Cazaly pegs Rio out to dry
November 26, 2005
IF Rio Tinto thinks it has a chance of getting the Shovelanna iron ore tenement back, it's just whistling Dixie.
The global miner has been embarrassed by a small mining tenement management firm in Perth that, like others in the business, watches every tenement in Western Australia, waiting to see what is surrendered voluntarily, but also ready to pounce on someone's carelessness - in this case, Rio's.
Industry figures can recall only one case in Western Australia in which a company that let a tenement lapse ended up getting it back. That was in 1979, when a prospector named Bill Beiberg from Kalgoorlie realised that Pancontinental Mining had unknowingly let lapse a licence that covered the spot where the company was planning to dig the pit for what became the Paddington gold mine. He was out the next day putting in his pegs.
Even under mining law at the time, the general opinion was that the tenement was fair game once the licence had expired. Somehow, political pressure was brought to bear and the late Mr Beiberg was stripped of the licence, allowing Pancontinental to develop its mine.
That was then. This is now. No West Australian minister today is going to do anything other than what the Mining Act says.
The issue was in the news this week when Cazaly Resources - the company that pegged a Pilbara tenement after Rio's application for renewal was delayed in transit - said it was forging a deal with BHP Billiton to explore and develop the prospect.
If the industry types are right, then State Development Minister Alan Carpenter will have little choice but to award Cazaly Resources the Pilbara tenement it picked up because Rio failed to get its renewal paperwork and cheque in on time - even though Rio has lobbied him to use discretionary powers to dislodge Cazaly. Rio should have known that every tenement expiry is watched by dozens of eyes - and those watchers are ready to pounce. Within minutes, someone will have an application lodged for the land and a pegging contractor on the way to knock pegs into the tenement.
That is just what happened with Rio and Cazaly on August 26 - and it was the brother of Cazaly Resources managing director Nathan McMahon who spotted Rio's failure.
By the opening of the next business day, Cazaly had lodged its application for E46/678, a 40sqkm block next to BHP's huge Ore Body 18 and located over what the geology maps show to be Brockman-type iron ore.
Shannon McMahon, who runs McMahon Mining Title Services, is in the business of looking after his client's tenements so they don't end up making the same mistake as Rio - but also looking for clients of others who do let matters slip.
"It's the most exciting time in a mining tenement manager's life when a tenement expires," he said.
Six expired in August, but the one containing what Cazaly has named Shovelanna was the only one he thought worth grabbing.
Shannon saw the Rio title lapse on the Friday afternoon, consulted his brother over the weekend and was ready to pounce first thing on Monday with a cheque for $2729 and a filled-in application form. Rio's paperwork and cheque, meanwhile, was apparently not moved promptly by a courier company and arrived two days later.
Mr McMahon said letting a licence expire accidentally was a tenement manager's worst nightmare.
Much of his business involves finding land next to or close by clients' projects.
According to Mr McMahon, holding on to land requires constant vigilance. After the third year of an exploration licence, the holder must surrender 50 per cent of the area; in the fourth year, 50 per cent of what remains (all intended to stop people sitting on tenements forever). Companies can apply for exemptions.
He said forgetting to apply for these exemptions, allowing licences to expire and failing to pay the rent to the government were equally common.
The McMahons should know their business: their father and mother, Terry and Gail, have been in the mining title management business since the 1970s.
One of their coups was to acquire the ground on which the 2 million ounce Thunderbox gold discovery was later made.
No one knew for sure what was there, but Dalrymple Resources wanted the land.
The tenement was released by the Department of Minerals and Energy at 8.30am on February 1, 1994. Twenty-one seconds later Mining Titles, the McMahon parents' company, lodged the application for E36/256.
Mining Titles, aware that the release was pending, was monitoring the Leonora office of the department where the release was to occur. The senior McMahons also pegged the Yeelirrie resource for former WMC Resources. It is one of the larger unmined uranium deposits in Australia.
It's usually carelessness that leads to the loss of titles.
Forty years ago, a geologist who knew that the paperwork at the then North Broken Hill was sloppy was waiting for a licence to expire on one of that company's tenements at Silver City. He pegged it at midnight on the day of expiry and was waiting the next morning when NBH geologists came to tap in their renewal pegs. Barrier Exploration was floated on the coup.
Legendary mining figure Ron Manners recalls when he and business partner John Elkington were pegging in the Forrestania region during the 1970s nickel boom. This area is now the home of the Emily Ann, Maggie Hays and Flying Fox nickel mines.
In those days you had to put in pegs, then attach mining application papers covered in plastic to state your claim.
Just to their south, geologists for Belgium's Union Miniere were also pegging land. But that crew knocked off at 5.30pm without attaching the papers to the pegs. That evening, Manners and Elkington put their paperwork on the Belgian's pegs - and the prospect was theirs.
"We thought it was Christmas," Manners recalled yesterday.
Another Perth-based tenement manager, Shane Nicholson of Mineral Tenement Services, said he learned his lesson 10 years ago when a courier lost a renewal application.
That case, and Rio's more recent predicament, taught him to track every application and make sure it arrived at the mining office.
"If it doesn't arrive on time, the title dies."
And Mr Nicholson's view on Nathan McMahon's chances of fighting off Rio at Shovelanna?
"I think he's got them done like a dinner."