PANAMA Law and Practice Contributed by: Roy C Durling, Arias, Fábrega & Fábrega
granted by means of contract-laws. In the case of mining, there are at least two examples of concessions granted pursuant to contract-laws: the Original Petaquilla Law and the Concession Contract between Vera Gold Corporation and the Ministry of Commerce and Industries, which was approved by means of Law 92 of 2013 (the concession corresponds to the Santa Rosa gold mine and adjoining deposits). The Cerro Colorado concession was originally granted by means of a special law, Law 41 of 1975, to a government-owned company called Corporación De Desarrollo Minero Cerro Colo - rado (CODEMIN). Law 41 of 1975 was repealed by means of Law 11 of 2012. It is important to note that the indirect holder of the Cerro Colo - rado concession was the Republic of Panama. Contract-laws provide for certain flexibility because, for example: • the terms of the concession can be tailor- made to the project; • investors may secure some tax relief; • special protections can be provided to lend - ers and financiers (for example, allowing lend - ers to step in in certain circumstances); and • there is greater certainty as to the enforce - ment of security arrangements. Recent decisions by our Supreme Court in the case of the Petaquilla concession (decisions ren - dered in 2017 and 2023) have cast doubts on the use of contract-laws for mining projects and, in
prospecting permits and processing and trans - portation concessions. Features of Concessions and Permits Exploration concessions grant their holders three key rights: • the right to engage in preliminary geological work (as would also be conferred by a pros - pecting permit); • the exclusive right to engage in all necessary exploration and related activities with respect to specific types of minerals within the zone constituting the concession; and • the exclusive right to be awarded an extrac - tion concession over the relevant area if min - erals in commercial quantities are discovered during exploration activities. Exploration concessions are available for initial periods of four years, subject to two discretion - ary extension periods of two years each. A holder of a valid exploration concession ben - efits from the exclusive right to apply for an extraction concession in the same area. The CMR also provides for the award of extraction concessions over minerals not currently subject to exploration activities. Extraction concessions are granted for: • an initial period of 25 years and a maximum area of 5,000 hectares for base metals; • an initial period of 20 years and a maximum area of 5,000 hectares for alluvial precious metals; and • an initial period of ten years and a maximum area of 3,000 hectares for non-alluvial pre - cious metals. Extraction concessions may be extended, at the discretion of the NDMR, for three periods, the
general, for other types of industries. 1.7 Mining: Security of Tenure
The CMR and related laws set forth two princi - pal types of mining concessions: the explora - tion concession and the extraction concession. In addition, the CMR provides for the granting of
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