I have some questions about silica mining that I was hoping someone could get me some help on.
My family owns some pretty good producing silica claims in Nevada, very high quality sand. For several decades we’ve been leasing the claims to a large mining company and I’m getting the feeling we’re being shafted (no pun intended). I’m not sure some of the older members of the family made the best decisions on lease agreements. The claims are currently about 30-40% of a large put mine that is made up of several claims owned by the company leasing ours.
Which brings me to my questions.
I’ve been told (and I don’t know how accurate it is) that the large company owns all the water right in the area. If true I assume that makes it impossible for us to mine it ourselves or lease to someone else? Are there options there? How hard is any of that? I assume setting up a mine is expensive and complicated and probably requires water?
Second question. What is a typical market rate for royalties on something like this. Right now we’re getting 2.5% of each ton of sand sold that they mine from our claims… assuming they get to that part of the mine during the year. They mine millions of dollars worth of sand out of there and we see very little of it. Is that a decent rate or am I correct that we’re getting screwed?