I noticed this Mining Warden Decision the other day and thought we could all learn something from it. Black Range Mining v Mesa Minerals (aka Mineral Resources)

Black Range Mining Pty Ltd made an application for forfeiture on 10 May 2017 against Mining Leases M46/237 and 238 held by Auvex and Mesa Minerals, one of Mineral Resources stable of companies.

MRL had spent in excess of $15M proving up a resource shown as quoted on the MRL website.

“Mesa holds the Sunday Hill and Ant Hill tenements within the Pilbara region, which contain a proven resource of medium grade ferruginous ores available for the establishment of a manganese ore export operation. In the 2015 financial year, record commodity exports were achieved which included 0.3 million wet metric tonnes of manganese.”

The expenditure by Mesa in the 2016 year exceeded the minimum commitment by approximately $5000 for each mining lease, that had commitments of $73,000 and $80,000.

When preparing the defence particulars, Mesa discovered there would be a shortfall of expenditure of about 50%, which was the expenditure on ‘geological reconnaissance’ and lodged an application for exemption 313 days after the required period which was refused by the Warden.

The Warden said “the difference between the expenditure could have been systemic failure, inexperience, inadvertence, ignorance, gross lack of care… [or] deliberate misrepresentation,” but was unable to determine which from the submission. The inadequate explanation went a considerable way to result in the refusal of the extension of time.

The question to be asked is how can we avoid being put in the same predicament? Accurate reporting for starters, which is a company wide responsibility. When expenditure is line ball with commitment, should an exemption from expenditure application be lodged despite having met expenditure? In this case spending $360 for an exemption application would have save thousands. A review of your processes within the company may be necessary so such a circumstance never arises.

LandTrack Systems runs a training course called Practical Tenement Management, which teaches you how to avoid this predicament.