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Area of Interest Provisions in Mining Agreements

Willa F. Harasym, Mining Agreements III

There can be no “standard form” area of interest provisions for use in all circumstances. The writer submits that the differing facts, issues and intentions of the parties which form the basis of any mining agreement weigh heavily against a draftsperson relying on area of interest provisions used in a previous transaction without detailed critical review and amendment.

It is the writer's experience that those individuals who are responsible for negotiating the business terms of a transaction are generally not familiar with the many issues and implications of area of interest provisions. A draftsperson should guide the parties to address the pertinent issues and to flesh out their intentions.

While area of interest provisions are commonly found in mining agreements, judging from the dearth of reported cases which refer to mining area of interest issues, those provisions have not been a frequent subject of litigation. Their common use in oil and gas agreements has on the other hand provided for the development of a significant body of case law. This paucity of mining case law is perhaps due to the infrequency of discovery of and nature of economic ore bodies relative to the frequency of discovery of and nature of oil and gas wells. There are however, many issues and legal principles which are common to area of interest provisions — whether contained in mining or