Australia: Renewing exploration licences in NSW and the importance of making a good application

Last Updated: 24 September 2013
Article by Dan Howard and Patrick Cranley

Key Points:

The Newcrest case highlights a number of important key issues when lodging applications for renewal of exploration licences under the New South Wales Mining Act.

The decision of the New South Wales Mining Minister For Resources and Energy to grant the renewal of exploration licence EL3856 held by Newcrest Mining Limited has recently been quashed by the Land and Environment Court and remitted to the Minister to be determined according to law (Gold and Copper Resources Pty Limited v Minister For Resources and Energy [2013] NSWLC 66).

Gold and Copper Resources Pty Ltd brought a judicial review application to challenge the Minister's decision to renew EL3856 over an area of 120 square kilometres near the existing Cadia goldmine in the Cadia Valley, south-west of Orange, New South Wales.

This was the seventh renewal granted to Newcrest for EL3856 and, in this case was granted by the Minister's delegate, Mr New.

The review revolved around the power of the Minister's delegate to grant an exploration licence renewal under section the Mining Act 1992 (NSW). This section of the Mining Act sets out the powers of a decision-maker (which includes a Minister's delegate) to grant a renewal of an exploration licence, the grounds for refusal of a renewal application and the period for which an exploration licence may be renewed.

Gold and Copper Resources' grounds for challenging the exploration licence renewal

While there were four key arguments raised by Gold and Copper Resources in support of its position opposing the renewal, only the following two arguments were accepted by the Court:

  • that the Minister had to be satisfied that special circumstances existed to justify the renewal being granted over the area applied for and if no special circumstances existed then the Minister could not grant the renewal in accordance with section 114(6) of the Mining Act; and
  • that the renewal of an exploration licence over land that was not previously covered by the exploration licence (immediately before renewal) was prohibited under section 114(5) of the Mining Act.

When are Special Circumstances required for a decision to renew an exploration licence under section 114(6) of the Mining Act?

This was the key ground on which the Court relied to overturn the decision to renew EL3856.

Under section 114(6), "[t]he area of land over which an exploration licence may be renewed is not to exceed half the area over which the licence was in force when the application for renewal was made unless the decision-maker is satisfied that special circumstances exist that justify renewal of the licence over a larger area."

Gold and Copper Resources said the Court should apply Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd & Ors (No 2) [2010] NSWLEC 1 where it was held that:

"The existence of the Minister's mental state of satisfaction under s114(6) ... that special circumstances exist that justify the renewal of the licence over a larger number of units, is a precondition or an essential preliminary to the exercise of the power to renew an authority over a number of units exceeding half the number of units over which the licence was in force when the application for the renewal was made. Unless the Minister forms that mental state of satisfaction, the prohibition on renewal [of more than half the existing units] remains..."

In defending the decision to grant the renewal of EL3856, the Minister sought to rely upon Bushell v Secretary of State for the Environment [1981] AC 75 which held that all relevant material did not have to be before the Minister's delegate; it was sufficient for relevant information to have been available in the Department when the relevant decision was made.

The Court held that as Mr New held a formal delegation from the Minister to administer the requirements of the Mining Act, and in doing so was to exercise an important statutory power, he had to form the requisite satisfaction of special circumstances as required by section 114(6).

In this instance the Court found there was insufficient evidence that the Minister's delegate had fully considered what amounted to special circumstances. The requirements of section 114(6) of the Mining Act had not been met and as a consequence the decision was held to be invalid.

Inclusion of additional land in renewal application

Because of amendments made by the Survey (Geocentric Datum of Australia) Act 1999, the Mining Act and Regulations adopted a new datum, known as the Geocentric Datum of Australia. As a result of these mapping changes and associated processes, Newcrest's renewal application contained certain areas of land that were not subject to EL3856 immediately before renewal and this was a breach of section 114(5) of the Mining Act. While this section of the Mining Act permits the area of land over which the renewal is sought to be different from that covered by the existing tenement, it does not allow the renewal to include land that was not subject to the tenement at the time of the renewal.

Newcrest was however, required to remove areas of land it had included in its renewal application which were not subject to EL3856 immediately before renewal which meant that the renewal could proceed on the amended basis.

The need to take care with preparing a renewal application

It is worth briefly examining the two other submissions put forward by Gold and Copper Resources which were not successful, because they highlight the need to take care with preparing a renewal application.

The arguments which on the facts were not adopted by the Court were:

  • that the Minister had no power under section 114(1)(a) of the Mining Act to renew the exploration licence for a period longer than the period in respect of which the renewal was sought; and
  • that Newcrest included false or misleading information in its application and the application should be refused under section 114(2)(c) of the Mining Act.

No power to renew licence for a period longer than originally sought

Newcrest's original application sought a renewal period for the exploration licence of two years. Later it submitted a variation to this application requesting a renewal period of five years.

Gold and Copper Resources' argument was that there is no power under the Mining Act for the Minister to accept a varied or amended application for a renewal of an exploration licence particularly in relation to the term extension.

The Court held that the Mining Act allowed the subsequent request for a term longer than that originally submitted provided that the term sought was for a period of less than five years to bring it within the limit imposed in section 114(3)(a) of the Mining Act.

False or misleading information included in application

Finally, Gold and Copper Resources submitted that Newcrest included false or misleading information in its application because Newcrest had previously indicated its intention to incorporate a certain technology to survey the entire prospect area, which ultimately it did not use.

In response, it was submitted that the information provided by Newcrest was not false and misleading because at the time it was provided in March 2009 Newcrest intended to use the stated technology.

The Court agreed with the submissions put forward by Newcrest and the Minister and held that no false or misleading information was provided by Newcrest.

Matters to consider when making a mining tenement renewal application

This case highlights a number of important key issues that should be addressed when lodging applications for renewal of exploration licences under the New South Wales Mining Act, including:

  • where the application is for a renewal of an exploration licence that exceeds the one half of the then current area, the application must include sufficient information to enable the Minister (or the Minister's delegate) to be satisfied that special circumstances exist to justify the renewal of the exploration licence over the larger area;
  • ensuring that the exploration licence does not include any additional area of land that was not previously within the boundaries of the exploration licence;
  • ensuring the appropriate period of renewal is filed with the original renewal application and that period is less than or equal to the maximum period permitted under the Mining Act; and
  • ensuring that any information provided in support of the application, such as a planned exploration activity, is current and is intended to be used during the renewal period so that it cannot be argued that the application includes false or misleading information.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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