Guide to expenditure conditions

If you are the holder of an exploration licence you must carry out the work program, and meet the expenditure conditions, detailed in the conditions on the licence.

For the first two years you must follow the program and expenditure outlined in your original application for a licence.

After this period, you must nominate a realistic work program for each year the licence remains current.

Vary the expenditure condition

If you do not spend the required amount, you can apply to vary the expenditure condition. This application is called a variation of condition (VOC).

An application for a VOC must be made at the same time you lodge the expenditure report the under spend relates to.

Get the variation of condition application forms.

Instead of waiting until the end of a reporting period, you can apply to vary the expenditure condition if you have a valid reason for not meeting the condition.  

You must pay a fee when you apply for either variation. Read about rents, fees and other costs.

Area reductions

You must surrender half the blocks in an exploration licence area every two years during the initial licence term. You can apply to defer, waive, or reduce this reduction requirement.

However, if you do not meet the expenditure condition in the same year the department may refuse to consider this application.

Get the vary reduction requirement application form.

Partial cancellation of blocks

Your licence can be partly cancelled if you do not meet the expenditure condition two years in a row. 

This is known as a loss of block penalty and the department will issue a partial cancellation notice if it imposes this penalty.

If you receive a notice you can either nominate specific blocks to be cancelled or make a case to the department to waive or reduce the loss of block penalty. It costs nothing to make a submission and the department will notify you in writing of its decision.

How cancellation is calculated

A formula will be used to assess how many blocks will be cancelled as a result of an underspend over two successive years. The calculation will be based on all of the following figures:

  • how much was proposed to be spent for the two years
  • how much was to be spent on each block in the second year - proposed expenditure divided by the number of blocks held
  • actual amount spent in the two years
  • difference between proposed and actual expenditure - underspend.

The number of blocks to be cancelled is equal to half the underspend divided by the amount to be spent per block.

Example

Total proposed two-year spend
Number of blocks held
Amount to be spent per block 

$145,000
 ÷      125
  =   $1,160

Total proposed two-year spend
 Actual spend
Underspend

$145,000
-  $  72,100
=  $ 72,900

Total underspend
Amount to be spent per block
 No. of blocks to be cancelled

$72,900
 ÷  $ 1160
 =  31.42 blocks

Cancellation of licence

Your licence can be cancelled in full if you do not meet meet your expenditure conditions or don't apply for a variation.

Expenditure project area 

If you are planning substantial expenditure you can apply to the department to combine two or more titles into an expenditure project area.

Read more about expenditure project areas.

Print all pages in this section

Last updated: 13 October 2017