North Queensland Lime Pty Ltd v Auctus Resources Pty Ltd; North Queensland Lime Pty Ltd v Auctus Resources Pty Ltd; North Queensland Lime Pty Ltd v Aurora Metals
[2024] QLC 25
•26 November 2024
LAND COURT OF QUEENSLAND
CITATION: North Queensland Lime Pty Ltd v Auctus Resources Pty Ltd & Ors; North Queensland Lime Pty Ltd v Auctus Resources Pty Ltd; North Queensland Lime Pty Ltd v Aurora Metals [2024] QLC 25 PARTIES: North Queensland Lime Pty Ltd
(applicant)v
Auctus Resources Pty Ltd,
Kordamentha (Anthony Jay Edward Miskiewicz - External Administrator),
Grant Thornton Australia (Philip Campbell-Wilson - Receivers & Managers)(respondents)
FILE NO: MRA004-24 (ML 20154)
PARTIES: North Queensland Lime Pty Ltd
(applicant)v
Auctus Resources Pty Ltd
(respondent)FILE NO: MRA075-24 (ML 20155) PARTIES: North Queensland Lime Pty Ltd
(applicant)v
Aurora Metals Limited
ACN 126 634 606
(respondent)FILE NO: MRA059-24 (ML 4103)
PROCEEDING: Determination of compensation payable for renewal of mining lease DELIVERED ON: 26 November 2024 DELIVERED AT: Brisbane HEARD ON: Submissions closed 15 October 2024 HEARD AT: On the papers MEMBER: JR McNamara ORDERS: 1. The applicant must pay the landholder of Lot 3 on Plan SP150971 compensation in respect of ML 20154 as follows:
(a) One hundred dollars ($100) per annum;
(b) The applicant must pay the amount set out in order 1(a) to the landholder of Lot 3 on Plan SP150971 within one (1) month of the grant of the renewal of ML 20154 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development;
(c) From year 2 and in each successive year for the term of the renewal, the Consumer Price Index must be applied to the amount paid in the preceding year, and the total amount must be paid annually on the date of the grant of the renewal of ML 20154 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development.
2. The applicant must pay the landholder of Lot 3 on Plan SP150971 compensation in respect of ML 20155 as follows:
(a) One hundred and seventeen dollars ($117) per annum;
(b) The applicant must pay the amount set out in order 2(a) to Lot 3 on Plan SP150971 within one (1) month of the grant of the renewal of ML 20155 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development; and
(c) From year 2 and in each successive year for the term of the renewal, the Consumer Price Index must be applied to the amount paid in the preceding year, and the total amount must be paid annually on the date of the grant of the renewal of ML 20155 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development.
3. The applicant must pay the landholder of Lot 2 on SP254665 compensation in respect of ML 4103 as follows:
(a) Six hundred and sixty dollars ($660) per annum;
(b) The applicant must pay the amount set out in order 3(a) to Lot 2 on SP254665 within one (1) month of the grant of the renewal of ML 4103 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development; and
(c) From year 2 and in each successive year for the term of the renewal, the Consumer Price Index must be applied to the amount paid in the preceding year, and the total amount must be paid annually on the date of the grant of the renewal of ML 4103 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development.
CATCHWORDS: ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where the applicant has applied for the renewal of three mining leases situated on the respondents’ land – where two mining leases will be for the mining of wollastonite – where one mining lease will be for the mining of limestone – whether and, if so, what compensation is payable under s 281 of the Mineral Resources Act 1989 (‘MRA’)
Mineral Resources Act 1989 s 281
Uniform Civil Procedure Rules 1999 r 67APPEARANCES: Not applicable
A mining lease cannot be granted or renewed unless compensation between the miner and any affected landholder is agreed or determined by the Land Court.[1]
[1]Mineral Resources Act 1989 (Qld) s 279 (‘MRA’).
North Queensland Lime Pty Ltd (NQL) has applied for the renewal of three mining leases. NQL seek a 4-year renewal of both ML 20154 and ML 20155. The contiguous leases are part of the Calcifer Mining Project. They are located on Lot 3 on SP150971, Chillagoe Station.
They also seek a 20-year renewal of ML 4103 on Lot 2 on SP254665 which is registered to Aurora Metals Limited (Aurora Metals). This lease forms part of the Mount Garnet Mining Project.
