The structuring and approval of a mining project in Brazil demand adherence to technical and economic-financial requirements established by the National Mining Agency (ANM). Among these, the preparation and submission of the Economic Exploitation Plan (PAE) and the proof of funds availability are key elements that attest to the viability and execution capacity of the mining venture.
The Economic Exploitation Plan (PAE) is the technical document that details how a mineral deposit will be mined. It describes the exploration operations, aiming for the optimal utilization of the mineral asset in a technically and economically sound manner. The PAE is an integral component when applying for a mining concession. The process begins with filling out an electronic pre-application form available on the ANM’s website, which must then be filed with the ANM’s Digital Protocol System within 30 days of its completion, ensuring the formalization and processing of the request. Any adjustments to the PAE, whether to include a new mineral substance or other modifications, require the appropriate Authorization of Technical Responsibility (ART) from the qualified professional assuming responsibility for the changes.
A well-prepared plan, however, requires resources for its execution. This is where Proof of Funds, or funds availability, comes into play. This involves demonstrating that the mineral rights holder possesses or will secure the necessary financing to implement the PAE and operate the mine. This requirement reflects the ANM’s concern with ensuring that only projects with financial sustainability move forward, preventing the stagnation of ventures due to a lack of capital.
The need to prove this financial capacity is specifically requested in various distinct situations that demand attention:
- Total assignment of mining rights: When fully transferring mining rights, the proof of financial resources is one of the requirements for the validation of the assignment.
- Total or partial lease of a mining concession or mine manifest: For a lessee to take over mining operations, they must demonstrate that they possess the necessary funds to execute the plan and operate the mine in their own name.
- Transfer of mining rights due to corporate mergers or spin-offs: If the ownership of a mining concession changes as a result of a corporate merger or spin-off, the new beneficiary company needs to demonstrate its financial capacity or a financing commitment for the project.
- Transfer of mining rights through enforcement of collateral: In cases where a mining right is transferred as a result of the enforcement of a guarantee, the acquirer is obligated to prove they have the funds to continue the execution of the PAE and the operation of the mine.
- Public tender notices for the assignment of use rights: When participating in tenders to obtain the right to use mineral tenements, proponents must present technical-operational, economic-financial, and legal credentials. This explicitly includes proving their financial capacity to implement, operate, and eventually decommission the facilities.
These requirements help minimize the risk of projects failing to materialize or being abandoned due to financial constraints. Attention to these regulatory details is indispensable for achieving success in Brazilian mining.
📷 Canva/Edition by ÍGNEABR
