Exemption from expenditure conditions

Temporary guide on applying for exemption from expenditure conditions for exploration licences

The COVID-19 situation has escalated significantly since 11 March 2020 and on 18 March 2020, Western Australia declared a State of Emergency under section 58 of the Emergency Management Act 2005.

The Department of Mines, Industry Regulation and Safety (DMIRS) understands that the measures being put in place to restrict the further spread of COVID-19 are likely to impact the resources sector. Measures to protect the health of staff and the wider community, travel restrictions, suspension of heritage surveys, protocols for minimising non-essential personal contact, and impacts on mine site access will challenge the sector in a way that hasn’t been seen before. Industry is already reporting the impacts COVID-19 is having on planned exploration activity.

Affected tenement holders have the ability, under section 102 of the Mining Act 1978 to apply for an exemption from expenditure conditions. The Minister for Mines published a Minister’s Ministerial Opinion on 27 March 2020 outlining his view that the impacts of COVID-19 on a exploration tenement holder’s ability to comply with expenditure commitments would be grounds for considering the grant of a Certificate of Exemption to the tenement holder.

The effect of COVID-19 on a exploration tenement holder’s ability to comply with the expenditure condition may also be considered in situations in which DMIRS officers have the delegated decision-making power to determine applications made under section 102. Applicants should therefore provide a statement, in the form of a statutory declaration, to support any application for exemption demonstrating that exploration expenditure conditions have not been met because of a direct result of the effects of COVID-19 and/or the restrictions imposed by governments in response to the COVID-19 pandemic.

Applications for exemption should be lodged electronically via Mineral Titles Online.

Applicants should note that when an application for exemption from expenditure conditions is lodged, the right for a third party to object remains in place. This means that at present the department is unable to determine an application for exemption from expenditure conditions prior to the 35-day objection period.

In the event that an objection is lodged, the exemption cannot be determined until the Warden has made a recommendation to the Minister, or the objection has been withdrawn by the objector, or dismissed by the Warden and an Order made to this effect by the Warden

The Perth Warden’s Court recently suspended all hearings until at least mid-April 2020. This means there will be no mention hearings until further notice and all hearings currently listed to take place between now and mid-April are vacated.

The suspension of proceedings in the Perth Warden’s Court will not prevent parties from having matters dealt with administratively. In situations in which the parties are amenable, some matters may be determined on the papers. If there is a need to call a matter on urgently during the suspension period, audio link or video link facilities will be used.

The intention of the Mining Act 1978 is to ensure effective exploration and development and therefore ground should not remain unexplored without compelling reasons.

Section 102 of the Mining Act 1978 provides a mechanism for exemption from expenditure commitments for a given expenditure year.

Reasons for exemption

  • title to the tenement is in dispute
  • time is required to evaluate work done on the tenement, plan future exploration or mining or raise capital therefor
  • time to purchase and erect plant and machinery
  • ground unworkable
  • tenement contains a mineral deposit which is uneconomic
  • tenement contains mineral ore which is required to sustain the future operations of an existing or proposed mining operation
  • mining on the tenement is prevented or restricted by political, environmental, force majeure, heritage, restrictive conditions placed on the tenement or other issues
  • aggregate exploration expenditure met for tenements in a project
  • any other reason which the Minister for Mines and Petroleum considers sufficient to justify an exemption.

Please note that a detailed explanation of the department’s guidelines when assessing each of these reasons is provided in the document Policy Guidelines – Exemption from Expenditure Condition.

Lodgement of an application for exemption

The Mining Act 1978 requires that an application for exemption be lodged on the prescribed form (Form 18) and with the prescribed fee at any departmental Mining Registrar office. The application can also be lodged electronically via the department’s website using Mineral Titles Online. The application must be lodged within 60 days after the end of the year to which it relates.

A statutory declaration should be lodged with the application however, if it can't then it must be lodged within 28 days of the acceptance of the application by the Mining Registrar.  In the event that the statutory declaration cannot be lodged within 28 days, an extension of time must be requested by the applicant, stating reasons why the statutory declaration cannot be lodged in time.  This request must be lodged at the department’s Perth office, prior to the expiry of the 28 days.

The applicant should note that a brief reason for exemption must be stated on the application (Form 18) in addition to and against the subsection under which exemption is being sought.  The applicant should also ensure that all relevant detail and evidence is included in the statutory declaration in support of the subsection and accompanying reason stated on the application.

 The application will be posted on the notice board of the office of the Mining Registrar for a period of 35 days.  Should no objection be lodged against the application, it will be forwarded to Perth for determination by the Minister for Mines and Petroleum.

In the event that an objection is lodged against an application, the exemption cannot be determined until the Warden has made a recommendation to the Minister responsible for the Mining Act 1978, or, the objection has been withdrawn by the objector or dismissed by the Warden and an Order made to this effect is made by the Warden.

Assessment and determination of applications for exemptions

The application for exemption is assessed by the department, based upon the information provided by the applicant.  The supporting evidence provided in the statutory declaration will only be taken into account where it is consistent with the subsection stated on the application.  The tenement holder will be advised once the application has been determined.

Refusal of applications for exemption - forfeiture action to commence

The refusal of an exemption will result in the commencement of forfeiture proceedings by the department.

In respect to Exploration Licences and Mining Leases, the tenement holder will be issued with a Notice of Intention to Forfeit as provided in Regulation 50. The tenement holder may then make a submission for the Minister for Mines and Petroleum’s consideration.

 Anything the applicant considers relevant may be included in the submission. However, of particular interest to the Minister for Mines and Petroleum would be details of any work planned (or work already being undertaken) on the tenement in the current period.

Following consideration of the submission, the Minister for Mines and Petroleum may take no further action, impose a penalty (fine), or forfeit the tenement pursuant to Sections 96A or 97 of the Act.

If forfeiture is commenced in respect to prospecting licences, the provisions of Regulation 49 will apply. The Warden, as he thinks fit in the circumstances of the case and depending on the mitigating circumstances brought to his attention by the tenement holder, may take no further action, impose a penalty (fine) or forfeit the tenement pursuant to Section 96 of the Act.

Note: There is no provision in the Act for the refund of the application fee if an application is withdrawn (minimum expenditure commitment has been subsequently met and an amended Form 5 lodged) or lapsed (upon the death of the tenement).

For further information:

Please refer to the Department’s information brochure titled Expenditure Report (Form 5) and Applying for Exemption from Expenditure Conditions for additional information.