The parties and the jurisdiction of the court
Communication between the parties and the court regarding the mining leases on Chillagoe Station was challenging because the ownership of the property had changed. Chillagoe Station is now held by Mount Garnet Mineral Finance (MGMF), the mortgagee in possession of mortgagor Aucutus Resources Pty Ltd (Aucutus Resources). When proceedings were commenced the applicant identified respondents Auctus Resources, Kordamentha (the external administrator), and Grant Thornton Australia (the receivers and managers).
Neither Kordamentha nor Grant Thornton Australia have participated in the proceedings and will not be affected by a determination of compensation by this court. Compensation will be paid to the landholder or to the entity in possession of the affected land. Rule 67 of the Uniform Civil Procedure Rules 1999 allows me to make a determination of compensation for this proceeding as between the applicant and the landholder. The Court was advised that MGMF is the mortgagee in possession of Aucutus Resources.
The Court was also advised that MGMF is the mortgagee in possession of Aurora Metals Limited (Aurora Metals) the landholder of Lot 2 on SP254665.
The NQL Chief Executive Officer Mr Smith represented the applicant in correspondence and at review hearings. Mr Donato of Mills Oakley lawyers represented MGMF in correspondence and at review hearings.
Due to logistical challenges, it was agreed that an ‘on the papers’ decision would be rendered. It was explained to the parties that a determination of the court is made on evidence relevant to the criteria found in s 281 of the MRA.
In compliance with orders made 17 May 2024, the applicant on 31 May 2024 provided written submissions which included information concerning the mining program, correspondence with the Queensland Government Mineral Assessment Hub, correspondence from Environmental Consultants, and draft compensation agreements and compensation recommendations. No material was filed by the respondents in response. At a review on 4 October 2024 representatives of all parties appeared and on 15 October 2024 the parties informed the court by email of their agreed proposal to the court for compensation, which also proposed certain conditions. The compensation amounts agreed are the same as those “recommended” in the applicant’s written submissions.
My determination concerns only compensation. The MRA authorises the Land Court “to settle the amount of compensation an owner of land is entitled to as compensation”. The court may determine the amount/s and the terms, conditions and times when payments aggregating the total compensation payable shall be payable.
Other than the compensation amount/s and payment arrangements I cannot make a determination of compensation which includes conditions, for example, for the renegotiation of compensation in defined circumstances, nor can I recommend or impose conditions on the grant or renewal of a mining lease.
The MRA does authorise this court to hear and determine proceedings with respect to any determination or review of compensation and the enforcement of any agreement or determination of compensation. However, a proceeding of that kind could only be launched after (not before) the grant or renewal of the mining lease where the landholder or the miner consider that the factual circumstances give rise to the need for such an application to the court.
The mining leases
Both ML 20154 and ML 20155 are for the mining of wollastonite. They are relatively small in area – 3.62 ha and 5.85 ha respectively, and they are located approximately 6 km and 8.7 km southeast of the township of Chillagoe respectively. Chillagoe Station is quite large – 213,600 ha.
The proposed term of the renewals is short – 4 years for both. The mining leases are contiguous. They form part of the broader ‘Calcifer Mining Project’ and are seen as strategic reserves. Mineral will be extracted on the mining leases, but they will also be used for stockpiling of ore extracted from the broader Calcifer Mining Project. Mineral extracted will be transported to the Chillagoe Plant for processing, 10 km northwest of the site by road.
ML 20155 is currently in an undisturbed state.
ML 4013 is over an area of approximately 44ha and is located on Lot 2 on SP254665, a property for which MGMF is mortgagee in possession. The proposed term of the renewal is 20 years. Lot 2 covers an area of approximately 583.2ha. ML 4103 is around 9km southwest of the township of Mt Garnet. Access is via the Kennedy Highway.
The target mineral on ML 4103 is limestone. The lease forms part of the ‘Mount Garnet Mining Project’. The applicant says that while no mineral extraction has commenced on ML 4103 to date, nor is it expected to over the proposed renewal term, the use of the mining lease in the future will be for limestone extraction as mineral is exhausted on other tenures which form part of the Mount Garnet Mining Project.
ML 20154
The applicant says ML 20154 is the productive use of land within a compact area. The mining lease was first granted in 1993 and has been renewed for 4 year terms ever since.
