Companies operating in Australia and New Zealand; ( where Aurora Minerals has its tenements ) are subject to the relevant statutory legislation in those juristictions.
This includes, in the case of the extensive Western Australian tenements (“Tenements or Mining Tenements”);
and in the case of New Zealand where the Company has one project (Macraes West);
In Western Australia, ownership of all minerals is vested in the State. Exploration and mining companies and individuals may access rights to minerals, subject to payment of rents and royalties, by obtaining exclusive mining title, commonly called mining “tenements”.
The Company's mining tenements comprise exploration licences, mining leases and prospecting licences, granted or applied for under the Western Australian Mining Act 1978.
The Western Australian Mining Act applies generally in relation to mining, prospecting and related activities conducted on the land subject to the Mining Tenements in addition to any standard and special conditions that apply to each tenements.
An exploration licence remains in force for a period of 5 years. Those applied for before 6 February 2006 may, in certain circumstances, be extended by a further period or periods of one or two years on application, while at the end of the third and fourth years of the term, the holder must relinquish not less than half of the area of the licence. Exploration licences applied for after 6 February 2006 still remain in force for 5 years but at the end of this term the licence can be extended for a further period of 5 years, subject to a 40% relinquishment of the original area. Further extensions of 2 years each are then possible under prescribed circumstances.
No legal or equitable interest in or affecting an exploration licence can be transferred or otherwise dealt with during the first year of its term without the prior written consent of the relevant Western Australian Government minister ("Minister").
Exploration licences are applied for in graticular blocks comprising one minute of latitude and longitude. The area comprising one graticular block will range from approximately 2.8 square km to 3.3 square km depending on latitude.
The WA Mining Act confers on the holder of an exploration licence which is in force, the right to apply for and, subject to the WA Mining Act, have granted one or more mining leases over any part of the land the subject of that licence, for the purpose of mining operation.
A mining lease remains in force for a period of 21 years and may be renewed for successive periods of 21 years. In the case of mining leases the period of 21 years commences from the date of notification by the Minister.
No legal or equitable interest in or affecting a mining lease can be transferred or otherwise dealt with, or sub-lease entered, without the prior written consent of the Minister. Mining tenements in Western Australia are granted subject to various conditions prescribed by the Western Australian Mining Act including payment of rent, expenditure and reporting requirements and environmental conditions.
Information on rent and expenditure conditions can be found at the website of the WA Department of Industry and Resources at
http://www.doir.wa.gov.au/aboutus/D69EC29123C14078A7F3F51D8C4864B3.asp
There may be sites of significance to Aboriginal people located on the land on which the Mining Tenements are situated.
The Aboriginal Heritage Act 1972 (WA) (WA Heritage Act) applies to the Mining Tenements and makes it an offence to, among other things, knowingly alter or damage an Aboriginal site or object on or under an Aboriginal site. A site is defined to include any sacred, ritual or ceremonial site which is of importance and special significance to persons of Aboriginal descent. There is no requirement or need for a site to be registered in any public manner or, indeed, be in any way acknowledged as an Aboriginal site for it to qualify as an Aboriginal site for the purposes of the WA Heritage Act.
The Aboriginal and Torres Strait Islander Heritage Act 1984 (Cth.) (Commonwealth Heritage Act) also applies to the Mining Tenements and is aimed at the preservation and protection from desecration of significant Aboriginal areas and significant Aboriginal objects. An area or object is found to be desecrated if it is used or treated in a manner inconsistent with Aboriginal tradition.
Database searches can ascertain if any Aboriginal sites have been identified and registered in the Company’s exploration licences and applications; however there is no guarantee that all sites, objects or relics have been registered. In any event, their exact location is often not ascertainable from such searches. Further, these enquiries are generally done by the exploration or mining company after the tenure applied for is granted and once a particular work programme has been determined. In those cases it may be generally necessary to enter into separate arrangements with the traditional owners of the sites to obtain that information. This may add to the time taken for the Company to gain access to the ground for exploration.
To ensure that that it does not contravene any laws while carrying out operations on its Tenements, the Company’s policy is to routinely conduct heritage surveys to determine if any Aboriginal sites exist within the area of such Tenements. The Company has to ensure that any interference with such Aboriginal sites is in strict conformity with the provisions of the above WA Heritage Act and the Commonwealth Heritage Act.
