Evaluation of the Mining Administrative Process.
What is it?
The term Due Diligence means “Prior Diligence” and this diligence refers to the idea of investigating in search of possible defects or errors in the administrative process. This investigation ensures that the holder or any other interested party has complete certainty of the current status of the mining process and with this, assess the risk of development in the mining project or possible acquisition of the mining title.
What issues are evaluated in Mining Administrative Due Diligence?
The mining administrative process follows rules and procedures of public administration. Considering these rules, it is possible to conduct a technical study on the evolution of a mining process in order to determine its compliance.
Initially, it is very important to understand who the contractor is and the reason for hiring the service. This is because, despite the information in the administrative process being public, certain interpretations and opinions may represent a risk to the business of its holders, partners, suppliers, or service providers.
Therefore, to hire this service, it is necessary to demonstrate that you are an interested party in the administrative process and have the power to receive this information.
Once it is determined that the contractor has the power to request information from the mining process, it is necessary to verify the data in the process through a complete review of the documents contained in the process files and the electronic systems of the ANM. The following information is checked through this:
- Compliance with material and procedural deadlines;
- Payment of Annual Fee Per Hectare (TAH);
- Audit of Mineral Exploration Investment Declaration – DIPEM;
- Audit of Annual Mining Report – RAL;
- Possible Nullity of Mining Title;
- Collection of CFEM Values;
- Compliance of Technical Reports Presented;
- Resources and Reserves Approved by ANM;
- Administrative Phase of the Process;
- Agreements with Surface Owner;
- Environmental Licensing; Among others.
When to do it?
Usually, this Due Diligence is used when a mining title acquisition is being carried out. This allows the acquiring party to reduce the business risk.
During the negotiation of mining title acquisition, the Administrative Due Diligence allows for an understanding of the entire procedural history of the activity, including its resource and reserve values declared as official information to ANM. In addition, a detailed analysis of CFEM (Financial Compensation for Mineral Exploration) collection allows for identification of data on production, sales, taxation, costs, and possible fraud.
However, the pre-audit diligence can be executed not only in the acquisition of titles. It is always recommended that holders keep their process information up to date as this minimizes possible administrative losses, such as missed deadlines and title lapses.
