AuKing Mining Limited Prospectus

AuKing Mining Limited Solicitor’s Report on Tenements HopgoodGanim Lawyers Page 20 of 46 An important issue for persons dealing in mining tenements is the extent to which they can rely upon this register as evidence that the holder’s title is valid, and therefore ‘indefeasible’. 4.45 Unlike the Torrens legislation (which enables such persons to rely solely on the register to validate title), the register under the Mining Act provides a ‘limited’ indefeasibility. Rather than offering full protection, section 116(2) of the Mining Act provides that a person dealing with the registered title holder can rely on the register to take a good title free of any competing, unregistered interests. However, this protection is subject to two (2) important qualifications: (a) registration will not of itself validate the transaction by which that person took from the registered title holder (that transaction could still be shown to be invalid and the register rectified); and (b) registration may be prevented by caveat. 4.46 Generally, a caveat is a statutory injunction which operates to protect a party’s interest in a mining tenement by ‘freezing’ the register, thereby preventing further dealings in the tenement to the detriment of the protected interest. Rent 4.47 The Mining Act and Mining Regulations provide that rent must be paid by the holders to hold the Tenements. The rate of rent depends upon the type of mining tenement. Rent is payable yearly in advance and is due on the anniversary date after the commencement of the term of the Tenement and must be paid not later than one month after that date. 4.48 Rent is payable for each of the Tenements pursuant to section 108 of the Mining Act and regulation 109 of the Mining Regulations (as prescribed by Schedule 2 of the Mining Regulations). 4.49 The rent paid and payable for the Tenements in the current and previous year is detailed in the Tenement Table. 4.50 If the holder of a mining lease or an exploration licence has failed to pay the rent owing by the due date, the tenement is liable for forfeiture under section 97(1) or 63A of the Mining Act respectively upon declaration by the Minister in the government gazette that the mining lease or exploration licence is forfeited. Alternative options available to the Minister, however, include imposing a fine of up to $150,000.00 (for a company) or imposing no penalty at all (sections 97 and 96A of the Mining Act). 4.51 If the holder of a prospecting licence has failed to pay the rent owing by the due date the tenement is liable for forfeiture under section 96 of the Mining Act upon the application to the mining warden by the Minister or any other person. Where the mining warden is satisfied that the non-payment justifies forfeiture, the mining warden may order that the tenement be forfeited (section 96(2) of the Mining Act), or alternatively impose a penalty of up to $150,000.00 or impose no penalty at all (section 96(3) of the Mining Act). Expenditure Requirements 4.52 The holder of an exploration licence, mining lease or prospecting licence must comply with the prescribed expenditure conditions for the licence unless an exemption is granted under the Mining Act. A tenement will be liable to forfeiture by the Minister or a third party if the expenditure obligations are not complied with (see further detailed information at paragraphs 4.36 to 4.38). AuKing Mining Limited | PROSPECTUS 175