Canada: L'épineuse problématique de l'amodiation – The thorny issue of "Amodiation" in Francophone Africa

Last Updated: September 23 2019
Article by Mining Prospects, Daye Kaba and Pierre Langlois

« Le permis de recherche constitue un droit mobilier, indivisible, non amodiable ni susceptible de gage ou d'hypothèque » 1  [emphasis added]

A substantial number of the companies operating in the mining industry in Francophone Africa are from common law jurisdictions such as Australia, the United Kingdom or Canada.  Executives of such companies oftentimes assume that things work a certain way in the mining industry and that, for example, earn-in or option agreements (agreements pursuant to which a company is able to acquire an interest in a project or project company provided that it performs certain work and financial obligations) are a well-established and widely accepted method through which a mining company can either grant or acquire mining rights in pretty much any jurisdiction. 

Companies that tend to assume that the type of flexibility afforded under common law regimes should more or less prevail in other jurisdictions would however be well-served to pay closer attention to the details of the laws of the countries in which they operate, in order to ensure that the assumptions they make regarding earn-in arrangements are consistent with the laws of those jurisdictions.

The fact is that the mining legislation of a number of countries in Francophone Africa contains a variation of the provision cited at the beginning of the article, which on its face, does not allow exploration permits to be subject to earn-in arrangements. 

In this article, we discuss the concept and background of "amodiation", and suggest that it should be considered carefully when structuring acquisitions or dispositions of mineral properties in Francophone Africa.

What is amodiation?

"Amodiation" is defined in a number of mining codes as the lease for a definite or indefinite period without the ability to sub-lease of part or all of the rights attached to a mining title, in consideration for such remuneration as agreed to between the parties. 2 

It is our view that this definition is imperfect inasmuch as the term "lease" suggests that while the lessee will enjoy the usufruct of the mineral property, it will not ultimately acquire an interest in the mineral title.  In practice however the form of remuneration agreed to between the parties typically entails the "lessee" being granted an interest in the mineral project or in the company holding title to the mineral project provided that it fulfills its obligations under the arrangement.  In fact, in our experience the remuneration or consideration sought by companies entering into amodiation arrangements is almost always the acquisition of an interest in the relevant mineral project.  As such, the concept of "amodiation" seems closer to the concept of the "farm-in" or "earn-in" than it is to the concept of the lease. 

Moreover, we note that the mining codes that state that amodiation is not allowed in respect of exploration permits typically expressly allow it in respect of mining permits (permis d'exploitation).  Why is that the case?

Overview and background

It is our assessment that the definition of amodiation as adopted in a number of jurisdictions in Francophone Africa stems from the practice that developed in the Democratic Republic of Congo (DRC) in a context which is arguably significantly different from the context of most other jurisdictions in Francophone Africa.

We understand that the practice of amodiation developed in the DRC in the early 2000s where State-owned mining companies (such as Gécamines) had a number of development-stage assets in respect of which they held mining permits but did not possess the resources, either technical or financial, to develop.  As such,  the 2002 mining code of the DRC enshrined the concept of "amodiation" pursuant to which a third party company would finance, develop and operate the mining projects on behalf of the State-owned companies, and would make payments to them in the form of maintenance and royalty payments in consideration therefor.  Article 177 of the DRC Mining Code (2002) not only defined amodiation but also set out the obligatory provisions required in amodiation agreements. Furthermore, in 2006, a model amodiation agreement3 of Gécamines was adopted to form the basis upon which amodiation agreements between Gécamines and third parties would be entered into.

We note that the definition given to the term "amodiation" in the DRC Mining Code (2002) 4 is identical to the one used in a number of mining codes that were enacted post-2002 throughout Francophone Africa, although one would argue that the context of those jurisdictions is markedly different from the one which gave rise the development of this practice in the DRC.

As currently drafted, "amodiation" as defined in the mining legislation of a number of countries in Francophone Africa, appears to be a form of arrangement intended to allow development stage companies to gain access to financing and technical expertise to get projects through to the mining phase.  The fact is that unlike the DRC in the early 2000s, most countries in Francophone Africa do not have a large number of development-stage mining assets held by State-owned companies that they are desperately seeking to bring to production.  These countries should focus on boosting investments to their exploration sector by removing unnecessary hindrances including those in the form of restrictions on earn-in arrangements.

Amodiation of exploration permits

In practice, in the context of an exploration-stage company, amodiation generally corresponds to an arrangement pursuant to which the holder of the exploration permit agrees to grant an interest in the project to a third party provided that such third party completes certain works and incurs certain expenditures on the project.

The reality of the mining industry is that a mining project in respect of which a feasibility study has been completed will have a number of financing options available (including project financing) and will generally have a lesser need for amodiation than an exploration-stage company.  To assert that the ability to enter into an amodiation arrangement is generally more important for exploration-stage companies than it is for development or mining stage companies does therefore seem fairly axiomatic.