The activities on the mining lease involve the stripping of topsoil and over burden by mechanical means; stockpiling from activities on site and the broader project; and drilling and blasting to fragment rock into a manageable size.
The infrastructure includes the mine void (pit); access tracks; raw material stockpiles and safety bunding. Mobile plant and equipment will be deployed to the site.
The factors the applicant says are relevant to a determination of compensation include: access tracks created for the mining activity may remain in the final landform for beneficial use; water storages created during the mining activity may be retained for ongoing use for livestock watering; mining is of a short term campaign and at other times the land remains accessible to livestock for grazing and watering.
ML 20155
In contrast, ML 20155 is in a natural undisturbed vacant state still capable of being used by the landholder as part of Chillagoe Station. It is seen by the applicant as a strategic reserve.
If and when activities are conducted on the mining lease they would be similar to those conducted on ML 20154 and the relevant factors are the same.
ML 4103
Although this application concerns a renewal, no mineral extraction has commenced on ML 4103, nor is it expected to over the proposed 20 year term of the renewal. Its future use is for limestone extraction.
The activities on the mining lease are described in the same way: the stripping of topsoil and over burden by mechanical means; stockpiling from activities on site and the broader project; and drilling and blasting to fragment rock into a manageable size.
Limestone extracted from the site in the future would be transported to a plant on another mining lease for processing and sale.
The infrastructure also includes the mine void (pit); access tracks; raw material stockpiles and safety bunding. A mobile plant and equipment will be deployed to the site.
The factors the applicant says are relevant to the assessment of compensation include: access tracks created for the mining activity may remain in the final landform for beneficial use; and water storages created during the mining activity may be retained for ongoing use for livestock watering. The applicant also says that the mining lease is in an unused state and will likely remain so for the term of the renewal.
The Statutory Criteria
Although the parties have come to an agreement about compensation, I must make my decision with reference to the criteria in the MRA. My assessment of compensation is not arbitrary.
There is no evidence that any of ML 20154, ML 20155 or ML 4103 would result in a permanent loss of land for the landowner. Furthermore, the applicant submits that ML 4103 is in a ‘natural un-used state’ and will likely continue to be for the renewal term.
On this basis, there is no compensable deprivation of possession of the surface of the land for any of the mining leases.
The applicant says that in accordance with the respective environmental authorities, rehabilitation will occur at the cessation of mining on all mining leases.
Noting the small areas of operation in respect of ML 20154 and ML 20155 on what is a very large property, the fact that the leases have existed since 1993, and in the absence of any evidence to the contrary, there will be no diminution of the value of Chillagoe Station or any improvements thereon as a result of the renewals.
I note also that ML 4103 has existed since 1973. It has not been mined and mining operations are not likely to commence during the proposed period of the renewal. There will be no diminution of the value of Lot 2 on SP254665 or of any improvements thereon as a result of the renewal of ML 4103.
Will there be diminution of the use made or which may be made of the land? s 281(3)(a)(iii)
The applicant says in relation to ML 20154 and ML 20155 that mining operations will be of a ‘short campaign nature’ and at other times the land remains accessible to livestock for grazing or watering.
The extent of the infrastructure and equipment used for the mining operations as described at paragraphs [19]-[20], [23], and [26]-[27] is likely to create dust and noise which may cause some inconvenience to landholder operations on both properties.
The most recent compensation agreement with respect to ML 20154 was made in 2019 where the amount agreed was $57.60 annually. This amount appears to be calculated on the (then) agreed $14.76 value of the land/ha applied over the 4ha area. The compensation amount now proposed and agreed as between the parties is $100 per ha per annum (inclusive of uplift). It appears to me that the ‘per hectare per annum’ proposal is a mistake. The 2019 agreement compensation was calculated on a whole-of-ML area (that is, for the total 4 hectares rather than per hectare) per annum basis. A per hectare per annum approach at the rate discussed between the parties would be illogical based on the land valuation approach the parties have taken.
If my understanding is correct the land value now agreed is $25 per hectare and compensation for the renewal of ML 20154 is proposed at a rate of $25 per hectare per annum or $100 per annum (total). This appears to be a not unreasonable increase from the previously agreed compensation amounts using that methodology.
The amount agreed is not disproportionate to compensation awarded in other matters. If there had been no agreement between the parties as to the compensation amount, I would have taken a more forensic approach to quantum.
In respect to ML 20155, the applicant applies a similar increase to the most recently agreed compensation amount for the renewal of the mining lease.
