Nevada Miners Could Lose Power of Eminent Domain

Source: Mineweb, Dorothy Kosich (2/15/11)

"Nevada miners are expected to face a number of legislative challenges."

As the Nevada mining industry faces a tough legislative session, the Nevada Senate Judiciary Committee heard testimony Monday on a bill aimed at eliminating mining-related uses of eminent domain.

Although eminent domain is seldom used by Nevada-based miners, junior explorer Fronteer Gold last year tried to use eminent domain to condemn 1,785 acres of private ranching property for its Long Canyon gold project.

Fronteer sued investors in the Big Spring Ranch after these investors turned down the junior company's offer of US$12M and an 4.25% royalty for 8,000 acres and about 10,685 feet of water. The landowners had originally bought the property in 2003 for $2.8 million. The 2010 Fronteer lawsuit sought access to mineral rights and roads for Long Canyon under the powers of eminent domain.

In testimony Monday on Senate Bill 86, which was introduced by Washoe County Senator Shelia Leslie, Nevada Mining Association President Tim Crowley said "As far as the NMA is aware there is no evidence that the eminent domain authority that had been accorded mining companies in this state for over 125 years has been used other than sparingly, and only when absolutely necessary to allow significant projects to go forward. Nor is there any evidence that this power has been abused when invoked."

Mineweb contacted two prominent mining attorneys who confirmed that eminent domain is rarely used.

However, several residents in Nevada's Comstock Mining District told the Judiciary Committee they fear eminent domain could be used against them for mining exploration.

Meanwhile, Nevada miners are also expected to face legislative challenges aimed at eliminating the constitutional caps on net proceeds of mines taxes, placing the independent Nevada Commission on Minerals under the State Department of Conservation and Natural Resources, and curtailing mining activities.

Nevada is the top gold producing state in the nation.

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