The document that determines the value of an asset

Before requesting a mining concession, the holder of a mining right must submit the Final Exploration Report (FER) within the timeframe established by the exploration permit. Since ANM Resolution 94/2022, the content of the FER must be aligned with the Brazilian System for Mineral Resources and Reserves (SBRRM). Strict compliance with these requirements determines whether the right remains active or if automatic termination occurs. Consequently, the adequacy of the FER directly affects the economic viability and the negotiability of a mineral asset.

What the law requires in the Final Exploration Report#

The applicable regulation establishes that the FER must be submitted during the validity of the exploration permit, as per art. 25 of Decree 9.406/2018. The document must contain a detailed description of exploration works, the methodology employed, the results obtained, and a preliminary economic assessment. Furthermore, the ANM Resolution that establishes the new system for resources and reserves requires the explicit inclusion of the resource and reserve concepts defined in the SBRRM, as well as the presentation of an Economic Development Plan (PAE) when viability is confirmed.

The required minimum structure includes: (i) geological context of the area; (ii) sampling and assay data; (iii) resource modeling; (iv) economic reserve estimates; and (v) economic sensitivity analysis. Each item must be supported by auditable technical documents so that the regulatory authority can validate the consistency of the presented values.

What happens if the FER is not submitted on time#

Decree 9.406/2018 stipulates that the omission or late submission of the FER leads to the automatic termination of the mining title, without the need for additional procedures. Termination implies the loss of all exploration rights and the impossibility of resuming activity without obtaining a new permit. This mechanism aims to ensure the effective utilization of mineral resources and prevent the maintenance of latent titles.

In addition to termination, the absence of an FER can create subsequent restrictions for the holder, such as the inability to access credit lines linked to mining assets and exclusion from negotiation processes with international investors, who require complete documentation in compliance with current regulations. Late regularization, when possible, generally requires the reopening of the permit process, subject to a new merit analysis and the payment of additional fees.

The new obligation: SBRRM resource and reserve concepts in the FER#

ANM Resolution 94/2022 introduces the requirement that the FER present resources and reserves in accordance with SBRRM definitions. A resource refers to the amount of mineral that can be estimated with a certain degree of confidence, while a reserve corresponds to the portion of the resource that meets economic, technical, and legal viability criteria. This differentiation forces the holder to apply recognized statistical methodologies (e.g., kriging or block methods) and to justify the economic assumptions used.

In a hypothetical scenario, imagine a holder who submits an FER containing only resource estimates, without separating the economically viable portion. If the regulatory authority identifies the absence of a reserve, the FER may be rejected, preventing the progression to the PAE and, consequently, to the mining concession. The practical consequence would be the need to conduct new drilling campaigns and data reprocessing, resulting in months of delays and additional costs that could compromise the investment decision.

Practical application requires the report to detail, for each geological block, the resource classification (by confidence level) and the corresponding amount of reserve, clearly indicating the cutoff parameters (metal price, operating costs, recovery rate). When there are multiple mineralized zones, the document must present the sum of the reserves transparently, allowing for portfolio risk analysis by the investor.

Who can draft an FER: qualified professional#

The drafting of the FER is conditioned upon the participation of a qualified professional, as defined by the ANM. This requirement implies that the technical lead must hold a recognized Competent Person (CP) credential, with proven experience in exploration geology or mine engineering. Qualification ensures that the document meets quality standards and data integrity, reducing the risk of subsequent revisions.

The professional's responsibility includes reviewing sampling programs, validating laboratory analyses, and verifying the coherence between geological models and economic estimates. If the FER is challenged, the regulatory authority may request the replacement or supplementation of the technical work, which may delay the concession process. Thus, selecting the appropriate professional is a critical point for the legal and technical security of the asset.

How to read an FER before deciding on an asset#

The critical reading of an FER allows the investor to identify inconsistencies, evaluate the robustness of resources, and estimate development risk. The review process must follow structured stages to ensure that all relevant information is considered before a decision is made.

1. Verify compliance with the exploration permit validity period.
2. Confirm the presence of resource and reserve concepts according to the SBRRM.
3. Evaluate the quality of sampling data (density, representativeness, analytical method).
4. Analyze the modeling methodology (software, geostatistical parameters, sensitivity).
5. Review the economic assumptions of the PAE (market price, operating costs, recovery rate).
6. Check the signature and credential of the responsible qualified professional.
7. Identify any gaps or requests for supplementation made by the ANM.
8. Compare reserve estimates with sector benchmarks to validate the asset's competitiveness.

By following these steps, the investor gains a clear view of the FER's soundness, allowing them to calibrate their acquisition or financing strategy based on technical and regulatory evidence.

Synthesis#

The requirement to submit the Final Exploration Report within the established timeframe and with the SBRRM resource and reserve concepts incorporated defines the starting point for the continuity of a mining right. Non-compliance results in the automatic termination of the title, while drafting by a qualified professional ensures the validity of the document before the ANM. A careful reading of the FER, following a structured roadmap, allows the investor to measure the real value of the asset and the associated risks. Thus, the regulatory compliance of the FER becomes an essential element for economic viability and legal security in the negotiation of mining rights.

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