of the surrendered area, as well as the responsibility of a subsequent holder of a licence for the area.

Care should be taken in the mining law and regulations and/or the environmental law and regulations to assure that an environmental bond, escrow account or other surety mechanism is required and has been established and that either the surrendering/relinquishing exploration licence holder has completed all necessary environmental rehabilitation work or that the [Regulating Authority] has access to a sufficient surety to complete all necessary rehabilitation work.

30.12 Example 1:

Article [_]

(1) The holder of a mining right licence may, upon application in the prescribed form and manner, and upon meeting prescribed conditions, surrender the mineral title.

(2) The Mining Cadastre Office shall approve an application made under subsection (1) of this section to surrender the mining right if he is satisfied that-

(a)the holder of the mining right has submitted the request for surrender in the prescribed form and manner;

(b)the surrender will not affect any liability incurred by the mining right holder before the surrender of the mining right, including environmental obligation;

(c)all rents due and fees prescribed, if any, have been paid by the holder of the mining right; and

(d) the holder of the mining right has surrendered the original title document.

Article [_]

(1) The holder of a mining right may at any time during the period of the validity of such mining right, upon application to the Mining Cadastre Office in the prescribed form and manner and upon meeting prescribed conditions, relinquish the area or part of area covered by the mining right; provided, the geometry and dimensions of each surrendered area shall satisfy the prescriptions of this [Law][Act][Code] and its Regulations

(2) Upon relinquishment of the area or part of the area covered by the mining right in accordance with the provisions of subsection (1) of this section, the fees payable on the basis of the area covered by the mining right shall be adjusted proportionally taking into account the area relinquished.

(3) The relinquishment of the area or part of the area covered by the mining right shall not affect the duration of the mining right.

(4) The relinquishment of the area or part of the area shall not affect any liability incurred by the mineral titleholder in respect of the area relinquished prior to the relinquishment, including environmental obligations.

Annotation

Drawn from Nigeria’s mining law (2007), these two articles deal separately with the surrender of a mineral title, on the one hand, and the total or partial relinquishment of land held under the mineral title, on the other hand.

The provisions apply to surrender of land held under all types of mineral licences, without distinction. That is probably appropriate as between exploration and exploitation, because exploration can involve the construction of access roads and camps, the introduction of chemicals for drilling, and invasive exploration techniques. Prospecting/reconnaissance activity, on the other hand, does not present similar issues, so surrenders of area held under prospecting/reconnaissance licences could be dealt with in more summary fashion.

These articles cover both total and partial surrenders of licenced area. Apparently, in the case of a total surrender of the licence, a two-stage procedure is involved: first the surrender of the licenced land area (under the second article), and then surrender of the licence (under the first article). The second article requires, appropriately, that any surrender of licenced land area comply with the prescriptions of the law and regulations as to geometry and dimension.

The surrender of land area, total or partial, appears to require an administrative approval, whereas the surrender of the licence appears to be automatic if the stated conditions are met. The second article provides for adjustment of fees payable on the basis of the area covered by the mineral title, to reflect any partial surrender or relinquishment. Both articles provide that the surrender of licenced land area or of the licence does not affect any liability of the licence holder incurred prior to the surrender, including environmental liability in particular.

These provisions do not clarify the status of the surrendered area, however. Ideally, provision would be made for an environmental audit or review before the area becomes available to another licensee and a clarification of the respective environmental liabilities of the surrendering licence holder and the next licence holder. Clarification is also needed as to whether the surrendered area will subsequently be made available for minerals exploration, and if so, by what method (for example, whether by competitive bid or by claim staking).

30.12 Example 2:

Article [_]

(1) A holder of a mining right who wishes to surrender all or a part of the land subject to the mining right shall apply to the [Regulating Authority] for a certificate of surrender not later than two months before the date on which the holder wishes the surrender to take effect.

(2) An application under subsection (1) shall be in accordance with prescribed Regulations.

(3) Subject to subsection (4), upon an application duly made under subsection (1), the [Regulating Authority] shall issue a certificate of surrender in respect of the land to which the application relates.

(4) The [Regulating Authority] shall not issue a certificate of surrender

(a) to an applicant who is in default,

(b) to an applicant who fails to give records and reports in relation to the applicant’s mineral operations,

(c) where the [Regulating Authority] is not satisfied that the applicant will surrender the land in a condition which is safe and accords with good mining practice, or

(d) in respect of land, if the remaining area of the land after the surrender would be less than one block.

(5) Where a certificate of surrender is issued under this section, the [Regulating Authority] shall, where only part of the land subject to the mineral right is surrendered, amend the relevant licence accordingly or cancel the mining right where the surrender is in respect of the whole area covered by the mineral right.

(6) Land in respect of which a certificate of surrender is issued, shall be treated as having been surrendered with effect from the date on which the certificate of surrender is issued under subsection (3).

(7) The surrender of land under this section shall not affect a liability incurred by a person in respect of that land before the date on which the surrender took effect.

Annotation

Drawn from Ghana’s mining law (2006), this article combines the provisions for total and partial relinquishment of licenced area and surrender of the licence. As in the first example, the conditions and procedure are the same regardless of the type of mineral right involved; and the coverage is similar.

However, in this example, stricter conditions apply for the issuance of the certificate of surrender, and the conditions under which such a certificate shall not be issued are specified. These include, in particular, a failure to provide records and reports of mineral operations (presumably as further detailed in regulations) and “where the [Regulating Authority] is not satisfied that the applicant will surrender the land in a condition which is safe and accords with good mining practice”. The latter stipulation appears to require an inspection of the area to be surrendered. Further clarification is needed as to whether the condition applies to environmental rehabilitation and as to the applicable standard, both of which could be provided in the mining regulation.