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Part B: Mineral Rights - Part B-2: Exploration - 25. Exploration Licensing | 25.8 Renewal of Licence

Addressed often at the same time as the term of the licence, renewal of licence refers to provisions determining when, for how long, and how many times a licence holder may extend the initial duration of the exploration licence. Given the relatively short initial term of exploration licences, renewal terms are generally necessary for the completion of the studies and plans required prior to mining operations.

Licence holders who are in compliance with the terms of their licence and their obligations under the mining law are generally entitled to renewals.

Most countries provide for two renewal terms, which may be of the same length as the initial term or may be for shorter periods.

Most countries have ultimate term limits on the combined initial and renewal terms; but ultimately, term limits are arbitrary and may be inadequate for the necessary preparation to develop a complex deposit or one situated in an area presenting major logistical or environmental challenges, or simply to finalize a feasibility study under difficult market conditions. To deal with such situations, Botswana, Namibia, Tanzania and Uganda provide for the availability of a retention licence after the exhaustion of renewal terms under an exploration licence.

Mining laws generally require an application for the renewal of an exploration licence to be filed no later than a certain date prior to the end of the initial term, in order to allow time for processing of the application before the initial term expires. The better mining laws also provide that an exploration licence for which a renewal application has been timely filed are automatically extended until they are either renewed or the renewal is definitively denied.

Most renewal provisions require the relinquishment of a percentage of the area held under the exploration licence (usually half) upon each renewal. An alternative approach would be to permit the holder to retain a larger area upon the payment of an additional fee in order for the licence holder to retain the area that would otherwise be subject to mandatory relinquishment (see Article 24 of the 2014 Mining Code of Côte d’Ivoire, for example). As a general matter, mining laws make very large areas available for initial prospecting/reconnaissance activity, but reduce the maximum size of the area that may be retained upon each renewal or transition from prospecting/reconnaissance to exploration and from the latter to exploitation. In doing so, the laws seek to maximum efficiency on the part of licence holders so that the country’s mineral resources are developed expeditiously, thereby generating employment, commercial activity and fiscal revenues that can be used for other national purposes. Most mining laws require reduction of the area licenced for exploration upon renewals in order to prevent the tying up of areas larger than are necessary for a normal exploration program and to make the excess area available to other prospective applicants who may be more highly motivated to conduct exploration in the relinquished area than the initial licence holder.

25.8 Example 1:

Article [_]

(1) Where an applicant is entitled to the grant of an exploration licence, the [Regulating Authority] shall issue to the applicant the exploration licence as provided in that section and the licence so issued shall subsist for the following periods-

(a) for the initial exploration period for which the applicant has applied, a period not exceeding four years;

(b) where application for renewal has been made by the holder in the prescribed form, for the first period of renewal for which the applicant has applied, a period not exceeding three years;

(c) where application for renewal has been made by the holder in the prescribed form, for the second period of renewal for which the applicant has applied, a period not exceeding two years;

(d) where the holder is not in default and at the end of the second period of renewal a further period is required to complete a feasibility study, already commenced by the holder, for such further period as may be reasonably required for that purpose, but not exceeding two years.

(2) A holder of the licence who intends to renew the licence shall, not later than one month before expiry date of the licence, submit an application for renewal of the exploration licence.

(3) The [Regulating Authority] shall, on application of the holder of a licence granted under subsection (1) of this section and on payment of prescribed fees for renewal, renew the exploration licence-

(a) at the end of the initial exploration period or, as the case may be, at the end of the first renewal period, for the period referred to in paragraphs (b) and (c) of subsection (1);

(b) at the end of the second renewal period, in a case falling under paragraph (d) of subsection (1), for the period required to complete the feasibility study.

(4) The obligation of the [Regulating Authority] to renew an exploration licence is subject to the condition that-

(a) the holder is not in default except that the [Regulating Authority] shall not reject an application to renew an exploration licence on the grounds that the holder is in default, without first serving on the holder a notice giving particulars of the default and requiring the holder within a reasonable time specified in the notice to remedy the default; and

(b) the holder, on renewal under paragraph (a) of subsection (3), has relinquished in the case of a first renewal fifty per centum of the area held during the initial exploration period and in the case of a second renewal fifty per centum of the balance, and has by notice in writing to the [Regulating Authority] given a sufficient description of the areas he is relinquishing.

(5) The relinquished areas shall be displayed on the notice board at the [[Regulating Authority] headquarters and local offices on a monthly basis.

(6) An exploration licence for gemstones other than kimberlitic diamonds, and an exploration licence for building materials shall subsist for one year from the date of grant and shall not be subject to renewal.

(7) The obligations of the [Regulating Authority] under paragraph (b) of subsection (4) shall not apply in the case where the exploration area is not more than twenty square kilometres.

Annotation

Drawn from Tanzania’s mining law (2010), this provision clearly states the conditions under which the exploration (called prospecting) licencee is entitled to renewals, when the applications must be filed, and the length of the renewal terms.

The terms of exploration licences for metallic and processed minerals decline from 4 years to 3 years for the first renewal and 2 years for the second and third renewals. (For gemstones other than diamonds, there is only a one-year initial term, non-renewable.) An exploration licence for such minerals can therefore be held for up to 11 years in Tanzania, which also provides for the issuance of a retention licence for a term of 5 years, renewable once for a like term, if the required justification is demonstrated. Reduction of the surface area by half is required at each renewal, but not below 20 square kilometres.

By contrast, the one-year terms of exploration licences for gemstones other than kimberlitic diamonds and for building materials are not renewable.

