Aim provide a practical roadmap for administrators and liquidators - - PDF document

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6/07/2016 Presented by Brett Molony, Director of Price Sierakowski Corporate and Anthony Papamatheos, Barrister at Francis Burt Chambers 6 July 2016 Aim provide a practical roadmap for administrators and liquidators of the mining laws of

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Presented by Brett Molony, Director of Price Sierakowski Corporate and Anthony Papamatheos, Barrister at Francis Burt Chambers 6 July 2016

 Aim – provide a practical roadmap for administrators

and liquidators of the mining laws of Western Australia, and some commonly faced commercial and legal issues.

 Provide an overview as to:

1) the mining legislation itself (land types, types

f tenements, obligations and processes);

2) issues that can be faced by a company during liquidation .

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 Purpose of Act – To open up land for the purpose of,

and to promote, mining in Western Australia.

 Types of land open for mining:

 Crown land;  Public reserves and Commonwealth land;  Private land.

 Type of land relevant:  Affects the process a company will face in applying

for the mining tenement (private land owner’s veto, national parks etc).

 If granted, limits placed on manner in which

tenement holder can exercise their rights.

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

Prospecting Licences

 Maximum area 200 hectares.  Must be marked out.  No limit to number that can be held.  Security of $5,000 is required in respect of each licence.  Four year term from grant, with provision to extend for one

more four year term.

 Holder may extract or disturb up to 500 tonnes of material from

the ground – Minister may approve higher amounts.

 Prescribed minimum annual expenditure and reporting

commitments.

 Special Prospecting Licences  Gold.  10 hectares.  Interest in 10 SPLs at the same time.  May be marked out over an existing prospecting licence

r exploration licence.

 May be granted if considered that activities could be

carried on without undue detriment to the activities of the primary tenement holder.

 Caution to administrators and liquidators to watch out for

applications for SPLs in their control – missing an

bjection period may restrict value or ability to deal with

the tenement.

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 Exploration Licences  Graticular block system – minimum size of one block,

maximum of 70 (size per block varies depending on latitude, but each block approximately 2.8km/sq).

 No marking out required – can be done by desktop.  No limit to the number that can be held.  Security of $5,000 is required in respect of each licence.  Grant term post February 2006  5 years  possible

extension of 5 years  further periods of 2 years thereafter (40% of ground to be surrendered at end of year 6).

 Holder may extract or disturb up to 1,000 tonnes of

material from the ground – Minister may approve higher amounts.

 Prescribed minimum annual expenditure and

reporting commitments. Significantly higher than prospecting licences, with amounts increasing the

lder the tenement.

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 Mining Leases  Must be marked out.  Area applied for must relate to an identified orebody as

well as an area for infrastructure requirements.

 Application for mining lease must be accompanied by a

mining proposal or a statement of mining operation and resource report.

 No limit to the number that can be held.  Term of 21 years, and may be renewed for further terms.  Prescribed minimum annual expenditure and reporting

commitments. Must be spent on mining or in connection

with mining on the lease.

 Miscellaneous Licences  For the purposes connected to mining, such as

roads, pipelines, rail, airport and other purposes prescribed by the Act.

 No need to mark out.  No limit to number that can be held.  Term of 21 years, and may be renewed for further

terms.

 Can be applied for over other tenements.  No expenditure.

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 Application made.  If compliance and no objections or Native Title

issues:

 Prospecting licences and miscellaneous licences –

granted by the Warden.

 Exploration licences and mining leases – Warden

recommends grant to Minister (Minister holds ultimate discretion).

 If objections lodged against applications within the

prescribed time:

 Warden deals with objections by receiving evidence and

programming to hearing.

 If objections upheld – Warden will not grant prospecting

licence or miscellaneous licence, or will recommend the Minister not grant exploration licence or mining lease. Priority over land will then go to next in time compliant application.

 If objections rejected, and no native title issues – Warden

will grant, or recommend grant to the Minister.

