ACN 056 837 506 Pty Ltd, Re [1992] QMW 58

IN THE WARDENS COURT OF QUEENSLAND HELD AT MAREEBA. BEFORE: WILLIAM SAMUEL CHRISTENSEN, ESQUIRE, WARDEN. IN THE MATTER OF: APPLICATION FOR MINING LEASE NUMBER 40021 IN THE CAIRNS MINING DISTRICT. APPLICANT: ACN 056 837 506 PTY. LTD. OBJECTORS: Nil. DATE OF HEARING: 7 December 1992. DECISION. This Application for mining lease for the purpose of mining gold, silver, copper, lead, zinc and platinum and for the stablishment of a tourist theme park focusing on the history of the gold mining industry in Far North Queensland is for 27.9 hectares situated at Kamerunga about 10 kilometres north-westerly of Cairns. The Application was lodged at the Mining Registrar's Office at Cairns on the 8th July, 1991 and a certificate of application was issued on the same day setting the last date for receipt of objections as 5th August, 1991. The original applicant was Stephen David Collins. An assignment of the Mining Lease Application from Mr. Collins to ACN 056 837 506 Pty.Ltd. (of which Mr. Collins is a director) was approved on the 28th October, 1992. An objection lodged by the Mulgrave Shire Council was withdrawn at the hearing upon the Applicant's amending the Application to conform with the Council's requirements set out in the Council's letter to the Mining Registrar dated 2 December 1992. (Copy attached). In the main, the amendment requires a substantial reduction in the surface area to less than .5 hectare. Mr. Collins, while giving evidence, etched the reduced surface area (in blue) on Appendix 4 to Exhibit 1 to cater for underground mine access and the proposed crushing, sluicing and waste control operations. Mr. Collins claims that the amended surface area is of the size stipulated by the Mulgrave Shire Council. Mining Lease Application 7072 over the same land was heard by me in the Wardens Court and later rejected previous to the filing of this Application. As section 7.25(2)(a) of the Mineral Resources Act 1989-1990 permits the Court to inform itself in such manner as it considers appropriate in order to determine the relative merits of the Application I have taken advantage of my knowledge of the land gained from the evidence tendered in the earlier application. [1992] QMW 58 -- 1 of 9 -- The following matters have been taken into account and considered by me in making my recommendation: (A) HAVE THE PROVISIONS OF THE MINERAL RESOURCES ACT BEEN COMPLIED WITH? The material indicates that the Applicant is an eligible person. I accept, on the material before me, that the Application is not in respect of land over which, pursuant to Section 7(6) of the Mineral Resources Act, 1989-1990, a mining lease shall not be granted without the consent of another person or persons. A declaration of posting was lodged on the 12th August, 1991 and I am satisfied on the material, including the uncontested information in the application form and the declaration of posting and advertising that all the provisions of the Mineral Resources Act, 1989-1990 have been substantially complied with. (B) IS THE LAND APPLIED FOR MINERALISED OR IS THE OTHER PURPOSE FOR WHICH THE LEASE IS SOUGHT APPROPRIATE? I accept the evidence that the proposed Mining Lease takes in underground mine workings dating from the early 1930's. Records, including a Report on Operations compiled by a consultant (Mr. A.T. Prowse) in 1984 (Exhibit 2) indicates that the mine, although having a history of mediocre performance, still contains some gold bearing ore reserves. I add that the history of the mine is reasonably well documented in Mines Department Annual Reports 1931 (p.83) 1932 (p.93) 1933 (p.112) and 1934 (P.106). The Mining Lease is sought primarily for the establishment of the tourist theme park. The mining operation will be conducted for display purposes and, although the prospect of a profitable return from that activity appeals to the Applicant, it does not expect that the mine will make a profit. The Applicant describes the terrain as "undulating hills with medium density bushland vegetation...suitable for the additional purpose in that the undulations will allow for the separation of various displays and simplify the screening of the various components of the theme park from external observation, enabling the theme park to blend in with the surrounding terrain". I viewed the site during the hearing of the previous mining lease application and find little, in general terms, to dispute the Applicant's description. In view of the Applicant's advice I am satisfied that the land applied for is mineralised. I am also satisfied, on -- 2 of 9 -- the information given by the Applicant, that the other purpose for which the lease is sought, namely the operation of a tourist theme park, is appropriate. (C) IF THE LAND APPLIED FOR IS MINERALISED WILL THERE BE AN ACCEPTABLE LEVEL OF DEVELOPMENT AND UTILISATION OF THE MINERAL RESOURCES WITHIN THE AREA APPLIED FOR? The proposed development depends primarily on the grant through the Department of Lands of a special lease over the surface of the land applied for. Mining will not commence until the special lease is granted and the Mulgrave Shire Council approves the overall construction of the theme park. Mining is proposed to occur only in demonstration mode, and for that reason, the Applicant anticipates that levels of ore extraction will be low. Extraction and treatment rates are not expected to exceed 30 tonnes of raw material daily. It is also proposed that mining activities will continue, using introduced ore materials, after the mineral resource is exhausted. The evidence tendered at this hearing and the earlier hearing in relation to Mining Lease Application 7072 demonstrates fairly clearly that most of the worthwhile orebody has been extracted over a series of mining operations since the early 1930's. Indeed, the report by Mr. Prouse (exhibit 2) suggests that much of the remaining mineral resource is not of high