On the Company’s tenements and tenement applications, Heritage Surveys are generally not required for low impact activities such as prospecting, soil sampling, rock chip sampling or airborne geophysical surveys, as they have very little impact on the landscape.
However, in order to conduct drilling and related activities, irrespective that such exploration may in many cases also be of very low impact, a Heritage Agreement is usually required, conducted with ; by ; or on behalf of the relevant Native Tile Claimant in that area.
A Heritage Agreement typically provides the parties with the template for the conduct and cost of heritage surveys by the Claimants over the areas of proposed drilling and related activity.
The Company is reliant on the timely, efficient and reasonable co-operation of the relevant Claimants and those who represent them to conduct Heritage Surveys.
The Company is required to have a Heritage Agreement with the relevant Claimant Group (if the Claimant Group requires the same) as a pre-requisite for the approval of the Native Title Tribunal and the subsequent granting of the Tenement by the Department of Mines and Petroleum.
If there are no Native Title Claimant objections to a tenement application, then grant of the tenement may occur some months after the application. However delays of more than 12 months can occur if objections to such grant are lodged by Native Title Claimants, under either the Mining Act or Native Title Act.
Native title objections are usually avoided if an applicant and an affected native title claimant/holder sign the State Government’s standard heritage agreement, (Regional Standard Heritage Agreement) which sets out the manner in which Heritage Surveys are to be conducted by the Claimants, paid for by the Company, to allow drilling and like exploration activities such as trenching, bulk sampling etc, to proceed and at the same time avoid any Aboriginal heritage sites.
In 2006-2007 a large number of the Company's Exploration Licences were applied for. A significant number of these are now granted and are subject to the State’s Regional Standard Heritage Agreement, signed by both the Company and the Claimants.
A large number of the Companies tenements are still at application stage and subject to objections by Native Title Claimants as set out in the Aurora Annual Report (2007 and 2008) and various other ASX announcements by the Company. The Company has routinely entered into the standard heritage agreement for these tenement applications, however many Claimants have not been prepared to sign this form of agreement, and instead have objected to the grant of the Tenements and, as a result, there have been significant delays in grant of the Tenements affected by their claims,.
The Native Title Tribunal has commenced considering some of these objections (mid 2009).
Meanwhile, the Company is interacting with the Claimant group which covers its Camel Hills, Glenburgh and Capricorn South East Project areas and a number of the Company’s other projects, aimed at acceptance of a heritage agreement on mutually acceptable terms, such that the Claimant Group would then remove its objections, permitting the grant of the Tenements. This would then lead to the conduct of heritage surveys by the Claimants for exploration to proceed.
The Company is working with determination on these matters and uses a specialist tenement consultant to assist with the process.
In June 1992 the High Court of Australia held in Mabo -v- Queensland that the common law of Australia recognises a form of native title. In order to maintain a claim to native title the persons making such claim must show that they enjoyed certain customary rights and privileges in respect of a particular area of land and that they have maintained their traditional connection with that land. Such a claim will not be recognised if the native title has been extinguished, either by voluntary surrender to the Crown, death of the last survivor of a community entitled to native title, abandonment of the land in question by that community or the granting of an "inconsistent interest" in the land by the Crown. An example of inconsistent interest would be the granting of a freehold or some types of leasehold interest in the land. The granting of a lesser form of interest will not extinguish native title unless it is wholly inconsistent with native title.
The Commonwealth Parliament responded to the Mabo decision by passing the Native Title Act 1993 (Commonwealth Act). Among other things, the Commonwealth Act:
(a) regulates the recognition and protection of native title;
(b) confirms the validity of titles granted by the Federal Government prior to the commencement of that Act on 1 January 1994;
(c) specifies the procedures to be complied with for certain future acts which affect native title; and
(d) specifies the procedures by which Aboriginal peoples can claim native title and by which people determined to hold native title holders can claim compensation.
The Commonwealth Act was extensively amended in 1998 by the Native Title Amendment Act 1998. These amendments include the validation of any titles that may have been invalidly granted over pastoral leases and certain other leasehold interests during the period 1 January 1994 to 23 December 1996. Other significant amendments include a revised threshold test for the acceptance of native title claims, confirmation of extinguishment of native title by the grant of "exclusive possession" pastoral leases and certain other leasehold interests and provisions intended to deal with overlapping claims.
