Due Diligence for Mining Investments in Uganda: What to Check

Mining investment in Uganda offers compelling opportunities. The country hosts significant deposits of gold, tin, tantalum, wolfram, rare earth elements, iron ore, limestone, and numerous other minerals across geological terrains that remain largely underexplored by modern standards. Government policy is increasingly favourable to responsible mining investment, and the regulatory framework — while still evolving — provides a structured pathway for project development.

Yet mining is inherently a high-risk, capital-intensive industry. For every successful mine, there are numerous projects that fail — not because the geology was wrong, but because critical risks were missed, misunderstood, or underestimated during the evaluation process. Due diligence is the systematic investigation and assessment that separates sound mining investments from costly mistakes.

This guide provides a comprehensive checklist for investors, mining companies, and their advisors conducting due diligence on mining projects in Uganda. Whether you are considering acquiring an exploration licence, investing in an operating mine, or entering a joint venture with a local partner, this framework will help you identify and evaluate the key risk areas before committing capital.

What is Mining Due Diligence?

Mining due diligence is the process of independently verifying and evaluating all material aspects of a mining project or mining company before making an investment decision. It goes beyond reviewing promotional materials and management presentations to examine the underlying technical, legal, financial, environmental, and social fundamentals of the project.

Thorough due diligence serves several purposes:

Risk identification: Uncovers potential problems, liabilities, or uncertainties that could affect the project's value or viability
Valuation accuracy: Provides the data needed to accurately value the project and structure an appropriate investment
Negotiating leverage: Identifies issues that can be addressed through deal structuring, warranties, or price adjustments
Regulatory compliance: Ensures that all legal and regulatory requirements have been met or can be met
Decision confidence: Gives investors the information they need to make an informed go or no-go decision

The Due Diligence Checklist

1. Mineral Rights Verification

The foundation of any mining investment is the legal right to explore and extract minerals. In Uganda, mineral rights are granted by the government through the Department of Geological Survey and Mines (DGSM) and are separate from surface land rights. Verifying the status and validity of mineral rights is the single most important due diligence step.

Key checks include:

Licence validity: Confirm that the exploration licence (EL), retention licence, or mining lease is current and has not expired, been revoked, or cancelled. Check the original grant date, duration, and any renewals.
Cadastre portal verification: Cross-reference licence details against the Mining Cadastre Portal, which is the official government registry of all mineral rights in Uganda. The cadastre shows licence boundaries, holders, status, and key dates.
Licence conditions: Review all conditions attached to the licence, including minimum expenditure commitments, work programme obligations, reporting requirements, and area relinquishment schedules.
Title chain: Trace the history of the licence from original grant through any transfers, assignments, or changes in beneficial ownership. Ensure all transfers were properly approved by the Commissioner for Geological Survey and Mines.
Area integrity: Verify that the licence area has not been encroached upon by overlapping applications or licences, and that the boundaries are correctly defined.
Outstanding obligations: Check whether all fees, royalties, and annual reports are up to date. Failure to meet these obligations can be grounds for licence cancellation.

For a detailed overview of the licensing process, see our guide on how to get a mining licence in Uganda.

2. Geological Data Review

The geological data underpinning a mining project is its technical foundation. An independent review of this data by a qualified geologist is essential.

Key areas to examine:

Exploration history: What work has been done? Review all geological mapping, geochemical sampling, geophysical surveys, and drilling programmes, including their dates, methods, and results.
Data quality: Assess the quality, reliability, and completeness of the geological data. Were samples collected, prepared, and analysed using industry-standard methods? Were quality assurance and quality control (QA/QC) protocols followed?
Resource estimates: If a mineral resource has been estimated, review the methodology, classification, and compliance with internationally recognised reporting standards (JORC, NI 43-101, SAMREC). Verify that the estimate was prepared or audited by a Competent Person.
Geological model: Evaluate the geological and structural model used to interpret the mineralisation. Does it make geological sense? Are there alternative interpretations that could significantly change the resource estimate?
Metallurgical testwork: Has the ore been tested to determine how it will respond to processing? Metallurgical recovery is a critical factor in project economics.
Exploration upside: Is there potential to expand the known resource through further exploration? What geological evidence supports this potential?

The geological review should be conducted by independent professionals with relevant experience. Relying solely on the vendor's data and interpretations is a recipe for unpleasant surprises.

