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Forming an LLC for a Mining Claim
by Steve Herschbach
Hi,
I posted this under my Moore Creek thread, but thought it merited it's
own thread. Maybe someone can learn something from the links, etc.
I just formed a Alaska Limited Liability Company (LLC) and used it to
purchase and stake some mining claims on state land. Here is the general
story:
Forming the LLC was really easy. Every state has it's own process, but
it's basically the same. In Alaska you go the the Alaska Banking,
Securities, and Corporations website at http://www.dced.state.ak.us/bsc/corps.htm
and download the application. It is all of two pages. Fill it out, and
file with a $250 filing fee. It's somewhat like a business license as
you have to renew every couple years.
An LLC is a cross between a partnership and a corporation. You manage it
like a partnership but it affords you most of the legal protections
against liability of a corporation.
You also need an operating agreement to really cover yourself against
things like partners dying, etc. Generic agreements can be had and
modified to suit. A proper operating agreement solidifies your LLC so do
not neglect this important step.
Your liability is essentially limited to what you have invested in the
LLC, in this case our claims. If it turned out we had an EPA toxic waste
site on our hands we could walk away. We would lose what we invested in
the claims, but they could not come after my house or my business. At
least, that's the theory!
Getting the LLC set up was a key first step. With this done a business
checking account was the next step. Monies were deposited by the LLC
members, and the claims purchased using a Quit Claim Deed for Mining
Claims Form found at http://www.dnr.state.ak.us/mlw/forms/qcd.pdf.
This form must be filled out and notarized, then filed with the
Recorders Office.
We executed a second Quit Claim Deed on all rights to structures, tools,
equipment on the claims. Exclusions were noted on some items.
That done, the ground was examined for potential claims on surrounding
land. These claims were staked using Alaska's new MTRSC forms located at
http://www.dnr.state.ak.us/mlw/forms/mtrsc.pdf.
A factsheet on the process is found at http://www.dnr.state.ak.us/mlw/factsht/mine_fs/mtrsc.pdf.
A copy of the form is put on the NE #1 corner of each claim while
staking.
Our claims are located in the Mt. McKinley Recording District, and that
means documents are recorded in Fairbanks. Kind of silly in this day and
age. But that's the way it is. A copy of the claims form is filed with
the Recorders Office, in this case via Registered Express Mail. You
actually have 45 days to file the paperwork but why delay? I always fear
paper stakers mucking up the process and so I want to get on record
ASAP.
The only part of the whole process I found confusing was the filing fees
listed at http://www.dnr.state.ak.us/ssd/recoff/fees.cfm.
Since all the paperwork for four claims was being filed at once, was it
$15 for the first page, and $3 for each additional page? Each claim form
had a plat copy attached with existing and new claims plotted, so each
claim had two pages - eight total. I finally called the Recorders Office
and the very nice lady that answered told me $15 for each claim form of
one page, plus $3 for each attached page. So it was $15x4=$60 plus
$3x4=$12 for a total of $72. I also paid $2 per filing, another $8, to
have copies returned immediately. I was told I did not need to pay for
postage for this but I enclosed a self-addressed stamped envelope
anyway.
Rental fees are also due on new claims. You can pay at a later date but
have the option of paying at the time of filing if the calculation form
with the MTRSC Form is filled out. I elected to pay the feees at time of
filing. The initial Alaska rental fee is $25 per 40 acres. We filed
three 160 acre claims and one 40 acre claim so the initial fee was $325.
The fun part about that is the fees expire in September and must be
repaid by the end on November for next year. See Key Dates for Miners at
http://www.dnr.state.ak.us/mlw/factsht/mine_fs/keydates.pdf.
The only way to avoid this was to wait until after September 1st to file
the new claims, but we did not want to wait that long. Besides the risk
of someone else staking the ground weather gets very dicey in September
in Alaska and we might have access problems.
The MTRSC system is sweet. You basically stake claims by the quarter
section (160 acres) or quarter-quarter section (40 acres). The old claim
system can still be used for claims where section corners do not fit the
actual deposit well, but in this case it was fine. The advantage is that
it is easy to premap the claims, and calculate Latitude/Longitude
coordinates for the corners. This is all done in advance, claim forms
filled out, etc. I had all the claim corners input as waypoints in my
GPS. So once you get on the ground you use your GPS to get to each
corner. I also had little metal tags prefilled out with corner
identification info for each corner. Doing this all in advance at home
saves a lot of frustration in the rain and the brush!
GPS is fine for claim staking... you are not doing an actual survey. My
Garmin would get me close but when you get to the spot a GPS gets flakey
and you find you can't quite get a fix within the last 40 feet. It does
not matter. Just get on location and if you are in the right terrain
find the best close tree to use as a corner post. I had to actually dig
posts in at a couple spots but most of my corners ended up being trees.
The marked corner on the ground is the actual legal corner, not the GPS
coordinate, so keep this in mind when placing the actual corner.
So the hardest part was just doing it. I scoped the corners by aerial
photos, but reality on the ground is harder than when you are looking at
aerial photos. It all looks so easy when looking at the photo, but get
on the ground and thick brush and wet areas make it more fun. Still, we
are not talking a vast number of claims and distances here, and since I
had plenty of time I took one day to do two claims and another day to do
the other two.
So that's it up to this point. I'm now looking over the Annual Placer
Miners Application found at http://www.dnr.state.ak.us/mlw/forms/03apma/placer.htm
to proceed to the next step.
That's it for now. For lots more information on Alaska claims and claim
staking including Dennis Garrett's tutorial visit http://www.akmining.com/mine/mcalaska.htm
Copyright © 2003. All rights reserved
Steve Herschbach
Moore Creek Mining LLC
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