We all know someone who has frantically managed expenditure by addressing their under-explored ground at the last minute. Sure, with luck it may work, but isn't it time to retire that system of planning? This is especially important in light of an increasing incidence of forfeiture plaints that has cost some miners dearly.
Here’s how it works: in addition to Departmental monitoring, the Mining Act 1978 (WA) establishes an industry self-regulation mechanism that enables anyone to apply to the Warden’s Court of Western Australia for the forfeiture of a mineral title on the grounds that the titleholder has not complied with the Act. After hearing the complaints, the Mining Warden makes recommendations to the Minister who may impose penalties or declare the title to be forfeited.
If the forfeiture is granted, the plaintiff has first option to apply for the tenement and, if this is granted, then has the opportunity to work the ground. There is now growing concern that this action is being used by serial plaintiffs to extort so-called “go away payments” from tenement holders.
For example, Focus Minerals recently settled 102 applications for forfeiture against the company’s tenements. The settlement deed required Focus to make a $400,000 cash payment to the applicants and transfer 13 of its tenements to the applicants.
Decisions like this have underscored the importance of the tenement holder’s expenditure obligations. It cannot be emphasised too strongly: it is vital to correctly resource and record in detail every aspect of expenditure functions, from compilation to calculation as well as reporting. Failure to do so could lead to forfeiture of the tenements.
The bottom line is this: mining companies must become more committed to exploring their ground – and recording every action and expenditure related to such exploration – to prevent exposure to forfeiture action.
Global Tenements has developed the Expenditure Strategy Tool to enable clients to better plan their exploration spend through knowing what they have already spent. The tool will also let them know how they are tracking with combined group spend. If the group is well over expenditure, the tool will protect the remainder of the tenements within the group.
The mining company can therefore plan to use its dollars on tenements that are more at risk from forfeiture plaints. This tool also means that geologists have plenty of time to properly plan sampling/drilling programs to ensure expenditure is well directed.
The Expenditure Strategy Tool has been designed to create reports which can be presented at Board Meetings to show easily where mining companies are spending their money and identify gaps where projects may have been overlooked.
As most miners are probably aware, the Department of Mines, Industry Regulation and Safety can refuse an application for exemption from expenditure, resulting in possible forfeiture action or fines.
Don’t risk exposing your company’s tenements – ensure complete protection through Global Tenements’ Expenditure Strategy Tool.