South Australian Exploration Licence Renewals – New Act or Old Act Renewal?

Are you aware of the legislative changes around renewal of Exploration Licences (EL) that took place in the mining laws in South Australia this year?

The South Australian Government made some significant changes to the Mining Act 1971 (SA) (Mining Act) and Mining Regulations 2020 (SA) (Mining Regulations) which came into force from 1 January 2021. The team at Hetherington have outlined some of the key changes to the renewal framework for Exploration Licences in South Australia, which have arisen from the amendments to the Mining Act and introduction of the Mining Regulations.

References to the Amended Mining Act refer to provisions of the Mining Act 1971 (SA) in force after 1 January 2021. References to the Old Mining Act refer to provision of the Mining Act 1971 (SA) in force prior to 1 January 2021.

Renewals

The Amended Mining Act removes the need to apply for “subsequent exploration licences.” Under the Old Mining Act, subsequent exploration licences were required to be applied for once a tenement had been renewed for a total term of 5 years. This requirement has now been removed meaning subsequent Exploration Licences with new identifiers for the same Exploration Licence will be a thing of the past.
The Amended Mining Act provides that the maximum term of an Exploration Licence is now 6 years, rather than 5 years once it is either granted under the Amended Mining Act or brought under the Amended Mining Act. Where a licence was granted under the Old Mining Act, once it has reached an aggregate term of 5 years, it will be taken to have reached 6 years and renewed under the Amended Mining Act for a further term of 6 years.
The maximum aggregate term an Exploration Licence can be held is 18 Years (i.e. three 6 year renewals.) It is noted that where an Exploration Licence has been held (prior to being brought under the amended Mining Act) for 10 years or more, it will be taken to have reached its second 6-year renewal (i.e. an aggregate term of 12 years), hence only being able to be renewed for a further one 6 year term.
On application for renewal at the 12th anniversary date of the licence, a mandatory 50% area reduction (as compared to the original granted licence area) is required. Any area reductions that have already taken place over the first twelve (12) years of the Licence are counted toward the 50% reduction requirement.
Under the Amended Mining Act, an application for an Exploration Licence renewal must be made prior to the expiry of the licence and should be no earlier than 3 months prior to the Exploration Licence expiry date. However, if it is an Old Mining Act renewal, renewal should be lodged 30 days prior to the expiry date.

We have prepared some examples below to help illustrate the above changes. Please note that all companies and Exploration Licence references used in the examples are fictitious and provided for demonstration purposes only.

Example 1

EL 2021 was granted to Digdeep Co. on the 22 November 2017 for a term of 2 years. It was then renewed in 2019 for a further term of 3 years. In 2021, the licence would have reached a term of 5 years. This means upon renewal of the Exploration Licence, it will be taken to have reached a 6 year term and be brought under the Amended Mining Act. It can be renewed for a further maximum term of 6 years.

Example 2

EL 2022 was granted to Digdeep Co. on 22 November 2019, for a term of 2 years. In 2021, the licence term has only reached 2 years, hence can be renewed for a further 3 years under the Old Mining Act, until it reaches its 5-year term. Therefore, on renewal in 2021, the Exploration Licence will be renewed under the Old Mining Act for a maximum term of 3 years. At the end of the 3-year renewal term (and 5-year total term) in 2024, the licence would be taken to have reached the end of its initial 6-year term under the Amended Mining Act and can be renewed for a further maximum term of 6 years under the Amended Mining Act.

Example 3

EL 2023 has been granted as a subsequent Exploration Licence on 22 November 2016 to Digdeep Co. for a term of 5 years. Prior to the subsequent Exploration Licence being granted, it was in existence for a 5 year term as EL 2013. At 2021, upon renewal, this means EL 2023 has reached an aggregate term of 10 years. As EL 2023 has reached its 5 year term, it will be renewed under the Amended Mining. Under the Amended Mining Act, the EL will be taken to have reached an aggregate term of 12 years and a mandatory 50% reduction in area of the EL will be required. The mandatory 50% area reduction is able to include any area reductions that have already taken place over the first twelve (12) years of the Licence.

Future Obligations

As can be seen in the above examples, renewal of existing Exploration Licences under the new framework can be complicated and may be limited depending on the age of the particular licence. It is important that all holders become familiar with the new legislative framework and plan renewal applications ahead to ensure maximum security of tenure in relation to key assets.

For more information on how Hetherington can assist in renewal of Exploration Licences, take a look at our Services, or all the experienced team at Hetherington to chat about how we can assist with the management of your tenement portfolio.

Contacts:


Nethmi Amarasekera	Ben Muscat