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Part B: Mineral Rights - Part B-1: Mineral Licences - Prospecting/Reconnaissance - 24. Prospecting/Reconnaissance Licencing | 24.1 Eligibility

A mining law may restrict what classes of individuals or legal entities can receive a permit or authorization to conduct prospecting/reconnaissance activities, either by defining who may or may not apply for the right, or by defining prior conditions that must be met before such an entity can be considered eligible to apply. The eligibility requirements for this type of licence should clarify whether individuals and/or corporate entities are eligible, whether foreign and national persons are eligible, and whether any technical or financial capability is required for eligibility, as well as any criteria for disqualification.

Because the work authorized by the licence for this preliminary phase of activity is non-intrusive and not intense, the eligibility requirements are generally less restrictive than for other mining rights. In some jurisdictions, there is freedom to exercise this activity and there is no mineral licence required for it, although registration and identification are typically required.

24.1 Example 1:

Article [­_]

(1) Any natural person or legal entity with the required technical and financial ability to carry out reconnaissance surveys for indicators, and prospecting for mining and quarry materials, may carry out said activities under the terms of the present Act. A Decree of the [President] shall specify what is meant by "technical and financial capacities."

(2) Persons or companies which are subject to international sanctions or criminal investigations related to fraud, corruption or money laundering may not obtain mining or quarrying titles.

(3) No natural person may obtain or hold a mining title or permit in the event that:

(a) they suffer from a legal disability preventing them from acting in their own name; or

(b) they have been imprisoned for violating the provisions of the present [Code][Act][Law] and its implementing regulations.

Annotation

Drawn from Guinea’s mining law (2011), this article recognizes both individuals and entities, regardless of nationality or place of formation, as eligible to engage in prospecting/reconnaissance activities under the conditions set forth in the law. This is a very broad provision. It also requires, however, that the individual or entity have the necessary technical and financial capacity as a condition of eligibility for prospecting/reconnaissance rights. The article delegates to the President of the Republic the authority to specify what is intended by the term “technical and financial capacity”. Thus, in this example, the legislature establishes a very broad criteria of eligibility for authorization of prospecting/reconnaissance activity, but enables the executive to limit eligibility based on technical and financial capacity criteria that the executive is authorized to establish.

The article also specifies additional types of persons not eligible for any mineral rights, including:

  • Persons subject to international sanctions or criminal investigation for fraud, corruption or money laundering,
  • Any individual whose status is incompatible with the exercise of commercial activities, such as public officials, and
  • Any individual condemned and sentenced to prison for violation of any provisions of the Mining Code and its implementing decrees.

24.2 Example 2:

Article [_]

A qualified applicant for a Prospecting/Reconnaissance Permit is-

(a) a citizen of [Country] with legal capacity and who has not been convicted of a

criminal offence; or

(b) a body corporate duly incorporated under the [Companies Act]; or

(c) a Mining Co-operative.

Article [_]

(1) The following persons shall not be eligible to obtain or hold licences set forth in this [Law][Act][Code]:

(a) The President, Vice-Presidents, Ministers, Chief Justice and members of Supreme Court, Attorney General, members of the National Assembly, Heads and members of the Independent Government Commissions, Governor of the Central Bank and General Director of National Directorate of Security, Provincial Governors, Mayors, and General Directors of the Government Independent Agencies, advisors, experts and Deputy Ministers of the [Mining Regulating Authority] and their relatives up to the second degree of consanguinity or by marriage.

(b) Judges, Prosecutors, Members of Provincial and District Councils, any Employee of the Ministry [in charge of Defence] or Ministry [in charge of Interior Affairs] or of the General Directorate of National Security, advisors, as well as experts and staff of the Commission, stipulated in [relevant article] of this [Law][Code][Act] (describing the membership of the Commission that reviews all licencing decisions and mining agreements, among other things);

(c) Any person who has been declared bankrupt and who continues to be bankrupt under the laws of [Country];

(d) Any person whose licence has been prematurely revoked, based on justifiable reasons, by the [Regulating Authority] prior to the expiry of the licence term.

(e) Companies in which the listed figures in (a) above, have obtained or will imminently obtain direct or indirect benefits;

(f) A natural person who has been convicted by a court of competent jurisdiction to more than ten (10) years in prison or has been convicted of administrative corruption and who has completed his or her prison term but has not yet had his or her prestige restored;

(g) Any legal person which is under a liquidation process, unless the liquidation is for the restructuring of such legal person;

(h) Any legal person that is subject to an order of dissolution issued by a court of competent jurisdiction;

(i) Any legal person in which one or more of its major shareholders, members of the executive board or members of its board of directors would be legally disqualified.

(j) Where one or more major shareholders of a legal person has been convicted of violation of the provisions of this [Law][Act][Code]; and/or

(k) Any major shareholder of a legal person or a member of its executive board is an existing employee of the [Petroleum Regulating Authority].

(2) Any person whose licence has been revoked, may not re-apply for all or part of its revoked Licence Areas for two years from the date of revocation;

(3) A major share for the purpose of this [Law][Act][Code] means ten percent or more of the total shares of a company.

(4) Any person stipulated in subsections (a) and (b) of Paragraph (1) of this Article may obtain a Licence or Contract provided for in this [Law][Act][Code] five years after termination of their term in office.

Annotation

Drawn from Nigeria’s Mining Law (2007), the first article in this example clearly and concisely states which Nigerian nationals, locally formed companies and mining cooperatives are eligible for what is called a reconnaissance permit under Nigerian law. The article applies only to the reconnaissance permit and does not mix in considerations other than eligibility. It therefore provides great clarity.

Drawn from Afghanistan’s mining law (2014), the second Article in this example presents a very specific and comprehensive list of persons and companies prohibited from obtaining and holding any type of mineral licence. In some cases the prohibition is unlimited. In other cases the prohibition is removed after a specified time period. Drafters should consider whether transparency and corruption concerns warrant providing such a detailed list of persons and entities that are not eligible for mineral licences. In some countries, the prohibitions against licence holding by public officials are set forth in other laws. In such cases, the issue is more likely to be one of enforcement rather than drafting. Even in those cases it may be desirable to repeat such prohibitions in the mining law so that the application process is designed to screen out persons prohibited from obtaining mineral licences.