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Alternatives to Dealing With Distressed and Orphaned Mineral Properties

Daniel C. Himelspach and Benjamin Spitzer, Proceedings of 32nd Annual Rocky Mountain Mineral Law Institute (1986)

The current depressed prices for natural resources commodities have drastically changed the economic parameters of mining and oil and gas projects. This has caused many companies to reconsider certain projects, and in some instances to reconsider their participation in the industry.

In many cases, participants in the industry are under severe economic constraints, thereby creating what have been called distressed properties. Several natural resource companies, while not necessarily economically distressed, have recently simply gone out of the mining business or abandoned a region, thereby creating what have been called orphaned properties. Many of these distressed and orphaned properties are good projects that have strong economic potential.

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Distressed companies and owners of orphaned properties are no longer able or are no longer interested in operating their properties. This paper will discuss various alternatives in dealing with such properties, with a primary emphasis on sale of such properties from both seller's and purchaser's perspectives.

While this phenomenon presents some very difficult times for the natural resources industry, it also presents many outstanding opportunities. The natural resources industry has always been cyclical. There's no reason to expect that this cycle has been broken. Without much imagination, we can