Sovica Legal, Trusted Legal Adviser to the Mining Industry

We have assisted both sellers and buyers with a range of arrangements from long-term offtakes to spot sales.  Supported by a detailed knowledge of the Incoterms®, our experience covers a wide variety of commodities produced both in Australia and overseas (including nickel, lithium, vanadium, graphite, copper, zinc, cobalt, precious metals, iron ore, lead, tin, sulphate of potash, biomass fuels [including wood pellets and palm kernel shells], mineral sands, salt and more).

We can help you navigate issues including:

• questions of enforceability (binding versus non-binding);
• ramp-up arrangements for new projects;
• scheduling (including “back to back” arrangements);
• “take or pay” and “deliver or pay” arrangements;
• determination of specifications and treatment of off-spec products;
• novel pricing formulae (including pricing commodities without universally recognised benchmark indices); and
• security of payment

From a seller’s perspective, we understand that the needs of emerging and established producers are often very different.  Producers also benefit from our experience in dealing with international traders, including their varying approaches to documentation and negotiation.

We have also reviewed offtake agreements on behalf of lenders, giving us a unique perspective into what lenders typically expect to see in a “bankable” offtake agreement.  We can work collaboratively with your lender’s legal team in the development of new offtake agreements and also assist with borrower due diligence on existing offtake agreements.

We have acted for both plant owners and miners on agreements for the processing of numerous commodities.  Whether traditional toll treatment (where title to the ore and processed product remains with the miner) or an ore purchase (where title passes to the plant owner), we understand the intricacies of and typical points of contention in each kind of arrangement.

We have dealt with a wide variety of pricing and payment mechanics and assisted clients in managing the risks associated with both standalone/campaign-based processing and the blending of multiple ore sources.

Our extensive experience in commodity sales informs our approach to royalty agreements, including the appropriate types of royalties (and deductions, if applicable) for different minerals.

We prepare user-friendly royalty agreements for both miners and royalty payees and can advise on the “must haves” and “nice to haves” from each perspective.  We also regularly work with standard form royalty agreements to strike the appropriate commercial balance, eliminate unnecessary and unduly onerous provisions and ensure suitability for the minerals and jurisdictions involved.

In addition, we have assisted both miners and financiers with royalty and metals streaming agreements in connection with project financing.  We appreciate the unique issues arising in this context – for example, to what extent it may be appropriate for a miner’s obligations to differ from those typically contained in a royalty agreement.  Equally, given that streaming agreements usually provide for the discounted sale of metals over a lengthy term (often life of mine), these documents can and should vary significantly from those governing arm’s length sales over shorter terms.

We have acted for clients on the sale and purchase of a large range of projects (from single exploration tenements to large operating mines), along with royalty portfolios.  We have worked with many different transaction structures including:

• asset sales and share sales;
• options to acquire;
• retention by vendors of minority interests and other rights; and
• deferred and contingent consideration, including the grant of vendor royalties.

We also appreciate the unique issues arising in respect of distressed assets, having acted for both purchasers and vendors (receivers and managers).

We provide advice in relation to obligations arising under royalty, access, heritage and other third party agreements upon the acquisition or disposal of a project and can prepare the documents required to comply with those obligations (including deeds of assignment and assumption).

We have prepared earn-in (or “farm-in”) agreements covering the acquisition and disposal of both majority and minority interests in mining projects – whether in a single stage or in multiple stages over time.

We can assist with the formal documentation of any resulting joint venture up front or alternatively establish a framework for the negotiation of a joint venture agreement at a later date.

We have extensive experience in the drafting and negotiation of joint venture agreements, whether unincorporated or incorporated (i.e., shareholders’ agreements).

We can also assist with the preparation of standalone joint venture management agreements.

We have a long history working with “split commodity” arrangements, under which multiple parties hold the rights to different minerals in respect of the same tenement package.  We can help you navigate the complex issues often arising in respect of such arrangements, including cooperation and priority between rights holders; exploitation of co-existing resources; rehabilitation; security of tenure and obligations owed to third parties.

We can also assist with the grant of mining rights for specific purposes or durations, including contractual licences, mining subleases and tribute arrangements.

We can assist with the preparation and negotiation of confidentiality agreements, whether one-way or mutual, template or transaction-specific.

Acquiring or disposing of a project subject to a myriad of historical royalty or other third party agreements?  Unsure which tenements are currently impacted due to conversions or replacements over time?  Has the royalty receivable changed hands or been split between multiple payees as a result of past assignments? Looking for a neat summary of your current obligations?

We can help untangle the mess for you.