The Western Australian Parliament has enacted the Titles (Validation) and Native Title (Effect of Past Acts) Act 1995 which adopts the Commonwealth Act in Western Australia. The majority of the High Court concluded in the recent Ward decision (8 August 2002) that, among other things:
(a) native title has been wholly extinguished in respect of land the subject of freehold, public works or other previous "exclusive possession" acts, and in respect of minerals and petroleum which are vested in the Crown, as well as various other grants and vestings; and
(b) native title has been partially extinguished as a result of the grant of "non-exclusive possession" pastoral leases and mining leases, and also as a result of the creation of certain reserves.
The underlying land tenure has not been researched in respect of the Tenements and applications in order to determine the extent of extinguishment.
Persons claiming to hold native title may lodge an application for determination of native title (being a native title claim) with the Federal Court. Applications which are lodged with the Federal Court will be referred to the National Native Title Tribunal (NNTT) for the purposes of registration of the claim.
If the Native Title Registrar is satisfied that a claim meets the registration requirements set out in the Commonwealth Act (Registration Test) it will be entered on the Register of Native Title Claims maintained by the NNTT (Register). Claimants of registered claims are afforded certain procedural rights under the Commonwealth Act including the "right to negotiate" discussed further below.
Claims which fail to meet the Registration Test are recorded on the Schedule of Applications Received maintained by the NNTT. Such claims may be entered on the Register at a later date if additional information is provided by the claimant that satisfies the Registration Test. Claims which are deregistered will lose the right to negotiate from the date of deregistration but will still remain on foot in the Federal Court until such time as they are determined by the Court.
All of the Mining Tenements relate to land which is currently the subject of at least one registered native title claim. The fact that a claim has been lodged does not necessarily mean that native title exists over the area claimed, nor does the absence of a claim necessarily indicate that no native title exists over that area. The existence of native title will be established in due course as the claims are determined by the Federal Court. The Company has not undertaken the considerable historical, anthropological and ethnographic work that would be required to determine the possibility of any further claims in respect of the area of the Mining Tenements being made in the future.
(a) Tenements granted prior to 1 January 1994 Under the Titles (Validation) and Native Title (Effect of Past Acts) Act 1995 the grant of mining tenements granted in Western Australia prior to 1 January 1994 has been validated to the extent that the grant may have been invalid as a result of the existence of native title. Exploration Licence 20/168 was granted prior to 1 January 1994 and accordingly has been validated pursuant to this Act.
(b) Tenements granted after 1 January 1994 The grant of a mining tenement is an act that is capable of affecting, and which may affect, native title. The future act processes of the Commonwealth Act provide a mechanism for achieving the valid grant of a mining tenement in terms of native title.
The Western Australian Parliament passed the Titles Validation Amendment Act 1999 which confirmed the validity of certain acts made by the State of Western Australia between 1 January 1994 and 23 December 1996, provided such acts had met various conditions set out in the Commonwealth Act.
Mining Tenements granted since 23 December 1996 which are affected by native title rights and interests will be valid provided the applicable processes prescribed by the Commonwealth Act were complied with. The balance of the granted WA Mining Tenements were granted after 23 December 1996. The Company understands that it has been the practice of the Western Australian Government to comply with these processes but have not undertaken any independent enquiries to confirm that this is the case.
As stated above, the valid grant of any of the Mining Tenements which may affect native title requires full compliance with the provisions of the Commonwealth Act in addition to compliance with the usual procedures under the relevant State's mining legislation. The primary procedure prescribed under the Commonwealth Act is the "right to negotiate" process. Other procedures generally apply to low-impact titles (such as prospecting and exploration licences) or infrastructure titles.
The right to negotiate process involves the publishing of a notice of the proposed grant of a tenement followed by a minimum 6 month period of negotiation between the relevant State Government, the tenement applicant and the relevant registered native title claimant. If agreement is not reached to enable the grant to occur, the matter may be referred to arbitration before the NNTT, which has a further 6 months to reach a decision. The decision of the NNTT may be reviewed by the relevant Federal Minister.
The Commonwealth Act provides that, in relation to the grant of mining tenements in certain areas, a State law can operate in lieu of the right to negotiate process of the Commonwealth Act. These areas are principally areas covered by pastoral leases. The Western Australian State Government has not yet introduced such a law. The right to negotiate process does not have to be pursued in cases where an indigenous land use agreement (ILUA) is negotiated with the relevant Aboriginal people and registered with the NNTT. In such cases, the procedures prescribed by the ILUA must be followed to obtain the valid grant of the tenement. These procedures will vary depending on the terms of the relevant ILUA.