The parties agreed to $20 per ha per annum for the term of the renewal term for ML 20155. The last compensation agreement with respect to ML 20155 was made in 2019. Again compensation was calculated at a rate of $14.76 per ha per annum.
The higher rate for ML 20154 ($25 per hectare per annum) as compared to ML 20155 ($20 per ha per annum) is due to the different, and lesser impact expected on ML 20155.
As ML 20155 has a surface area of approximately 5.85ha, the applicant must pay compensation in the amount of $117 per annum.
The applicant submits that ML 4103 is in its natural unused state with very little exploration activity undertaken in its previous term. The applicant provided Google Earth aerial imagery showing that the mining lease area was densely vegetated and unaltered by mining activity or other uses as at April 2023. The applicant says that they inspected and confirmed the unused status of the land in June 2023.
The evidence before me suggests that it is unlikely that mining operations will commence on ML 4103 during the renewal term; however, it is possible. On this basis, limited compensation is payable under this head.
The parties have agreed to $15 per ha on an annual basis for the 20-year renewal term of ML 4103. I accept that this is an appropriate figure on the basis that mining is not intended to occur during the renewal period, the lease is in its natural un-used state and because $15 per ha per annum is not an unrealistic figure based on agreed compensation for surrounding mining leases in the Mount Garnet area. I repeat that if there had been no agreement between the parties as to the compensation amount, I would have taken a more forensic approach to quantum.
As ML 4013 has an approximate surface area of 44ha, compensation is $660 per annum for the duration of the renewal-term.
It is reasonable that the annual compensation amounts for each ML be indexed to the Consumer Price Index (CPI). This means that from year 2, the CPI be applied to the aggregate amount of the previous year.
It is the understanding of the parties and I accept that the compensation amounts proposed are inclusive of the additional amount of 10% which reflects the compulsory nature of the payment and is recognised under s 281(4)(e).
Conclusion
I have assessed total compensation for the renewal for the mining leases.
For ML 20154, compensation for the first year is $100.
For ML 20155, compensation for the first year is $117.
For ML 4104, compensation for the first year is $660.
For the second year onwards until the end of the renewal terms, the CPI must be applied to the amount paid in the preceding year and paid annually on the date of the grant of the renewal of the mining leases.
I note that the agreement between the parties also includes a condition for ML 20155 and ML 4103 that if the miner proposes to change its activities, it will notify the landholder in writing and the compensation amounts will be reviewed. The task before me is to determine compensation under section 281 of the MRA. I cannot make orders for conditions to be attached to the mining leases.
Orders
The applicant must pay the landholder of Lot 3 on Plan SP150971 compensation in respect of ML 20154 as follows:
(a) One hundred dollars ($100) per annum;
(b) The applicant must pay the amount set out in order 1(a) to the landholder of Lot 3 on Plan SP150971 within one (1) month of the grant of the renewal of ML 20154 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development;
(c) From year 2 and in each successive year for the term of the renewal, the Consumer Price Index must be applied to the amount paid in the preceding year, and the total amount must be paid annually on the date of the grant of the renewal of ML 20154 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development.
The applicant must pay the landholder of Lot 3 on Plan SP150971 compensation in respect of ML 20155 as follows:
(a) One hundred and seventeen dollars ($117) per annum;
(b) The applicant must pay the amount set out in order 2(a) to Lot 3 on Plan SP150971 within one (1) month of the grant of the renewal of ML 20155 by the Department of Resources; and
(c) From year 2 and in each successive year for the term of the renewal, the Consumer Price Index must be applied to the amount paid in the preceding year, and the total amount must be paid annually on the date of the grant of the renewal of ML 20155 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development.
The applicant must pay the landholder of Lot 2 on SP254665 compensation in respect of ML 4103 as follows:
(a) Six hundred and sixty dollars ($660) per annum;
(b) The applicant must pay the amount set out in order 3(a) to Lot 2 on SP254665 within one (1) month of the grant of the renewal of ML 4103 by the Department of Resources; and
(c) From year 2 and in each successive year for the term of the renewal, the Consumer Price Index must be applied to the amount paid in the preceding year, and the total amount must be paid annually on the date of the grant of the renewal of ML 4103 by the Department of Natural Resources and Mines, Manufacturing, and Regional and Rural Development.
0
0
2