Sections 116 to 126 of the Mining Act 1992 govern dealings in tenements.
Section 116 — interests must be created in writing
A legal or equitable interest in an existing or future tenement is not capable of being created, assigned, or dealt with, whether directly or indirectly, except by a written instrument signed by the person creating, assigning or otherwise dealing with the interest, or by his duly authorised agent.
“Equitable” — an informal or beneficial interest is caught, not only a registered one.
“Future” — an agreement about a tenement not yet granted, such as a farm-in over an application, must comply.
“Indirectly” — arrangements structured to achieve the same result by another route are within the section.
Section 117 — the permitted dealings
Subject to this Act, a legal or equitable interest in a tenement may be sold, transferred, mortgaged, charged or otherwise encumbered, transmitted, seized under a warrant or writ of execution, or otherwise disposed of, or made the subject of any other dealing.
The two prohibitions
No transfer or other dealings in an alluvial mining lease. Section 58 also prevents its consolidation.
This follows from section 48(1): the lease may be granted only to a citizen or a land group, and only over land they own. Allowing it to be sold on would defeat the point. The practical consequence is that it cannot be used as security; outside capital must come through a service or contracting arrangement with the holder, and advice should be taken, because an arrangement that in substance transfers the lease offends section 57.
A person whose only legal or equitable interest in a tenement is held, directly or indirectly, in an exploration licence in its first term of two years shall not validly create, transfer or otherwise dispose of that interest, directly or indirectly — subject to the exceptions in section 31(2) and (3), which include a holder that is a corporation listed on a public stock exchange anywhere in the world.
An anti-speculation rule, reinforced by section 25(3)(a): the purchase of a tenement is not acceptable exploration expenditure.
Section 118 — transfers must be approved and registered
(1) An application for approval of a transfer shall be in writing, submitted with an instrument of transfer on the prescribed form to the Registrar, who shall submit it to the Council for consideration.
(2) The Minister may, on the recommendation of the Council, approve or refuse the application — and any approval may be subject to such conditions as the Minister considers necessary.
(3) Where the Minister approves, the Registrar shall register the instrument of transfer.
(4) An instrument of transfer does not convey a legal or equitable interest in the tenement unless and until it has been (a) approved by the Minister and (b) registered.
Until both approval and registration have happened, nothing passes — not even in equity. A signed and paid-for transfer conveys no interest in the tenement.
That has consequences for how a sale is documented: completion mechanics, the holding of consideration, and what happens if approval is refused or given on conditions the buyer will not accept. Section 123 deals with instruments made in contemplation of approval.
Note also that a transfer of the application for a mining lease is dealt with expressly by section 38(1)(b), which allows the exploration licence holder and the proposed transferee to apply together.
Section 119 — other instruments
Section 119 applies the same architecture — approval and registration — to instruments other than transfers. That covers mortgages, charges and other encumbrances, and dealings with equitable interests.
Section 126 deals with the effect of a mortgage, and section 124 with devolution — where an interest passes by operation of law, on death or on the winding up of a company.
The effect of registration
Section 114(2) — the time and date of lodgement with the Registrar is deemed to be the time and date at which registration was effected.
Section 120(1) — except in the case of fraud, the registered holder has priority over any other person, subject only to encumbrances or interests notified on the Register and to the conditions of the tenement.
Section 120(2)(b) — a person dealing with a registered holder need not inquire into how he became registered, and is not affected by notice of an unregistered interest; knowledge of one shall not of itself be imputed as fraud.
So an unregistered interest is fragile. Anyone holding one should either register it or lodge a caveat under section 127, which prevents registration of a transfer or other instrument while it stands.
The Minister is not concerned with the effect in law of an instrument, and approval does not give it any force, effect or validity it would not otherwise have had. If the document does not work as a matter of contract or property law, ministerial approval will not fix it.
And under section 122, the rights are only exercisable by the holder and the obligations only enforceable against the holder. A financier or contractor with an unregistered interest cannot exercise tenement rights in its own name.
Checklist for a transfer
- Check the tenement type. An alluvial mining lease cannot be transferred at all; an exploration licence in its first two years is caught by section 31.
- Search the Register for the conditions, encumbrances and any caveats.
- Check compliance — rent, security, expenditure, reporting, and above all compensation: under section 28(1)(b) an extension depends on compensation having been paid, and unpaid compensation is a live risk for a buyer.
- Document in a written instrument signed by the parties — section 116.
- Lodge the application for approval with the instrument of transfer on the prescribed form.
- Expect conditions. The Minister may approve subject to conditions.
- Do not treat the deal as done until the Minister has approved and the Registrar has registered — section 118(4).
- Check the related tenements — a lease for mining purposes and a mining easement have terms tied to the primary tenement.
- Check the environment position — the environment permit is a separate instrument with its own transfer procedure, and an environmental bond may be outstanding.
Sources
- Mining Act 1992 — ss 25, 28, 31, 38, 48, 57, 58, 113–127, 150
- Environment Act 2000 — ss 70, 99
- Land Registration Act (Chapter 191) — PacLII 1986 Revised Edition
Before relying on anything here, read the current text of the Mining Act 1992 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.