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Consumer Financed Exploration

Keith M. Crouch, Bruce J. Meagher, Mining Agreements (1979)

In recent years, consumers of fuels, primarily large industrial concerns and public utilities, have entered the field of minerals exploration, development and production because the traditional suppliers of fuels have found it exceedingly difficult to meet the ever increasing demands of their customers. The fuel consumer, in an effort to obtain some control over prices, has found it necessary to attempt to compete with the traditional suppliers in order to obtain some bargaining power in the fuel supply markets, and more importantly, given the inability of the traditional suppliers to provide secure and reliable supplies, consumers are now attempting to secure their own guaranteed fuel supplies at a reasonable cost.1

For all of those reasons, but primarily for the need to secure adequate future supplies of fuels, the mineral consumer has determined that it is now necessary to participate in the risks associated with exploring for and developing minerals for fuel purposes.

The purpose of this discussion is to identify and discuss some of the more obvious problems one might expect to encounter when the mineral consumer finances exploration and/or development activities with/or for a party selected for its land position and/or its expertise in mining. We will also review some of the problems faced by coowners of mining properties when only one of the owners bears