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Part B: Mineral Rights - Part B-2: Exploration - 25. Exploration Licensing | 25.14 Specific Violations and Penalties

In addition to the general Offenses and Penalties described in Part A of this Guiding Template, the common specific violations and penalties that apply to Exploration Licences are (1) conducting exploration activities in an area for which the operator does not hold an exploration licence, (2) engaging in mining under an exploration licence, and (3) not meeting the applicable work and expenditure requirements. It is therefore of critical importance, notably in cases where a mining right may ultimately attach to an exploration licence to clearly define and distinguish between what activities are permitted under exploration licences and mining rights, respectively – particularly with respect to the taking and disposal of samples under an exploration licence. Typical penalties include fines, suspension of the mineral right, and seizure `of minerals (that are mined illegally).

25.14 Example 1:

Article [_]

(1) The following offences shall be penalised with imprisonment for a period of between two months and three years and with a fine of between [x] and [y] [national currency] or with only one of these two penalties: whoever is engaged in prospecting or mining work relating to a mine or quarry without a title, or outside of the limits for their title, or whoever undertakes mining work with a prospecting licence.

(2) The above fine shall be between [2x] and [2y] [national currency] if the related substance is diamond or another gemstone.

(3) A conviction shall result in the State seizing the fraudulently mined products and the relevant instruments used for this.

(4) Should the offence be repeated, the fine shall be tripled and the prison sentence doubled.

Annotation

Drawn from Guinea’s mining law (2011), this provision articulates the classic prohibition against engaging in exploration without a licence or outside of the licence area and the prohibition against engaging in mining (exploitation) while only holding an exploration licence. The law provides for a range of financial penalties dependent on the type of violation, as well as seizure of any mineral products obtained in the course of the violation.

Though no amounts are specifically given in the example, the fine amount should be significant enough to meet the deterrence objective of sanctions.

25.14 Example 2:

Article [_].

(1) A person who--

(a) conducts exploration or mines minerals or carries out quarrying operations otherwise than in accordance with the provisions of the [Act][Code][Law];

(b) in making an application for mining rights, knowingly makes a statement which is false or misleading in any material particular;

(c) in any report, return or affidavit submitted in pursuance of the provisions of this [Act][Code][Law], knowingly gives any information which is false or misleading or fails to declare in any material particular;

(d) removes, possesses or disposes of any mineral contrary to the provisions of this [Act][Code][Law], commits an offence.

(2) A mining rights holder who is guilty of an offence under section [_] (on illegal mining, false and misleading statements, false or non-declaration and smuggling) is liable to have his licence revoked and on conviction at the first instance, to a fine not less than [x][national currency]; and imprisonment of not less five years, if the offence is a continuing one, whether or not it is a first offence, the person convicted shall, in addition, be liable to a fine of [x] [national currency] in respect of each day during which the offence continues.

(3) A person who-

(a) places or deposits, or causes to be placed or deposited in a place any minerals, with the intention to mislead any other person as to the mineral possibilities of the place; or

(b) mingles or causes to be mingled, with samples or ore, any substances which may enhance the value or in any way change the nature of the ore, with the intention to cheat, deceive or defraud; or engages in the business of milling, leaching, sampling, concentrating, reducing, assaying, transporting, or dealing in ores, metals or minerals, contrary to the provisions of this [Act][Code][Law] commits an offence under this [Act][Code][Law] and is liable on conviction to a fine of not less than [x][national currency] or to imprisonment for a term not exceeding 2 years or to both fine and imprisonment.

Annotation

Drawn from Nigeria’s mining law (2007), this provision contains a more generic description of the violations discussed above. However, the penalties for violations are much more severe. In light of the exchange rate of +/- 250 Naira to one US dollar on September 14, 2015, the penalty for the offenses of unauthorized exploration or mining is a fine of the equivalent of USD 100,000 and a prison sentence of not less than 5 years.

Notably, the Nigerian law covers a broader range of offences, including but not limited to knowingly giving false and misleading information or failing to declare relevant information. While it can be of value to provide a broader range of offences as shown in this example, for organizational clarity it may serve a mining law to place offences that occur across all mining licences in a general offences and penalties section, restricting offences discussed here to those that are narrowly specific to the particular licence.

Article 134 of Nigeria’s law contains a specific offense of salting as described therein (perhaps in light of the 1997 Bre-X salting scandal). The fine for salting is not less than USD 2,500; and a prison term of up to 2 years may be assessed in addition or in the alternative.