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Part B: Mineral Rights - Part B-2: Exploration | 25. Exploration Licensing

Exploration – also called “prospecting” in many Anglophone African jurisdictions (e.g., Botswana, Ghana, Namibia, South Africa, Tanzania, Zambia, Zimbabwe) and “recherche” in Francophone jurisdictions - is the systematic investigation of the surface and subsurface of the Earth in a designated area using geological, geophysical and geochemical methods for the purpose of determining the presence of economic deposits of mineral substances and establishing their nature, chemical composition, shape, grade and estimated quantity within degrees of certainty according to industry norms, as well as the most effective, efficient and appropriate means of extracting, processing and marketing the mineral products derived from the deposits under forecasted conditions of price and cost (including fiscal terms). Exploration can be conducted by the state or an investor.

Exploration activity proceeds in stages. The results of each stage are evaluated by the explorer and a determination is made to either proceed to the next stage, sell the exploration rights where possible, or abandon the project and relinquish the rights. The first stage of exploration in a geographical area that has not been the subject of extensive prior exploration or mining activity typically commences with wide scale, superficial investigation using primarily geological and geophysical methods. This is the least costly stage of exploration activity.

If the results of that activity are sufficiently promising and the explorer is willing and able, then the second stage of exploration work will typically involve progressively more narrowly targeted investigation of the type, quality, extent and quantity of concentrated mineralization in a specific area by means of drilling and the analysis of core samples taken at various depths from selected points on a grid laid over the targeted surface area, and the completion of at least a preliminary reserve study to quantify the volume of mineralization identified or projected based on the drilling and analysis in accordance with industry norms as to degree of certainty. The second stage of activity may be the first stage of exploration activity in an area that has previously been extensively explored or mined and for which substantial data is available for analysis.

If the results of the drill core analysis and preliminary reserve study are determined to justify a significant investment in evaluating the commercial feasibility of exploiting the identified deposit, the third and most expensive stage of exploration activity will involve conducting the final mineral reserve studies (if one has not already been completed), prefeasibility studies, environmental and social impact assessments and final feasibility studies with the goal of establishing the economic justification for developing the identified deposits.

In some jurisdictions, an exploration licence may be, or must be, preceded by a prospecting/reconnaissance licence as described in the previous part of this Guiding Template (Part B-1). In those jurisdictions, the main difference between prospecting/reconnaissance activity and exploration (or “prospecting”) activity is that the former is limited to the types of activity common to the first stage of “greenfield” exploration, whereas the latter includes drilling, analysis of drill core samples of ore and the conduct of in-depth studies to determine the presence of a commercial deposit of valuable mineral substances.

In other jurisdictions, the activity described under prospecting/reconnaissance licences in Part B-1 of this Guiding Template is considered part of exploration and there is no separate licensing of prospecting/reconnaissance activity.

Thus, depending on the jurisdiction, an exploration licence may be the right or title that authorizes (a) initial activity to locate and evaluate concentrations of valuable minerals in nature, and/or (b) the second stage of exploration activity following the completion of an initial stage of such activity pursuant to a prospecting/reconnaissance licence. Overall, it is essential for “exploration” (or “prospecting” or “recherche”) to be defined or described in the “definitions” and “types of mineral rights” sections of a mining law to avoid confusion.