June 20, 1949
L'a.:IC EllERGY co;.:.cr SS!ON POLICY ON LEASI!:G CQI..IIAISSi mi-COll'l'ROLLED
ro.r..:snc
URAl!Itr.! YH:I::G PROPERTIESThis is a statement of present Ato~ic 3ner~J Commission policy on leasing for mining purposes those mining properties in the Colorado Pls.tcau area of western Colorado ~d eastern Utah which are ~~ed or controlled by the Comnission,
Mining Properties of the Atomic Ener~£ommission
The Atomic .:,.,ergy Commission o=s or controls m.1n1.ng properties con-taining deposits of urcnium-benring carnotite nnd roscoelite orcs in
western Colorado nnd eastern Utah, !.!aps showing the locntions of these proportivs are avcil~blo for i~spcction at tho Grand Junction, Colorado und ~s.shington, D. C., offices of the Commission.
One group of these properties wc.s o.cquiree !'or tho Government by the Union Kinos Devoloptlent Corporation during the '~o.r and =s transferred to the Ato~c ~nergy Commission on Februar:· 28, 1949 in accordnnco with the contrc.ct with Union ~nos Development Corporction,
The properties acquired by Union Mines for the Government cover o.pproximo.toly 4, 410 ceres including the following:
1. 42 unpatented mining clo.ims located on the Cs.lnmity, Maverick o.nd Outla~ Ycsas in the Gatawny Mining District, Mesa County, Color::.do,
2, 75 unpatented mining claims, 37 patented mining clcios, 2 mill sites and 4 tunnel sites locctod in the Slick Rock aron of the Lo-:mr Sen loliguol l!inin~; District, Sen :.!iguel County, Colorado.
3, 5 unpntented mining clcim& in the Abcjo l!ountain area, San Juan County, Utah.
4, A mining lease consisting of 960 acres in four sepcratc loca-tions on the Ncvajo Indian Reservation in northeastern Arizona.
-The other group of properties under the control of the Atomic
Enerfy Commission consists of portions of approximately 154 square
miles of tbe public <!omair. vrithdrarm from disposition under the mining
la~s in 1948 and 1949 by ~~blic Land Orders Nos. 459, 494 ~~d 555. The last-mentioned Land Order restored to the public do~ain approximately 54 squ<>re :tiles of land ~..ioh had previously been ':'rithdrawn in Public Land Order 494. Under the te~s of these withdrawal orders v~lid minin& -claims lceld bj· others on the dates when tho orders were issued are not affected, so that the entire area included within the boundaries of the withdrar.al orc.ers is not controlled by the Commission.
Why tho Atomic Energy Co~ssion Has Acquired Those Properties
Tho ~ining properties acquired by the Union Uines Development Cor -poration during the :>ar were purchased in order to preserve the s<3curi ty of the uraniilln project then being carried on by tho Uanhattan Engineer
Di3trict of tho Corps of Zngineers and to insure the ~ediate avcil-ability to the Govornmont, as required for the atomic bomb project, of a supply of t~~~iu~ from domestic sources under tho direct control of the l~anhnttan DJ.Strict.
The ar~as covered by Public Land Orders 459, 494 ~~d 565 have been nithdra~ by tho Secr~tcry of the Int<3rior at tho request of the
Commis-sion for the purpose of exploration by the Commission. For tho most part these lands cover aroas tihero the ore-bearing formations lio ur.der a
cover of bcrron rocks ~th no g~olocicLl indications as to the location
of individual ore deposits. Because "~ tho largo financial risks
in-volved in prospecting, those lands have not been located or explored by private operators. The nood for additional information concerning the gcologict>l occurrence or these hidden deposits which may load to a
cheaper, ~oro selective ne&ns or exploration than gc~etrical cirilling und the need for i;tcr.>using dO'lnestie reserves of uranium oro, however,
justifies such exploration by the Govo~ent. Specul~tors should not bo nllO'-ad to ~refit fro~ discoveries made by expenditure of Gov~rn:nont funds, principally for diamond drilling progro.I'Jis, Unless tho lends 'OTero
Yli thdra\'1'11 in advance of drilling, spcculctors could stake cla~ on public do=in boin[; drilled by the Government and havo a ch:mco for profit without making any contribution.
The Commission has stated that any ore deposits discovered ~ould,
as required for plant operation, be ~c.dc available for mining under arrangements with private mine oper~tors.