As with the grant of mining tenements, renewals of mining tenements granted prior to 1 January 1994, to the extent the renewals were invalid due to native title, have been validated by legislation. Renewals granted between 1 January 1994 and 23 December 1996 have been similarly validated provided certain statutory criteria have been met. Renewals made after 23 December 1996 of tenements validly granted before that date will not be subject to the right to negotiate process provided:
(i) the area to which the earlier right is made is not extended;
(ii) the term of the new right is not longer than the term of the earlier right; and
(iii) the rights to be created are not greater than the rights conferred by the earlier grant.
There is doubt as to whether the right to negotiate process applies to second and subsequent renewals but this matter is yet to be determined by the courts. Other than as stated above, renewals of mining tenements are subject to the same right to negotiate (or, pending legislation, alternative State) process as is described above.
In New Zealand all naturally occurring petroleum, gold, silver and uranium is owned by the Government. The allocation of rights to prospect, explore or mine minerals that are owned by the Government is carried out by the issuing of permits under the Crown Minerals Act 1991(CMA). The policy and procedures followed for the allocation of the mineral resources are determined in the Minerals Programmes and requirements to be met defined in the Regulations.
Issues to do with the environment are dealt with under the Resource Management Act 1991 (RMA). Local government authorities manage resource consents under the RMA. The process is separate from obtaining a permit for mineral rights under the CMA. The purpose of the RMA is to promote sustainable development of natural and physical resources, including use and development.
Drilling and mining in the Company’s New Zealand project is subject to the Company receiving an array of such consents and permits.
The RMA consent process considers the environmental effects of activities associated with exploration and mining of minerals, making it a key consideration in the granting of consents for such activities.
It considers the relationship of Maori with their ancestral lands, water, sites of special significance and other taonga (treasured possessions) and the principles of the Treaty of Waitangi (the document which defines the relationship between Maori and the New Zealand Government). As a consequence, it is crucial to establish and maintain good working relationships with local iwi (tribes) in the area of any mining or exploration activity is important.
The granting of resource consents is administered by regional councils with regard to water and air and district councils in the case of land use matters. Consents are generally granted for a fixed term and may require renewal during the term of an exploration or mining permit. There is always a risk that as an outcome of any such “consenting process” the activity may be denied consent, or as an outcome of the “re-consenting process” the relevant consenting authority deny consent renewal or impose different conditions.
Neither a permit under the CMA or a consent under the RMA gives a right of access to land. Land access in determined by direct negotiation with the landowner.
In general, surface prospecting including surface sampling, mapping and geophysical surveys, is permitted on private land but it is always the Company’s strong preference to have landowner consent.
The right to have access to privately owned land for drilling and mining must be negotiated with the landowner and occupier of the land under the land access provisions of the Crown Minerals Act. If agreement cannot be reached the company may apply to the Minister responsible for Crown Minerals to appoint an arbitrator, which the Minister may do if he determines it to be in the public interest.
Access to land which is specifically owned by Maori under title requires the owners’ consent for all forms of prospecting, drilling and mining.
Access to Crown Land must be negotiated with the responsible Minister. In some cases Crown Land, or Crown Land which has been sold to private citizens may become subject to Maori Claims, pursuant to the Treaty of Waitangi. If successful, such claims could result in resumption of the land for a Maori claimant, though compensation would generally be payable to those effected, in such cases.
Crown Land administered by the Department of Conservation is governed by the Conservation Act 1987 (NZ). There are various categories of conservation land from high level Specially Protected Areas through to Marginal Strips, and Stewardship Areas. Stewardship areas may be sold under some circumstances subject to Ministerial approval and a public process.
The process for seeking consent under the RMA and other relevant legislation requires extensive stakeholder consultation, and enables all interested third parties to participate in the process.
It is important to then appreciate that the “consenting process” is a time and capital consuming process that is exacerbated by a lack of suitably qualified geological and land access personnel, who have been attracted to the Australian resources boom.
As mentioned above, no Government-owned minerals may be extracted from any land within New Zealand without an appropriate permit. A permit is granted by Crown Minerals in respect of specific minerals and land and the Minister of Energy (“the Minister”) has a wide discretion to impose such conditions as he/she thinks fit.
