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Acquisition of Mineral Interests Involving the Purchase of a Business (A Guide to Basic Corporate Issues)

Robert F. Wilson, Keith M. Crouch, Mining Agreements III

The typical mineral property acquisition focuses with a relatively limited scope on the direct acquisition of the target mineral property and associated tangible and intangible personal property or on the earning of an interest in the property through an exploration and development joint venture agreement. Because these types of acquisition structures focus primarily on the specific property involved, the range of issues the advisor has to review and handle is limited to those inherent in the acquisition of the property.

When a mix of geographically disbursed mineral properties that constitute all or substantially all of the properties of a company is involved, it may be far more expedient to acquire them indirectly by acquiring the company. However, by reason of such a shift in focus from an individual property to the owner, a much broader range of transaction issues must be dealt with and accommodated. For the mining attorney who has dealt generally with the acquisition of individual mining properties, the negotiation and due diligence issues become exceeding more complex and are often driven by factors unrelated to title, property value, development potential or obligations and liabilities related only to the properties themselves.

Due to liability issues and capital considerations, most commercially feasible mineral properties today are owned and developed