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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: d:oug who wrote (89451)	9/10/2002 2:24:24 AM
From: E. Charters	Read Replies (1) \| Respond to of 116806

Let me see if I can get this totally straight. Wildcat is separate from the land it options or "owns". It is a provincially incorporated company with shareholders, some 35 of them, with a smallish investment in the company. It owns an option to acquire 100% a mineral claim subject to living up to the terms of the option and paying the royalty on production. The cost of this option are keeping the claims in good standing with the government in perpetuity, surveying the mineral claims within 3 years, paying the sum of 150,000 dollars CDN, paying 250,000 share of a publically traded company or equivalent in cash, and 3% of mineral production off the top. There are other terms that are not consequential financially. A mineral claim may be leased from the Federal government in this case, as it is on Federal land, being in a territory and not a province. The cost is nominal, in that it is a tax on the acreage of about 4 dollars per acre per year. This lease cost is also borne by the company. As well, in order to produce from the claim, one must complete a survey and do other required work on the claims in each calendar year until the claims are brought into production. This work amounts to about 10 dollars per acre per year and does not have to be carried out once the claims are brought to lease or put into production. There is no other category of mineral production land on federal or provincial land in Canada. It all must meet requirements for production, such as taxation, lease, and survey as well as environmental guidelines in order to produce minerals thereon. Wildcat can enter into a deal with a 3rd party on the land it owns under option at any rate of sharing or remuneration it so desires. It is not constrained to share out its mineral options at any particular rate. So if one wanted to do a deal on a property on a basis of putting the money up to finance production and wishing to make 50% after cash recovery for doing so, Wildcat may and will do such a deal on the ground in the NWT. This is not a problem. It is not necessary to get into the complexity of owning or buying out Wildcat for one thin dime to do so. After all it is the property and gold you are after, is it not? A Joint Venture is so much simpler, it is like falling off a log in comparison. Why buy out the shareholders of Wildcat? Who cares? That is my problem. If you wanted to buy them all out, I suppose about 160K would do it, but as I said it is money wasted. Put the 160K in the ground and get the deal going and everybody will be much happier. I can pay Wildcat people out of my end, at a rate of dividends I choose. They would be ecstatic to receive 25% of my profits, I can assure you. And that amount is my decision. Nothing cannot attach, suborn or impugn the JV deal I make, because I am majority shareholder and my decisions are final. Wildcat has no debt except what it owes the underlying optionee of the claims, which is a nominal amount. So in essence is the deed to the land mine to deal 100%. The answer is, yes it is. There are no contraints to deal the optioned ground except that buyors must live up to the terms of the option. The cost to get the land in full title sans any royalty? Well, that is usually according to the terms of the deal about 1.5 million dollars over the herein mentioned option costs. (the buyout clause) This you never, never pay in the terms of normal practice unless you are Barrick, and the feasibility is done, as the payout is more than you would make from the land times 3% normally. In short you don't pay the buyout, you just pay the 3% as you go along as it is always cheaper in terms of NPV unless the deposit is large. EC<:-}

To: d:oug who wrote (89451)	9/10/2002 2:52:32 PM
From: E. Charters	Respond to of 116806

There is one other category of land that can have mining rights. That is called patented land. It is no longer granted in Canada, but existing patents do subsist. They all carry tax obligation except for one land grant in Ontario belonging to a Georgia Forest products company. In general you never want to make a deal or deal with an owner of this outright owned patented land if there is any other equally attractive mineral land that is not patented. It is the reverse of what you would think. Staked land is simple to deal on, and review. Patented land, on the other hand, with only taxes and outright ownership, is a nightmare of legal complexity and is always expensive to deal on. It can be done, for perhaps 2 to 10 times the cost of dealing on a staked claim. This is situational and not a fast rule, but generally you find patented land way more expensive, simply because the owner has infinite time to make a deal as far as carrying costs go. Leases are similar. They are limited to 20 years and them must be produced from or lost, but may in many cases be renewed. It is up to the government's whim! This small fact, which does not effect any producing mine as production forestalls the government from non renewal, has kept Shell Oil out of Canadian mining production since 1991. So the situation is that yes, there are "deeds" to mining rights called patents and leases. They are NOT preferrable to make a mining deal on, in comparison to staked claims. It confers no development advantage and no exemption from environmental regulation or permitting. In addition patented claims ALWAYS have to be legally searched and generally ALWAYS have either leins, claims, contesting of ownership, mortgages, court cases, debt or other dispute. Even the search is costly. I did a first level search of all patents in one Timmins township and it cost me 1000 dollars to do the initial search. Additional fees to search court documents and claims referred to, would have cost perhaps 25,000 and not have been guaranteed to be comprehensive. This, by the way goes for trees and surface rights too. A single patented or leased claim is not that expensive to search, -- but -- not all claims against and owner, nor agreements an owner can enter into, need be registered. Generally you find out how many claimants there are if you try to develop the patented claim. An average is about 4 or more. 20 to 50 is not uncommon. It depends on how old the claim is, and how many creditors and inheritors there are. Staked land or dealing on staked land is the way to go. One owner, no leins, no debts, no claims, no hassles. Or a minimum at least. This latter is our situation. EC<:-}