25.8 Example 2:

Article [_]

(1) The holder of an exploration licence may, not later than ninety calendar days before the initial expiry of the licence, apply to the Mining Cadastre Office for a first renewal of the licence in respect of not more than one hundred and twenty-five square kilometres of the exploration licence area, except that where the results of exploration to date strongly indicate the presence of widespread mineralisation such that a surrender to one hundred and twenty-five square kilometres would result in some highly prospective areas being surrendered, the [Regulating Authority], on the advice of the Minerals Advisory Board, may exceptionally allow such areas constituting more than one hundred and twenty five square kilometres to be retained.

(2) An application for the first renewal of an exploration licence-

(a)shall be accompanied by-

(i)a detailed annual report as prescribed describing all operations carried out in the previous year together with an annual financial report for the same period, plus a surrender report as prescribed, covering in detail all work carried out over any portion of the ground to be surrendered and accompanied by all results, data, information and interpretation since the grant of the exploration licence;

(ii)a proposed programme of exploration operations to be carried out during the period of first renewal and the estimated cost thereof;

(iii)a plan identifying that part of the exploration licence area for which renewal is sought; (iv)a description of the contiguous blocks comprising the exploration licence area for which renewal is sought, identified in the prescribed manner; and

(b)shall give particulars of any alteration in the matters stated in the application for the grant of the licence under paragraphs [_] of section [_] (on the required elements of an application for an exploration licence).

(3) The Mining Cadastre Office shall forward an application for the first renewal of an exploration licence to the Minerals Advisory Board.

(4) Upon receipt of a completed application for the renewal of an explorations licence from the Mining Cadastre Office, where the [statutory advisory board] has determined that an application for the renewal of an exploration licence has met all the criteria for such licence the [statutory advisory board] shall certify to the [Regulating Authority] in the prescribed form that it advises that the application be approved, and such certification shall be recorded in the mining cadastre registry.

(5) The [Regulating Authority] shall, subject to all prescribed criteria of this [Act][Code][Law] and of the regulations, on the certified advice of the Minerals Advisory Board, renew the licence for the reduced area applied for with or without variation of the conditions of the initial licence, for a period not exceeding three years.

(6) The holder of an exploration licence may, not later than ninety calendar days before the expiry of a once-renewed licence apply to the Mining Cadastre Office for a second renewal of the licence.

(7) An application for the second renewal of an exploration licence-

(a)shall be accompanied by-

(i)a report on exploration operations carried out so far and the direct costs incurred thereby;

(ii)a proposed programme of exploration operations, feasibility studies, and environmental impact assessments to be carried out during the period of second renewal and the estimated cost thereof;

(iii)a plan identifying that part of the exploration licence area for which renewal is sought, which shall not be greater than one hundred and twenty-five square kilometres unless it can be conclusively demonstrated that to do so would unavoidably exclude part of an economically recoverable mineral deposit;

(iv)a description of the blocks comprising the exploration licence area for which renewal is sought, identified in the prescribed manner;

(b)shall give particulars of any alteration in the matters stated in the application for the grant of the licence under paragraphs [_] of section [_] (on the required elements of an application for an exploration licence); and

(c)shall provide evidence that a mineral discovery has been made that may be of commercial value.

(8) The Mining Cadastre Office shall forward an application for the second renewal of an exploration licence to the Minerals Advisory Board.

(9) Upon receipt of a completed application for the second renewal of an explorations licence from the Mining Cadastre Office, where the Minerals Advisory Board has determined that an application for the second renewal of an exploration licence has met all the criteria and where the holder of an exploration licence who has made and reported a discovery of possible commercial value, the Board shall certify to the [Regulating Authority] in the prescribed form that it advises that the application be approved, and such certification shall be recorded in the mining cadastre registry.

(10) The [Regulating Authority] shall on the certified advice of Minerals Advisory Board confirming all prescribed criteria of this [Act][Code][Law] and of the regulations have been met, renew the licence for a period not exceeding two years.

(11) The applicant shall be notified in writing of the decision on renewal applications, and if an application is refused, the [Regulating Authority] shall give reasons for such refusal.

(12) Where the [Regulating Authority] has refused an application to renew an exploration licence that is renewable and the cause given by the [Regulating Authority] for such refusal can be remedied by the holder of the licence, if the cause has been remedied with thirty calendar days of receiving the notice under subsection (11), the licence holder may reapply for a renewal of the licence within such thirty day period.

Annotation

Drawn from Sierra Leone’s mining law (2009), this provision sets the initial exploration term of four years that can be renewed twice for 3 years and 2 years respectively. This gradual reduction in term length encourages the licence holder to focus on the most prospective sites within the licenced area and to conduct its exploration program expeditiously.

Unlike Tanzania, Sierra Leone’s mining law does not provide for a retention licence. Thus, an exploration licence may be held for a maximum period of 9 years in Sierra Leone. That period is likely to be sufficient for the identification of a small to medium sized commercial deposit and completion of the requisite environmental and feasibility studies in order to progress to the exploitation phase, but the 9 year limit may be problematic for the detailed study of a complex or very large scale deposit in a challenging environment.

The article requires a mandatory reduction in size of the area to a maximum of 120 square kilometers for the first renewal that may be waived upon the requisite showing to the Minerals Advisory Board and the Regulating Authority. No further reduction of area is required for the second renewal.

Renewals are not automatic under Sierra Leone’s law. The licence holder is required to submit a detailed annual report of operations carried out and results achieved, as well as a proposed exploration work program for the requested renewal period. The renewal must be approved by the Minerals Advisory Board.