Ariz. Admin. Code § 12-5-1805

Current through Register Vol. 30, No. 50, December 13, 2024

Section R12-5-1805 - Lease for Mineral Claim

A. Term of lease. Every mineral lease of state land shall be for a term of 20 years.

B. Lessee's right of possession and enjoyment. Every mineral lease shall confer the right:

1. To extract and ship minerals from the claim located within planes drawn vertically downward through the exterior boundary lines thereof, provided:

a. That in case of each lease of a claim located pursuant to the provisions of subsection (C) of these rules and regulations (Type A claim), the lease shall confer extralateral rights, in the discovery vein only, as follows:

Exclusive right of possession and enjoyment of the vein, lode, or ledge throughout its entire depth, the top or apex of which lies inside the surface lines of the claim extended downward vertically, although such veins, lodes or ledges may so far depart from a perpendicular in their course downward as to extend outside the vertical side lines of such surface locations. But the right of possession to such outside parts of such veins or ledges shall be confined to such portions thereof as lie between vertical planes drawn downward as above described, through the end lines of the location, so continued in their own direction that such planes will intersect such exterior parts of such veins or ledges. Nothing in this subsection shall authorize the locator or possessor of a vein or lode which extends in its downward course beyond the vertical lines of his claim to enter upon the surface of a claim owned or possessed by another.

2. To use as much of the surface as required for purposes incident to mining.

3. Of ingress to and egress from other state lands, whether or not leased for purposes other than mining.

a. Proposed routes of ingress and egress over state lands, preferably reflecting agreement on the part of the lessees concerned, shall be subject to final approval by the Commissioner. Construction of roadways shall not be initiated by the mineral claimant or lessee until such approval is had.

C. Provisions of mineral lease

1. Every mineral lease of state lands shall provide for:

a. The annual performance of not less than $100.00 worth of labor or of improvements made upon each claim or group of contiguous claims in common ownership. The annual expenditure shall become due and shall be performed during the year commencing at the expiration of one year from the date of location at 12:00 o'clock meridian and during each year thereafter.

i. The term "labor" shall include, without being limited to, geological, geochemical and geophysical surveys conducted by qualified experts and verified by a detailed report filed with the Commissioner which sets forth fully

(1) the location of the work performed in relation to the point of discovery and boundaries of the claim,

(2) the nature, extent and cost thereof,

(3) the basic findings therefrom, and

(4) the name, address, and professional background of the persons conducting the work.

Such surveys, however, may not be applied as labor for more than two consecutive years or for a total of more than five years on any one mining claim, and each such survey shall be non-repetitive of any previous survey of the same claim.

ii. Improvements mentioned in (A)(1) above shall be limited to those necessary and incident to mining or which develop, or tend to develop, mineral.

iii. Proof of annual labor on each claim shall be filed with the Commissioner, in such form as the Commissioner may prescribe, within 90 days after expiration of the period provided for its performance.

b. The fencing of all shafts, prospect holes, adits, tunnels and other dangerous mine workings for the protection of livestock.

c. The construction of necessary improvements and installation of necessary machinery and equipment with the right to remove it upon expiration, termination or abandonment of the lease, if all the monies owing to the state under the terms of the lease have been paid.

d. The cutting and use of timber and stone upon the claim, not otherwise appropriated, for fuel, construction of necessary improvements, or for drains, roadways, tramways, supports, or other necessary purposes.

e. The right of the lessee and his assigns to transfer the lease.

f. Termination of the lease by the Commissioner upon written notice specifically setting forth the default for which forfeiture is declared, and preserving the right of the lessee to cure the default within a period of not less than 30 days.

Notices of termination shall be mailed to the address of record of the lessee. Such notice shall set forth the default and inform the lessee of the time and place he may appear before the Commissioner to show cause why the lease should be restored to good standing.

g. Termination of the lease by the lessee at any time during its term by giving the Commissioner 30 days' notice of termination in writing; provided, the lessee is not delinquent in the payment of rent or royalty to the date of termination.

D. Lease rental. The rental for a lease of a mineral claim on state lands shall be $15.00 per annum, payable in advance at the time of application for lease and at the beginning of each yearly period thereafter.

E. Royalty

1. Every mineral lease of state land shall provide for payment to the state by the lessee of a royalty of 5% of the net value of the minerals produced from the claim. The net value shall be deemed to be the gross value after processing, where processing is necessary for commercial use, less the actual cost of transportation from the place of production to the place of processing, less costs of processing and taxes levied and paid upon the production thereof. In case of minerals not processed for commercial use, the net value shall be the gross proceeds, or gross value, at the place of sale or use, less the actual cost of transportation from the place of production to the place of sale or use, less taxes, if any, levied and paid upon the production thereof.

2. In the case of limestone, silica, shale, and clay manufactured into building materials, the royalty shall be 3¢ per gross short ton of material removed. The 3¢ per ton royalty shall be based upon the average regional wholesale price of the building material so manufactured over the 12-month period immediately preceding June 14, 1958. The royalty shall be adjusted at the end of each five-year period thereafter in direct proportion to the decrease or increase in the five-year average of the average yearly regional prices for such building materials over the preceding five-year period, providing the decrease or increase amounts to 10% or more of the previous base price.

3. In case of sand, rock and gravel to be used in the construction of roads, buildings or other structures, the royalty shall be 5¢ per cubic yard.

a. As used as a basis of classification for royalty purposes, the word "rock" means the granular material coarser than gravel, and usually associated with natural deposits of sand and gravel.

4. The minimum rental paid for each year shall be credited upon royalties which may become due during the year.

F. Assignment of lease. The lessee of each mineral claim, if not in default of rent or royalty, and who has kept and performed all the conditions of his lease, may with the written approval of the Commissioner assign his lease. Application for assignment and assignments will be in such form as the Commissioner may require.

G. Renewal. Upon application to the Commissioner, not less than 30 nor more than 60 days prior to the expiration of the lease, the lessee of mineral lands, if he is not delinquent in the payment of rental or royalty on the date of expiration of the lease, shall have a preferred right to renew the lease bearing even date with the expiration of the old lease for a term of 20 years.

H. Sub-leases. No sub-lease shall be valid without the written permission of the Department.

I. Lease, reserved mineral interest; bond

1. Each mineral lease of the state's reserved mineral interest, resulting from sale of state land, shall contain such special conditions and terms as are necessary to the protection of the pertinent patentee or contract purchaser of state lands, or their successors in interest and the state of Arizona, against damage to lands, livestock, water, crops or other tangible improvements on lands held by such patentee or contract purchaser and suffered by the reason of the use or occupation of such land by the lessee.

a. Lease applicant will be required to execute a bond in a reasonable principal amount, conditioned upon payment for such damage.

b. Failure by lease applicant to post bond within 30 days after notice of such requirement has been served by the Department shall be deemed to constitute forfeiture of right to the lease.

Ariz. Admin. Code § R12-5-1805

Original rule, Art. VI, Subchapter B, Ch. II (Supp. 76-4). Section R12-5-1805 renumbered from Section R12-5-705 (Supp. 93-3).