Aurora’s Mining Tenements comprise Prospecting Permits, and Exploration Permits , granted under and subject to the Crown Minerals Act 1991 (NZ) (“Crown Minerals Act”).
A Prospecting Permit remains in force for a period of two years and contains a Right of Renewal for up to another two years. Prospecting Permits are granted to enable identification of land likely to contain mineral deposits. The Crown Minerals Act 1991 confers on the holder of a Prospecting Permit the right to apply for Exploration Permits and subsequently apply for Mining Permits over any of the part of the land subject of that Permit. The activities permitted pursuant to a Prospecting Permit are low impact activities that include geological mapping, aerial surveying (including geophysics) and surface geochemical surveys.
Exploration Permits remain in force for a period of up to five years and carry a right of renewal for another five years. At the end of the fourth year of the Exploration Permit, the holder must relinquish not less than half of the area of the permit.
Exploration Permits are granted to enable the determination of the potential for and feasibility of mining in an area. The activities permitted pursuant to an Exploration Permit may include drilling, bulk sampling and mine feasibility studies subject to conditions imposed from time to time under the Crown Minerals Act.
Exploration Permits generally require the permit holder to make reasonable efforts to explore the permit area and to take all reasonable steps to undertake a defined minimum work programme as set out in the Permit.
The Crown Minerals Act regulates the issue of mining permits to allow mining of Crown-owned minerals. Mining Permits are issued when the nature and extent of mineral deposits have been accurately determined. A Mining Permit remains in force for a maximum period of 40 years. Mining Permits are granted subject to various conditions prescribed under the Crown Minerals Act including payment of royalties, expending required levels of expenditure and completion of reporting requirements and the licensee making reasonable efforts to undertake the permitted mining activities pursuant to its work programmes. Additional conditions may be imposed on each Permit as may be required by Crown Minerals. Mining Tenements in New Zealand are also subject to other statutory requirements.
Royalties are payable to the Crown annually in respect of minerals taken from land pursuant to the Mining Permit. Any Mining Permit granted under the Crown Minerals Act is subject to the Royalty regime, based on sales or accounting profits, of up to 1% ad valorem.
Changes to permits:- Applications may be made during the period of the permit for permits to be changed subject to the consent of the Minister of Energy, the Minister responsible for Crown Minerals. Such applications may be declined if the permit holder has not substantially complied with the provisions of the permit.
Transfers:- Permit holders are prohibited from assigning or transferring interests in a permit without the consent of the Minister.
Security:- The Minister may require bonds or deposits payable as security for compliance with the conditions of any permit. The Minister may revoke all permits in the event that the permit holder contravenes or does not make reasonable efforts to comply with the Crown Minerals Act.
Land Access:- An Access Agreement will be required from the Department of Conservation where land is in a Conservation Area under the Conservation Act 1987 (NZ). The Prospecting Permits granted for Lannigans and Rockville (see Tenement Schedule) include land within a Conservation Area. An access agreement from the Department of Conservation has been obtained for the Rockville Project. .However no access agreement has yet been negotiated and obtained from the Department of Conservation for Lannigans, which contains sensitive areas.[IS THIS STILL RELEVANT?]
A land access agreement is not required for a Prospecting Permit where minimum impact activity as defined in the Crown Minerals Act is to be carried out. The works to be carried out on the Prospecting Permits obtained for the NZ Mining Tenements are to be minimum impact activities; however it is Company policy to try to obtain such consent at an early stage of exploration.
Where an Exploration Permit is obtained, access arrangements are required to be agreed between the permit holder and the owner and occupier of the land. Where access arrangements cannot be agreed, then an access arrangement may be determined by Arbitrator appointed as required by the Crown Minerals Act.
The Minerals Programme:- The programme, which establishes the policies, procedures and provisions to be applied in respect of the management of Crown owned minerals, is reviewed on a regular basis. Any review may result in changes to the policies in relation to permits, conditions and royalties, such as increases in rental and application fees.
Activities carried out under Exploration and Mining Permits are subject to compliance with all other applicable statutes in particular the Resource Management Act 1991 (N.Z.).
Mining and exploration are high risk endeavours with the potential for high returns. Interested investors are referred to the Risk Factors section of the site for details of the broad ranging risks of investing in exploration and mining companies including:
the success or otherwise of exploration and mining operations