Potash Lease

[bucket]

I know nothing about this but if it's based on the price of potash get them to use the retail price at your local retailer.

It's about 250 dollars a tonne higher than their production costs or higher than their price to the Asia countries.

[boarderbloke]

Do you not get a percent of the potash removed from your minerals, like an mineral lease for oil & gas? or do you just receive this flat acreage payment?

[farmaholic]

Is it the fact they won't allow leasing different minerals on the same property.

Or is it interference with each other's extraction processes. Oil and potash. Or where one exists the other doesnt?

I thought I heard something about "zone" leases in oil country?

I know nothing about this but would.like to hear an informed opinion.

[sumdumguy]

Alberta allows leases in layers, I am told Sask not.

[LEP]

The government leases different zones to different companies. I am sure they did that near Midale.

I would make sure that you spoke to a lawyer with experience in resources. The advice you get ain't worth a pinch of salt otherwise.

I would think the biggest impetiment to leasing different minerals would be the proximity of pay zones although I doubt there is oil very close to any of the potash mines.

Using retail price of potash is a non starter. It would be like saying you want to use pump price for oil royalties.

[checking]

It appears the potash company (maybe), but could just be a speculative land company wants to tie up your 160 acres of potash minerals for 21 years for the grand sum of $3200.00 of chump change. Did you ask who you were dealing with?

If it's the later, and you signed, then you just gave, whoever, decades to pedal your potash minerals for their own gain through subleasing with no assurance they will ever be produced, which is where your royalty percentage makes you the big bucks.

Yipes, 1950 revisited!

[parsley]

A potash company offered me money to buy my mineral rights several years ago.
I ignored them.

The potash company then offered to lease my mineral rights.
I ignored them
The potash company then offered to both buy some of my mineral rights plus lease some of the mineral rights
I ignored them.

The potash company then asked me what I wanted.

I said I want to keep the rights to other minerals, for example oil, but perhaps would be willing to renegotiate leasing. perhaps.
We agreed they will wait for me to call them. Parsley

[oneoff]

We are all really so ill informed about that which we really do know absolutely next to nothing.

Its quite probable that the "landman" said he represented a "potash" company or whomever. If you pressed what company name would be...quite probably that person would say they weren't at liberty to say.

Thats when a person says they can only do business with someone that has a name and track record.

This is a game of speculation; options and making deals with those who are naive and uninformed about business they only encounter infrequently....if at all...in a lifetime.

[parsley]

The potash company itself sent me a formal offer and a formal agreement form to sign.

We do have a lawyer in the immediate family, who I am quite sure I can convince to check the agreement if I should take the notion to proceed, on some fine Monday morning.
But thanks for your kind concern, oneoff. Parsley

[mrossm3]

I own MR's on a 160 acres about 2 KM's (stoney beach) from the operating Mosaic Solution mine in Belle Plaine. I know they are expanding north. I have had a land-man chasing me for quite some time @ $100 per acre to SELL the rights. I have been digging about for a couple of years trying to get an answer on the worth of those M rights but to no avail. If you or someone else on this forum has an idea I would sure like to have a discussion and gain some insight.

[sumdumguy]

is that $100/acre/year?

[oneoff]

If you are asked to SELL the rights; that 100.00 per acre is likely to appear in one and only one cheque.

After all it isn't reasonable to still be receiving $100.00 per acre per year until eternity. There would come a time after the resource is mined and gone...that some bean counter would catch on that payments had to cease.

[oneoff]

And pars.....not everyone has a lawyer in their family.

and I have never doubted that some people are quite capable of looking after themselves.

But in matters like mineral rights and leases; its pretty safe to say that only a very few persons even know what the questions are that should be clarified.

[oneoff]

You know that back in the early 1950's Imperial Oil signed up leases for oil rights in Sask for 3 cents per acre per year.


And if the option was taken up to drill a well and they obtained commercial production of hydrocarbons; then a royalty of one barrel in eight was due to the oil mineral right holder. And that's where the old standard of a 12.5% royalty came from.

Fast forward to 2015 and we have potash companies looking to tie up the relatively few potential reserves that are not under lease by ordinary members of the public.

My question to the readers is have you ever thought how many tonnes of potash per acre might underlie a quater section that probably has the highest purity of potassium anywhere on the face of the earth.

Now the next step is the mind blowing one.

At an analogous "one barrel in eight" you could settle for with any oil company or speculator lease; just what fraction would you settle for with potash.

My guess is that most uncommitted potash rights owners don't even know what the point is.

Any idea what the gross value of the potash is under that quarter section?

Or in other words...how many pennies per ton will you receive when that resource is mined?

And thats my answer to the reply above about a relationship between crude oil and price at the pumps. Maybe with oil its out of whack by a couple of times its value......but I'm guessing that potash companies pay a ridiculously low royalty (or maybe nothing) to the rights holders above the lease payment (or an outright sale)

All I know is the pennies on the dollar deal they have with the provincial government for royalties. Why would they pay even that same fraction to an ordinary potash mineral holder who has zero chance of ever mining their own potash reserves.

[oneoff]

Based on what should now be called the history of the boom period that may just have ended; it appears that an approx 4.7% royalty (maybe plus or minus 4.7%) was the cut given to various lease holders.

Going forward into uncharted water; it might be wise to factor in that extremely high construction and operating costs are involved; the provincial government has just overhauled lease and "block' rules through legislation etc. etc.
Further; what demand will be; who the customer(s) will be; how price levels are set; who pays the bookkeeper; and whose interest is most important to the business.

It appears any payout to mineral owners, speculators or government coffers as well as decisions made regarding naming rights; pet projects and so on are outside the open ended lease deals that an extremely small number of people are looking at as a lottery windfall.

Who knows....even that might change