It is known in the mining industry that the vast majority of the exploration of greenfield projects is done by cash-strapped junior mining companies which tend to obtain their financings on stock exchanges such as AIM, the ASX or TSXV, are very much dependent on their ability to raise financing on these exchanges, and are highly susceptible to the cyclical nature of the mining sector.  These are precisely the types of companies which from time to time may need to farm-out some of their rights in order to, as the case may be, survive, hold on to their exploration projects or advance them.  The ability to enter into earn-in arrangement is also relevant to larger companies with greater access to capital which may elect to pursue the amodiation route for strategic reasons or for purposes of diversifying their exposure and mitigating their risk.

This raises the question as to why so many mining codes in Francophone Africa do not allow the amodiation of exploration permits.

Rationale behind the restrictions on amodiation for exploration permits

It seems likely that in the mind of the legislator, as the applicant of an exploration permit is required to demonstrate technical and financial capability, the grantee of an exploration permit should possess the requisite technical and financial resources to execute the work program contained in its permit application without the assistance of a third party.  Clearly, this rationale ignores the reality of mine financing and of the mining industry. 

Additionally, over the past several years, a large number of the mines administrations and civil societies in Francophone Africa have expressed their concerns with regard to what is characterized as the speculation of mineral permits by foreign companies (i.e., companies without financial and technical qualifications that purportedly scour the African continent in search of permits that they have no intention of developing but rather are keen to acquire and sell to other companies for a profit). 5   Irrespective of the views one might hold regarding the "speculation" of mineral permits, and whether in the end it constitutes a net benefit or a disadvantage for host countries, the fact is that it remains a highly sensitive and contentious issue in the public opinion in Francophone Africa.

Moreover, mines administrations generally consider that the grant of an exploration permit is intuitu personae, a concept well known to civil law that affirms that the person to whom a right is given or with whom a relationship entered into is essential to the contractual or legal relationship.

Not all of the countries in Francophone Africa have followed the lead of the DRC in relation to the treatment of amodiation in their mining legislation. The Republic of Guinea is an example of a country that appears to have embraced a more pragmatic approach on this issue, as it allows the holder of an exploration permit to enter into technical partnerships to raise the necessary capital to finance exploration activities, provided that the partnership is submitted to the Minister of Mines for his approval and that the permit is not transferred either directly or indirectly. 6   This approach gives the titleholder some flexibility to enter into earn-in arrangements, while addressing the concerns of the mines administration by giving it the ability to review and sign off on such arrangements. 7 

Because the restrictions respecting earn-in arrangements for exploration permits are not consistent with the practice in the mining industry, it appears that a number of mining companies simply disregard them.  We would suggest that companies ignoring these restrictions do so at their own peril.

What are the consequences of a breach of the provision on amodiation?

Entering into an "unlawful" earn-in arrangement can cause significant adverse local liability. For example, in Côte d'Ivoire, article 182 of the mining code states that the holder of a mining title that does not submit for prior approval to the administration all of the memoranda of understanding or agreements pursuant to which it intends to entrust, transfer or assign in part or in full the rights and obligations related to said title can be subject to imprisonment between 1 and 3 years and a penalty between 10 million and 50 million FCFA.  As well, the relevant permit can be subject to revocation. 

Additionally, companies purporting to conclude amodiation arrangements in respect of an exploration permit take on significant risk considering that such arrangements may not be recognized by the mines administration, and that in some cases, the mines administration could even take the view that the relevant company is engaging in unauthorized exploration operations.

Final Thoughts

As discussed above, the rationale behind the restriction related to amodiation of exploration permits seems inconsistent with the realities of the mining sector and the financing of exploration projects.

Too often in an effort to benchmark, drafters of mining legislation include provisions from other mining codes that do not reflect the realities of their country.  Restrictions on the ability to enter into earn-in arrangements limit the ability of companies to obtain financing and to develop exploration stage mining projects, and ultimately impede the development of the mining sector, while adducing little benefit to host countries.

It is our view that mining codes should be aligned with the realities of the mining industry, and that as such, title holders of exploration permits should be allowed to enter into amodiation arrangements with third parties, subject to reasonable terms and conditions to be set out in the relevant legislation.  In the meantime, companies should comply with all applicable mining legislation.  There are ways to work around restrictions related to amodiation.  Companies should consult with their legal counsel prior to entering into earn-in agreements in order to ensure compliance with the relevant legislation.


1. Article 20 of the 2014 Mining Code of Côte d'Ivoire

2. See definitions section of mining codes of Mali (2012) and Côte d'Ivoire (2014), Guinea (2011 as amended in 2013)

3. Convention Type d'Amodiation de la Générale des Carrières et des Mines - Contrat No. 31/COPIREP/SE/02/2005

4. L'amodiation consiste en un louage pour une durée fixe ou indéterminée, sans faculté de sous louage, de tout ou partie de droits attachés à un droit minier ou une autorisation de carrières, moyennant une rémunération fixée par accord entre l'amodiant et l'amodiataire. (article 177)

5. Those familiar with this issue will recall that the concern regarding the speculation of mining titles gave rise to the introduction of the capital gains tax on the transfer of permits in a number of jurisdictions of the region.

6. See article 19 of the Guinea Mining Code (2011 as amended in 2013)

7. With that said, we think that to the extent that the Minister approves the arrangement, an indirect transfer of the permit should be permitted through an earn-in into the project company.

To view the original article click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions