Dust flux, Vostok ice core

Dust flux, Vostok ice core
Two dimensional phase space reconstruction of dust flux from the Vostok core over the period 186-4 ka using the time derivative method. Dust flux on the x-axis, rate of change is on the y-axis. From Gipp (2001).

Wednesday, February 16, 2011

More Hands in the Till

Whenever an industry becomes more profitable, it sends a signal to governments to start looting.

Now comes word that Obama's new budget proposes a 5% royalty on gross proceeds of mining (which sounds to me like the equivalent of a net smelter return, or NSR).

True, 5% doesn't sound like much. When you develop a project which is later taken over by a larger outfit, you normally keep your share of the project in the form of an NSR--the reason being that if you maintain a percentage of the profit, the operator would never actually make one (for the same sorts of reasons that movies never make profits).

As a quick rule of thumb, every 10% interest you have in a project is converted into a 1% NSR.

A 5% NSR is what you would give to a partner who owned half of the project. So this proposed royalty is the equivalent of the government siezing 50% ownership of all qualifying hard rock mines in the US.

If this goes forward, it just may have an impact on the share prices of certain American exploration and mining companies.

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