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Form 5 and Exemption from Expenditure (WA)

Form 5 and Expenditure

Expenditure conditions are prescribed for Es, Ps and Ms, which is a yearly obligations. The relevant sections of the Mining Act and Regulations that govern of the Form 5 compliance are sections 51, 68, 70H, 82, and 115A and regulations 16, 22, 23 e, 32, 96B and 96C.

Regulation 21 stipulates the expenditure requirements for exploration licences refer to - Expenditure requirements of exploration licences

Due to a company's monthly reporting of expenditure: the expenditure in the month of tenement's anniversary it may be reported in the previous year or the following year of a tenements anniversary.

The Operations Report - Expenditure on Mining Tenement is lodged annual within 60 day of the anniversary date, online or by a report (link) to Form 5 Operations Report).. The DMP is seeking to make it compulsory to lodge expenditure online.

At the end of the Form 5 are instructions what can be included in each expenditure category (link to Form 5 Operations Report)

(link to Form 5) - Operations Reports-Expenditure on Mining Tenements . The Wardens in numerous cases have stipulated what can be included as expenditure, see Hunt and Humphrey for further elaboration. Mining Law in WA, M Hunt

The following are deemed to be expenditure for mining (s8 has a wide definition of mining including fossicking, prospecting and exploring for minerals, and mining operations ) :

  1. r96C lists
    1. Aboriginal heritage surveys even while an application
    2. Rehabilitation even in connection with a tenement
    3. Annual rent and rates
    4. Administration and land access costs up to 20% of commitment or 20% of total expenditure, which ever is greater
    5. Cutting an polishing minerals
    6. Aerial surveys
  2. s118A a persons expenditure where the person has been authorised in writing to carry out mining by the tenement holder.
  3. The courts hold the following as expenditure (M Hunt Mining Law WA 4th Edition Federation Press p181):
    1. Cost of travel to and from the tenement except for viewing
    2. Cost of accommodation and field supplies except where they are normal living expenses
    3. drilling costs
    4. metal detecting, dollying, panning and sampling except when taken place at home. Note that the Warden used the value of person time as ascribed in Minimum Conditions of Employment Act 1993
    5. Cost of plant and equipment in the year of purchase
    6. Earth moving equipment hire including environmental rehabilitation and walking it into a tenement but not off the tenement
    7. stationery and office equipment
    8. maps and plan printing
    9. evaluation and assessment of geologists (desk top studies), geological reporting, core storage, tenement administration: see Commercial Properties P/L v Italo Nominees P/L
    10. tools and equipment
    11. Wages and supervisory work
    12. Payment is not require as long as a liability is incurred eg a eg a geologist writing a report.

The following is deemed not expenditure:

  1. r96C states
    1. Marking out a mining tenement
    2. cost associated with the sale of mining tenement
    3. research not related to a specific tenement
    4. compensation payments
  2. The courts have deemed the following not expenditure
    1. depreciation of plant and equipment Craig v Spargos Exploration NL (M Hunt doubted the authority of this decision)
    2. Caretakers expenses; though where a caretaker was undertaking mining related activities (environmental monitoring) it was deemed allowable
    3. Loss on sale of fixed assets
    4. Research by the holder
    5. An optionee conducting research on whether to exercise the option. Also applied for a due diligence by a prospective purchaser
    6. Food and accommodation that are normal living expenses
    7. Share of gold paid to a tributer
    8. Expenses relating to use of the mineral after production eg marketing and freight
    9. Hire of ones own vehicle

Policy Guidelines for Auditing Operations Report

Exemption from Expenditure

Group Expenditure.........

Applying for an Exemption

Policy Guidelines Exemption from Expenditure

Under the s102 of the Mining Act an exemption from expenditure may be granted for the following reasons:

  1. The title to the mining tenement is in dispute: s102(2)(a).
  2. Time is required to evaluate work done, to plan future exploration or mining or to raise capital: 102(2)(b).
  3. Time is required to purchase and erect plant and machinery: 102(2)(c).
  4. The ground the subject of the tenement is for any sufficient reason unworkable: s102(2)(d).
  5. The ground the subject of the mining tenement contains a mineral deposit which is uneconomic but may become economic or market problems make the mining enviable: s102(2)(e).
  6. The ground of the mining tenement contains ore required to sustain future operations of an existing or proposed mining operation:s102(2)
  7. Political, environmental or other difficulties in obtaining requisite approvals prevent mining or restrict it in a manner that is, or subject to conditions that are impracticable: s102(2)(g)

Refer to page M Hunt Mining Law WA 4th Edition Federation Press p206 -p222 for greater explanation