Project-based tenement management may be the most effective way of holding onto your most prospective sub-blocks in light of legislative changes in Queensland.

Queensland has recently witnessed the biggest change to exploration permit management in 30 years with the Natural Resources and Other Legislation Amendment Act 2019 (NROLA)

Tenement manager with more than 30 years’ experience, Richard Smith, warned resource companies who own or are interested in holding Queensland tenements to project base these for extra security.

“The legislative changes will make tenement managers consider the risk of their tenements lapsing.  These are, after all, their primary company assets,” Mr Smith said.

“If you are a resource company with multiple tenements, now is the best time to project base these. The new legislation changes mandates that 50 percent of your current sub-blocks must be relinquished every five years. By project basing these, you are able to offset sub-blocks from other tenements within the project – enabling you to hold onto your most prospective sub-blocks for longer.”

Tenement managers need to manage explorations efficiently, and now NROLA as well.

What is NROLA?

The Natural Resources and Other Legislation Amendment Act 2019 (NROLA) was introduced in February 2019 and full implementation of the Act commenced on 25th May 2020. NROLA was introduced to cap exploration permit time periods, streamline relinquishment requirements, and introduce flexibility in work programs.

How it plays out on the ground is unfolding but tenement security is an area tenement managers are always hyper-vigilant about and the introduction of NROLA is causing tenement mangers some concern.  But with concern, comes opportunity.

Tenement management concerns with NROLA

The main concerns of tenement managers with NROLA are

  • Tenement security
  • Tenement relinquishments
  • How to make outcomes-based work programs work on the ground
  • How to juggle multiple tenements and compliance guidelines in an efficient manner
  • How to minimise risk to tenements without compromising on the work pipeline.

Tenement security

Mr Smith said the legislative requirements of NROLA focussed attention on tenement security.

“Tenements are the building blocks of our industry. Without securing these assets – ensuring compliance with all the obligations and having a clear strategy in retaining the most prospective tenements for the longest possible term – the essential exploration and mining work needed to discover and exploit a resource cannot be completed. Unsecured tenements put question marks over the financial viability of a resource company,” Mr Smith said.

“Put simply, without secured tenements, resource companies are risking their work pipeline.”

Tenement relinquishment

Mr Smith also explained how the mandated specific tenement terms meant companies had between 10 and 15 years for current Exploration Permit portfolios before they lapsed.

“When you think of a work pipeline and the time periods for companies to progress to full exploration stage, 15 years is actually a relatively short timeframe.

“This will flow on to companies being selective on which tenements they continue to hold on to and move through the exploration phases,” Mr Smith said.

“I predict we will also see more work programs that will keep tenements active that may not have been so under traditional models of management,” he said.

With outcomes-based work programs, Tenement managers gain additional flexibility.. and complexity

Outcomes-based work programs

NROLA provides for flexible ‘outcomes-based’ or ‘activity-based’ work program pathways. This gives companies increased flexibility to define their resource, without restrictive activities or expenditure commitments.

Mr Smith argues that this is another reason to move to a project-based model.

“Commonplace variations to sub-block and expenditure conditions have been removed from standalone tenements and so there is no reason not to move to project-based tenement management,” he said. 

“Tenements can be looked at holistic projects, where an “outcome” driven program of works encompasses your portfolio. This will enable companies to look at their project on a broad scale, rather than working out how many drill holes or hours or samples are required on individual tenements.”

What is an outcomes-based work program?

An outcomes-based work program allows the tenement holder to state a desired outcome for the tenements and provide a strategy and rationale that details how this outcome can be achieved.

It is important to note that, before allowing an outcomes-based work program, the Minister must consider the following (refer to s137(3)(b) of the Mineral Resources Act 1989):

  • whether the applicant has an adequate technical knowledge of the geology of the proposed area of the permit;
  • whether the proposed outcomes ensure appropriate exploration of the proposed area of the permit;
  • whether the applicant has the financial and technical capability of pursuing the proposed outcomes

“So, the expectation from the Department is a more in-depth assessment of the geology and an obvious coordination between your strategy and the planned exploration activities that will be required to strengthen your understanding of the geology and mineralisation potential,” Mr Smith said.

“You will still need to detail the exploration techniques proposed and data you expect to collect from this work, however the benefit is that your assessment is completed at a more macro level, rather than be solely delineated by individual tenement boundaries.

“Coupling an outcomes-based work program with a project-based tenement portfolio simply provides exploration companies with a greater strategic view of the mineralisation they are exploring for,” he said.

The juggle—multiple tenements and compliance guidelines

Tenement managers are expert project managers able to juggle competing high-stakes compliance and record keeping. NROLA adds a complexity to this process.

With the new, prescriptive changes NROLA brings, the strategic use of project-based tenements will be an essential tool in helping guide holders in the effective development of their projects.

Minimising risk without compromising the work pipeline

A new software, PX4 Resources, has been developed by tenement managers for tenement managers. It has been developed to specifically manage tenements in a post-NROLA world—where risk is great and strategically using project-based tenements through activities-based work programs is the best way forward.

PX4 Resources product director Donna Gaffney said the software specifically dealt with the post-NROLA world through a series of features.

“We know how complex and confusing constantly updated legislation can be to keep up with and so we’ve developed a responsive software that automatically updates with changes,” Ms Gaffney said.

PX4 Resources does a range of things that can help tenement managers navigate their compliance commitments,” she said.

PX4 Resources capability

PX4 Resources is a Next Generation Tenement Management System designed for NROLA

PX4 Resources can

  • Easily record sub-blocks held per exploration permit and display the relinquishment history as sub-blocks are dropped (either voluntarily or because of the commitment schedule).
  • Record and track sub-block relinquishments, expenditure, and work program activity offset to and from other tenements within the same project to meet the scheduled commitment.
  • Differentiate between tenement term years before and after NROLA became active.
  • Track voluntary relinquished sub-blocks post-NROLA as rolling credit to be used in future commitments.
  • Track over and under actual expenditure post-NROLA as rolling credit to be used in future commitments.
  • Manage commitment variations applicable before and after NROLA and for exploration permits not in an approved project and within an approved project.

“All of this capability can be seen in a visual summary as well as in a detailed breakdown of the exploration project status for relinquishments, expenditure, and work programs,” Ms Gaffney said.

“This includes a company’s commitment compared to their actual relinquishment or expenditure for each calendar year, as well as seeing offsets and rolling credits for each tenement during each calendar year—able to be sent to the Department of Natural Resources, Mines and Energy to comply with the project status reporting requirements.

“You can track all tenements under the umbrella of the exploration project and see their current commitment status summarised so you can easily track the current total of your project,” she said.

Features of PX4 Resources that assist in a post-NROLA world

  • Cloud-based and intuitive
  • Automation of actions and deadline dates as legislation changes
  • Comprehensive project tracking
  • Security across many jurisdictions
  • Accurate workload forecasting
  • Auditable content
  • Compliant workflow reducing costs and risk
  • Significant time saving completing daily tenement tasks
  • Easy-to-read dashboard.

Do you want to find out more about project-based tenement management and how PX4 Resources might help you navigate the post-NROLA world?

Contact  px4@px4software.com to arrange for a demonstration and free extended trial.