Petro reserve projections based on this information would be premature. Under terms of the Joint Operating Agreement, when 10,000,000 pounds of 30g have been delineated which can be ceonemically recovered, Minerals Exploration Company will finance construction of the mine and milling facility. Nuclear has the election to contribute its proportionate share of these costs currently or elect to have their costs advanced by Kinerals Exploration Company bearing interest at 10% per annum and recoverable from 90% of the cash flow attributable to Petro-Nuclear's interest in the venture. Far in excess of the required 10,000,000 pounds U30 has been delineated by drilling, but the crucial test of mining feasibility and the required marketing outlet have yet to be demonstrated. Management projects the 1975-1977 period before substantial cash flow will accrue to Petro-Nuclear Ltd. B) CLARKSON HILL, WYOMING A new province with an as yet undetermined potential is anfolding at Clarkson Hill, Wyoming in the Poison Spider Basin. This project also is being developed in joint venture with Minerals Exploration Company. Clone spaced drilling at Clarkson Bill has outlined a mineralized trend of ore grade and thickness extending over one mile in length. Wide spaced drilling during 1971 and 1972 indicated that the target sandstone continues for some additional miles in a favorable geologic setting. More drilling will be required to determine the full potential of this exciting project. 4- URAVAN MINERAL FELT, COLORADO: Petro-Nuclear Ltd. has continued to develop small high grade deposits in the Uravan mineral belt in western Colorado to be mined by lessors. There are currently two mines in operation on these properties. PROPOSED REORGANIZATION: In June, 1972, the Board of Directors of your company entored into a better of Intent to merge or reorganize with Silver Bell Industries, Inc. of Denver, Colorado. A condition to this reorganization is the approval by 66 2/3% of the total . outstanding shares of Petro-Nuclear Ltd. Complete details of this proposed reorganization are included with the proxy material enclosed, for your consideration. Silver Bell Industries, Inc. is engaged in the exploration for and development of base and precious metals at Ophir, Colorado; has made investments in commercial real estate ventures in Denver, Colorado; and has joined with Union Carbide Corporation in the exploration and development of uranium properties in the Uravan district of Colorado and the Red Desert area of Wyoming. Silver Eel1 Industries, Inc. holds an impressive land position adjoining our discovery in the Red Desert area of Wyoming Λ substantial part of this land position is being developed by Union Carbide Corporation under an agreement with Silver Sell. The combined position of Fetro-Nuclear Ltd. and Silver Bell in the Red Desert area will assure Petro and Silver Bell shareholders a substantial stake in any commercial development maturing there. 1 to Shaneholders Page 4 The financial, marketing and technological resources available through our associations with major companies, such as Union Oil Company and Union Carbide Corporation, we feel will be invaluable to the company. The management of your company believes that the goals and objectives of the current Silver Bol1 management is compatible with the objectives of Petro investors. We look forward to beccaing a part of a new company pursuing base and precious metals and energy fuels using its forte at land acquisition and w prospecting to encourage truly major companies to join us in the development and production of these commodities. W. J. Murphy, Mr. ATKISSON. However that may be, your opinion of his senility stands. By the way, the work that you yourself personally know of, how much of it would you say is geological survey in nature? I am talking about the work you have done on the claims that have been under discussion here all morning which is now in the hands of Fremont with an option to Washington Public Power System. Is it geological in nature? Mr. MURPHY. I think the exploration work that has been carried out and is being carried out is very serious, well planned exploration--- Mr. ATKISSON. Is it in the nature of a geological survey? Is any of it like that? Mr. MURPHY. Certainly. Mr. ATKISSON. Staff was unable to find, while it was spending a pleasant time in Wyoming, any filings of that geological work. Are you aware that under a 1958 Federal law when geological work of that type is undertaken a very detailed analysis of it is supposed to be filed in the county courthouse? Mr. MURPHY. No, I am not aware of that. I would consider that work highly proprietary. I would not consider that it should be filed. I am aware of no such regulations or interpretations of the regulations that requires that. Mr. ATKISSON. For your enlightenment and counsel's enlightenment, I have reference to title 30 of the United States Code, section 28. I will not bother to read it but will put it in the record at this point. Mr. LUKEN. Without objection, so ordered. [The citation referred to follows:] UNPATENTED MINING CLAIMS-LABOR ASSESSMENT REQUIREMENTS For Legislative History of Act, see p. 5116 PUBLIC LAW 85-876; 72 STAT. 1701 [8. 2039] An Act to clarify the requirements with respect to the performance of labor Imposed as a condition for the holding of mining claims on Federal lands pending the issuance of patents therefor, Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That: The term "labor", as used in the third sentence of section 2324 of the Revised Statutes (30 U.S.C. 28), shall include, without being limited to, geological, geochemical and geophysical surveys conducted by qualified experts and verified by a detailed report filed in the county office in which the claim is located which sets forth fully (a) the location of the work performed in relation to the point of discovery and boundaries of the claim, (b) the nature, extent, and cost thereof, (c) the basic findings therefrom, and (d) the name, address, and professional background of the person or persons conducting the work. Such surveys, however, may not be applied as labor for more than two consecutive years or for more than a total of five years on any one mining claim, and each such survey shall be nonrepetitive of any previous survey on the same claim. Sec. 2. As used in this Act, (a) The term "geological surveys" means surveys on the ground for mineral deposits by the proper application of the principles