Mining State Participation Regulations 2022

The recently enacted Mining (State Participation) Regulations 2022 revoked the Mining (State Participation) Regulations 2020 as of 23 September 2022 and, in brief, include the following provisions:

1. Government participation in mining activities through direct equity interests in any mining venture (see Regulation 6(1)).
2. Any entity holding a Mining License or Special Mining Licence shall by 22 December 2022 (being within 90 days from the date of publication of the Regulations) give notice to the Mining Commission to initiate negotiations for JV Agreement to enable the Government acquire shareholding in the venture (see Regulation 6(2)). The JV Agreement shall be governed by a Framework Agreement in the form set out under the First Schedule of the Regulations.
3. Government shall have not less than 16% non dilutable free carried interest in the equity capital of any entity holding a Mining License or Special Mining Licence (see Regulation 7). The free carried interest shall be treated as preferred shares entitled to preferred dividend immediately a distributable profit is recognised by the company (see Regulation 9).
4. Shareholder Agreement substantially in the form set out in the Second Schedule shall provide for the management of the joint venture entity holding a Mining License or Special Mining Licence (see Regulation 12(1)).
5. Day to day running of the joint venture entity holding a Mining License or Special Mining Licence shall be governed by the [Memorandum and] Articles of Association substantially in the form set out in the Third Schedule (see Regulation 12(2)).
6. Articles of Association permit the Government to appoint 2 out of 5 directors (see Article 73), provide that the Government director must form part of the quorum of the board of directors (see Article 100).