Resources companies should pay more attention to the detail and consequences of Mineral Sharing Arrangements to protect their long-term interests, a Perth lawyer warned today.
Resources companies should pay more attention to the detail and consequences of Mineral Sharing Arrangements to protect their long-term interests, a Perth lawyer warned today.
Resources companies should pay more attention to the detail and consequences of Mineral Sharing Arrangements to protect their long-term interests, a Perth lawyer warned today.
Addressing the 2006 Paydirt Australian Nickel Conference in Perth, Ms Claire Boyd, a Partner in leading Perth-based Blakiston & Crabb Lawyers, said the concept of MSA is simple but the "devil is in the detail".
Ms Boyd told delegates that the intention of MSAs - now entrenched in the nation's mineral landscape - was to set the ground rules "up front" before the mineral stakes got too high and project values escalated.
"Miners have in some cases, underestimated the complexity of MSAs and try and achieve them as 'one liners'," Ms Boyd said.
"Yet there are substantial liabilities and obligations associated with having someone operate on your tenements, and these need to be properly considered and addressed."
She said four key areas that needed to be considered by mining companies, were:
- The allocation of site rehabilitation responsibilities
- How to resolve operational and development conflicts
- Priority rights for stakeholders
- Structuring the development stage of a project and implications of financing arrangements.
"Rehabilitation relationships present the greatest risk for the tenement holder, particularly during the development period where there is substantial ground disturbance," Ms Boyd said.
"The holder, in the eyes of regulators, has the ultimate exposure for rehabilitation outcomes and costs.
"While the environmental arrangements between parties are a fundamental and obvious part of MSAs, it is essential that these agreements address all issues, rather than leave them on an 'understood' basis."
Ms Boyd said one of the great difficulties with MSAs was finding appropriate mechanisms for resolving conflicts between the parties.
"There is no easy solution unfortunately, and ultimately this will depend on the negotiating power of the respective parties," she said.
"It is in the interests of all parties to reach agreement rather than leave an issue undocumented and subject to potential legal action."