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Shovelanna spells uncertainty: Cazaly letter to Dryblower


Thursday, April 27, 2006

DEAR Mr Blower, Your articles often make for interesting reading and they certainly do provide for a different take on what often are seen to be straight forward issues. It is often hard to take issue with a crusty old type (and I mean that good naturedly Dry) who’s been around the mining industry far longer than my paltry 20 plus years.



I am compelled however to take issue with your article “Cazaly claim catastrophe” from Monday April 24th with respect to the termination of our legal application for the Shovelanna licence.

Specifically I would like to discuss what you claim to be the “exchange of money” whereby Rio had prepaid rent to the government and, I quote “there is something extremely important about someone handing over a cheque for an asset – and something even more important about the other side accepting the cash. And that's what the WA Government did”.

Any sympathy for this line should be dismissed, it is a furphy. Why?

1. Partial compliance is NOT full compliance.
The Act is very clear on what is required in this instance. To accept just a cheque as full compliance re-writes the Mining Act. There are clearly numerous other situations both in government and in life generally where being late with paperwork is just plain tough luck.

2. The government ALSO accepted Cazaly’s cheque.
Yes, comprising pre-paid rent plus an application fee. According to your argument this should then ensure that Cazaly be granted the tenement - no other documents are required.

The government has seen it fit to grant a large number of licences to Cazaly through time. In fact we have had 16 licences granted since the Shovelanna application went in. It would appear that Cazaly is seen by the government to be a fit and capable company to explore and develop the States resources
which may potentially exist in these areas but not so for Shovelanna – how so?.

There is a simple equation upon which the State has used to grant licences in Western Australia as follows:

Rental payment + Application Fee + Technical Ability + Financial Capability + 1st application in = GRANTED Licence.

This basic equation has been good enough to serve the people of Western Australia for over 100 years. The Minister's recent decision has effectively re-written this to:

Rental payment + Application Fee + Technical Ability + Financial Capability + 1st application in + “Public Interest” = ? ? ? ?
(For this equation to read correctly please place the “Public Interest” factor in a very grey box)

This is the issue facing the WA mining industry, and this is why there should be very grave concerns about this decision. The Minister has allowed a very clear simple principle to be replaced by a very uncertain factor and one which can lead to all sorts of potentially unclear decisions. The industry can no longer be confident that the provisions of the Mining Act can be applied without political interference.

Regards,

Clive Jones
Joint Managing Director
Cazaly Resources Limited