There is a particular excitement around a promising mining claim. It may be quiet today, covered by grass and old workings, but in the owner’s mind it represents a better house, school fees, a new vehicle, a family legacy and to some even a new marriage.
The difficulty is that excitement does not always come with money. One person may hold a registered mining location without an excavator, pump, mill, fuel or working capital. Another may have all those things, but no claim on which to use them. That is how many relationships begin; one brings the ground, another the machinery, and both believe the arrangement is too obvious to require a document. In my experience, this relationship has all the markings of success, except that it often is a recipe for disaster, if not handled well from the outset.
I recently encountered a sanitised version of such a situation. The owner of a gold claim in the lucrative area of Concession had been unable to operate for several months. An experienced operator approached him with equipment, workers and a promise to start production quickly. Over a plate of sadza and grilled chicken, they agreed that the operator would work the claim and the owner would receive an agreed share of the gold.
The first few weeks were peaceful, as any relationship tends to be. The operator brought machinery, and the owner proudly showed visitors around. Everyone called it “our project”. Then production improved. “Our project” became “my operation” when the operator spoke, and “my claim” when the owner spoke. The dispute was caused by the absence of an agreement explaining what each person had received.
This is where a Tribute Agreement becomes important.
What is a Tribute Agreement?
I have heard the term ‘Tribute Agreement’ being thrown around quite a lot. In simple terms, a Tribute Agreement is an arrangement under which the holder of a registered mining location gives another person the right to work or mine that location or a defined part of it, in accordance with agreed conditions.
The tribute holder may provide the money, equipment, labour, technical skills or management required to conduct mining operations. In return, the registered holder may receive a royalty, a percentage of production, a fixed payment or another agreed benefit.
The important point is this, a Tribute Agreement normally grants a right to mine; it does not automatically transfer ownership of the mining claim.
The claim remains registered in the name of its holder unless there is a separate lawful transfer. The tribute holder receives only the rights described in the agreement. Those rights may be broad or narrow. They may cover the whole registered location or only a particular block, shaft, mineral or period.
The statutory language in Zimbabwe generally refers to a Tribute Agreement, although the expression “tributary agreement” is sometimes used informally. For legal and administrative purposes, miners should use the correct term and ensure that the agreement complies with the Mines and Minerals Act [Chapter 21:05].
Why do Tribute Agreements matter in ASM?
Tribute Agreements can solve a common Artisanal and Small Scale [ASM] problem, the separation between ownership of a mining right and the ability to work it. A claim owner may lack capital, while an equipment owner or mining syndicate has machinery, labour and practical knowledge but no registered location. The arrangement can create income from an idle asset and lawful access to ground that would otherwise be unavailable. The benefits only, however, materialise when the arrangement is clear. Mining is not like lending a wheelbarrow to a neighbour. It involves valuable rights, dangerous operations, government obligations, workers, machinery and minerals that can disappear quickly once extracted.
When is a Tribute Agreement appropriate?
A Tribute Agreement may be suitable where the registered holder wants another person to conduct mining operations without transferring ownership of the claim.
For example, as has been discussed above, the owner may have no capital for fuel and machinery, while the proposed operator funds the operation and pays a percentage of production. An equipment owner may provide machinery for a production-based return, or a company may support small-scale miners with equipment and working capital in return for defined production or supply rights.
The agreement can be limited to a particular portion of a claim. This is especially important where the owner intends to retain some workings for personal use or wants to give different operators rights over separate areas.
It may also suit an investor who wants access to production but does not wish to buy the mining title. The document must say precisely what has been granted. “You can work the mine” is not enough. Does it mean the whole claim, one shaft, a particular mineral, surface mining only, or processing as well as extraction? Ambiguity is where future disputes begin.
When is it not a Tribute Agreement?
Not every mining relationship should be forced into a Tribute Agreement.
If the parties intend to transfer ownership of the mining location, they need a sale or transfer arrangement. If they intend to establish a company, contribute assets, share management and jointly own the business, a joint venture or shareholders’ agreement may be more suitable.
If one party is advancing money to be repaid, the transaction may be a loan. If equipment is made available for a fee, it may be an equipment lease. If the parties operate a continuing business and share profits and liabilities, a partnership may arise, whether or not they use that word.
