Friday, March 7, 2014

Mineral Rights Royalties (Part 1)

 (Somebody's getting royalty money here.)

One aspect of property and mining claim ownership that few (if any) mining and prospecting websites or books ever address is mineral rights royalties. I suspect it's never even crossed the minds of the authors or publishers of these other venues or, alternately, they deem the subject too far off the beaten path from the generic "how to pan for gold" info they dispense. Me? I hope to rectify that situation and increase your mining knowledge at the same time.

Mineral Rights, not Surface Rights

Let's get something straight here from the start...I'm no expert on property rights or mineral rights. For one thing, the legalities concerning this sort of thing can vary (even if slightly) from locality to locality, county to county, or state to state here in the United States. In general though, when you own land or property you should also own any mineral rights to that land or property. Believe it or not, this is where Big Brother (i.e., the Feds) here in the United States deserve your kudos. The U.S. is one of the few countries in the world where you're actually guaranteed ownership of the mineral rights beneath your feet if you own your property.

 (You never know what's just beneath your feet.)

The potential sticky wicket here is that it wouldn't surprise me if some unsuspecting souls have been duped out of the mineral rights on their property because they didn't read the fine print on their escrow paperwork or failed to ask the right questions on the front end of the deal. One way this happens is when you end up owning only the "surface" rights and not the actual mineral rights themselves. Get the picture here? Surface rights alone won't do you any good from a royalty (money) standpoint if you've got the Mother of all oil wells sitting a full thousand feet beneath your property. Ditto if you have the modern version of the Homestake Mine under your old tool shed. Remember this point and remember it well. You need to own the mineral rights to your property, not just the surface rights.

Economic Concentrations

Now we come to the mining aspect of this mineral rights thing. If you own your own mining claim, either patented or unpatented, you automatically own the mineral rights to that claim. In fact, with an unpatented claim (the most common form of mining claim these days) the mineral rights are all you DO own on that claim. You don't own the land, just the mineral rights to it as long as your claim is current and not in arrears in terms of fees, taxes, or annual assessment work. Patented mining claims are a rarity these days and you or I can no longer file on one thanks to the legions of bozos inhabiting the hallowed halls of Congress. With an unpatented claim you not only own the mineral rights but the land itself.

 (Got talc?)

OK, that basic stuff established, what sort of minerals are we talking about here? Any sort of metals including our beloved gold and just about any mineral you can think of with some sort of economic value, including gem minerals and less exciting stuff like bauxite or even a lowly talc deposit. Other minerals or metals that may have economic value include silver, copper, calcite, cinnabar, diamonds, galena, gypsum, jadeite, olivine, nephrite, quartz, rutile, sulfur, uranium, zircon, and on and on and on. I think you get the picture here. Remember this though...for you to expect any sort of royalties from these minerals or metals, they're going to have to be in large-enough concentrations to make them attractive to the operators who will actually be doing the mining or recovery on your property and paying you for that privilege.

I've set the stage for you in this post. In my next few posts on this topic I'll be walking you through the main types of mineral production royalties and how they work.

Until then, be safe and keep smiling.

(c) Jim Rocha (J.R.) 2014

Questions? E-mail me at jr872vt90@yahoo.com

2 comments:

  1. Unpatented mining claims are a rarity these days and you or I can no longer file on one thanks to the legions of bozos inhabiting the hallowed halls of Congress. With an unpatented claim you not only own the mineral rights but the land itself....

    Don't you mean "Patented"?

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  2. Excellent catch! Sorry about that boo-boo...yes, unpatented claims are what I meant. Patented claims are no longer available except for private purchase from a current owner. Unpatented mining claims are the typical claim available these days. Thanks! J.R.

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