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Economic Considerations For the Layman/Landman in Negotiating Mining Leases

Graham M. Clark, Jr., Proceedings of 24th Annual Rocky Mountain Mineral Law Institute (1978)

The topic of this paper was chosen by the Program Committee because a number of members of the Committee were concerned that leasing mining properties is becoming more and more difficult for landmen. Although a good landman claims to be able to lease anything that his client can spell, some of the reasons that leasing is becoming more difficult are particularly troublesome for landmen with an oil and gas leasing background.

One of the problems faced by landmen is the strong and constant upward trend in the royalty rates which landowner-lessors have been demanding from mining company lessees. One landman's characterization of the concern about this upward trend in uranium royalty rates was expressed in terms of how far can it go. Some members of the committee hoped that question might be answered in this paper. Unfortunately, the answer to the question how far can royalties go must be that they can go just as far as the market will allow. There really is not any way, either legally or technically, that any specific ceiling or maximum royalty rates for uranium, or any other types of mineral deposits can be set. From a technical standpoint there are just too many variables to consider, [812] allowing too great a range of potential profitability or unprofitability, and from a legal standpoint a free market interplay of supply and demand for leases has to be allowed to be