Missed connections: WA Supreme Court provides guidance on Reg 31(1) Expenditure Test

In Wingstar Investments Pty Ltd v The Honourable Genevieve M Cleary in her capacity as Mining Warden [2025] WASC 477, the WA Supreme Court has provided guidance on what constitutes expenditure “in connection with mining” in the context of future proposed mining operations.

Background

The case concerned a review of a Warden’s recommendation that ten mining leases be forfeited for failure to comply with the relevant expenditure conditions in expenditure years ending between December 2017 and March 2018. 

At issue was whether expenditure on a heap leach dry plant was expenditure ‘on or in connection with mining’ on those mining leases for the purposes of the prescribed expenditure condition in regulation 31(1) of the Mining Regulations 1981 (WA), where no current mining was taking place. 

The tenement holder argued that, at first instance, the Warden construed regulation 31(1) as requiring, in circumstances where there is only proposed mining operations, ‘an assessment of the reasonableness of such plans and the likelihood of their ever being carried out’. The applicant for forfeiture argued that the Warden had not included those conditions in the construction of reg 31(1), but instead made factual findings that the tenement holder ‘did not have any real intention or plan to mine on the tenements’ and that the relevant expenditure therefore was not “on or in connection with mining” on the tenements.

The Warden found, on the evidence, that ‘Mr Gardner and Wingstar may have had ‘a hope, but no real intention or plans to mine”. The Warden found that the heap leach dry plant was not operational or close to being operational and ‘there was not any real hope or intention of using the heap leach dry plant during or even close to the relevant tenement year, or perhaps at all’. The Warden ultimately found the expenditure on the heap leach dry plant was not on or in connection with mining on the tenements. 

The decision

The Supreme Court quashed the decision, finding that the Warden has misconstrued regulation 31(1). The Court found that, where there was no current mining on the tenement, regulation 31(1) did not impose conditions that the plans for mining were reasonable or likely to be carried out. In construing regulation 31(1) as imposing those conditions, the Warden had fallen into error.

The Court illustrated the point by reference to pre-feasibility studies, which are commonly claimed as expenditure “in connection with mining” notwithstanding there may be no intention to mine at the time of those studies.

As the expenditure on the dry heap leach plant was sufficient that the expenditure requirements could have been met had it been included, the error was material to the Warden’s decision and thus the Warden’s decision was quashed.

Consequently, the decision was quashed and sent back to the Warden to be determined applying the correct construction of regulation 31(1) found by the Supreme Court. 

Takeaways

The case provides helpful guidance on the breadth of the test to be applied when determining what expenditure can be claimed in respect of future or proposed mining. Expenditure incurred prior to a definitive decision to mine may still be considered “in connection with mining” under reg 31(1). It is another reminder that a long road of litigation can ensue if expenditure commitments are not clearly met, reinforcing the importance of complying with those conditions.