Licensing Regime of Mineral Resources

 Mineral rights are granted through issuance of licences &

Leases

 Licence: is the permission granted by an owner of a land or

a person with an interest in a land which permission allows
the licencee to do certain acts in relation to the land. In
effect in property law a licence is the permission to enter or
use the property of another.

 In the absence of a licence any act on the land will amount

to trespass

 Licences include (a) bare licence, (b) contractual licence;

and (c) licence coupled with an interest in land.

 Bare Licence: it is the express or implied permission to

enter or use the property of another which is not supported
 At common law, bares licences are revocable at will by the
property owner at any time upon giving reasonable notice.

 A bare licence is automatically revoked upon the death of the

licensor or the assignment of the land in respect of which the
licence was given.

 Bare licences are not assignable/transferable

 Contractual Licence: this is a licence which is granted under the terms

of a contract b/n the licensor & the licensee.

 It is the express or implied permission to enter or use of another

person’s property in exchange for some consideration.
Assignability/revocability is dependent on the contract.

 Strictly speaking a contractual licences are not grants in land but rather
mere contracts. The remedy available to contractual licensee at common
law when the licence is revoked in breach of contract is damages.
E.g. purchase of a ticket to watch a soccer match entitled the
purchaser to enter the stadium at a particular time
 Licence coupled with interest: A licence is coupled with
an interest if its exercise is necessary for the enjoyment of
an interest known to the law. This licence has no
independent existence & it is always attached to the
interest with which it is coupled.

 It is simply the right to take possession of property located

on someone else’s land.

 This type of licence is usually revocable & assignable at least

until the licence holder has retrieve the property that gave
rise to the licence.

 E.g. a person may have the right to enter another’s land to

cut trees, hunt or engage in mining. In such circumstances,
such a person cannot mine or do whatever he/she is entitled
to unless he enters the land. Hence, every right to take
sometime from land necessarily carries with it a licence to
enter the land in order to exercise such right.
 Lease: is an interest in land created to last for a fixed
period of time, (definite period). It must have a
commencement date as well as expiration date.

 Features:
 Definite period of time

 Exclusive possession to the lessee; landlord cannot retain

concurrent right to possession or control.

 Lessor may impose restrictions on the manner in which the land

may be used

 Lessor entitled to reposses the land upon expiration of the lease.

There are 3 stages/types of mineral rights
 Reconnaissance Licence (s:31) allows the holder to search for minerals through
the use of geophysical, geochemical & other remote-sensing techniques that do
not involve drilling or excavation

 The minister on the recommendation of the MC grants RL on an application by a

person in respect of a mineral specified.

 It is granted for an initial period of 12 months

 The land size for reconnaissance licence may be one block or not more than 5000
contiguous blocks

 RL does not allow the holder to undertake drilling or excavation activity

 Reconnaissance operations must start within 1 month after the grant or period of
time as may be specified in the licence.
 Holder to submit quarterly financial, geological or other reports to the MC

 Comply with the terms of the environmental permit that may be granted pursuant
to the RL

 Must report to the MC mineral discovery within 30 days after discovery

 Holder of RL is not allow to conduct prospecting or mining operations
in the covered areas of the licence

 Holder is to keep accurate record of mineral discovered, result of

geological analysis, financial statement etc

 An application for extension of the licence may be made not less

than 3 months b4 expiration.

 The extension may be granted once and for not more than 12
months

 Prospecting Licence (s:34 – 38) allows for intentional search for

minerals to determine the extent of & economic value of a mineral
deposit.
 Prospecting licence is granted by the minister on the
recommendation by the MC upon an application by a person.

 The initial period for the grant of PL is 3 years.


 PL allows the holder to dig a borehole, make excavations, erect camps or
any temporary structures necessary for prospecting purposes.

 Prospecting must start within 3 months after the issuance of the licence or
time period specified therein.

 Notify the minister through the MC of the discovery of any mineral within
30 days of discovery

 Notify the minister through the Commission of the discovery of any other
mineral of economic value within 30 days after discovery

 To backfill any excavation made during the prospecting operations

 Holder to keep full & accurate records of the prospecting operation.

 An application for PL must be accompanied by a proposed programme of

mineral operations

 The programme of prospecting operation may be amended upon

notification to the minister and which shall come into effect within 2
months of the receipt of the notice unless the amendment is rejected by
 Application for amendment to an approved programme of prospecting
operations may be allowed by the minister upon satisfaction that:

 There is a demonstration by the licencee of a secured financial resources,

technical competence & experience to be able to carry out the proposed revised
programme of prospecting operations.

 Proposed amendment will cover the proposed prospecting area needed under the
amendment

 Proposed amendment result in efficient prospecting of the mineral resources in the

area

 The minister may upon an application limit/suspend the obligation of

prospecting operations by the licencee under reasonable terms &
conditions.

