By the Mining, Minerals & Energy Team

We have recently been approached in several instances, where the DMR has issued a "Preliminary Notice of Withdrawal of Decision to grant a Prospecting Right" to a number of our clients who, having been granted a prospecting right, have not yet attended to its notarial execution.

This notice threatens that the withdrawal, by the Minister or his delegate, of the decision to grant the right will occur in circumstances where a holder has received directives to execute upon compliance with, inter alia:

1. payment of financial provision or prospecting fees;
2. submission of required documents for example a shareholder's agreement in respect of its BEE shareholding; or
3. the appointment of a notary and company representative to attend the execution

but has failed to do so.

Notably, the DMR's notice does not provide holders with the opportunity to make representations prior to the withdrawal of the decision to grant a prospecting right. Rather, it simply urges affected holders to contact the DMR "and enquire on matters relating to [their] application".

If holders are denied the opportunity to make representations before a decision is made, this would amount to a contravention by the Minister of the provisions of section 103(4) of the MPRDA, which allows for the withdrawal of a decision by the Minister or his delegate to grant a prospecting right, provided that no existing rights shall be affected by such withdrawal and amending of a decision.

In the current context this means that before the Minister or his delegate may withdraw the decision to grant a prospecting right, the holder must be given an opportunity to make representations as to why this should not occur.

This is especially important because it is often the case that the holder's failure to comply with the DMR's directive is not due to its fault. This was demonstrated by the facts in the recent Mawetse judgment decided by the SCA:

1. Dilokong Chrome Mine (Pty) Ltd had been granted a prospecting right.
2. Prior to execution it was issued with a DMR directive ordering it to submit proof of adequate BEE shareholding.
3. However, a government moratorium on the disposal of mining related state assets prevented Dilokong (partly owned by a government entity) from disposing of sufficient shares to a BEE entity. As such, Dilokong was unable to comply with the DMR's directive and the right was never executed.
4. Notwithstanding the fact that the right had not been executed, the SCA ruled that the date of commencement of the right was the date on which Dilokong had been informed of the granting – we have previously reported on this aspect of the case, and the practical effect on prospecting right holders.

If the decision to grant a holder's prospecting right is withdrawn (whether or not the holder was allowed to make representations first), the holder is not left entirely without recourse. Very briefly:

1. The withdrawal of the decision to grant a prospecting right constitutes an administrative decision for the purposes of the MPRDA and administrative action for the purposes of the Promotion of Administrative Justice Act 3 of 2000.

2. As such, the holder whose rights have been materially and adversely affected by the withdrawal may lodge an appeal with the Director-General, if the withdrawal is made by the Regional Manager, or the Minister, if the withdrawal of the decision is delegated to the Director-General, in terms of section 96 of the MPRDA. If the appeal is unsuccessful, the holder may, in certain instances, apply to the High Court for the judicial review of the withdrawal of the decision to grant the prospecting right.