quality and will be difficult to recover. There is nothing in the material which indicates that the Applicant is unable to conduct a mining operation at the proposed level. In view of the probable limited extent of the orebody I am of the opinion that the very small mining operation planned by the Applicant will represent an acceptable level of development and utilisation of the mineral resources within the area applied for. (D) IS THE LAND AND THE SURFACE AREA OF LAND IN RESPECT OF WHICH THE MINING LEASE IS SOUGHT OF AN APPROPRIATE SIZE AND SHAPE? The size and shape of the land applied for takes in the the existing mine workings and probable mineralised land; and the surface area (as amended) adequately caters for underground mine access and the proposed crushing, sluicing and waste containment operation. There is nothing in the information supplied by the Applicant to suggest that the surface area of the land in respect of which the mining lease is sought is not an appropriate size and shape. -- 3 of 9 -- (E) IS THE TERM SOUGHT APPROPRIATE? The term of lease applied for is 30 years. As the mining operation is planned as an integral part of a long-term tourist business enterprise in which a large amount of capital will be invested I am satisfied that the term sought is appropriate. (F) HAS THE APPLICANT THE NECESSARY FINANCIAL AND TECHNICAL CAPABILITIES TO CARRY ON MINING OPERATIONS UNDER THE PROPOSED MINING LEASE? Evidence produced in relation to the Applicant's financial and technical capacity to carry on mining operations under the proposed lease discloses that the Applicant Company has no liquid assets of significance. It estimates that an investment of $20M is required and says that funds of that magnitude are available from financiers immediately Lands Department tenure is secured. Morgan Stockbroking Ltd. is arranging funds from Australia and overseas. The Applicant intends to engage a properly qualified and experienced mine manager for its day to day operations and also acquire the services of mining industry consultants, when required. Although the Applicant Company has declined to name the parties with whom it has been negotiating and give details of those negotiations I have no reason not to accept the Applicant's advice and I am satisfied that the Applicant has the necessary financial capability and that it will have sufficient technical expertise to properly carry on the proposed mining operation under the proposed lease. The Applicant is confident that the necessary funds will be received within 6 months of the grant of a Lands Department tenure. I recommend that the Mining Lease not be granted until the Applicant produces proof to the satisfaction of the Minister not later than 6 months following the grant of a lease to the Applicant that the amount of $20M is substantially funded. I also recommend that in the event that the Applicant's application for Lands Department tenure is rejected or finally determined in any other way the Application for Mining Lease be rejected. (G) HAS THE PAST PERFORMANCE OF THE APPLICANT BEEN SATISFACTORY? There is no material before me to suggest that the past performance of the Applicant has been unsatisfactory. -- 4 of 9 -- (H) WILL THE OPERATIONS TO BE CARRIED ON UNDER THE AUTHORITY OF THE PROPOSED LEASE CONFORM WITH SOUND LAND USE MANAGEMENT? The land appears to be used under the authority of a permit to occupy to graze a few horses and there seems to be no suggestion that the proposed mining operation will not significantly disturb the owners' stock or stock watering and stock management facilities. In the operation to be carried on under authority of the proposed mining lease the Applicant will restore and further develop part of the existing workings for the prime purpose of creating a demonstration mine. Early mining artifacts used in the mine for the purpose of enhancing the project's historical theme will be supplemented with modern mining machinery. Ore will be extracted by shrink stoping and carted to the surface where it will be crushed in a restored stamp mill. The crushed product will then be processed in a wet gravity separation plant which will discharge waste materials into a series of containment dams below the plant. No chemical processes will be used in the treatment operation. The tailings dams will be dewatered from time to time and the dried contents returned underground. The Applicant at this stage does not have the technical expertise to finalise detailed mining plans. This will be done in consultation with qualified people if and when the development is in a position to proceed. Process water will be obtained initially from the local mains supply and recycled. The Applicant advises that underground operations will be consistent with all precautions necessary for safe viewing by tourists. There has been no mine working plan submitted but the evidence leaves me with no reason to believe that the proposed mining operations will not conform with sound land use management. (I) WILL THERE BE ADVERSE ENVIRONMENTAL EFFECTS CAUSED BY THE PROPOSE OPERATION, AND IS SO, THE EXTENT THEREOF? Treatment of minerals on site and the proposed excavations appear unlikely to affect any river system. I conclude from my own knowledge of the area and from the evidence in this hearing and the hearing of the earlier mining lease application that, although the site of the -- 5 of 9 -- proposed mine is sufficiently removed from densely populated areas as to pose little or no environmental concerns of the kind normally associated with mining developments near closely settled areas, urban development is likely to spread in the short or medium term to the extent that controls may have to be placed on some of the proposed mining activities. The conceptual description of the proposed mining operation points to the stamping operation as the activity most likely to be incompatible with future community environmental