Acquiring a mining site and securing an exploration license are crucial first steps in establishing a successful mining operation in Nigeria.
This process involves regulatory compliance, site assessments, and adherence to national mining laws. Below is a detailed guide on how to acquire a mining site and apply for an exploration license.
What is an Exploration License?
An exploration license grants the holder the right to explore specific areas for mineral deposits. It provides exclusive rights to survey the land and collect samples for analysis to determine the potential for commercial mining.
Why is an Exploration License Important?
Obtaining this license is crucial as it secures exclusive access to a potential mining site. Without the license, all exploration activities would be illegal, leading to penalties and possible loss of rights to the land.
Step-by-Step Approach for Acquiring a Mining Site in Nigeria
1. Visit the Site by a Professional Geologist for Coordinate Capturing
- Description: Engage a licensed geologist to capture the site’s GPS coordinates. This marks the boundary of the area you intend to explore.
- Why it is Important: It prevents legal disputes over land boundaries and ensures accurate demarcation for exploration.
- Cost: ₦200,000 – ₦500,000 (depending on location)
2. Inspection of the Site to Obtain Samples
- Description: The geologist inspects the site and collects mineral samples. These samples may include soil, rock, and mineral fragments.
- Why it is Important: Sampling is essential to assess the viability of the minerals in the area.
- Cost: ₦100,000 – ₦300,000
3. Analysis of Samples from the Site
- Description: After the site inspection, the samples are sent to a laboratory for detailed mineral analysis. This helps in determining the economic potential of the mineral deposits.
- Why it is Important: This process is critical to avoid investing in non-viable mineral deposits.
- Cost: ₦150,000 – ₦500,000
4. Conduct a Search with the Coordinates to Confirm Site Availability
- Description: Using the site coordinates, a search is conducted at the Mining Cadastre Office (MCO) to verify if the land is free or already claimed.
- Why it is Important: Ensures that the site is legally available for mining activities.
- Cost: ₦50,000 – ₦100,000
| Step | Description | Cost Range (₦) |
|---|---|---|
| Coordinate Capturing | Professional geologist conducts capturing | ₦200,000 – ₦500,000 |
| Site Inspection | Mineral sampling from the site | ₦100,000 – ₦300,000 |
| Sample Analysis | Lab tests for mineral viability | ₦150,000 – ₦500,000 |
| Coordinate Search | Check with the Mining Cadastre Office | ₦50,000 – ₦100,000 |
Total Estimated Cost: ₦500,000 – ₦1,400,000
Requirements for Exploration License Application in Nigeria
Once the site acquisition process is complete, you can apply for an exploration license. Here are the mandatory requirements and procedures:
1. Confirmation of Coordinates with the Cadastral Office
- Description: The Cadastral Office will confirm that the coordinates correspond to an available area for exploration.
- Cost: ₦30,000 – ₦50,000
2. Copy of Certificate of Incorporation from the Corporate Affairs Commission (CAC)
- Description: Proof that the company applying for the exploration license is registered.
- Cost: ₦10,000 (for certified true copies)
3. Form CAC 2 and CAC 7
- Description: These forms show the details of the company’s directors and shareholders.
- Cost: ₦5,000 – ₦10,000
4. Memorandum and Articles of Association
- Description: The company’s objectives, as stated in the memorandum, must include mining-related activities.
- Cost: ₦20,000 – ₦50,000
5. Reference Letter from the Bank
- Description: A reference letter from the company’s bank, confirming financial capability to engage in exploration.
- Cost: Free (usually issued by the bank)
6. Six-Month Bank Statement
- Description: A six-month bank statement demonstrating financial capacity.
- Cost: Free (obtained from the bank)
7. Two Letter-Headed Papers for Appointing a Mining Engineer/Geologist
- Description: The company must submit official letterheads to issue appointment letters to the mining engineer and geologist.
- Cost: Varies (based on printing costs)
8. Consent Letter from the Landowner
- Description: A written consent from the landowner granting the company rights to explore minerals on the land.
- Cost: Negotiable with the landowner
9. Tax Clearance Certificate
- Description: A valid tax clearance certificate showing that the company is tax compliant.
- Why it is Important: Ensures the company has fulfilled its tax obligations. The cost of obtaining the certificate is determined by the company’s financial standing, based on the six-month bank statement, which the Federal Inland Revenue Service (FIRS) will review.
- Cost: Dependent on tax liabilities determined by the bank statement
10. Preparation of a Pre-Feasibility Report
- Description: A report that outlines the technical and financial viability of the project.
- Cost: ₦500,000 – ₦1,000,000 (consultant fees)
11. Logistics for Site Visits
- Description: Adequate transportation, accommodation, and communication facilities must be arranged for engineers, geologists, and other personnel involved.
- Cost: ₦300,000 – ₦700,000
Table of Requirements and Costs for Exploration License Application
| Requirement | Description | Cost (₦) |
|---|---|---|
| Coordinate Confirmation | Verification with Cadastral Office | ₦30,000 – ₦50,000 |
| CAC Certificate | Certified true copy of incorporation | ₦10,000 |
| CAC 2 & 7 Forms | Certified copies of directors/shareholders | ₦5,000 – ₦10,000 |
| Memorandum & Articles of Association | Certified copies of company objectives | ₦20,000 – ₦50,000 |
| Bank Reference Letter | Financial capability assurance | Free |
| Six-Month Bank Statement | Proof of financial stability | Free |
| Letter-Headed Papers | For appointment of professionals | Varies |
| Consent Letter | From landowner | Negotiable |
| Tax Clearance | Based on company’s tax liabilities | Varies |
| Pre-Feasibility Report | Outlines project scope/viability | ₦500,000 – ₦1,000,000 |
| Logistics | Transportation, accommodation, communication | ₦300,000 – ₦700,000 |
Total Estimated Cost: ₦935,000 – ₦2,310,000
