Las Vegas Sun

September 2, 2014

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Letter to the editor:

Nevada shouldn’t scare away mining

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When considering increasing state revenues from mining, it is crucial to understand certain realities of the mining business. Mining is very good for Nevada but could leave if efforts to turn it into a cash cow go too far.

Nevada has favorable geology and new discoveries will surely be made to replace existing mines as they are worked out — provided we do not remove the financial incentives for continuing the high-risk business of mineral exploration and development. Mining is truly international, going wherever in the world that offers favorable geology and political-economic environment. There are many places to choose from, and countries with great geology are ignored for decades because of the other factors.

Mining is cyclical — it has always been boom or bust. When metal prices are good, lower-grade ores are mined, extending mine life and helping profitability. As prices tank, profits drop and operations restrict or go out of business.

It is crucial that the tax structure be based on net profits rather than gross income, to allow the industry to ride out the bust years, and to continue to attract new exploration for the next generation of mines.

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  1. Mining tax in Nevada is a sweetheart deal, for the mining company. For the citizens of Nevada? Not so much.

    The Nevada Net Proceeds is gross revenue less deductions for the following: cost of extraction, transportation costs, marketing and delivery of mineral, fire and workers insurance, production royalties and depreciation. The maximum rate is 5%.

    The Hollister dig (here in Nevada), currently producing, is one of two claims held by Great Basin Gold, a company incorporated in Canada. Hollister is number 1 of the top ten rated gold claims producing in the world, by grade (grams of gold per ton). They can afford to pay more, and they will. The state Senate passed a resolution to increase mining taxes. The vote was 17 - 4 with only four GOP votes against. It will go to the Legislature where it is pretty much guaranteed to pass. Ultimately, the voters will decide in 2014. Being a resolution, the Governor is not a factor.

  2. When taxes and fees were levied, gold and silver were selling at prices that were hardly worth mining. That's not the case anymore and hasn't been for years. In 2003 it cost mining companies about $200 an ounce to mine the gold which was just shy of what it was selling for on the market. Gold is $1400 an ounce now and has been on the rise for the last 10 years and likely will remain at current levels, and certainly higher than $200 an ounce, well into the future.

    Carmine D

  3. The author left out a very important fact. You just can't mine anywhere expecting to find precious ores or gems. They can only be found in suitable geological environments.

    The question that needs to be asked, is mining being subsidized with our tax dollars like other profit making industries?

  4. If you worry about the boom/bust cycle and maintaining the industry during a bust cycle then apply taxes based on the differential between market price and production costs.

  5. The letter writer needs to visit a gold-mining operation. It takes a vast amount of money and time to set up a gold-mining operation like what exists in northern Nevada. Barrick Gold takes billions of dollars worth of gold out of this state and it's not even an American company. It's based in Canada. The people in the state are so stupid they can't even dig their own holes in the ground. Regardless of how you tax mining operations they're not leaving Nevada. Read Carmine's post above. He's absolutely correct. At these prices mining is a license to print money.