State Nonferrous Metallic Minerals Leasing

Since 1966, the State of Minnesota has offered leases of its nonferrous metallic mineral interests for exploration and development according to Minnesota Statutes and Rules. Primarily this is accomplished through a public competitive bid offering known as the Metallic Minerals Lease Sale. *Currently there are 310 active state nonferrous metallic minerals leases located within 6 counties in the northern-half of Minnesota. There are a total of 12 companies holding state nonferrous metallic mineral leases. Targeted minerals for exploration include copper (Cu), nickel (Ni), platinum group metals (PGM - group of 6 metallic elements), titanium (Ti), and gold (Au). There has not been mining of nonferrous metals in Minnesota, but the Environmental Review Process is on-going for one proposal - PolyMet's NorthMet project. Furthermore, even with a state or private nonferrous metallic mineral lease a mine cannot be built until an Permit to Mine is obtained (see DNR Mineland Reclamation).

*Based on data obtained in July 21, 2014 from MN DNR Land Records database

Jump to a Nonferrous Metallic Mineral Leasing Topic:

  • School Trust fiduciary responsibility Link
  • State policy Link
  • Metallic minerals lease sale Link
  • Locations of current state metallic minerals leases Link
  • Targeted metallic minerals for exploration Link
  • Companies holding state metallic minerals leases Link
  • State mineral interests: Defining the mineral estate, surface estate, and severed estate Link
  • History of State Metallic Minerals Leasing in Minnesota (since 1966) Link

 

School Trust and fiduciary responsibility

Permanent School Fund and School Trust Lands

Learn more about School Trust Lands:

  • The permanent school fund of the state consists of the original USA grants to schools in each township (sections 16 and 36, historically), the swamp lands granted to the state, and the indemnity and internal improvement lands granted to the state.
  • Minerals have generated 80% of the historical total revenue to the Permanent School Fund.
  • Read about the Permanent School Fund in the Minnesota Constitution, Article XI This link leads to an external site., Section 8.

The legislature intends that it is the goal of the permanent school fund (Minnesota Statutes, section 127A.31) This link leads to an external site. to secure the maximum long-term economic return from the school trust lands consistent with the fiduciary responsibilities imposed by the trust relationship established in the Minnesota Constitution, with sound natural resource conservation and management principles, and with other specific policy provided in state law.

Leasing nonferrous metallic mineral interests on School Trust Lands is one process used to generate revenue for the Permanent School Fund. As of May of 2012, active nonferrous metallic minerals leases on School Trust Lands makes up 30% of all active nonferrous metallic minerals leases. A number of these leases are located on known metallic mineral deposits; Maturi deposit, Birch Lake deposit, and Mesaba deposit. The potential future revenue for the Permanent School Fund from these three deposits is in the range of $2-3 billion. These are just estimates since metal prices tend to vary over time.

The commissioner of natural resources has the authority and responsibility (Minnesota Statutes, section 84.027, subd. 18) This link leads to an external site. for the administration of school trust lands.  Currently, the DNR administers approximately 2.5 million acres of school trust surface and mineral interests and an additional 1 million of acres of severed school trust mineral interests.

 

State policy

State mineral economy

The Minnesota Legislature enacted Minnesota Statutes, section 93.001 This link leads to an external site.setting forth state policy to:

“provide for the diversification of the state's mineral economy through long-term support of mineral exploration, evaluation, environmental research, development, production, and commercialization.” 

Leasing and revenue

The state of Minnesota issues leases for nonferrous metallic minerals mining units pursuant to Minnesota Statutes, section 93.25; Minnesota Rules, parts 6125.0100 -.0700. MN DNR creates mining units to establish the state-owned lands and minerals that are available for lease in accordance with Minnesota Statutes, section 93.15. As a result of metallic mineral leasing, a portion of the state’s mineral economy is derived from nonferrous metallic mineral exploration and development. Even with a lease, a mine cannot be built until an Environmental Permit is obtained.

Purpose and policy

The state Minnesota Rules, Chapter 6132 This link leads to an external site. states that the purpose and policy concerning nonferrous metallic minerals is:

Learn more:

*The PDF includes embedded 'speaker notes' with additional information for select slides. The speaker notes can be viewed in Adobe Reader or Acrobat, and within the following internet browsers; Internet Explorer, Mozilla Firefox, & Safari. Google Chrome does not display the speaker notes.