and techniques of the science of geology as they relate to the search for and discovery of minéral deposits; (b) The term "geochemical surveys” means surveys on the ground for mineral deposits by the proper application of the principles and techniques of the science of chemistry as they relate to the search for and discovery of mineral deposits; (c) The term "geophysical surveys” means surveys on the ground for mineral deposits through the employment of generally recognized equipment and methods for measuring physical differences between rock types or discontinuities in geological formations; (d) The term "qualified expert" means an individual qualified by education or experience to conduct geological, geochemical or geophysical surveys, as the case may be. Approved September 2, 1958. Mr. ATKISSON. I have no further questions, Mr. Chairman. Mr. GORE. Briefly, Mr. Chairman, I will say this. In your statement, Mr. Murphy, you talked about Mr. MacGuire's expertise in the mining laws. In order to buttress your contention that he has no expertise, you cited some litigation that he was unsuccessful in. I just thought that the record ought to be complete. In 1969 Mr. MacGuire overstaked 250 claims of U.S. Energy Corp. in Natrona County, Wyo., and won. He overstaked 500 claims of an individual in Converse County, Wyo. and in 1975 he overstaked 1,200 claims of Conoco in Sweetwater County, Wyo., on which Conoco had expended a good deal of work. He won and they have appealed. In 1975 he overstaked 600 Kerr-McGee claims in Johnson County, Wyo. The matter is pending in litigation. I submit that is not a bad batting average for someone who you say has no expertise in the mining laws. Shortly thereafter in your statement, you make an assessment that there is no such thing as uranium cartel and that no oil companies participate in it. I think the record established by the subcommittee earlier this year demonstrates the existence of the cartel. Mr. MURPHY. I qualified that clearly-to my knowledge. Perhaps Mr. MacGuire's knowledge is not as limited as you said earlier and perhaps yours is more so because there definitely is a substantial amount of evidence already gathered on the uranium cartel. Mr. MURPHY. With U.S. corporations participating? Mr. GORE. Oh, yes. We would be glad to furnish that for you. Mr. MURPHY. I am not aware of one. It is unusual that people I started with in this business 20 years ago-many of those are in executive positions and in exploration departments. It would be rare if I wouldn't hear about it. But it is possible. Mr. GORE. There has been substantial publicity about it. I will be glad to personally send you a copy of the hearing record put out by the subcommittee. Mr. MURPHY. I would appreciate that. Mr. GORE. That is all I have. Mr. LUKEN. Mr. Atkisson? Mr. ATKISSON. Mr. Murphy, taking all of the figures that you have put in your affidavit and lumping them together up to the time Fremont Energy entered into its agreement with Washington Public Power Supply System-which is too long to pronounce and so the staff has come to call it WPPS—and taking all the numbers together you get $32 million. That still is woefully short of the amount of annual assessment required under the law which for 18,000 claims, at $1.8 million a year for 7 years would be a little over $12 million. Is that not correct? Mr. MURPHY. That is correct. If I may, I would like to say this. We probably have some variance in interpretations about what is required under mining law. Other than just the very clearcut and bare facts statements that were set down in 1872, what we envision as the embodiment of that law or what has come to be incorporated in the law, comprises all the court cases which have judged the appropriate and inappropriate applications of that law since then. Our theory under which we believe our position to be defensible is that we have conducted a serious ongoing exploration program on the ground. Mr. ATKISSON. I appreciate those objectives. The law is pretty clear. It does say $100. You mentioned the year 1872 as if to put down the law. It strikes me that in 1872, $100 would buy a hell of a lot more assessment work than it will today so the requirement today is even easier than it was in 1872 when the Congress passed that law. They indicated very clearly the reason why it passed that law which was to encourage the development of Western lands. Mr. MURPHY. May I express an opinion again. Mr. MURPHY. I believe in 1872 they were talking about the work on the domain at that time as being ordinarily just a few claims. The work was put in on a particular little vein or whatever. It did not envision taking a big raw piece of desolated portions of the domain and trying to search out the microscopic values out of that total land picture. I think if you made a mining claim of 25,000 acres, which is about the minimum position that you look for in terms of a significant uranium ore deposit in this day, and if you applied $100 worth of assessment work to hold that land, then if you applied your inflation forward for the $100, then the perspective is more in line. Mr. ATKISSON. I appreciate that circumstances have changed and that in 1872 uranium was defined in Webster's Dictionary as a "useless metal.” But even though there are changes in the circumstances, I think your remedy, if you think that law is ill-suited to mining practices of today, lies with this House and the other body across the Hill to change that law, and if we ever get into the business of summarily breaking them to suit the convenience of practicality we're in trouble. I have no further questions. Mr. LUKEN. Since that was not a question, maybe we could terminate at this point. Is there anything else to be said? We thank you, Mr. Murphy. Again, those witnesses who are under subpena, the supena has not been withdrawn. But this hearing will adjourn until further call of the Chair. This is no definite time specified. I am corrected. For those witnesses who have testified, they need not appear Monday morning but those who have been called for Monday morning, there will be a continuing session on this matter on Monday morning at 10 a.m. in this room. Mr. CONSTANTINE. Is Mr. Murphy released subject to later call? Mr. LUKEN. That is correct. That is so we wouldn't have to go through the subpena, but we will have to give you a reasonable notice. We thank you. The subcommittee stands adjourned. [Whereupon at 2:50 p.m. the subcommittee adjourned.] |