Mining NCNDA: Protecting a Mine Introduction

The Structural Problem With Disclosing a Mine

A mining introduction has an inherent asymmetry. Your value as an introducer rests entirely on information the recipient needs — the identity and location of the asset, and who controls it. The moment you disclose it, you have handed over the only thing you were being paid for. Nothing except a contract prevents the recipient contacting the owner directly the following week.

Why generic NDAs fail here

A standard confidentiality agreement restrains disclosure to third parties. It rarely restrains the recipient from using the information themselves. A recipient who never tells anyone else, and simply negotiates directly with the tenement holder, may not have breached a plain NDA at all. The restriction you need is on acquisition, not merely on disclosure.

What a mining NCNDA adds

A mining NCNDA establishes one operative rule: having learned of the asset from you, the recipient may pursue any interest in it only through you. Everything else in the document exists to make that rule survive the ways people get around it.

Defining the Asset Widely Enough to Matter

The narrowest useful definition names the tenement. That definition is also the easiest to defeat, because mineral rights are fluid: licences are renewed under new numbers, converted from exploration to mining titles, or surrendered and re-applied for over the same ground.

What the asset definition should capture

• The named tenements, licences or applications, and any coded project name used in negotiations.
• Renewals, extensions, conversions and successor titles over substantially the same ground.
• Adjoining or overlapping tenements held or applied for by the owner or its affiliates.
• Any mineral right anywhere identified or applied for using information you disclosed — this closes the route where a recipient uses your geological data to stake adjacent ground themselves.
• Any entity that holds or controls the asset, so a share purchase is caught as well as an asset purchase.

Define "interest" broadly too

Acquisition is not the only way to take economic value. A workable definition covers purchase, option, lease, farm-in, earn-in, joint venture, merger, royalty, streaming, offtake, financing and security interests — direct or indirect. It should also catch a purchase of securities in a parent or holding entity where the purpose or effect is to obtain an interest in the asset, with the fee applied only to the value fairly attributable to it.

Connected Persons: Closing the SPV Route

If the agreement binds only the recipient company, it binds almost nobody. The predictable response to a well-drafted restraint is to place the acquisition somewhere the restraint does not reach.

Make the recipient liable for the group

State expressly that the recipient is liable for the acts of connected persons as for its own, and require it to keep a register of everyone to whom the information is disclosed, producible on demand. That register is what turns a suspicion into evidence.

The Attribution Clause: Where Disputes Are Actually Won

Assume the recipient acquires the mine. You will be told one of two things: that they already knew about it, or that it came from another broker. Without an attribution clause you carry the burden of disproving both, using information only they hold.

How to shift the evidential position

• Presumption: any interest acquired during the term or tail is presumed to result from your introduction.
• Narrow rebuttal: displaced only by contemporaneous written records dated before your first disclosure, evidencing knowledge of the specific opportunity from a lawful independent source.
• Prior-knowledge schedule: at signature the recipient declares any existing knowledge. An undeclared claim raised later contradicts their own signed document.
• Broker-chain exclusion: receiving the same asset through another chain is not an independent source unless the transaction was in fact concluded exclusively through that channel under a prior written agreement.
• Post-tail window: an interest acquired shortly after the tail expires remains presumed yours if contact or diligence occurred during the term.

Avoid drafting the presumption as conclusive and irrebuttable. Clauses that purport to remove a party's ability to prove the facts are the ones tribunals strike out, taking your protection with them. A strong but rebuttable presumption is more durable than an absolute one.

Penalties That Deter Without Being Struck Out

A remedy has to be severe enough to change behaviour and proportionate enough to be enforced. Those pull in opposite directions, which is why penalty clauses are the most commonly voided part of an NCNDA.

The three structures

Making a share-transfer remedy hold

Where the penalty is that the breaching party gives up a share of the mine, record that the share represents the interest the discloser would have held as consideration for the introduction — a bargained-for allocation rather than a punishment. Add three protections: the recipient holds the share for your benefit pending transfer and cannot encumber it; if transfer is legally impossible or delayed beyond a stated period, the monetary equivalent of fair market value becomes payable; and the obligation operates subject to any ministerial consent or registration the mining legislation requires.