-
-In con.'lection with the issuance of these withdrawnl orders the Comcission stated that lands on which uranium is not found will be re-leased from the withdr&II'Uls ond will &.Gain be open for entry. This hu e.ctually occurred in the cttse of the 54 squttrc l:liles restored to the pub-lic do-.J~n in Public L'Uld Order SSS. In that case the Coml:lission em-phc.sized thnt restoration wns not bnaed on a determinntion by the Com
-mission that the restored area does not contain vnluablo deposits of uraniuo ore but merely th~t the depth of the oro bonring formation was found to be too grent to justify the expense of drilling nt this time. ~t~ ~~~~ :.n<:rr;y Co=il!_S_ion Has Leased, -~d Plans to Lease, Portions
of the ilin~n;;; Properties 1~ch It Controls
Th~ Atomic Energy Co~ssion hils already lensed for minin& purposes some of tho mining properties lihich it controls. Properties rrhich hnvo been loe.a~d, and the nature of the loaso aeroements, aro discussed lator on in this statement. Th ranson the Commission hns leased those proper -tics for minin& purposes, end expects to loase othc.rs, is to provido an adoqu~te oro supply in connection ~th processing opertttions n~
bei!li
cnrrio<i on or soon to b o&in in existing uro.niu::a oro processing plants in tho Colorado Plntcnu nren. This moons that properties are leasod only lihon a supplamontnry or~ supply for on existing processing facility is
roquir~d. Torms of tho lonso are dosi&nod to nssuro continuous mining oporctions by qualified nnd oxpcrioncod oporntors. Tho Commission, while it is anxious to ronli&o o fnir return fro~ these Govorumont properties, is prim:a-ily interost.ld in hnvint; the properties mined to provide ore os noodod for ita production progr~. This in effect moons thnt tho
Cocmis-sion c1.3siros to ho.vo its properties mined only whore nn adoqunto oro
supply for on existing plont is not ave.ilnble froo sources of production
controlled by privnto individunls or compnnios.
Commission Controlled Hi~ing Proportios r.hich Have Alron~y Boon Loasod
Tho Co~ssion's Colorado urcnium production progrttO colls for tho operation of the existing fivo processing plcnts on tho Colorado Ploteau. Thro~ of those plonta woro idlo rrhcn tho Commission docidod,in ctlrly 1918,
to opon up n domestic urcnium produc ion program ~~d nrrnngcments hnd to bo ncgoti~tcd for their rohnbilitation nnd operation. Tho expense of
rohnbilite.tion ond putting n plrunt in oporntion is justiriod only if nn
....
.
-Co~ssion contracts for putting two plants back into operation, the Com
-mission lensed two groups of mining properties acquired for tho Govern
-mont by tho Onion Mines Development Corporation.
!'no first of these arrnng~~~nt~ ~s n sublease or 960 acres of ruinin& ?roporty on the !:r.vt>.jo Indi~"l Reservation in liorthcrn J'.rhous.
Tr.~s le~o, orilinally gr~tcd to a ?riv~te oper~tor, ~~ purc~nsod by
Un~on ~~os ror tho ~~hnttnn Distr:ct ~d subsequently transferred to
tho C~ssion. This prop~rty w~s subloas~d to tho Vs"lndium Corpor~tion of ;.-,or icc in ccnn<'cd"n -:rith c ccntrnct with th-t com?r.ny for rehabilita-tion o.nd oporntion of the Govornm<.nt-crmod precessing plant o.t !>ur=go,
Colorcdo. Undor tho contract tho compcny pnys tho cost of rohnbilito.-tion r-nd oporntion, rssumes tho ris!c of oro suppl)", rnd sells tho plnnt production to tho Co:~~~~ission t.t n fixed price. Tho sublease of the Nnvnjo property wns to provide one of the sources of uranium ~re for the plcnt end the tel":il of the sublease is cvexten:ive with th•t of the oper=ting contract ~aicb, unlese ter-inoted for the convenience of the Gove~ent, runs until June 30, 1953. Royalty i:s p~d to the Com:aiuion by the
co~p~~Y ~t c porcentr~e of the v~ue of the ore ~ned; these ro)~tios are in turn pnid over to the nsvnjos, in the form of o direct ro~.lty in tho full ~ount required under the tor.ns of the prime le~se, lo~ving ~ b~l
o.nce avo.ilnblo which is used to finmce ror.d construction nnd explor~
tory work on tho Reservation in o.n e!'fort to dovolo? 11ddi tion:U ore
rosourcos.
Logotiations for the rehnoilitotion ~~d oper~ti~n of tho Ur~~-n,
Color=.do pl·.nt of tho
u
.
