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Part B: Mineral Rights - Part B-1: Mineral Licences - Prospecting/Reconnaissance - 24. Prospecting/Reconnaissance Licencing | 24.4 Area

In jurisdictions that licence reconnaissance-type prospecting activity, areas are typically larger than exploration areas, which are usually larger than mining areas, because reconnaissance, prospecting and exploration proceed from larger to smaller areas as the increasingly intense investigation of mineral occurrences identify and focus on a targeted deposit. A mining law may provide for relinquishment, or the process of mandatorily reducing the area under the prospecting/reconnaissance licence during successive renewals.

Because prospecting/reconnaissance licences are for very large areas, if the mining law provides for a prospecting/reconnaissance licence that is exclusive and has a term of more than one year (including renewal), it should require either relinquishment of part of the area (typically half) after the initial year or, alternatively, a doubling of the annual fee per unit area for the second year in order to prevent or discourage the tying up of more area than a company can reasonably investigate during the term (including renewals) of the licence, and to encourage focusing on the most prospective areas.

If the mining law provides for a prospecting/reconnaissance licence that is non-exclusive, or has a term limited to one year, with no renewals, then the risk of non-productive tying up of excessive areas is low. If the licence is exclusive but limited to a one year nonrenewable term, the mining law will likely not grant an exploration licence for the subsequent phase of mineral resource development activity over the entire area covered by the prospecting/reconnaissance licence because the maximum size of an exploration licence area is generally significantly smaller than the maximum size of a prospecting/reconnaissance licence area.

Alternatively, a mining law may limit the size of the area for a prospecting/reconnaissance licence area by charging annual maintenance fees per unit area that are relatively high or that increase in proportion to the size of the licenced area.

24.4 Example 1:

Article [_]

A prospecting/reconnaissance licence area shall not exceed ten thousand (10,000) square kilometres.

Annotation

Drawn from Sierra Leone’s mining law (2009), this example sets a very large limit on the size of a reconnaissance licence area. The reconnaissance licence is non-exclusive under the mining law of Sierra Leone.

24.4 Example 2:

Article [_]

(1) The area of land in respect of which a reconnaissance licence may be granted shall be a block or any number not more than five thousand contiguous blocks each having a side in common with at least one other block the subject of the application.

(2) For purpose of this [Act][Code][Law], the surface of the Earth shall be deemed to be divided in accordance with the co-ordinates represented in the official maps of [Country] held at the [Regulating Authority] at a scale of 1:50,000,

(a) by the meridian of Greenwich and by meridians that are at a distance from that meridian of 15 or a multiple of 15 seconds of longitude,

(b) by the equator and by parallels of latitude that are at a distance from the equator of 15 or a multiple of 15 seconds of latitude, into sections (“geometric sections”) each of which is bounded,

(c) by portions of those 2 meridians that are at a distance from each other of 15 seconds of longitude, and

(d) by portions of 2 of those parallels of latitude that are at a distance from each other of 15 seconds of latitude.

(3) For purposes of this [Act][Code][Law]

(a) a geometric section that is wholly within [Country] constitutes a block and

(b) where only part of a geometric section is within [Country], that part constitutes a block.

Annotation

Drawn from Ghana’s mining law (2006), the maximum area of a reconnaissance licence – which is exclusive under the Act (i.e. for the minerals to which the licence relates) – is defined in terms of blocks. The size of the blocks is in turn defined in the article of the law describing the Cadastral System for mining, by reference to the geographical projection to be used for identifying the borders of areas subject to mining rights. Thus, the area is a function of the defined cadastral grid system, which assures consistency among all licence areas.