3. Regulatory Compliance Status

Uganda's mining sector is regulated by a framework of laws, regulations, and administrative procedures. Non-compliance — whether historical or ongoing — can create significant legal and financial liabilities.

Check the following:

Mining Act compliance: Is the project in compliance with all requirements of the Mining and Minerals Act 2003 (as amended) and its associated regulations?
Environmental approvals: Has the required Environmental and Social Impact Assessment (ESIA) been conducted and approved by the National Environment Management Authority (NEMA)? Are all environmental permits and conditions current?
Tax compliance: Are all taxes, royalties, and fees current? Verify with the Uganda Revenue Authority and the DGSM.
Labour and safety: Is the operation in compliance with occupational health and safety regulations? Review any inspection reports or enforcement actions.
Reporting obligations: Have all required geological reports, annual returns, and production reports been submitted on time?
Pending litigation or disputes: Are there any pending legal proceedings, regulatory investigations, or disputes involving the project, the licence, or the licence holder?

4. Environmental Liabilities Assessment

Environmental liabilities can represent a significant hidden cost in mining investments. In Uganda, environmental regulation of the mining sector has been strengthened in recent years, and investors must understand both existing and potential environmental obligations.

Areas to investigate:

Existing contamination: Has previous mining or exploration activity resulted in soil or water contamination? If so, what remediation obligations exist?
Tailings and waste management: If the project involves or will involve mineral processing, how are tailings and waste rock managed? Are storage facilities properly designed, constructed, and monitored?
Water management: What are the project's water abstraction and discharge practices? Are they compliant with water permits and water quality standards?
Closure planning: Does a mine closure plan exist? What are the estimated closure costs, and have adequate financial provisions been made?
Biodiversity and sensitive areas: Is the project located in or near a protected area, forest reserve, wetland, or area of high biodiversity value? Are there species-specific or habitat-specific protections that apply?
Community complaints: Have nearby communities raised environmental concerns? What is the history of environmental grievances?

5. Community Relations Assessment

Mining in Uganda, as in most of Africa, takes place in the context of established communities with their own land use patterns, livelihoods, cultural practices, and expectations. The quality of the relationship between a mining project and its host communities can make or break the project.

Evaluate the following:

Community engagement history: Has the company maintained regular, transparent, and meaningful engagement with affected communities? Review records of community meetings, consultations, and feedback mechanisms.
Social licence to operate: Does the project enjoy genuine community support, or is there significant opposition? What are the main community concerns?
Resettlement and displacement: Has the project required or will it require physical or economic displacement of communities? If so, has a resettlement action plan been developed in accordance with international standards?
Benefit-sharing: What benefits has the project delivered to local communities (employment, infrastructure, development programmes)? Are there formal agreements or community development plans?
Artisanal mining: Is there artisanal and small-scale mining (ASM) activity within or adjacent to the licence area? How has the company managed this relationship? ASM conflicts are a major risk factor in Uganda.
Cultural and heritage sites: Are there sacred sites, burial grounds, or cultural heritage areas within or near the project area?

6. Financial Projections Review

For projects that have progressed beyond early-stage exploration, a critical review of financial projections is essential.

Key elements to scrutinise:

Revenue assumptions: Are commodity price assumptions reasonable and well-supported? What price scenarios have been modelled?
Capital cost estimates: Are capital cost estimates based on adequate engineering studies (pre-feasibility, feasibility)? What is the accuracy range? Have contingencies been included?
Operating cost estimates: Are operating costs benchmarked against comparable operations? Have all cost categories been included (mining, processing, transport, administration, environmental management, community development)?
Production schedule: Is the production schedule realistic given the resource base, mining method, and processing capacity?
Tax and royalty modelling: Have all applicable taxes, royalties, and government obligations been correctly modelled? Uganda's mining fiscal regime includes income tax, royalties (based on mineral type and gross revenue), and various fees.
Sensitivity analysis: How sensitive is the project to changes in key variables — commodity prices, grades, recovery rates, costs, exchange rates?

A comprehensive mining feasibility study is the best vehicle for these financial assessments and should be reviewed critically by independent technical and financial experts.

7. Political and Security Risk Assessment

Uganda is generally stable by regional standards, but political and security risks exist and should be assessed as part of any mining investment due diligence.

