Reduce Risk or Lose Tenements

23 Jul 2019


Mining tenure is the most intrinsic asset of a mining company that is often given a low risk priority with little reflection on risk management.   Conducting a risk assessment (risk identification, risk analysis, including the likelihood and impact assessment, and risk evaluation) of mining tenure is very important to secure tenure and the future of a mining company.

Risk identification and security of mining tenements requires:

  • a means of demonstrating due diligence in discharging legal and regulatory obligations;
  • adequate inhouse management, knowledge and planning (eg to meet expenditure commitment);
  • security of confidentiality of tenure and innovative geological knowhow, IT, agreements, and environmental;
  • adequate personnel and succession planning; and
  • adequate funding of tenure and not limiting financing without consideration of the increased risk.

Risk impact assessment

Using back of the envelope calculations, the importance and value of a mining company’s tenure can be assessed, to give an example:

  • An average company that holds 90 tenements will have to pay approximately $1,000,000 worth of rent per year;
  • A 500,000 ounce resource at $2042 per oz Au (ounce of gold which is current going rate) total worth is $1.021 billion dollars.

Mining tenement compliance with the regulatory obligations is becoming more rigorous across a range of laws, including  Mining Law, Environmental Law and Native Title.   Additionally, DMIRS and EPA have become stricter with compliance and increased fines and penalties.  For example, the graph below shows how forfeitures of mining tenure have increased over the last 8 years.

Illustrations of lost Mining Tenure

In the period of my career, I can recall several examples of tenements being forfeited through mistakes with major consequences, below are a few:

  1. Shovelanna Case: In the days when mining lease renewals were required to be lodged at Mining Registrar’s Regional Office, Rio Tinto failed to lodge the mining lease renewals over the Shovelanna leases, as the documents were on the front seat of a courier’s car and Cazaly Resources Ltd applied for mining leases over the area. It cost Rio a fortune in legal fees to retain the tenure. Minister-explains-reasons-behind-Shovelanna


  1. Data entered incorrectly: A tenement management assistant, incorrectly entered a fine date into a clunky tenement management programme, the fine wasn’t paid on time and DMIRS forfeited the tenements.


  1. Persons Psychology: A Tenement Manager was phoned by his partner and she informed him she was leaving their relationship. An exploration licence renewal application being prepared at the time was forgotten, the tenement expired and the Joint Venture partner required compensation.


  1. Renewal of Exploration Licence: Leopard Resources failed to renew an exploration licence with an approximate inferred 200,000 oz Au resource. This case is still in the courts.


  1. 55 mining leases invalid: In this case in 2018 the Warden said the non-compliance to lodge a mineralisation report at the same time as a mining lease application would void the mining leases. DMIRs announced 55 other mining leases are invalid and the amending legislation to legalise the mining leases is still pending over 12 months later.


  1. Failure to pay a fine: Mr Campbell failed to lodge a Form 5 (expenditure report) for an exploration licence that was automatically forfeited for non-payment of a fine for failure of lodgement.

These cases are of interest as they demonstrate that small and large companies are not fully addressing the risk management process.

Risk assessment is fundamentally important part of the risk management process and in order to achieve a comprehensive risk management approach, an organisation needs to undertake suitable and sufficient risk assessments eg SWOT analyses (Strength, Weakness, Opportunities, Threats), workshops and brainstormings.

Risk Assessment for Tenements

To give an overview, as we can see from the above examples, risk in tenure management is a result of several different things:

  • Mistakes by tenement managers and errors not escalated within time to direct managers;
  • Mistakes by software;
  • Failure of data, data management and auditing;
  • Believing government guidelines and not reading the legislation; and
  • Confidentiality of tenure.

Personnel and Training

Reducing tenement risks starts with the personnel employed and the relationships they have within the mining company, both in giving knowledge and obtaining information. Therefore, tenement managers need to have an intimate and confidential knowledge of the personnel across the company, including the accounts department, geologists, engineers, environmentalists, miners and not least of all management.  It helps if they are no not left dwelling in the cellar to be called on when a disaster strikes.

Tenement managers compensate for risk by being gifted with attention to detail, which can be improved with training. Also essential, is a breath of knowledge across the field of tenement management, so training is essential in legislative law, including Mining Law, Native Title, Contract Law, Environmental Law and Corporations Law.

Another way of reducing risk, is the escalation of risks to management – eg a renewal not lodged a week before it is due should be escalated to the above manager and then upwards as the timing becomes more critical. This is probably the most important for the triple checking of risks but rarely addressed.

Succession planning also reduces risk, but also rarely occurs. A recent XpertHR Survey’s key findings were:

  • “About 40% of respondents reported having no formal succession planning process at their organization.
  • One-fifth of respondents (20.2%) reported not being confident that their workplaces have adequate talent pipelines for critical positions.
  • Sixteen percent of respondents reported that their organizations did not plan to develop a succession plan”.[1]


Today, the national average tenure in a job is 3 years and 4 months[2], so in the life of a mining lease (21 years) a company can expect at least 6 tenement managers to manage the lease.  Also, of critical importance is that the termination (for whatever reason) of an employee is usually very sudden and the hand over is usually non-existent, therefore a system to manage tenements needs to function across multiple employee’s terms of employment. Sound corporate governance ensures detailed succession planning.

Software Risk

The use of functioning, modern innovative tenement management software will substantially reduce risk. Modern tenement management software allows the company’s employees to implement risk management strategies by:

  • Automating data update, including compliance dates against government databases:
  • Automated auditing of the tenement database;
  • Automating the escalation of mistakes/ issues to management;
  • Security of the data;
  • Eliminating redundant software that fails to meet legislative changes; and
  • Preventing errors by having procedures that are documented and cemented into the company process.


Software is one of the great hidden risks of tenement management. Tenements being managed on out dated legacy software that is well past its use by date, or software that is unfit for purpose eg tenements being managed on Excel worksheets, Word documents and Outlook Calendars.

This type of software increases risks through manual data entry, failing to meet legislative changes by inability to change or having the knowledge of the change and introduces inefficiency of processes.

Reducing tenure risk with corporate management

A company can reduce the risk of losing tenements by, firstly; have policies and procedures for managing tenements that cater for the various State and Commonwealth legislation and regulations including but not limited to the Corporations Act, Native Title Act , Heritage Acts, Environmental Acts and various Mining Acts.

Secondly, have tenement management software that is fit for purpose and not old legacy software that is unadaptable to changes in legislation.

Thirdly, and most importantly, have procedures in place where tenure risk is managed upwards; eg where an expiry renewal of a tenement is not lodged within a week of expiry the Managing Director is informed.

Fourthly, employ personnel suited to the position and willing to learn and adapt to the changing legislation and environment and with an ability to communicate to a range of professionals in the mining industry.

If you need assistance with reducing tenure risk call LandTrack Systems.

To avoid making similar mistakes so you don’t lose your tenements, LandTrack Systems offers several Training Courses:

Practical Tenement Management

Advanced Tenement Management

Understanding Tenement Expenditure

Environmental Essentials

Navigating Exploration Agreements