This distinction is important because labels can mislead. Calling a transaction “sponsorship” does not tell us whether it is a loan, investment, tribute, partnership or joint venture. The real question is: what rights were given, what obligations were assumed and what did the parties intend to happen to the money, equipment, minerals and risk?
An investor who believes he bought an interest in a mine may discover that he received only a temporary right to mine. An owner who believes he merely allowed someone to operate may discover that the operator claims a continuing commercial interest. The document must tell the truth.
What should the agreement cover?
A properly drafted Tribute Agreement should begin by identifying the parties and confirming the authority of the person granting the right. The mining location should be described by its registered name, registration details, mineral, area and the precise portion covered.
The agreement should state its duration, renewal procedure and termination events. It should explain what activities are permitted, including excavation, processing, stockpiling, transportation, drilling, blasting and sale or delivery of minerals.
The parties must be clear about money and production. How will output be measured and who will weigh it? Will the owner receive a percentage of gross production or of the balance after specified costs? Which costs may be deducted, when is payment due, and who keeps the production and sale records?
Equipment requires special attention. Who owns the machinery brought onto the claim? Who pays for fuel, repairs, insurance and security? May the operator remove it at the end? What happens if the equipment is permanently attached to the workings? These questions are far easier to answer before the equipment arrives than after the relationship has broken down.
The agreement should allocate responsibility for employees, safety, environmental compliance, taxes, royalties, licences, statutory returns and mineral marketing. A private agreement cannot excuse the parties from legal obligations. The parties may allocate responsibility between themselves, but regulators may still look to the relevant holder or operator where obligations are breached.
Finally, there should be inspection and audit rights, rules against unauthorised subcontracting, clear default provisions and a dispute-resolution mechanism. It should say what happens if one party fails to pay, stops working, conceals production, damages the environment or brings strangers onto the claim.
Why registration is not optional
Signing a document is not the end of the process. Under the Mines and Minerals Act [Chapter 21:05], tribute arrangements are subject to statutory requirements dealing with submission, approval, registration and records. The Act also provides consequences for acting under an unapproved agreement.
The practical process should begin with due diligence. The parties should confirm that the mining location is registered, that the grantor has authority to act, and that there are no existing tributes, options, hypothecations, disputes, forfeiture risks or other restrictions affecting the claim.
The agreement should then be reduced to writing and properly executed. It should be submitted to the appropriate mining authorities with the required documents and prescribed fees. Depending on the arrangement, it may require consideration or approval through the relevant mining administration structures. The parties should retain proof of submission, approval and registration.
Registration is not a decorative stamp. It creates an official record of what rights were granted, to whom, for what period and on what terms. It can become important if the claim is later transferred, another person asserts competing rights, or one party denies the agreement.
No miner should assume that an agreement is safe merely because both parties signed it in the presence of witnesses. A private document may still be incomplete from a statutory perspective. Before operations begin, the parties should obtain advice on the approval and registration requirements applicable to their specific arrangement.
The agreement protects the relationship
Many miners worry that requesting a formal agreement will offend the other party. They say, “We know each other,” or, “We are family,” or, “Let us start first and do the paperwork when production improves.” Unfortunately, production is often when trust becomes most expensive.
A written and registered Tribute Agreement is not an accusation of dishonesty. It is a recognition that honest people can remember conversations differently, especially when gold, machinery and unpaid expenses enter the discussion.
The legal right to work another person’s mine can create opportunity for both parties, but it must be defined, documented, approved and registered. The owner must know what is given away and the tribute holder what is received. Both must understand who carries the risks and how the relationship ends.
The first gold may take months to appear. The first disagreement can appear in a single afternoon. A properly structured Tribute Agreement ensures that when the gold finally comes out of the ground, the parties are not fighting over what they agreed before the work began.
Namatirai Ruzvidzo is a registered Legal Practitioner, Conveyancer, and Notary Public. She possesses over 15 years of experience specialising in Commercial law, Mining law and Property law. She practices in Avondale, Harare, under the Law Firm Ruzvidzo Legal Counsel. She can be reached on +263 784 228 534 or by email [email protected], copying [email protected]
