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I’m interested in buying a property with a ‘mining claim.’ What is it and what are some common problems?

The General Mining Act of 1872, amongst other things, afforded people the right to prepare and mine a particular government-owned property, known as ‘staking a claim.’ Once staked, a survey was prepared to depict the mining claim’s boundaries.

A private person who satisfies the required ‘assessment work’ could eventually convert the right to mine into ownership of the surface of the mining claim and the minerals underlying the same. The document that granted a private person ownership of the mining claim is called a patent.  Hence, a mining claim with a patent from the federal government to a private person is called a patented mining claim.[1] The patent typically uses the survey to legally describe the mining claim.

Purchasing a mining claim can be interesting but is often riddled with complications. This article discusses five common complications with purchasing a mining claim in Colorado.

1. Visual Evidence of Mining Operations.

The first complication is determining if mining operations currently exist or previously existed on the property. Just because the property is designated a ‘mining claim’ does not mean it is unusable because of mining operations. Obvious signs of mining operations include visible open pits, strips, pillars, shafts, and tunnels. Regardless of the historic mining operations on the property, it should not be assumed that someone else can access the surface to develop the minerals.

2. Severed Mineral Estate.

Another common occurrence with mining claims is a mineral severance in the chain of title. Even though a mining claim patent typically conveys the surface and mineral rights, a prior owner may have reserved or conveyed the minerals in a prior transaction. In such an event, the mineral owner is entitled to enter upon the surface to develop the minerals. A close examination of the chain of title to determine mineral ownership is an important part of mining claim due diligence.

3. The ‘Right of a Proprietor.’

A third consideration is determining if the mining claim is subject to the ‘right of a proprietor to extract his ore.’ This right, typically found in the mining claim patent, is not an outright mineral reservation, but instead a reference to an ‘extralateral right.’ Extralateral rights were established by the 1872 Act so a miner could follow his vein, lode, or ledge onto a neighbor’s mining claim if certain specific conditions were met and preserved. A visible inspection of the property for lode-based mining is a necessary first step in determining if the ‘right of a proprietor’ warrants further examination.

4. Overlapping Mining Claims.

A fourth obstacle to purchasing a mining claim is the prevalence of overlapping claims. A mining claim initially staked for rock in-place lode or vein mining is called a ‘lode claim.’ A lode claim typically takes the shape of a parallelogram. A prospector typically staked a claim so that the mineral lode or vein ran parallel with the long sides of the parallelogram. Not all lodes or veins run perfectly parallel with one another, so lode claim boundaries often overlap where two lodes or veins intersect. The language of the competing mining claim patents often determines priority rights to the overlapping areas. A complete examination of the title, survey, and surrounding claims is required to assess the severity of an overlapping claim situation.

5. Illegal Subdivisions.

Lastly, many mining claims have been informally carved into separate parcels over the years. Colorado law requires any subdivision resulting in a parcel of less than 35 acres to comply with applicable subdivision rules and regulations. Purchasing a portion of a mining claim that was not duly subdivided can potentially thwart future development of the property.

The five problems highlighted above are the most common, but many other mining claim quirks exist. Anyone interested in purchasing a mining claim should consider hiring a knowledgeable attorney to conduct the due diligence necessary to fully understand its benefits and limitations. Please contact Zachary Grey with any questions concerning mining claims or other mineral, oil and gas, or water inquiries.

[1] Contrast the patented mining claim with an unpatented mining claim where the private person possesses a right to mine the property, but the federal government retains ownership of the surface and mineral rights.

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