Exploration and mining licences
The licences a project moves through, from a first exploration licence to a mining licence: what each one allows, how it is held and renewed, which one a project needs at each stage, and the risks of losing title along the way.
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Mineral title is the asset. A project moves from a licence to look for minerals to a licence to mine them, and a licence that lapses, is cancelled or is refused conversion makes every number built on it uncertain.
Who owns the minerals
In most countries, minerals belong to the state, not to whoever owns the land surface. The state grants companies the right to explore and mine. In a few places, minerals can be privately owned and are leased from the owner instead. Either way, the right to the minerals and the right to use the surface are often separate, and a company may need both.
The licence ladder
Most mining codes set out a sequence of licences. Names and details vary, but the shape is similar:
| Licence | What it allows | Typical term |
|---|---|---|
| Reconnaissance or prospecting permit | Surface work over a large area: mapping, sampling, airborne surveys. Usually no drilling | Short, often one to two years |
| Exploration including drilling, over a defined area, with work commitments | A few years, renewable a limited number of times | |
| (where available) | Holds a defined deposit that is not yet economic, with lower work commitments | A few years, sometimes renewable |
| Building and operating a mine over a defined area | Long, often decades, linked to the mine's life |
Not every country has every step: many have no reconnaissance permit or no retention licence. Some codes call the final step a mining lease, a mining right or an exploitation concession.
Licences and permits are different
A licence gives the right to the minerals. A permit allows a specific activity. A company can hold a valid exploration licence and still be unable to drill until it has a drilling or environmental permit, water rights and access to the land. A mining licence is usually granted only alongside, or after, an approved environmental impact assessment.
are a third layer: the right to use the land itself, held by the landowner, the state or a community. Access agreements or land purchases are often needed before work starts.
Names differ by country
The same step can have different names. Some common examples:
| Country or region | Exploration stage | Mining stage |
|---|---|---|
| Canada (Ontario, for example) | Mining claims | Mining lease |
| Western Australia | Exploration licence | Mining lease |
| South Africa | Prospecting right | Mining right |
| Chile | Exploration concession | Exploitation concession |
These are simplified and rules change. Always read a listing's licence name against the local mining code.
How title is granted
Common systems:
- First come, first served: the first valid application over open ground wins. Fast and predictable. Many places now use online map-staking.
- Discretionary grant: an official decides, sometimes against criteria. Slower, and open to delay or favouritism.
- Tender or auction: the state offers areas and picks bids on money, work programme or both.
Holding an exploration licence
| Feature | Typical form |
|---|---|
| Term | A few years, renewable a limited number of times |
| Fees | Annual rent per square kilometre, often rising over time |
| Work commitments | A minimum spend or work programme each year |
| Area reductions | Part of the area must be given back at each renewal |
| Reporting | Annual reports of work done and results |
If commitments are missed, the licence can be cancelled or not renewed. Ground then returns to the state or opens to others.
Which licence at which stage
| Stage | Licence usually held | What has to happen to move on |
|---|---|---|
| 1. Grassroots | Prospecting permit or exploration licence, sometimes still an application | Licence granted, plus access and drilling permits |
| 2. Discovery drilling | Exploration licence | Work commitments met; renewal on time |
| 3. Maiden resource | Exploration licence | A renewal whose term outlasts the coming studies |
| 4. Resource upgrade | Exploration licence, or a retention licence if the project is paused | The mining-licence route is scoped in the PFS |
| 5. Pre-development | Exploration licence, with a mining licence applied for | Mining licence granted, usually after the feasibility study and environmental approval: part of the build decision |
| 6. Development and production | Mining licence | A licence term long enough for the mine's life, and its conditions kept |
The switch from exploration licence to mining licence usually happens around the build decision. Until then, a project with an excellent study can still be stopped by a licence problem.
From exploration to mining
To mine, the company must convert its exploration licence into a mining licence. Conversion usually requires a feasibility study, an approved environmental impact assessment and sometimes agreements with communities and the state. Key questions:
- Is conversion a right once the conditions are met, or at the government's discretion?
- Does the state take a stake at conversion? See government take.
- How long does the mining licence last, and is it long enough for the mine's life?
A worked example: does the licence outlast the plan?
An invented explorer holds an exploration licence granted in 2024 for three years, renewable twice for two years each: seven years at most, to 2031.
| Year | Plan | Licence |
|---|---|---|
| 2026 | Maiden resource | First term |
| 2027 | PEA | First term ends: first renewal needed |
| 2029 | PFS | Second renewal needed |
| 2031 | Feasibility study | Final expiry |
The plan only works if both renewals are granted on time, and if the mining-licence application is lodged before 2031. A one-year delay in the studies could leave the project with a feasibility study and no licence to use it. Where available, a retention licence or an early mining-licence application can bridge the gap.
Title risks to check
- Overlapping claims from other companies or artisanal miners.
- Expiry dates that fall before the next study or financing.
- Pending applications shown as if they were granted licences.
- Ownership chains: the licence may sit in a local company, held through an option or joint venture, with conditions still to meet.
- Change-of-control rules: some countries require approval before a licence-holding company is sold.
What to take away
Before looking at grade, confirm which licence is held, by whom, until when, and on what conditions, then check whether its term and renewals outlast the plan. Ask early whether conversion to a mining licence is a right or a discretion.
All examples are simplified or invented. This is educational material, not legal or investment advice.
Key terms
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Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.