Current through Register Vol. 35, No. 6, March 26, 2024
In the matter of the application of Kerr-McGee Corporation
for consolidation of all small tracts or interests in Section 19, Township 14
North, Range 9 West, New Mexico Principal Meridian, McKinley County, New
Mexico, pursuant to Chapter 33, New Mexico Laws of 1967.
A. This cause came on for hearing at 9:30
a.m. on March 19, 1968, at Santa Fe, New Mexico, upon the Application of
Kerr-McGee Corporation (hereinafter called "Kerr-McGee") praying for an order
of consolidation of all small tracts or interests in Section 19, Township 14
North, Range 9 West, N.M.P.M., McKinley County, New Mexico (hereinafter called
"Section 19"), pursuant to Chapter 33 of the New Mexico Laws of 1967.
B. After an examination of the files in said
cause, the undersigned finds said Application was filed with the undersigned on
the 19th day of December, 1967, and that on said date the undersigned set the
Application for hearing at 9:30 a.m. on March 19, 1968, at Santa Fe, New
Mexico; that due notice of this hearing has been given by publication in the
Gallup Independent on February 7, 14, 21, and 28, 1968, as shown by affidavit
of publication filed herein, and by mailing, as shown by affidavit of mailing
filed herein.
C. The undersigned,
having heard and considered the evidence concerning the said application, and
being fully advised in the premises, Finds:
(1) The state geologist of the state of New
Mexico (appointed pursuant to Section
65-3-1 New
Mexico Statutes Annotated, 1953 Compilation) has jurisdiction of this cause and
the subject matter thereof.
(2)
Kerr-McGee is a corporation organized under the laws of the state of Delaware,
qualified to do business in the state of New Mexico, and is presently engaged
in the exploration, development, mining and processing of ore, and the
production and marketing of uranium in concentrate, in the Ambrosia lake area
of McKinley county, New Mexico.
(3)
Section 19, containing 645.50 acres, is comprised wholly of contiguous small
tracts, each containing two acres or less. Such small tracts were created by
the subdivision of Section 19 by a plat of subdivision filed with the county
clerk of McKinley county, New Mexico, on November 30, 1933, as Reception No.
2162, and recorded in Book 6 of Miscellaneous Records, page 586.
(4) Kerr-McGee has made extensive, diligent
and good faith effort to identify and locate every person owning an interest in
each small tract in Section 19, and, as to each owner who has been identified
and located, has made extensive, diligent and good faith effort to purchase,
lease or otherwise acquire mining rights covering such interest for the purpose
of exploring, developing, mining, producing, marketing and/or processing
uranium and uranium ore. As a result of these efforts, Kerr-McGee presently
holds mining rights covering in excess of 85 percent of the entire mineral
estate in Section 19. Despite the efforts that have been made by Kerr-McGee to
identify, locate and acquire mining rights from all owners of interest in
Section 19, there remain owners of small tracts or interests therein whose
addresses are unknown, or from whom Kerr-McGee has not acquired mining
rights.
(5) The lack of exploration
and development on Section 19 up to the present time makes it impossible to
ascertain that all or any portion of Section 19, or any small tract therein,
definitely contains uranium ore on all sides of Section 19, and other geologic
evidence, indicates that each small tract in Section 19 probably will be
productive of uranium ore. The entirety of Section 19 therefore composes an
appropriate unit for consolidation.
(6) Kerr-McGee proposes to conduct
exploratory operations on, and to develop, mine, produce, save, remove, market
or process uranium ore and other associated minerals mined therewith from
Section 19. The proposed operations are feasible and in accord with good
industry practices.
(7) The
exploration and mineral development of the small tracts in Section 19 on a
separate and individual basis would be uneconomic and impractical, and the
consolidation of Section 19 is needed to induce mineral exploration and
potential mineral development in order to avoid waste of natural resources and
to protect the correlative rights of all owners in Section 19.
(8) Due to the diversity of ownership of the
small tracts in Section 19, and due to the inability of Kerr-McGee to obtain
mining rights from some of the owners, and in order to insure the development
of Section 19, all small tracts or interests in said Section 19 should be
ordered consolidated in the manner provided by Chapter 33, New Mexico Laws of
1967.
D. It is therefore
ordered: that all small tracts or interests therein in Section 19, Township 14
North, Range 9 West, N.M.P.M., McKinley county, New Mexico, be, and the same
hereby are consolidated pursuant to Chapter 33 of the New Mexico Laws of 1967.