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 Expenditure  Prospecting licences, exploration licences, mining leases –

minimum expenditure to be met each year (on each anniversary of the grant date).

 Lessee required to confirm expenditure met by lodging a

Form 5 with the Department of Mines annually.

 Form 5 requires breakdown of expenses into categories

(eg drilling, plant and equipment hire, Aboriginal heritage surveys, tenement rent and rates), but not proof of expense.

 Department may audit (s115B(2) Mining Act).  Form 5 to be filed within 60 days of the anniversary of

the commencement of the tenement.

 Exemption  s102 Mining Act provides a mechanism for exemption

from expenditure commitments for a given expenditure year.

 Reasons:

 title of tenement in dispute;  give time to purchase and erect plant and machinery;  ground unworkable;  tenement contains a deposit which is uneconomic;  any other reason which the Minister considers sufficient to justify an exemption.  “Any other reason” includes liquidation of the holder of the tenement.

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 Application for exemption:  must made within 60 days of the end of the year to which it

relates.

 must give brief reasons for the application being sought, and

include all supporting evidence in a statutory declaration.

 application posted on notice board of the Mining Registrar for a

period of 35 days;

 if no objection – forwarded to the Minister for determination;  If objection – heard by Warden, who then forwards a

recommendation to the Minister.

 If refused – forfeiture proceedings will be commenced by the

Minister (if they have not been commenced by a third party already).

 Forfeiture  Importantly, if expenditure not met, third parties may

apply for the right of forfeiture.

 Forfeiture – can be applied for by the Minister or any

ther person as a result of a failure of the tenement

holder to fulfil any of the requirements listed under s96(2) of the Mining Act.

 Includes failure to pay rent, meet expenditure, or breach

any term or condition to which the tenement is subject.

 Filing of Form 5 prima facie evidence that expenditure

has been met, it is open to an applicant for forfeiture to challenge that expenditure recorded on a Form 5 has actually been met.

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 If application is successful, and Warden recommends

forfeiture to the Minister (and the Minister orders forfeiture), the applicant will have a 14 day priority in marking out the ground over which the forfeited tenement covered.

 Effectively, tenement ceases to exist, and applicant

has first opportunity to create a new tenement over all or part of the land comprised by the forfeited tenement.



Distinction between warden in his/her capacity as the warden of mines (usually sitting in open court), and the warden’s court.



Warden of mines



Administrative in nature – not technically a court, despite repeated reference to the warden of mines sitting in “open court”.



Warden of mines may hear and determine finally (in open court):



applications for the grant of prospecting licences and miscellaneous licences when an objection has been lodged; and



applications for forfeiture of prospecting licences and miscellaneous licences for non-payment of rent or failure to meet expenditure requirements.

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 Warden of mines may hear (in open court) and

report a recommendation to the Minister:

 applications for exploration licences or mining leases;  applications for forfeiture for exploration licences or

mining leases for non-payment of rent or failure to meet expenditure requirements; and

 applications for exemption for expenditure

conditions.

 Creature of statute – Mining Act/Regulations,

imports provisions from the Magistrate Court Rules and Supreme Court Rules.

 Hears range of matters including:  areas, dimensions and boundaries of tenements;  disputes as to water;  trespass or encroachment upon tenements;  disputes between joint holders of tenements;  determination of compensation for private land

wners whose land has been affected by tenements.

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 Tenement applications.  Forfeiture and exemption applications:  Considerations:

 Meeting obligations of the company to lodge reports,

returns, pay rents and rates; and

 Whether proceedings already on foot or commenced

after administration are stayed – s440D Corporations Act

 Proceedings for compensation.

 Tenement applications.  Forfeiture and exemption applications.  Considerations:

 Meeting obligations of the company to lodge reports,

returns, pay rents and rates; and

 Whether proceedings already on foot or commenced

after administration are stayed – s471B Corporations Act

 Proceedings for compensation.