Exploration Contracts & Options

Previous to a mining company being willing to put out a significant amount of funds on a property, it will need enough time to study the prospect thoroughly and set up the engineering and geology reports. The focus of the company might have to do with looking into the wide outlines of the deal or to go into an exploration concurrence on a shorter term basis. This type of deal will most likely have an option to then go onto a more formal lease or buying agreement by a specific time limit. It is very common for exploration leases and buying agreements to be utilized in the mining industry. In most cases a lease is drawn up along with an option that provides the company with the right to purchase at a specific amount and at established terms. The company then makes an agreement to carry out a specific amount of work while the lease is running, and it will in most cases be ready to provide the owner with copies of the results that have been achieved. In most cases it will be to the benefit of the owner to provide the company with enough time to do a thorough exploration job. Nonetheless, provisions for some work to be done inside of a specific amount of time need to be included in, even though provisions for extensions of time are not common. It is not common for a company to make a cash payment at the beginning of an exploration lease, even though there are some exceptions such as in cases when a sellers’ market is open as well as when the owner has taken on a lot of debts and liabilities in the exploration of the property or in getting the property tied up.