 The licencee is obliged to keep and report accurately on records

concerning the prospecting operations including boreholes drilled, No.
of persons employed, geological interpretation of records maintained,
result of geochemical or geophysical analysis etc.

 Such reports must be submitted to the MC at least on a quarterly basis

 There is also the requirement of submission to the MC on a
half-yearly basis or not later than 30 days after the half-
year; a summary report on the outcome of the prospecting
operations carried out during the period.

 And a submission to the Commission at the end of the

financial year & not less than 30 days after the end of the
financial year a summary report of the result of prospecting
operations during the financial year & when necessary the
proposed operations for the following year.

 Violation of the record keeping and reporting requirements

is an offence.

 The licencee is obliged to surrender prior to or at the

expiration of the initial term, at least half the No. of blocks
of the prospecting area provided a minimum of 125 blocks
remain.
 Production/Mining Lease (s:39-61): is a product of negotiations
b/n the state and the mining company.

 A mining lease may be granted for an initial period of 30 years or less

and for land size of one block or more than 300 contiguous blocks.

 Upon the grant of the lease, the holder should within 30 days paint
and keep painted on notice board of the relevant beacon & the
number assigned to the lease by the MC.

 A mining lease entitles the holder to enter upon the land which is the
subject of mining lease to undertake mineral operations for the
purpose of mining the specified minerals

 The holder also has the right to erect equipment, structures which are
necessary for the transportation, treating, refining and treating of the
specified mineral

 Dump mineral waste as approved by EPA in an EIS

 Right to undertake any incidental activity

 The minister should be notified of any intention to amend the
programme of mining operations which unless such amendment
is rejected by the minister on reasonable grounds shall come to
effect 2 months after the notification. S:45(1) Act 703 (compare
with Reg. 19 notification to MC & s:45 notification to the
Minister)

 Approval by the minister is subject to the same requirements

under prospecting licence.

 Mining operations must also be in compliance with the approved

programme

 Demarcate the mining area

 Comply with the conditions of the lease & any Dev’t Agreement
pursuant to the lease

 Comply with requests & directives by the MC and other

Commencement of mineral operations
 The mineral right holder has the obligation to commence
operations within 24 months of the grant or any other period as
may be specified in the lease or Dev’t Agreement.

 The holder must notify the MC of the commencement of mining

operations

 Suspension of mining operations

 Recommencement of mining operations after suspension

 Closure of mining operations

 Commencement of installation of any major equipment/machinery

as well as major construction activity

 The notice required for the above must be given within 90 days
 What constitute commencement?

 What is the legal effect of failure to commence mining

operation within the stipulated period or 24 months?
 Is commencement the same as “production”?
 Production under oil and gas contract has been defined as
being synonymous with the phrase “producing in paying
quantities” (Garcia v King, 164 S.W.2d 509, 511-512)

 An oil well is producing in paying quantities if the production

is sufficient to pay the lessee a profit, even small, over the
operating & marketing expenses

 In the determination of whether operations have

commenced, the Texas Courts have defined
“commencement of operations” in oil and gas contracts as
requiring a bona fide intent to proceed thereafter with
diligence toward the completion of a producing well.(Bell v
Mitchell Energy Corp., 553 S.W. 2d 626, 632 (Tex.App.1977)

 Substantial surface operations will be sufficient provided that

the preliminary operations are continued
 In the case of Breaux v Apache Oil Corp 240 So.2d 589 (La. App 1970) the
court found that the lessee had commenced operations by completing a
road to the well location by the end of the primary term, even though
equipment was not moved to the site and drilling operations were not
commenced until two days after the primary term ended.

 Petersen v Robinson oil & Gas Co., 356 S.W. 2d 217 (Tex. App. 1962) the
court held that drilling operations had commenced because the lessee had
hired a contractor, hired a surveyor, completed the survey, staked the well,
moved the maintainer onto location, and begun to level the well location

 Some courts have sought to distinguish b/n “commence drilling operations”

and “commence to drill a well” from “commence operations for the drilling
of a well”.

 Commence drilling operation & commence to drill a well require the lessee
to penetrate the ground with a drill bit prior to the end of the primary term.

 In Hall v JFW, Inc 893 P.2d 837,842 (Kan. 1995) the court found that even
though the well location was staked, elevation survey completed, drilling
contractor hired, drilling pits dug, location leveled, and water well dug,
drilling had not commenced because actual drilling had not started.
Suspension of production
 Production may be suspended by 3 months advance notice to the
minister with reasons for the suspension.

 Where the licencee is unable to give advance notice as required due to

circumstances beyond its control, the holder shall notify the minister 14
days after the suspension.

 The duration of the suspension is 12 months maximum with an option of

extension upon application.

 The mineral right holder who proposes to suspend/discontinue mining

operations should prepare an accurate plan of the mining operations as
at the time of the discontinuance or suspension and submit same to the
MC.

 The MC issues a certificate on behalf of the minister if the

suspension/discontinuance is approved.