Purpose

  • control possible adverse environmental effects of nonferrous metallic mineral mining,
  • to preserve natural resources,
  • and to encourage planning of future land utilization,
  • while at the same time promoting orderly development of nonferrous metallic mineral mining,
  • encouragement of good mining practices,
  • and recognition and identification of the beneficial aspects of nonferrous metallic mineral mining

Policy

  • mining be conducted in a manner that will reduce impacts to the extent practicable,
  • mitigate unavoidable impacts,
  • ensure that the mining area is left in a condition that protects natural resources and minimizes to the extent practicable the need for maintenance.

Nonferrous Metallic Minerals Lease Sale

The MN DNR offers nonferrous metallic minerals leases through a public competitive bid offering (Minnesota Rules, parts 6125.0500) known as the Metallic Minerals Lease Sale

The metallic minerals state lease category includes elements such as copper, nickel, platinum, palladium, gold, silver, cobalt, chromium, titanium, zinc, lead, bismuth, tin, tungsten, tantalum, niobium, or rare earth elements. Some of these ores contain native gold or native copper, or oxides of chromium or titanium, but the common trait in this category is that most of the ore deposits contain sulfide minerals. Conditions and obligations within state mineral leases, environmental review, and permits are all specifically designed to mitigate the environmental impacts of exploration and/or mining of sulfide minerals.

All leases for nonferrous metallic minerals must be approved by the Executive Council (93.25, Subd. 2). The Executive Council consists of the governor, lieutenant governor, secretary of state, state auditor, and attorney general. 

Learn more:

*The PDF includes embedded 'speaker notes' with additional information for select slides. The speaker notes can be viewed in Adobe Reader or Acrobat, and within the following internet browsers; Internet Explorer, Mozilla Firefox, & Safari. Google Chrome does not display the speaker notes.

 

Locations of state nonferrous metallic mineral leases

Explorers invest in locations where they believe the geologic conditions are prospective to contain undiscovered mineral deposits, based upon known mine locations with similar geologic conditions in other parts of the world.

Since 1966 the state has offered state leases for metallic minerals on the state mineral rights in the following 21 counties: Aitkin, Beltrami, Carlton, Cass, Cook, Crow Wing, Itasca, Kanabec, Koochiching, Lake, Lake of the Woods, Marshall, Mille Lacs, Morrison, Norman, Ottertail, Pine, Roseau, St. Louis, Todd, and Wilkin Counties. In that time 3,158 metallic minerals leases have either been terminated or expired by 92 exploration companies. As of July 21, 2014 there are 310 active leases in 6 counties.

Map 1 titled, "State Mineral Interests and Metallic Minerals Leasing in Northern Minnesota (as of July 21, 2014)," displays active metallic minerals leases, expired or terminated metallic minerals leases, and areas ever offered for state nonferrous metallic minerals lease to the PLS forty-level of detail. The map also displays state mineral interests that have no history of being offered for lease.

Map 1: State Mineral Interests and Metallic Minerals Leasing in Northern Minnesota as of July 21, 2014.

Map 1: State Mineral Interests and Metallic Minerals Leasing in Northern Minnesota as of July 21, 2014. Click for a full size view of this map as a PDF

Map 2 titled, "Minnesota's Active State Metallic Minerals Leases," displays only the active state nonferrous metallic mineral leases (as of July 21, 2014) in 6 counties as shown in Table 1. Note that the map is so small that it cannot accurately show the details of the size (acreage) and shape (parcel shape and number of parcels) of each state mineral lease. That information is available in a document called the State Mining Unit Book.

Map 2: Active State Nonferrous Metallic Minerals Leases in Minnesota as of July 21, 2014.

Map 2: Active State Nonferrous Metallic Minerals Leases in Minnesota as of July 21, 2014. Click for a full size view of this map as PDF

Table 1: List of counties with state metallic minerals leases (as of July 21, 2014)

County Number of Leases Percentage of Total Leases
Aitkin 67 22%
Carlton 18 5%
Itasca 21 7%
Koochiching 3 1%
Lake 92 30%
St. Louis 109 35%
6 Total Counties 310 Leases 100%

 

Targeted metallic minerals for exploration

There has been exploration for copper and nickel deposits in the bedrock unit called the Duluth Complex in St. Louis and Lake Counties, since the discovery of copper and nickel mineralization there in 1948. Platinum and palladium were discovered in the Duluth Complex in 1986. Subsequent geologic research indicates that the copper and nickel and platinum and palladium tend to occur together in the known deposits in the Duluth Complex. But platinum and palladium could be found in separate deposits from the copper and nickel, based upon examples around the world. Known deposits of Titanium have been found in Oxide-bearing ultramafic intrusions of the Duluth Complex.