expectations and it is clear from the record that the Applicant recognises that special measures may have to be taken to eliminate or substantially reduce unacceptable noise levels. I recommend, if the Mining Lease is granted, that special conditions setting standards and methods to be applied to minimise the effect of the mining operation on the environment be imposed. The Applicant also recognises, as an integral part of its development, the importance of minimising the visual impact of the development and preserving the natural features of the land. I recommend that Departmental attention be given to investigating, in consultation with the Mulgrave Shire Council, the need for development of further special conditions setting standards and methods to be applied to maintain an acceptable degree of unobtrusiveness of the mining operation in the landscape, and to preserve and, where desireable, restore at nominated times during the currency of the Mining Lease any part of the land which is at the commencement of the mining operation in a degraded state or which is degraded as a result of the mining operation. The evidence indicates no other environmental factors of significance which may be adversely affected. (J) WILL THE PUBLIC RIGHT AND INTEREST BE PREJUDICED? Apart from the matters mentioned in Part (I) the only other significant matter which seems likely to prejudicially affect the public right and interest is the inability of the present road system to adequately cope with the level of generated motor traffic. The Applicant has stated that its budget allocation for roadworks will be to the order of $1M and has acknowledged that it is prepared to be bound by conditions of lease which stipulate minimum developmental standards for the construction of the access road from and including the Brinsmead Kamerunga Road turn out. I recommend that suitable conditions of Mining Lease be formulated in consultation with the Mulgrave Shire Council. No other factors likely to be prejudicial to the public right have been identified. (K) HAS ANY GOOD REASON BEEN SHOWN FOR A REFUSAL TO GRANT -- 6 of 9 -- THE MINING LEASE? Having taken into account and considered all the matters set out in paragraphs (a) to (l) inclusive of section 7.26(3) of the Mineral Resources Act 1989-1990 I am of the opinion that the matters which weigh against a decision to grant the Mining Lease are: The uncertain state of the evidence as to the availability of adequate funding for the mining operation and the wider business development. When all other aspects of the Application and the matters set out section 7.26(3) are taken into account and considered I am satisfied that the objects of the Mineral Resources Act set out in section 1.3 (a), (b), (c), (d), (e) and (g) will be attained if a Mining Lease is granted for the term and upon the conditions recommended, for the following reasons: (a) In terms of section 7.3(b) of the Mineral Resources Act 1989-1990 the purpose other than mining for which the Mining Lease is sought is clearly a purpose associated with, arising from or promoting the activity of mining and is, thus, a purpose for which the Mining Lease may be granted; (b) The nature of the mineral occurrence is such that it is suitable for a small-scale mining operation of the kind intended; (c) It is unlikely that the community will benefit from any attempt to develop a self sufficient mine on the land applied for; (d) Owing to the close proximity of the mine to the major international and domestic tourist destination of Cairns it is likely that greater economic and social benefits will accrue to the community from the proposed form of exploitation of the mineral resource than from a conventional mining operation; (e) The location of the proposed mining operation and the method of mining is (with the imposition of suitable mining lease conditions) unlikely to cause environmental or public interest concerns; (f) A realistic security deposit will be imposed to guard against the financial failure of the miner; and (g) As discussed in Part (L) hereunder, when the current and prospective uses of the land are taken into consideration, the proposed mining operation is an appropriate land use. In my view no good reason has been shown for a refusal to grant the mining lease. -- 7 of 9 -- (L) IS THE PROPOSED MINING OPERATION AN APPROPRIATE LAND USE, TAKING INTO CONSIDERATION THE CURRENT AND PROSPECTIVE USES OF THE LAND? The evidence indicates that the land is currently used for limited horse grazing purposes and appears, on the evidence, to be suitable for no other use apart from mining. The Applicant intends to establish a tourist enterprise in which the element of mining, albeit essential to the success of the enterprise, is of secondary importance. If there was evidence that the quality and quantity of the ore body was such that it would probably support a self sufficient mining operation, a finding that the proposed mining operation is not an appropriate land use in light of the prospective uses of the land, would likely follow. No such evidence has come to light in this proceeding. Indeed the evidence in this proceeding and in the hearing of the earlier mining lease application indicates that the mine was never an outstanding performer and an attempt to work it in recent times was not profitable. In my view, no evidence has been presented to show significant conflict between the current land use, or any prospective land use, and the proposed mining operation. When taking into account the current and prospective uses of the land, the proposed mining operation appears, on the evidence, an appropriate land use. RECOMMENDATION I recommend to the Honourable, the Minister that, upon compliance with the condition recommended in Part (F), the mining lease be granted subject to the conditions recommended in Parts (I) and (J) above. Mareeba 11 December 1992 Warden -- 8 of 9 -- -- 9 of 9 --