As to each small tract or interest therein in Section 19 on which Kerr-McGee
does not otherwise hold the mining rights, a mining lease thereon is hereby
effectuated to Kerr-McGee under which it shall have the exclusive right and
privilege, by such means and methods as it shall determine, to explore for,
develop, mine (by underground, strip, solution or any other mining methods),
extract, store, remove, own, market or process, for its benefit and use, any
uranium ore and other associated minerals mined therewith, in, upon or under
the said tracts or interests therein, and to use so much of the surface of each
of said small tracts and of the water and appurtenant water rights as it shall
deem necessary or desirable for such operations, including, but not by way of
limitation, the right to construct and maintain buildings, roads, openings,
ditches, stockpiles, dumps and other improvements and facilities thereon, being
hereby given all such rights and privileges as may be necessary or convenient
in connection with the foregoing, as well as the right to mine and remove ore
from any of said tracts in Section 19 through or by means of shafts, haulage
ways or by other facilities located in or on other tracts in said Section 19 or
other lands, upon the following terms and conditions;:
(1) The mining leases effectuated by this
order shall be effective as of February 7, 1968, and shall remain in force for
a term of ten years from this date, and as long thereafter as such ores are
being produced, saved and removed from, or any mining operations are being
conducted on, said Section 19. Mine development or other operations preparatory
to mining, as well as actual mining and operations for or in connection
therewith, shall be considered to be mining operations. Mining operations shall
be deemed continuous so long as such operations are not suspended for any
period of longer than ninety consecutive days and despite interruptions in such
operations of whatever duration (whether or not in excess of ninety days)
caused by force majeure or by reason of lack of a satisfactory market for ores
from Section 19.
(2) If mining
operations are being conducted anywhere on Section 19, it shall be considered
such operations are being conducted on each small tract within Section
19.
(3) Uranium ore and other
associated minerals mined therewith, produced, saved and removed from any part
of Section 19, (hereinafter called "area production"), shall be considered as
though production of ore is had from each small tract within Section 19, and
there shall be allocated to each such tract as its share of the area production
that part of the area production which bears the same ratio to the whole amount
of such area production, as the area that the number of surface acres in said
small tract bears to the total number of surface acres of 645.50 acres in
Section 19.
(4) Kerr-McGee shall
pay a bonus of $10.00 to each owner with respect to the mining leases
effectuated by this order upon small tracts or interests therein as to which
Kerr-McGee does not otherwise hold the mining rights. This bonus shall be due
and payable when this order becomes final and effective.
(5) Royalty:
(a) Kerr-McGee shall pay a royalty of ten per
cent of the "mine value" of the ore produced, saved and removed from Section
19. The "mine value" shall be the value of such ore at the mouth of the mine in
the crude state in which produced, saved and removed, and shall be determined
as follows:
(i) The mine value of any such
ore taken by Kerr-McGee for processing in its uranium processing mill shall be
an amount determined and computed by:
(a)
multiplying the number of pounds of
U3O8 contained in said ore by the
"unadjusted value per pound" thereof as determined, on the basis of the "grade"
(i.e., percentage of contained
U3O8) of said ore, in accordance
with the following schedule:
Grade of Ore Unadjusted Value per
Uranium (U3O8)
Content Pound of Contained
U3O8
| 0.10% | $1.50 |
| 0.11% | $1.70 |
| 0.12% | $1.90 |
| 0.13% | $2.10 |
| 0.14% | $2.30 |
| 0.15% | $2.50 |
| 0.16% $2.70 |
| 0.17% $2.90 |
| 0.18% $3.10 |
| 0.19% $3.30 |
| 0.20% or more $3.50 |
and
(b)
then adjusting the result so obtained by multiplying such result by a fraction
having a denominator of $8.00 (which is the price beng received for
U3O8 in concentrate produced at
Kerr-McGee's mill and sold to the AEC during calendar year 1966) and a
numerator equal to the weighted average price per pound received for all sales
of U3O8 in concentrate made by
Kerr-McGee during the twelve month period ending with the month in which said
ore was processed and (c) finally then deducting from the adjusted result so
obtained the cost of transporting said ore from the mine to Kerr-McGee's mill
and also any sales, severance or similar taxes levied or assessed on or in
connection with said ore.
(ii) The mine value of any such ore sold by
Kerr-McGee before processing shall be the actual net proceeds received by
Kerr-McGee from the sale of said ore, less the cost of transporting said ore
from mine to point of its sale and less any sales, severance or similar taxes
levied or assessed on or in connection with said ore or the sale
thereof.
