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Page 3 of 11 Mining Lease- 110324 <br /> The map in Figure 2 also illustrates the location of greater sage grouse leks in proximity to the proposed <br /> lease. The relevance of sage grouse habitat on the leasing decision is discussed in greater detail in the <br /> Referrals section of this memorandum. <br /> This parcel of state trust land was previously mined for placer gold and was documented as part of the <br /> Four Mile Placer Mining District by Herbert Hoover in 1897. Evidence of past unreclaimed mining <br /> activities can be seen in Photographs 1 and 2 in the attached Exhibit 1. The property can be accessed <br /> today with existing roads. <br /> AuPt is a small scale mining and exploration company with claims on federal land in Colorado. AuPt is <br /> interested in producing placer gold deposits identified during exploration conducted in 2015 under a <br /> State Land Board exploration permit. AuPt is also interested in exploring the economic value of <br /> titanium, zircon and rare earth elements on the property. <br /> AuPt plans a phased approach that will initially include a 10-acre mining and reclamation permit. <br /> Mining would begin in previously disturbed areas of the site. Processing of the minerals will involve <br /> small equipment, water and gravity to separate the gold from the sandy material. No chemicals will be <br /> used in the process. Exhibit 2 is a property map of the proposed tease. <br /> RECOMMENDATION FORMULATION <br /> State Land Board staff (Staff) has negotiated production royalty payments for minerals produced and <br /> sold from the lease: <br /> 10% of the gross proceeds from all gold, titanium and rare earth minerals produced and sold from <br /> the lease <br /> • Advance Minimum Royalty (AMR) of $10,000 per year beginning in the second year of the lease <br /> • Primary term of 5 years and a secondary term of 5 years if minerals are being produced in paying <br /> quantities equal or greater than the AMR <br /> Based on exploration results, it is estimated that gold recovery could average about 200 ounces per <br /> acre. Initially, AuPt intends to mine approximately 1 acre per year. Based on this estimate, the royalty <br /> rates described above and the current price of gold, the estimated annual revenue to the State Land <br /> Board is approximately $20,000 per year. <br /> Staff visited the property and observed that the area where mining would commence was disturbed by <br /> mining activities over 100 years ago and never property reclaimed. All new disturbances wilt be <br /> reclaimed to current standards of reclamation, which will improve the wildlife habitat compared to the <br /> current state. Photograph 3 in Exhibit 1 shows the area that would be included in the first phase of <br /> mining. <br /> Referrals <br /> Staff engaged Colorado Parks and Wildlife (CPW), Moffat County, Division of Water Resources, and the <br /> State Historic Preservation Office regarding this lease application. No agency expressed opposition to <br /> the issuance of this lease. <br /> CPW noted that the property is in the Priority Habitat Management Area (PHMA) for greater sage grouse <br /> (Exhibit 3). CPW identified four leks within five miles south of the lease (Figure 2). One of the leks is <br /> approximately two miles south of the proposed lease. The recommended two-mile buffer around this <br /> lek, which is the "No Surface Occupancy" guideline used by the Bureau of Land Management for <br /> COLORADO <br /> State Land Board <br /> Page 3 of 5 <br /> 5.12.2016 <br />