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Confidentiality Agreements in the Mining Industry

Fred E. Ferguson, Jr., Proceedings of 35th Annual Rocky Mountain Mineral Law Institute (1989)

Confidentiality agreements are an appropriate means to govern certain conduct of parties who stand in a confidential relationship to one another. In the mining and oil and gas industries, such confidential relationships occur most frequently between employer and employee, between parties negotiating for the sale or lease of mineral property, and between joint venture participants and partners engaged in development of mineral prospects. Confidentiality agreements [7-2] often seek to protect proprietary information regarding technical processes or procedures, information regarding the location of geologic prospects, and technical data pertaining to the mineral characteristics of property. Protection is sought from premature public disclosure which could destroy the proprietary nature of the information, from disclosure to competitors, and from use by former employees, venture participants, partners, and the like for their own profit.

Protection of proprietary information is often sought at the outset of negotiations for a farmout arrangement. The party receiving the information usually needs it to evaluate the property and to determine whether to acquire the property or some interest in it. In turn, to assist in making such evaluation, the receiving party's employees, consultants, and contractors may need access to some or all of the proprietary information pertaining