State to exchange land with Rare Element Resources

graphic courtesy Wyoming State Lands

By Sarah Pridgeon

Rare Element Resources has initiated a land exchange that, if approved by the Board of Land Commissioners, will allow the company to acquire 640 surface and mineral acres of State Trust Land near Warren Peak, adjacent to the planned Bull Hill Rare Earth Mine.

In exchange, the State of Wyoming will acquire 400 acres of additional land in the Little Grand Canyon area, says Lisa Reinhart, Office of State Lands and Investments. The two parcels differ considerably in acreage as the Moskee land, currently owned by the Moskee Land Corporation, is of higher value.

“RER approached us a year ago with the potential exchange,” Reinhart explains.

The exchange will aid RER in its development of the Bull Hill Rare Earth Mine, allowing waste rock and low grade material to be stored after extraction from the Forest Service land upon which the mine will sit. The waste rock storage piles will be reclaimed at the end of the mine’s life by replacing the top soil and re-vegetating the area to a natural appearance.

The benefit to the state, says Reinhart, is triplefold. “We will be acquiring land with a higher appraised value if the exchange is approved by the Board of Land Commissioners,” she says, referring to the appraised values obtained in 2012.

As the State Trust Land was valued at $960,000 and the Moskee Land at $1 million, the value of the Common School Permanent Land Fund will be increased by at least $40,000 if the exchange occurs. The difference in value is attributable, according to the detailed analysis of the exchange, to the transitional nature of the market in the Black Hills, which changes quickly across short distances and is particularly pronounced when moving east into ‘core’ areas (versus adjacent ‘transitional’ zones with fewer amenities.)

The Moskee land is also believed to be an area of higher appreciation although, as appreciation rates are influenced by market conditions, the economy, interest rates, inventory levels and amenities, this is speculative and would only be realized on a future sale.

“Secondly,” Reinhart continues, “As RER holds 497 unpatented mining claims and therefore can mine on the adjacent Forest Service land, if the Bull Hill Mine is developed, the State Trust Land at Warren Peak will lose value. Finally, the State will also acquire additional mineral rights on the Moskee parcel.”

According to the detailed analysis, the state will reserve a non-participating royalty interest; essentially, it will collect the same amount in royalty from the Warren Peak land should the exchange occur. It will also gain additional mineral interest and potential for additional revenue from the Moskee Land minerals.

In addition, the state will gain potential opportunities for timber production on land with similar forest stands to its current holding.

“While the State section is currently being harvested, the Moskee parcel is not,” explains the detailed analysis. “Opportunities for forest management practices including forest product sales would exist in the short and long term. Timber production will continue on the Moskee parcel with mature trees currently ready for harvest and long term harvest potential with rotations every 80 to 100 years.”

“The main consideration is our Trust Land Management Objectives,” explains Reinhart. “We need to make decisions that are in the best interest of our Beneficiaries and it’s better to have the Moskee land in exchange for the Warren Peak Section if the Bull Hill mine is developed.”

The Moskee land, which can be accessed from Grand Canyon Road, is currently used for grazing, recreation and hunting. Wyoming State Parks & Cultural Resources commented in its review of the exchange that, once the land sale is complete, the department will work with RER to keep the groomed snowmobile trail and two OHV access roads on the Warren Peak land open for recreationists.

A preliminary analysis of the exchange was presented to the State Board of Land Commissioners on October 4, 2012 during a public board meeting. At that time, the Board approved a Resolution Approving the Agreement to Initiate the Exchange with RER.

The detailed analysis is now available for public review on the website at lands.state.wy.us and the comment period is open until March 15, while the final Board consideration date is anticipated for April 11.

“The public comment period will be a minimum of 60 days and comments can be submitted to the Office of State Lands and Investments at 122 West 25th Street, Cheyenne, WY 82002,” says Reinhart. A public hearing will be held in Sundance.