AuKing Mining Limited Prospectus

AuKing Mining Limited Solicitor’s Report on Tenements HopgoodGanim Lawyers Page 21 of 46 Combined Reporting Groups 4.53 Combined reporting groups allow the holder to apply for a “project exemption” from expenditure requirements under section 102(2)(h) of the Mining Act, if it can be established that the aggregate expenditure for the combined reporting tenements would satisfy the requirements for a particular tenement, had the aggregate expenditure been apportioned between each tenement in the respective Combined Reporting Group. Forrest Decision 4.54 In the recent High Court decision in Forrest & Forrest Pty Ltd v Wilson & Others [2017] HCA 30 ( Forrest Decision ), the High Court held that where a mineralisation report has been submitted after (and not at) the time of an application for a mining lease, the Warden has no jurisdiction to recommend grant and the Minister has no jurisdiction to subsequently grant a mining lease. 4.55 An application for a mining lease must be accompanied by either a mining proposal or a mineralisation report (section 74(1)(ca)(ii) of the Mining Act). This provision was inserted through the Mining Amendment Act 2004 (WA) which commenced on 10 February 2006. Accordingly, the Forrest Decision only impacts the validity of mining leases granted on or after 10 February 2006 which did not comply with section 74(1)(ca)(ii) of the Mining Act. 4.56 The Minister announced in a media statement on 5 September 2017 that the Government is examining legislative solutions to provide assurance to the State's mining industry following the High Court decision. The Western Australian State Government introduced a draft Mining Amendment (Procedures and Validation) Bill 2018 to provide a legislative fix to validate mining leases which were invalidly granted following the Forrest Decision. The draft bill was tabled before the Legislative Assembly on 26 June 2018 but it has not been enacted. Security and Bonds 4.57 Each of the Tenements is subject to the Mining Rehabilitation Fund ( MRF ). 4.58 The Mining Act requires that for mining tenements security is lodged with DMIRS to protect against the holder not complying with the tenement conditions and the requirements of the Mining Act and the Mining Regulations. 4.59 As of 1 July 2013, the majority of environmental bonds in Western Australia have been retired due to the operation of the MRF. The new system requires tenement holders to pay an annual levy on their tenements into a fund, which can later be used to rehabilitate mining sites. The levy is calculated based on the area of disturbed land, the kind of disturbance and the relevant environmental impact. 4.60 The MRF requires disturbance data (describing the number of hectares disturbed and the type of disturbance) to be collated and submitted online to the DMP annually. The data is used to calculate a levy which the tenement holder must pay. Tenements with a liability estimate below $50,000 must report disturbance data but will not be required to pay a levy to the MRF. 4.61 Disturbance data for the Western Australian Tenements must be submitted by 30 June of a given year for the reporting period 1 July of the previous year to 30 June of the current year and if applicable the levy paid for that year. 4.62 The obligation to report disturbance data and pay the levy for a given year, and any penalties for non-payment, are borne by the holder recorded in DMIRS’ Mineral Titles Online system who holds the relevant mining tenement on the due date. This liability remains with that holder even if the tenement is transferred to a third party after the due date. continued 9. S olicitor’s Report on Koongie Park Tenements 176