Q. What is the deadline on filing application for exploration assistance? A. The deadline for filing applications is 30 days before the authority for initiating exploration projects granted by the Defense Production Act of 1950 expires. As of now, that authority expires on June 30, 1951, so that current applications must be filed by May 31, 1951. Q. What is the advantage of filing Form MF-100 even if I don't have to for an exploration project? A. Besides making your project eligible later for priorities assistance, it provides basic data for supporting requests you may make in the future for Government purchase contracts, direct loans, or other forms of Government assistance if your prospect develops into a mine and the emergency continues. Q. Is there any other advantage? A. Some of the questions on Form MF-103 duplicate those on Form MF-100. If you have filed Form MF-100, you can disregard those questions on Form MF-103. Q. What happens after DMA receives my application on Form MF-103? A. If the Government does not have sufficient data on hand to act on your application, it may request a Bureau of Mines-Geological Survey team to examine and define your proposed project. Q. What factors does DMA consider in deciding whether to approve or reject an application? A. The strategic importance of the mineral involved is an important factor. Others are the geological probability of making a significant discovery, the availability of manpower, the availability of equipment and supplies, the accessibility of the project, water and power supplies, and the operating experience and background of the applicant. Q. If my application is approved, what happens? A. You are asked to enter a simple contract with the Government by filling in and signing Form MF-200, which will then be signed by DMA, and a copy returned to you. Q. What does the contract obligate me to do? A. To begin exploring a specific property for an agreed-upon metal or mineral, according to a definite plan, and to meet your share of the cost. Q. Who will be in charge of the work? A. You will assume sole charge unless the Government gives you permission in writing to have one or more independent contractors do part or all of it. In that event you must also obtain the Govenrment's written approval of the contract or contracts. Q. Can I obtain advice from the Government engineers and geologists? A. Yes; you can ask for their consultation and advice relative to your contract at any time. Q. Will the Government engineers and geologists inspect my project? A. The Government reserves the right to observe and inspect the project at all reasonable times, and you will be obligated to do all you can to help the Government representatives visiting it for those purposes. Q. Suppose I take charge of the project myself; can I count my time as part of the cost? A. Yes; but the Government will not participate in paying you at a rate higher than the prevailing wage or salary in the locality where your project is situated. If you perform any duties not connected with the exploration project, you must disregard the time so spent in figuring the part of your salary that can be counted as part of the cost of the project. Q. How much time do I have to complete the work? A. That will be specified in the contract. In no event will any exploration contract run for more than 2 years from the date of the contract. Q. Who will determine whether the project is successful enough so that the ore may be mined commercially, i.e., constitute a valid discovery? A. The Government. If its judgment is affirmative, it will notify you formally within 6 months after the work has been completed. This notification will describe specifically the nature and area of the discovery. Q. If exploration is successful, how soon after completing the exploration work do I have to begin mining? A. That is entirely up to you. Q. You mean I don't necessarily have to do any mining? A. That is right. It is within your own discretion whether or not to undertake development work or mining operations. Q. What chance do I have of getting my money back? A. Exactly the same that you would if you had prospected the property on your own. Q. How about the Government? A. The Government would receive its share of the money expended for explor ation, only in the event you decide to operate the porperty. Q. Will I have to pay interest on the money contributed by the Government? A. No: 10 years from the time the exploration contract is signed. A. You have to repay the Government's contribution on a percentage royalty basis until you have repaid the entire amount, without interest, or the 10-year period ends, whichever comes first. Q. What is the royalty rate A. It is on a sliding scale, ranging from 1% percent of your net smelter returns or other net proceeds if they are $8 a ton of ore or less up to a max imum of 5 percent. The rate goes up 1⁄2 percent for every full 50 cents by which your net smelter returns exceed $8 a ton of ore, up to but not in excess of 5 percent. Q. Suppose I take out some ore during exploration work-when trenching or tunneling in order to prove the extent and grade of the deposit, for instanceis it subject to royalty? A. If you ship it, you must pay the Government the proper percentage royalty just as if you had produced it in development and mining operations after the conclusion of the project. Q. Suppose I dispose of the property before the 10 years are up, and before ,the amount of the Government contribution is wholly repaid? A. The Government has a lien on the net proceeds during the full 10-year period, no matter who controls the property. Q. If I don't own the property, but am only a lessee, can I still obtain an exploration grant? A. Yes. However, it will be necessary for you to secure subordination agreement from your lessor. A form (Form MF-202) for this purpose will be provided you by DMA. Q. Suppose my lessor will not sign the subordination agreement? A. This is possible, but unlikely. The subordination agreement cannot be any detriment to the lessor, and the lessor will be the principal beneficiary of any discovery that may be made. The purpose of the subordination agreement is to preserve the Government's lien on the property should the lease be canceled or terminated, but the lessor should understand that the lien and