Expenditure condition

If you're a 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 2 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 don't spend the required amount, you can apply to vary the expenditure condition.

This application is called a variation of condition (VOC).

You must submit an application for a VOC at the same time you submit the expenditure report the underspend relates to.

Get the variation of condition application.

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 2 years during the initial licence term.

You can apply to defer, waive, or reduce this reduction requirement.

However, if you don't meet the expenditure condition in the same year, the department may refuse to consider this application.

Get the vary reduction requirement application.

Partial cancellation of blocks

Your licence can be partly cancelled if you don't meet the expenditure condition 2 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 2 successive years.

The calculation will be based on all of the following figures:

how much was proposed to be spent for the 2 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 2 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 2-year spend Number of blocks held Amount to be spent per block	$145,000 ÷ 125 = $1,160
Total proposed 2-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