Nevada Creates Mining Claim Tax to Balance Budget
April 2010 by Chris RalphLike many states, Nevada has faced severe budget shortages in recent years, and the governor recently called a special legislative session to deal with the crisis. The special session in Carson City lasted seven days, and a variety of service cuts and fee increases were considered and debated to help balance an $888 million shortfall.
One of the largest new taxes enacted in the special session was a $25.7 million special claims tax. Nevada mining has long contributed significant amounts of money to the state coffers, and because of recent high precious metals prices, Nevada mines will also contribute an additional $58 million in unanticipated net proceeds of mine tax revenues based on existing Nevada tax law. With the new one-time claim tax, the industry will be contributing even more.
Governor Jim Gibbons, a geologist and mining attorney by profession, was a part of the negotiations, as was the Nevada Mining Association. Mining is important to the economy of many rural Nevada counties, and a number of the state lawmakers who also participated in the discussions made it a priority to insure that the new claim taxes would not hurt small miners. Things move quickly at these special sessions and most of the laws enacted are settled in closed door discussions with little or no outside input.
The new tax is structured into a four tier system, with those holding the largest number of claims paying the most. The tax will be structured such that claim owners with 10 or fewer claims will not pay anything additional. Claim owners holding 10 to 200 claims will pay $70 per claim; those holding 200 to 1,300 claims will pay $85 per claim; and those holding more than 1,300 claims will be paying $195 per claim. The fee was set up as a one time payment and is scheduled to sunset and be removed June 30, 2011. The exact details as to how the fee will be collected are being worked out by the Nevada State Division of Minerals. There will be an option to spread the payment over a two year period as Nevada budgets are structured that way as the legislature normally only meets every other year.
While a number of the larger producing mines supported the fee proposal, exploration companies and smaller operators who are not in production may be hit hard by the new fees. With the economy only beginning to recover, only now are exploration companies starting to be able to raise some capital. Venture funding for most exploration operations was virtually shut down when the banking and economic collapse reached a fever pitch in late 2008.
Nevada exploration is not the hotbed of activity it once was, and it has been difficult to raise exploration money for the state in recent years. It is expected that this new tax may make the state appear less friendly toward mining such that it may become an even more difficult target for which to raise exploration money. Some explorers with limited budgets will likely choose to drop claims to get below the 1,300 threshold because of the big jump from $85 to $195 per claim. The loss of exploration monies that provide jobs and eventually lead to new mines may well cost the state far more in the long run than the new fees will raise.
If approved, the project would use block caving to extract the remaining ore, most of which is 7,000 feet below ground level.
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The areas that were mineralized with the bedded ore were huge and vast tonnages were indicated, although they had no idea at the time.
The strike and the dip of the veins can be broken down into two categories: veins in the eastern area and along Lander Hill, and the veins in the southwestern portion of the district.
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