obligation to pay relate only to the net smelter returns from ores that are newly discovered as a result of the exploration project. If no commercial deposits are discovered, or even if they are discovered and not worked, there is no obligation to pay anything to the Government. Lessors who hesitate to sign subordination agreements under these circumstances simply do not understand that the project will benefit them or else have no confidence in the lessee and in the Government who are willing to expend money to carry out an expleration project on the lessor's property. Q. Suppose I own the property, but it is covered by a mortgage? A. It will be necessary for you to secure the subordination agreement of your mortgage on the form (MF-201) supplied by DMA. Q. Suppose the mortgagee will not sign the subordination agreement? A. As in the case of a lessor, this is possible, but unlikely. The exploration for new mineral deposits cannot be anything but a benefit to any mortgage, inasmuch as if a discovery is made the mortgagee's security will be that much better. The Government requires the subordination agreement of the mortgage, because the Government is spending the money which will directly benefit the mortgagee's security. The mortgagee's position is affected only with respect to any possible new discoveries of ores, and does not diminish his existing security. Mortgagees will not hesitate to sign subordination agreements under these circumstances if they understand that it is for their own good, especially since the lessee and the Government are willing to expend money to carry out an exploration project that may greatly strengthen the mortgagee's security. Q. Suppose I am operating one or more good mines and making money. 1 have another property that looks good, so I apply for an exploration project. The Bureau and the Survey think it looks good and DMA approves my application, but when we come to explore I find I can't operate this property. Do I have to repay the Government out of what I get from my other mines? A. No. The Government's contribution is repayable out of net proceeds from the sale of ore produced on the area covered by the exploration project and no other. When the project is completed the Government representatives will determine and define the block of ground including the discovery or development. The operator must repay the Government's share of the project cost from the net proceeds of production from this block. Q. Suppose I am mining one of the eligible metals and minerals, just getting by or perhaps losing a little so that I haven't been able to keep up exploration, and I've just about used up my ore in sight. Can I apply for an exploration grant to block out more ore so that I can keep going? A. Yes; but you cannot contract for development work under this agreement. The minute you pass from exploration to development, the Government steps out. Also, you can't count any of the costs that you would have anyway if you continued operating-overhead, pumping, supervision, equipment and supplies for your mining operation, and so on. Q. Just what do you mean by direct costs of exploration? A. The definition is spelled out in detail in the regulations (MO-5) governing the mineral exploration assistance program, copies of which are obtainable from DMA in Washington and DMA field offices. In general, they include the cost of materials, supplies, labor, direct supervision, engineering, power, water, and utilities. Q. How about existing improvements, such as buildings, on my property? A. You are supposed to devote them, as well as the land itself, to the project without any allowance. However, you can include the necessary-and reasonable cost of putting them in usable condition and keeping them that way. Q. How do I get the Government's contribution to the cost of the project? A. At the end of the first full calendar month after you begin work, and at the end of each succeeding calendar month, you submit to the DMA field office a voucher for payment. This must include a detailed statement of all work done and all allowable costs. Upon approval, the Government will pay you the agreed upon proportion of the allowable costs. These payments will be made promptly through the regional offices of the Bureau of Mines. Q. Is there a ceiling on the total amount the Government will make available? A. Yes. It differs from project to project, and your ceiling will be specified in the contract. Government payments will cease if and when their aggregate during the life of the contract reaches that ceiling. Q. How about liens and claims against the property? A. You can't count them as project costs. Paying back taxes or removing liens and other incumbrances on the property is not part of a mineral exploration job. Q. Suppose I borrow to meet my share of the cost. Will the Government advance part of the interest I have to pay? A. No. Interest would not be regarded as a direct cost of the mineral exploration project. Q. What kind of accounts will I have to keep? A. Your records and accounts must be complete enough so that the Government can examine and audit them at any time. Q. Does this mean that I must use some special system of bookkeeping? A. No; you can continue to use your accustomed system, so long as it is complete enough so that your books give a full picture of the financial status of the project. Q. When can the Government inspect and audit the records and accounts relating to this project? A. At any time. Q. Will it do this through its own accountants? A. Not necessarily. The Government can order an audit by a certified public accountant. Q. Who will pay his fee? A. It will be regarded as a cost of the project to which the Government contributes its proportionate share. Q. How long must I keep my project records and accounts? A. For 3 years after completion of the project or, if it is not completed, after the contract is terminated. Q. Can the contract be terminated before completion of the project or expiration of the time agreed upon? A. The Government reserves the right to terminate it for any of three reasons. Q. What are they? A. First, if you fail to put up your share of the money; second, if the Govern ment believes that you are not carrying on the project according to the agree ment; and third, if the Government feels that