S. Vnno.diu= Ccrporc.tion r.ho involv~d tho quosticn of c.n ndoqu~tv cro SU?pl: • Arrcr~~onts =.a f~no.lly c~pl~ted i~volved the lecso to t~t con~cny of 42 ~ning cl~s, origin~lly cc-quirod for tho Go~cr=ent by Union lUnas, in the C~lc.ni ty-ll~vorick
Outl=.w ~r~~ in south~rn Meso. Countj, Colcr~do. Prod~cti~n fron these prcportios, in ndditi.:m to oro from other knm·m sourc<ts, will bo noc
-esso.ry to provide n sup?lY of oro 1\doquc.to for rnnxinum oporntion of tho Oravan plnnt fer tho period of tho ComrJission's contract. The con -trr~t nnd tho leaso beth covor tho pori~d ending Ju."lc SO, 1954. b5 in the c~so of tho lo~sc to the V =di•.r:t Cor;>or·.tion of J."\(lrico n roy
-alty is :-aid to the Govor=ont.
On Hay 1, this y:::u-, tho Cu=iuicn =nounecd thct n limited m.c
-bor of ~ pr~pcrti¥s in tho Slick Reck District, So.n Miguel County, c~lor·do, "\laO forr.orly a pr.rt of tho Union Mines :;>rcpurtios, would bo
nvnilcblo fer loaso to qualified mining operators and invitod np?licn
-the Co~ssion plans to leasa 3 or 4 operating units of several claims
each at thiS time. The purpose of the Slick Rock lease proe:r= is to provide an additional source of ore at the Co~issionla Monticello1
Utnh, oro processing plc.nt vthich ia scheduled to begin opl)ro.tions ih August or September of t!rls yoar as well as to other plants which cwy require oro for C!lpc.ei ty opcro.tions. One lease in the Slick Rock area hfls ~lroady been ncgoti~ted in order to get mining operations sta~ved
in t~c to avot the Mon•icello opere.tine schedule, Applications o~ other loss~os ore still being considered.
Why tho Atomic Bnorgy Conrnission Selects Lossees by t;ogotiation Rat!::er Th".n bY: Comp_3titivo i'!idding,
-Under ~ system of competitive bidding i t would be nooossary, as a general practice, to award tho lo~es on tho basis or tho highost bid in ten&.s of royC1lty par-ents or lump su::t payments. Sinco roy,.~ty is nn ito::: in tho cost of cining, a high ro;,ral ty would tend to pr~o•o
"hi::;!l-[r:l.din£11
, thAt i'i, Jrinin& tho richer po:-tions Of the deposits ll!ld lecting the low~r-~;r.,c!a oro. This would be contrary to the Co=issio:11 s
policy of encouraging acr~Q~ recovery of urnni~ ore fromCbposits being :::ined. I f bids wore mmrdod o: tho basis of luap awn cash p::.y
-mcnts,
m
th or without o. royo.l ty, 1 .,. of o.vnilable cash might prevent many S4all operators from obtaining a lc~se, From tho Commission'sstondpoint, tho osse:ttio.l q unlificntion of ~ lessoe is tho ~bility to
do a bood job of clot~ ~ning. Losaoes should bo selected on the basis of experience end int~gri~J, nn~ they should ho.vc sufficient cnpi~~
in the for:n of cesh or cquip:tc; t to oporo.to propcrl:; tho type of property they desire to lonso. In othor =rds, in this rcspoct tho solcction of c loss')O is si:ulnr to tho sclootion of c.n c:nplo;tOo, nnd the selec -tion c~~ b6st be modo by nogoti~tion rat~or thnn compotitivo bidding.
Tcr:ns On r.hich Looses Arc Mc.do
As is tho co.so in any commorcinl lensing oporntion, the toms of individu-~ lenses must be vnriod to fit the conditions
or
tho property~~d tho nnturo or tho operation -- richness of deposit, oxtont of pre -vious dev.:~lop:tont l"'rk, cstimo.tcd cost or cining, cquir:mcnt O.Tailcl>le
-.
•..
-
-and ot~er si~lar factors. In general, the t~e of leftse which the
Co~s~ion is prepared to ~~~e is represented by the attached lease fortll (Appendix A) which covers the s~' .dard provisions which lwYe been
and oay be ir.corpor~ted into Cocmissi~~ leases. ¥or business reasons,
such ~~tters as the royalty to the Cogmission nnd other special
pro-visions are held in confidence.
Aa the Commission is purchasing all acceptable ore delivered by
indepe~dent producers to the Monticello plant, production from C~s
sion-ar.ne<i. ?roperties ':rill be li.mi ted to an tl::IOU!lt ,.,hich, in addition to purch~sed oro, will ?rovide on o.dequ1.te plant supply. Until the ex
-tent of the ore supply o.v~lable to Monticello is better known, leases
in the Slick Rock are~ will be for relatively short terms,
