Selling Vs Leasing of Mineral Rights

By | November 3, 2011

It is often confusing for the people who own a land along with the mineral rights, whether to sell the rights or to give them for lease. They are not sure about what exactly to do mostly in case of people having more properties. There are two cases in this situation. One is to sell the rights the moment you get a best deal from a good mining company. And the second thing is to wait till you get a good offer and best deal in the industry.

The moment you get a deal just try to compute the lease value and the price after selling your rights. Calculate the lease for a span of 40 years or even more. This is bit difficult because the calculation depends upon the price of the mineral on the particular day of mining and also quantity of mineral found on that particular day. However, with a professional assistance you can compute the things by taking the average of both the quantities. If it will is much lesser than the amount you get after selling your rights, a wise business man will sell his rights and enjoy the lump sum amount.

Second case, waiting for the best deal to come. Let us see this with an example. Mr. X has a few acres of land for which he wants to sell his mineral rights. He got a best deal from one mining company, but rejected it because he thought it is much lesser. After few days, the same company purchased the rights of his neighbor and found the mineral is not up to the mark what the company expected to be. Now, coming back to X, no company who came to know about his neighbors issue offered him the best deal. In this case, he cannot sell it, but only can lease his rights which earns very less mount of money.

So, it is always best to sell your rights the moment you thought you got a nice deal.