(b) The above
specified royalty on ore produced, saved and removed by Kerr-McGee from Section
19 shall be due and payable on or before the 25th day of the month following
the calendar quarter-year in which such ore is processed or sold by Kerr-McGee,
and said royalty, computed and determined as above provided, shall constitute
the sole and total royalty for such ore, and all components and constituents
thereof.
(c) Bonus and royalty
payments to the owners of each small tract or interest therein may be made by
mailing or delivering Kerr-McGee's check to such owners at their respective
addresses as shown on the records of Kerr-McGee, or if address is unknown, such
payments shall be made to the state treasurer of the state of New Mexico, at
Santa Fe, New Mexico, for the use and benefit of such owner, as provided by
Section 10, Chapter 33 of the New Mexico Laws of 1967.
(d) Royalty payments shall be conclusively
deemed to have been truly and correctly determined, computed and made if no
exception and claim for adjustment is made, with respect to the particular
payment involved, by written notice given within twenty-four months from the
end of the calendar quarter-year for which such payment was made.
(6) Kerr-McGee's
operations shall be carried on in a miner-like fashion and in compliance with
applicable laws and governmental regulations. Kerr-McGee shall have the right
to deposit waste material and overburden on Section 19, and to mine and remove
such pillars as it may elect from any underground working area it may wish to
abandon; however, Kerr-McGee shall not be liable for subsidence or other
damages done to the surface of the lands comprising Section 19, or the
improvements thereon.
(7) Uranium
ore and other associated minerals mined therewith, produced from Section 19,
will not be commingled with ores mined and produced from other lands, unless
procedures, consistent with good practice in the industry, are adopted and
employed to determine the quantity and grade of the ore produced from Section
19.
(8) Kerr-McGee shall have the
right at any time during the continuance hereof, or within one year after the
termination hereof as herein provided, to remove any machinery, fixtures,
buildings or other structures or property placed on Section 19.
(9) Kerr-McGee may, if it so elects, pay any
mortgage, taxes or other liens or encumbrances on Section 19, and in the event
of such payment, Kerr-McGee shall be entitled to reimburse itself therefor out
of any royalties becoming due to any tract owner, and shall also be fully
subrogated to the rights of the holders of the liens and encumbrances so paid;
provided, however, Kerr-McGee shall not be entitled to seek reimbursement for
taxes paid by it for the year 1968 or any prior years.
(10) In case of any dispute or question
regarding ownership of Section 19, or any royalties payable hereunder,
Kerr-McGee shall be entitled to withhold, without interest, payment of
royalties until such dispute or question has been properly settled and
appropriate proof (such as original or certified copy of the settlement
instrument) has been submitted to Kerr-McGee.
(11) If the estate of any tract owner is
assigned (and the privilege of assigning in whole or in part is expressly
allowed), the covenants hereof shall extend to their heirs, devisees,
executors, administrators, successors and assigns, but no change or division of
ownership or in the royalties payable hereunder shall be binding upon
Kerr-McGee for any purpose until fifteen days after Kerr-McGee shall have been
furnished with the original recorded instrument or instruments, or duly
certified copies thereof, properly evidencing the same and neither shall any
such change or division or ownership ever operate to enlarge the obligations or
diminish the rights of Kerr-McGee.
(12) Failure of Kerr-McGee to perform any of
its obligations hereunder, or to comply with any requirements hereof, shall not
automatically terminate the leases effectuated by this order, it being agreed
that such leases shall never be terminated, forfeited or canceled for any
failure of performance on the part of Kerr-McGee unless and until it shall have
first been finally determined by a court of record of competent jurisdiction
that Kerr-McGee is in default hereunder, and it shall have failed to commence
action within sixty days after the said judicial determination thereof to cure
such default and thereafter to prosecute such action to completion. Provided,
that nothing herein shall ever serve to create any commitment or obligation on
the part of Kerr-McGee, express or implied, to explore, develop, mine or
conduct any other operations on Section 19.
(13) Kerr-McGee shall not be liable or deemed
in default for failure to perform any of its obligations during periods in
which performance is prevented by any cause reasonably beyond Kerr-McGee's
control (any such cause being for purposes hereof "force majeure").
(14) While the leases effectuated by this
order remain in force, Kerr-McGee will pay the property taxes on any
improvements placed on Section 19 by it, but otherwise each tract owner shall
pay all property taxes on their separate tracts, except as provided in
paragraph 9.4.9 [now paragraph (9) of subsection D of 19.7.3.9 NMAC] of this
order.
(15) The provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
personal representative and heirs of the various tract owners and of
Kerr-McGee.