See the geologic map This link leads to an external site. for the location of Duluth Complex and related bedrock units associated with the Midcontinent Rift, a feature formed when tectonic forces pulled the continent apart. The Midcontinent Rift's Tamarack intrusion in Aitkin County is being actively explored and is known to host copper and nickel mineralization.

There are private mineral leases in virtually all the same areas as the active state mineral leases. These are on privately owned lands, so the state does not have locations for them, except where a company discloses the lease in a public way such as on a website. There is also exploration for copper and nickel on private (not state) mineral leases in southern MN.

There has also been gold exploration in many areas of Minnesota for more than 100 years. There are many bedrock locations that contain economic quantities of gold, but so far only small tonnages have been found. One example is near the cities of Virginia and Gilbert, just north of the iron mines. Currently there is gold exploration occurring in St. Louis, Itasca, and Koochiching counties.

 

Companies with State Nonferrous Metallic Minerals Leases

Table 2: List of companies holding state metallic mineral leases (as of July 21, 2014)

Exploration Company Number of Leases Counties
Agate Lake Resources, LLC 11 St. Louis
DMC USA LLC 53 Lake and St. Louis
Encampment Minerals, Inc. 80 Lake and St. Louis
Franconia Minerals Inc. 17 Lake and St. Louis
HTX Minerals Corp. 2 Aitkin and Carlton
Kennecott Exploration Company 82 Aitkin and Carlton
Lehmann Exploration Management, Inc. 34 Itasca, Koochiching, and St. Louis
MMG USA Exploration LLC 1 Aitkin
Prime Meridian Resources, Inc. 4 St. Louis
Teck American Inc. 2 St. Louis
Twin Metals Minnesota LLC 10 Lake
Vermillion Gold LLC 14 Itasca, Koochiching, and St. Louis
Total 310 Aitkin, Carlton, Itasca, Koochiching, Lake, and St. Louis

 

 

State mineral interests: Defining the mineral estate, surface estate, and severed estate

As stated, the state may lease its nonferrous metallic mineral interests for mineral exploration and development according to Minnesota Statutes 93.25, Minnesota Rules 61.25.0100-.0700. Listed below are definitions and summaries of the three different estates; Mineral, Surface, and Severed.

Mineral estate

A mineral interest is an estate in real property that is referred to as the mineral estate. The mineral estate includes, among others, many different metal ores, coal, oil, natural gas, gemstones, silica sand, and dimension stone. The mineral estate consists of the following:

  • the right to use as much of the surface as is reasonably necessary to access the minerals,
  • the right to execute any conveyances of mineral rights,
  • the right to receive bonus consideration,
  • the right to receive rentals, and,
  • the right to receive royalty.

The mineral estate owner has the legal right to convey any or all of these five mineral rights.

Learn more:

 

Surface estate

Like a mineral interest, the surface interest is an estate in real property. Fee simple ownership of the surface estate means that the owner enjoys all the rights that one can hold in the surface. However, the term surface estate can mean a number of different rights in the surface including the right to sell, lease, mortgage, donate, subdivide, or grant easements over the surface and the right to a stream of benefits from agricultural production and natural resource development of the surface. The rights can be granted for a period of years, a day, year, lifetime, or be inheritable.

Severed estate

A severed estate occurs when a property owner severs the mineral estate from the surface estate. Doing so, thereby creates two separate ownership interests that can be conveyed separately from one another (e.g. Owner "A" can sever the mineral estate, convey the surface estate to Owner "B" and later convey the mineral estate to Owner "C"). In Minnesota, severed mineral estate owners are required to register their mineral estate by recording a Statement of Severed Mineral Interest (Minnesota Statutes, section 93.52.This link leads to an external site.

State law requires that the State retain the mineral rights whenever it conveys real property. Thus, a severed mineral estate is created when the State conveys real property. After a conveyance by the State a private party owns the surface estate and the State owns the mineral estate. (Minnesota Statutes, sections 16B.286, 93.01-93.04, 94.14).

 

If you have additional questions on this topic please contact:

Susan Damon, Transaction Manager
MN DNR - Division of Lands and Minerals
500 Lafayette Road 
St. Paul, Minnesota 55155-4045
tel. 651-259-5955 
fax 651-296-5939 
susan.damon@state.mn.us

 

History of State Metallic Minerals Leasing in Minnesota

The state began offering leases for nonferrous metallic minerals in 1966. Listed below is data from 46 years of state metallic minerals lease transactions and associated exploration between January 1966 through January 2012.

Significant summary points from the data:

  • 89% of state nonferrous metallic minerals leases were terminated within 5 years.
  • 97.6% of the current and historic state leased parcels for nonferrous metallic minerals had no exploration drilling on them.