Consider the following:

Political stability: Assess the broader political environment, including upcoming elections, policy continuity, and the stability of the regulatory framework.
Resource nationalism: Evaluate the risk of changes in mining policy, tax rates, or licence conditions that could adversely affect the project. Uganda's mining legislation includes provisions for renegotiation of mineral agreements under certain circumstances.
Regional security: Some mineral-rich areas of Uganda — particularly in the north and northeast (Karamoja) and along the western border — have historically experienced security challenges. Assess the current security situation in the project area.
Corruption risks: Mining sector governance in Uganda, as in many developing countries, faces corruption challenges. Assess compliance with anti-corruption laws (including the UK Bribery Act and US Foreign Corrupt Practices Act if applicable) and evaluate the integrity of government interactions.
Cross-border risks: For projects near international borders, consider risks related to cross-border mineral trade, smuggling, and conflict mineral regulations.

8. Surface Rights Verification

In Uganda, mineral rights and surface land rights are separate legal instruments. Holding a mineral right does not automatically grant access to the land surface. Surface rights must be separately secured.

Key checks:

Land ownership: Determine who owns or has customary rights to the land within the licence area. Uganda has a complex land tenure system comprising freehold, leasehold, mailo (a historical form of freehold in Buganda), and customary tenure.
Access agreements: Have agreements been reached with surface landowners or occupants for access to conduct exploration or mining? Are these agreements legally binding and adequately documented?
Compensation: Has fair and adequate compensation been paid for any land acquisition, crop destruction, or disruption of livelihoods? Are there outstanding compensation claims?
Government land: If the project is on government land, have the necessary permissions been obtained from the Uganda Land Commission or relevant local authority?
Encumbrances: Are there any mortgages, liens, or other encumbrances on the land that could complicate access?

Engaging Local Expertise

Due diligence on a mining project in Uganda requires local knowledge and expertise that cannot be replicated from a distance. The regulatory environment, land tenure system, community dynamics, and geological context all have specificities that demand on-the-ground understanding.

At ALOM Mining & Geohydro Services, we provide technical due diligence support for mining investors evaluating projects in Uganda. Our services include:

Mineral rights verification: Independent verification of licence status, conditions, and compliance through direct engagement with the Mining Cadastre and DGSM
Geological data review: Technical assessment of exploration data, resource estimates, and geological models by qualified geologists with extensive Uganda experience
Site visits and field verification: Physical inspection of project sites, infrastructure, environmental conditions, and community relationships
Regulatory compliance assessment: Review of compliance with mining, environmental, and tax regulations
Risk identification and reporting: Comprehensive due diligence reports that clearly identify risks, uncertainties, and recommended actions

Our team's deep familiarity with Uganda's mining sector — including its regulatory framework, geological provinces, and operating environment — enables us to identify issues that an overseas-based review team might miss.

Common Red Flags in Mining Due Diligence

Based on our experience advising investors in Uganda's mining sector, we highlight several common red flags that warrant particular caution:

Mineral rights with unclear title chains or pending disputes — If the ownership history is complicated or contested, proceed with extreme caution.
Resource estimates prepared without independent verification — Vendor-prepared estimates that have not been reviewed by a qualified independent Competent Person should be treated with scepticism.
Absence of metallurgical testwork — A project that claims economic viability without having tested how the ore will respond to processing is making assumptions that may not hold.
Unresolved community conflicts — Community opposition can delay or halt mining projects indefinitely. Do not underestimate this risk.
Environmental liabilities without adequate provisioning — Past contamination or inadequate waste management can create liabilities that exceed the project's value.
Overdue licence obligations — Failure to meet minimum expenditure commitments or reporting deadlines suggests either financial distress or negligent management.
Excessive reliance on a single commodity price scenario — Financial projections that only work at historically high commodity prices are inherently fragile.
Opacity around beneficial ownership — If you cannot clearly establish who ultimately owns and controls the project, this is a significant governance risk.

Conclusion

Due diligence is not a bureaucratic formality — it is the process that protects investors from costly mistakes and positions them to capture genuine value. In Uganda's mining sector, where opportunity and risk coexist in equal measure, thorough and independent due diligence is not optional; it is essential.

The checklist outlined in this guide provides a framework for evaluating the key risk areas in any Uganda mining investment: mineral rights, geological data, regulatory compliance, environmental liabilities, community relations, financial projections, political risk, and surface rights. Each of these areas requires careful investigation by qualified professionals with local knowledge and experience.

For expert due diligence support on mining investments in Uganda, contact ALOM Mining & Geohydro Services. Our team provides independent, thorough, and locally informed technical assessments that give investors the confidence they need to make sound decisions.