the work has failed to indicate the possibility of making a worth while discovery and that further work would not be justified. Q. What if I need additional improvements in order to carry out the project? A. If you obtain the written approval of the DMA Administrator in advance, the Government will pay its pro rata share of providing them. At the time of final settlement, the difference between their cost and their salvage value at the close of work is charged to the cost of the project. Q. What if I use equipment that I already own on the project? A. If you obtain the written approval of the DMA Administrator in advance, you can include its rental value in the cost of the project. Q. How is the rental value of my own equipment determined? A. On the basis of such factors as original cost, age and condition, and standard amortization rates. Q. What about hand tools such as wrenches, etc.? A. They are regarded as supplies, and therefore expendible, unless an individual item costs at least $50. Q. What if I have to rent or purchase equipment? A. Again assuming that you obtain the written approval of the DMA Adminis trator in advance, you can include the rental in the cost of the project. If you have to buy equipment, the Government will pay its pro rata share of the cost, and the difference between the purchase price and its salvage value at the close of work will be charged to the cost of the project as in the case of improvements added at the project site. Q. Who owns improvements and equipment paid for partly with my money and partly with the Government's? A. You and the Government jointly, according to the share of the cost that each put up. Q. What becomes of such items when the exploration project is completed? A. They must be disposed of for the joint account of you and the Government, unless the Government waives in writing its claim to any or all of the items. Q. What right does the Government reserve with respect to improvements installed or erected on the project site? A. It can require their dismantling and removal from the site at the close of the project. Q. What if I want to keep the improvements and equipment that the Govern ment helped pay for? A. You can buy out the Government's interest. Q. What reports will I have to make? A. Besides the vouchers and supporting evidence you submit in order to collect the Government's contribution to the cost of the project, you will be required to submit monthly progress reports, using Form MF-104. Q. What information will I have to include? A. Such data as the number and depth of holes drilled, including drill-hole logs, the amount of tunneling, cross cutting, shaft sinking, etc., done, the signs of mineralization encountered if any, and the results of any geophysical or geochemical prospecting done during the period. Q. What report will I have to file when the contract is terminated? A. You will be expected to submit a complete geological and engineering re port, including an estimate of ore reserves disclosed by the project. Q. What else will I have to do at that time? A. You will have to give the Government a full accounting of your operations and expenditures under the contract. In addition, you will have to dispose of any unused materials, supplies, and equipment for the joint account of the Goernment and yourself—you can do this by buying out the Government's interest if you choose and pay the Government its share of any money that may be left A list of DMA field offices follows: Region I, Defense Minerals Administration, Federal Building, Post Office Box 2990, Juneau, Alaska, for Alaska. Region II, Defense Minerals Administration, South 157 Howard Street, Spokane, Wash., for Washington, Oregon, Idaho, and Montana. Region III, Defense Minerals Administration, 1415 Appraisers Building, San Francisco, Calif., for California and Nevada. Region IV, Defense Minerals Administration, 224 New Customhouse Building, Denver 2, Colo., for Arizona, New Mexico, Colorado, Utah, and Wyoming. Region V, Defense Minerals Administration, 2908 Colfax Avenue South, Minneapolis 8, Minn., for North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, and Michigan. Region VI, Defense Minerals Administration, Post Office Box 431, Joplin, Mo., for Kansas, Louisiana, Oklahoma, Texas, Arkansas, and Missouri. Region VII, Defense Minerals Administration, Room 13, Post Office Building, Knoxville, Tenn., for Tennessee, North Carolina, South Carolina, Georgia, Florida, Alabama, and Mississippi. Region VIII, Defense Minerals Administration, Eastern Experiment Station, College Park, Md., for Illinois, Indiana, Ohio, Kentucky, Virginia, West Virginia, Maryland, New York, Vermont, Maine, New Hampshire, Connecticut, Rhode Island, New Jersey, Delaware, Pennsylvania, and Massachusetts. EXHIBIT 85 DMA FORM MF-105-APPLICATION FOR ACCESS ROAD Form MF-105 (April 1951) Budget Bureau No. 42-R1054. UNITED STATES DEPARTMENT OF THE INTERIOR DEFENSE MINERALS ADMINISTRATION (Leave blank) Instructions to Applicant: Complete five copies of this form, keeping one copy for your files and sending original and three copies to: NOTICE. If you have already filed Defense Minerals Administration Form MF-100 or MF-103, give date filed Docket No., if available and do not answer questions 3 to 7, inclusive. Then return signed forms to Defense Minerals Administration, Department of the Interior, Requirements Division, Washington 25, D. C. If more space is needed, attach additional sheets of the same size, indicating item being answered. 1. Location of project: State Mining district 2. Name of mine or plant (previous names, etc.) County Nearest town Other identifying data. 3. Principal metal or mineral produced (or to be produced) 4. Subordinate metals or minerals 5. Present average daily production 6. Estimated future average daily production 7. Estimated ore reserves or life of the mine 8. Access road requested from To be a new road?.... to Length. or improvement of existing road?. 9. Number of trucks by type and size Total trips per day (1-way) ___ 10. To the best of your knowledge, does any Federal, State, or county agency have jurisdiction over this road? Which agency? Have you been refused assistance by this agency? 11. Have you applied for a Federal loan for your mining or milling operation? If so, on what date and to what Government agency? |