Transaction History Tables

Table 1: State Metallic Mineral Leases (01/1966 to 01/2012)

Lease Status Number of Leases Percentage of Total
Active 387 11%
Terminated 2,992 89%
Total 3,379 100%

 

Table 2: Length of State Metallic Mineral Leases (01/1966 to 01/2012)

Terminated Leases (2,992 Leases) Percentage of Total Terminated Leases
Terminated within 5 years 89%
Terminated within 6-10 years 11%
Active Leases (387 Leases) Percentage of Total Active Leases
Less than 3 years old 31%
Lease is between 3 and 5 years old 27%
Lease is between 6 and 10 years old 31%
Lease is greater than 10 years old 15%

 

Learn more:

*The PDF includes embedded 'speaker notes' with additional information for select slides. The speaker notes can be viewed in Adobe Reader or Acrobat, and within the following internet browsers; Internet Explorer, Mozilla Firefox, & Safari. Google Chrome does not display the speaker notes.

 

History of State Metallic Minerals Leasing versus Exploration Drilling in Minnesota (46 years)

Historical data from January 1966 through March 2011

State Metallic Minerals Leases as 40 acre parcels 

As stated there have been 3,379 state metallic minerals leases. This equates to approximately 23,752 40-acre leased parcels since 1966. Note that some of these parcels have been leased multiple times though are only counted once for this calculation.

Exploration Drilling History on the 23,752 Parcels 

According to analysis of 46 years of state mineral lease data; 97.6% of all state metallic mineral leased parcels had no exploration drilling on them. There were a total of 1,477 total exploration drill holes (01/1966-03/2011) that intersected a state leased parcel. Those drill holes intersected 555 leased parcels or 2.4% of all state leased parcels.

Table 3: Exploration Drilling on State Metallic Minerals Leased Parcels (01/1966 to 03/2011)

Number of Parcels (approximately 40 acres) Number of Drill Holes per Parcel Total number of Drill Holes Percentage of Leased Parcels and Exploration Drilling
23,197 0 0 97.6% of the leased parcels had no exploration drilling
380 1 380 1.6% of the leased parcels had 1 exploration drill hole
116 2-5 317 0.5% of the leased parcels had between 2 and 5 exploration drill holes
41 6-10 307 0.2% of the leased parcels had between 6 and 10 exploration drill holes
18 11+ 473 0.1% of the leased parcels had greater than 11 exploration drill holes
23,752 total leased parcels   1,477 total drill holes 2.4% (n=555) of leased parcels had 1 or more drill holes. 97.6% (n=23,197) of leased parcels had no exploration drilling.

 

History of State Metallic Minerals Leasing versus Exploration Drilling in Minnesota (5 years)

Historical data from January 2008 through December 2012

New Analysis of Recent Exploration Drilling and State Leasing between January 2008 through December 2012 (5 years) on 4,465 Parcels 

A new analysis of state metallic minerals leasing versus exploration drilling was completed by the DNR to summarize the last 5 years of leasing and drilling in order to compare the historical results (46 years) versus the last 5 years of data, which has seen an increase in drilling and leasing. The new analysis, seen in Table 4, delivers similar results as the previous analysis (46 years: January 1966 through March 2011). 98.2% of all state metallic mineral leased parcels had no exploration drilling on them from the last 5 years of data. There were a total of 355 total exploration drill holes (01/2008-12/2012) that intersected a state leased parcel. Those drill holes intersected 83 leased parcels or 1.8% of all state leased parcels.

Table 4: Exploration Drilling on State Metallic Minerals Leased Parcels (01/2008 through 12/2012)

Number of Parcels (approximately 40 acres) Number of Drill Holes per Parcel Total number of Drill Holes Percentage of Leased Parcels and Exploration Drilling
4,382 0 0 98.2% of the leased parcels had no exploration drilling
37 1 37 0.8% of the leased parcels had 1 exploration drill hole
24 2-5 63 0.5% of the leased parcels had between 2 and 5 exploration drill holes
14 6-10 105 0.3% of the leased parcels had between 6 and 10 exploration drill holes
8 11+ 150 0.2% of the leased parcels had greater than 11 exploration drill holes
4,465 total leased parcels   355 total drill holes 1.8% (n=83) of leased parcels had 1 or more drill holes. 98.2% (n=4,382) of leased parcels had no exploration drilling.

 

If you have additional questions on this topic please contact:

Dennis Martin, Mineral Potential Section Manager
MN DNR - Division of Lands and Minerals
500 Lafayette Road 
St. Paul, Minnesota 55155-4045
tel. 651-259-5405 
fax 651-296-5939 
dennis.martin@state.mn.us

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