If at any time during the term of a CoW, the company believes the CoW area is unworkable, it may terminate the CoW. The procedures for terminating the CoW may be summarized as follows.
- Submit a written notice to terminate the contract, attaching a closure plan, related documents, maps, plans, worksheets and other technical data and information.
- Provided that the data and fulfilment of the company’s obligations are considered acceptable to the Minister of Mines and Energy, the Minister will issue confirmation within six months from the date that the company submitted the notice. Otherwise, the contract is automatically considered terminated, and the company shall be relieved of its obligations.
A general summary of the implications of termination of the CoW at the various stages of the contract is set out below. All sales, removals or disposals of property will be subject to the tax rules as set out in the CoW.
a. General Survey and Exploration Periods
- The company has a period of six months to sell or remove its property, otherwise the property becomes the property of the Government.
- The company is required to provide any information gained from the work it has performed to the Department of Mines and Energy.
b. Feasibility Study Period
- The company is required to offer all property located in the Contract Area to the Government at market value.
- The offer is valid for 30 days. If the Government accepts the offer, it is required to settle within 90 days.
- If the Government does not accept the offer, the company then has six months to sell or remove its property, otherwise the property reverts to the Government without any compensation to the company.
c. Construction Period
The conditions are identical to those for the Feasibility period except that, if the Government does not accept the offer, the company has 12 months to remove or sell its property.
d. Operating Period or Expiration of the CoW
Once again the requirements are similar to those outlined in the Feasibility Period, however the offer price to the Government is the lower of cost or market value. As for the Construction Period, the company has 12 months to sell or remove the property if the Government does not accept the offer.
At the termination of the CoW, any property that is used for public purposes such as roads, schools, hospitals and school and hospital equipment immediately becomes the property of the Government without any compensation to the company.