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Part B: Mineral Rights - Part B-1: Mineral Licences - Prospecting/Reconnaissance - 24. Prospecting/Reconnaissance Licencing | 24.11 Revocation of Licence

A provision authorizing the Regulatory Authority to put an end to the validity of a prospecting/reconnaissance licence before the end of its term is referred to as the revocation of the licence. In some mining laws it is called withdrawal, cancellation or nullification of the licence. Whereas suspension of the licence is a condition that can be cured, revocation of the licence is final. Moreover, many mining laws provide that a person whose mineral licence has been revoked is ineligible to receive any new mineral licence for several years after the revocation. Because of the seriousness of the revocation sanction, it should be subject to certain procedural due process safeguards including notification to the licence holder of the grounds for the revocation and an opportunity to cure the problem, if feasible, or to present arguments and evidence that a failure or violation constituting grounds for revocation of the licence has not in fact occurred or should be excused.

As noted above with respect to suspension, prospecting/reconnaissance licences tend to be subject to general provisions on revocation rather than provisions specific to that type of licence in particular. Where revocation provisions are deemed necessary for a prospecting/reconnaissance licence, the mining law should clearly spell out the grounds for revocation and the steps that occur before revocation is final, including notice and an opportunity to cure the problem, as well as identify a transparent process through which the licence holder may contest the revocation.

Other issues to be given careful consideration in drafting clauses on revocation of mining rights are:

    1) Whether revocation of the reconnaissance/prospecting licence should be automatic in certain circumstances and, if so, in what circumstances;

    2) Whether revocation of the licence should always be preceded by an order of suspension of the licence and an opportunity for the holder to cure the problem that provides the grounds for revocation; and

    3) Whether the Regulating Authority should have discretion to revoke the licence or not, in all or certain circumstances.

As a general matter, if the prospecting/reconnaissance licence is exclusive and gives the holder an exclusive right or priority to apply for an exploration licence in the licence area, then it constitutes a robust and valuable right under which the licence holder is likely to make a substantial investment in reconnaissance work. In such cases, stronger procedural safeguards would be appropriate.

Conversely, if the prospecting/reconnaissance licence is non-exclusive and does not provide an exclusive or priority right to apply for an exploration licence in the licenced area, then it constitutes a less robust and valuable right under which the licence holder is less likely to make a substantial investment in reconnaissance work. In such cases, fewer procedural safeguards may be appropriate.

24.11 Example 1:

Article [_]

(1) The [Regulating Authority] may revoke any mining right if-

(a) the holder is convicted by any court of competent jurisdiction for an offence under this [Act][Code][Law] or its Regulations and the time for appealing against the conviction, if any, has lapsed or the appeal has been dismissed or withdrawn or struck out for want of prosecution;

(b) the holder breaches any provision of this [Act][Code][Law] or regulations made or of any terms or conditions of his mining right whether express or implied;

(c) the holder breaches any order or notice issued or given under this [Act][Code][Law] or Regulations made under it, or on being required by the [Regulating Authority] by notice to show cause within a time specified in the notice why the mining right should not be revoked, the holder fails to comply or show adequate cause;

(d) the holder is declared by a court of competent jurisdiction to be insolvent or bankrupt or goes into insolvent liquidation, except as part of a scheme for reorganisation, amalgamation or an arrangement with its creditors; or

(e) the mining right is held jointly by more than one person and the provisions of subsection (1) (a) of this section apply to any one of the joint holders unless the other joint holders are able to assume the obligations of the former and adopt measures which will guarantee the performance of these obligations.

(2) A mining right shall be revoked upon written advice of the [Regulating Authority] only after thirty days’ notice of the intention to revoke the mining right containing in detail the grounds thereof is given to the holder and during the period fixed the holder has failed to remedy the breach or remove the grounds for revocation within the required period.

(3) Any notice issued by the [Regulating Authority] and sent by registered mail to the last known address in [Country] or given in person to an authorised representative of the mining right holder in [Country] or published in the [Gazette], shall for all purposes be sufficient notice of the revocation of the mining right to the mining right holder.

Annotation

Drawn from Nigeria’s mining law (2007), this article details – in a general article on revocation of all mineral licences - the grounds for revocation of a prospecting/reconnaissance licence. The licence is non-exclusive under the mining law of Nigeria. The provision includes the following safeguards:

  1. The grounds for revocation are specified;
  2. Notice of the ground for revocation of a holder’s licence must be provided to the holder in writing, in one of three specified ways; and
  3. The holder is given thirty days to remedy the breach or remove the grounds for revocation.
Revocation is not automatic in this example. The Regulating Authority has discretion to exercise its revocation authority or not. These revocation terms are more than adequate to protect the rights of the holder of a non-exclusive prospecting/reconnaissance licence.

24.11 Example 2:

Article [_]

(1) The [Regulating Authority] on the recommendation of the [Administrative Reviewer] may cancel a mineral right if the holder,

(a) fails to make payment on the due date, whether due to the [State] or another person, required by or under this [Act][Code][Law],

(b) becomes insolvent or bankrupt, enters into an agreement or scheme of composition with the holder’s creditors, or takes advantage of an enactment for the benefit of its debtors or goes into liquidation, except as part of a scheme for an arrangement or amalgamation,

(c) makes a statement to the [Regulating Authority] in connection with the mineral right which the holder knows or ought to have known to be materially false, or

(d) for any reason, becomes ineligible to apply for a mineral right under this [Act][Code][Law].

(2) The [Regulating Authority] shall, before cancelling a mineral right under subsection (1), give notice to the holder and shall in the notice, require the holder to remedy a breach of the condition of the mineral right within a reasonable period, being not less than sixty days in the case of a prospecting/reconnaissance right and if the breach cannot be remedied, to show cause to the reasonable satisfaction of the [Regulating Authority] why the prospecting/reconnaissance right should not be cancelled.

(3) On cancellation of a mineral right under this section, the right of the holder shall cease but without prejudice to the liabilities or obligations incurred by another person in relation to the mineral right prior to the date of the cancellation.

Annotation

Drawn from the mining law of Ghana (2006), this provision governs the revocation of an exclusive prospecting/reconnaissance licence. It includes the following safeguards:

  1. The Regulating Authority is only authorized to revoke a licence on the recommendation of the Minerals Commission;
  2. The grounds for revocation are specified in the mining law and are more limited than in the first example (i.e., a breach of any term of the mining law is not a ground for revocation of the licence under the Ghanaian mining law); and
  3. The Regulating Authority must give prior notice to the holder,
  4. The holder is given a sixty day period to cure the breach or explain why the licence should not be revoked.

These safeguards are stronger than those for non-exclusive rights under the first example in that a recommendation of the Commission is required in order for the Regulating Authority to revoke, the grounds for revocation are much more limited, and the holder is given a longer cure period.

As in the first example, the Regulating Authority is given the flexibility to revoke or not, based on the circumstances and the reasoning provided by the licence holder.