 Minister may revoke the mining lease if the holder fails to resume
operations at the expiration of the period of cessation or failure to
complied with the conditions contained in the certificate of
Building & Industrial Minerals (s:76-80)
 Industrial minerals are defined to mean basalt, clay, granite,
gravel, gypsum, laterite, limestone…S:111 Act 703

 Restricted reconnaissance, prospecting licence or mining

lease may be used in respect of industrial minerals.

 Restricted mining lease is for a period of not more than 15

years subject to renewal

 Restricted licences are granted to only citizens of Ghana.

 Mineral right is granted to non-citizen in respect of industrial

mineral if proposed investment is US$ 10 million or above
 Critical provisions in Mining Agreements
 Work obligation: the mineral right holder has an obligation to
undertake to operate in the concession until the reserves have been
completely depleted or area no longer profitable to continue to exploit.

 Conduct of operations: in the course of its operations the mineral

right holder is required to maintain its equipment in good and safe
conditions.

 The mineral right holder has an obligation to notify the minerals

commission of the discovery of minerals not covered under the lease

 Health & safety concerns: Holders of rights are also mandated to

secure the health & safety of persons connected with their operations
with the adoption of the necessary measures to prevent pollution water
bodies.

 Local content issues: employment and training of indigenous people

and also companies should opt for local goods and services associated
with mining operations.
Affiliated firm transactions:
 Provision of services including purchase of material between
related and/or affiliated firms must be at a fair and reasonable
price and the need for justification for costs incurred if necessary.

 Transactions between affiliated companies must be an arm length

transaction

Financial obligations: include payment of consideration fee which

is the fee you pay for the grant of the mineral right.

 There is also the requirement of payment of annual ground rent to

the owner of land or the Administrator of stool land in the case of
stool lands being the subject of minerals right.
 Royalties: to be paid as prescribed by law to the Ghana Revenue
Authority which shall be between 3% and 6% of the total revenue
of minerals obtained

 Taxation: taxes to be paid as prescribed by law.

No withholding taxes on fees, interest and dividends paid to
shareholders
Application for
Reconnaissance/Prospecting Licence
1) Applicant/Company identifies Area of interest

2) Applicant obtains a cartographic search report from the Commission

to ascertain whether the area of interest identified by the Applicant
is available or encumbered. (Applicant pay for the search)

3) Where the area of interest is available the Applicant will purchase,

complete and then submit a reconnaissance/prospecting licence
application form and all other supporting documents to the
Commission.
i. 20 copies of each of the following documents.
 Application Forms
 Site Plan (topographic sheet signed by a surveyor)
 Cartographic search report from the MC
 Work program
 Particulars of company
ii. Annual report of the company which will carry out the
reconnaissance/prospecting operation if the operations will not
be carried out by the applicant
iii. Power of Attorney if Applicant company is registered outside the
jurisdiction or being represented by an agent
iv. Evidence of financial capability
v. Processing Fee to the MC
4) MC request the Metropolitan/Municipal/District Assembly
of the area to publish the application within the locality for
a period of 21 days
5) MC undertakes due diligence on the applicant’s financial
capability
6) Application is evaluated by by a Technical Committee on
Mineral Titles & submit it report to the CEO
7) CEO makes recommendation to the Board C’ttee on
Mineral Titles
8) Applicant obtains environmental permit from the EPA &
submit same to the MC
9) MC issues an Offer Letter with the prescribed fees
10)MC recommends to the Minister to grant mineral right
11)Cabinet deliberation of the application & recommendation
12)If granted then submitted to Parliament for ratification
Application for a Mining Lease
1. Identification of area of interest by Applicant with Site
plan/map/geological info

2. Submission of application with all the supporting documents

including 10 copies of site plan of the area of interest, 3 copies of
feasibility study report, company’s documentation etc

3. Request for & publication of notices in the catchment district of

the application for 21 days (Certificate of service/publication of
the notice should be endorsed only by the Assembly’s Chief
Executive)

4. Duel diligence on Applicant’s finances – consideration of bank

reference of applicant or its principals

5. Technical C’ttee on mineral titles evaluates the application by

considering, inter alia, background info on the applicant’s financial
& technical capabilities & submit its recommendations to the CEO.
6. Based on the technical c’ttee’s recommendation the CEO also
makes recommendations to to the Board C’ttee on Mineral Titles

7. Applicant obtains & submits same to MC of environmental permit

(Request letter from MC & Environmental permit registration
form)
8. MC issues Offer Letter to Applicant with the prescribed fee after
submission of EPA environmental permit

9. MC makes recommendation for grant to Minister which is

deliberated upon at cabinet level. Applicant sends letter of
acceptance, payment of consideration fee & annual ground rent
to the OASL

10. Minister reviews & grants on behalf of the GOG (Agreement)

11. Parliamentary ratification of agreement

12. Agreement to be sent for swear an oath & certificate of proof at

the HC registry, stamped & registered with the LVB & Title Deeds
Thank You