Do not stack remedies carelessly

Liquidated damages plus an account of profits plus a constructive trust, all cumulative for the same breach, invites the argument that the true purpose is punishment. Make the remedies elective or credited against each other, and include a severability clause so that an over-broad restriction is read down rather than voided entirely.

Governing Law, Arbitration and Cross-Border Reality

Remedy language that works in one legal system can be meaningless in another. Trust concepts and adequacy-of-damages stipulations are common-law devices; a court in France, Germany or Switzerland will not apply them as drafted.

Adapt the remedy to the system

• Common law (England and Wales, Singapore, Hong Kong, DIFC, New York, Australia): constructive trust and injunctive relief language operates as intended.
• Civil law (France, Germany, Netherlands, Switzerland): use transfer obligations and account-of-profits formulations, and acknowledge the court's power to adjust agreed damages.
• Australian states: mining law is state-based, so choose the law of the state where the tenements sit and expect ministerial consent to condition any transfer remedy.

Match the forum to the asset

Seat the arbitration consistently with the governing law, and choose an institution that handles resources disputes — ICC, LCIA, SIAC, ACICA or HKIAC. Trade-association tribunals designed for grain and oils cargoes are the wrong forum for a mining asset. Always include a carve-out allowing urgent injunctive relief before a competent court, because by the time an arbitral tribunal is constituted the asset may already have moved.

Practical Sequence: Sign Before You Disclose

The most common failure is procedural, not legal. Information gets sent during the enthusiasm of first contact, and the agreement is signed afterwards.

A workable order of operations

• Disclose only a coded, non-identifying teaser: commodity, general region, stage, scale.
• Verify the recipient before you go further — entity, beneficial ownership and sanctions status.
• Execute the NCNDA, with the prior-knowledge schedule completed.
• Only then release identity, location, tenement numbers and technical data, tracked so you can prove what went to whom and when.
• Keep the register of disclosures current — it is the evidence base for any attribution claim.

Where information was already shared before signature, say so in the agreement: a clause confirming that pre-contract disclosures made in contemplation of the agreement are covered removes an obvious defence. For the commercial terms that follow, see our guide to mining joint venture structures, and for the underlying asset checks, tenement due diligence.

Frequently Asked Questions

What is the difference between an NCNDA and an NDA?

An NDA restricts disclosure of information. An NCNDA does that and adds non-circumvention: the recipient cannot bypass the discloser to deal directly with the party or asset that was introduced. In a mining introduction the confidentiality limb protects the data; the non-circumvention limb protects your economic position. An NDA alone leaves you with no remedy when the recipient simply approaches the owner directly.

How long should a mining NCNDA last?

Two to three years for the term, with a non-circumvention tail of a further one to two years after expiry, is common and defensible. Confidentiality over technical data should run longer — for as long as the information remains confidential in character. Indefinite non-circumvention is more likely to be read down as an unreasonable restraint, so a stated term with a defined tail is usually stronger in practice than an unlimited one.

Can the recipient buy the mine through a different company?

Only if your drafting allows it. This is the most common evasion route: the recipient forms a special-purpose vehicle, uses an affiliate, joins a consortium, or has a director acquire personally. A properly drafted connected-persons definition captures affiliates, nominees, entities formed or advised by the recipient's officers, and any person receiving the information from them, with the recipient liable for their acts as for its own.

What penalty can a mining NCNDA impose for circumvention?

Three structures are used: monetary liquidated damages, transfer of a share of the acquired interest to the discloser, or both. A transfer remedy has more deterrent force. To survive challenge it should be framed as the bargained-for share the discloser would have received for the introduction rather than as a punishment, with a cash-equivalent fallback where transfer is legally impossible and, for tenements, express recognition that ministerial consent may be required.

Is an NCNDA enforceable if the recipient already knew about the mine?

Prior knowledge is the standard defence, which is why an attribution clause matters. A well-drafted agreement presumes that any interest acquired during the term or tail resulted from your introduction, rebuttable only by contemporaneous written records dated before your disclosure. Requiring the recipient to declare prior knowledge in a schedule at signature converts a later assertion into a documented contradiction.