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Explanation of Discovery

Discovery of a Valuable Mineral Deposit

Federal statutes do not describe what constitutes a valuable mineral deposit. However, the Government adopted an "economic" definition of locatable minerals that has resulted in a test that makes use of the concept of an economic ore body. Consequently, several judicial and administrative decisions have established the "prudent man rule" of discovery, A Land Decision of the Department of the Interior in 1894, Castle v. Womble, 19 LD 455 (1894), states: "...where minerals have been found and the evidence is of such a character that a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success in developing a valuable mine, the requirements of the statutes have been met."

The Supreme Court approved this definition in Chrisman v. Miller, 197 US 313 (1905). In 1968 the Supreme Court approved a parallel concept, the marketability test, in U.S. v. Coleman, 290 US 602-603 (1968). The marketability test adds to the prudent man rule and considers economics. It requires that the claimant show a reasonable prospect of selling minerals from a claim or a group of claims. Its use by the Department of the Interior since 1933 is based on the Solicitor's opinion in Layman v. lli , 52 LD 714 (1929). This decision involved widespread nonmetallic minerals. The Solicitor noted a need for a distinct showing that the mineral could be mined, removed, and marketed at a profit. The Interior Board of Land Appeals ruled in Pacific Coast Molybdenum, 90 ID 352 (1983) that proof of past or present profit is not a requirement; However. a profit must be a reasonable likelihood.

Other Departmental decisions require a discovery on each claim, based on an actual physical exposure of the mineral deposit within the claim boundaries. Jefferson-Montana Copper Mines Co., 41 LD 320 (1912), establishes the full test for a lode claim: (1) a physical exposure of the mineral deposit, (2) evidence that the deposit contains a valuable mineral, and (3) engineering and economic data showing a possible profit. For placer claims, in addition to proof of a discovery of a pay streak, each 10 acres must be shown to be mineral-in-character. Mineral-in character is based on geologic inference and marketability, not necessarily on an actual exposure. It is used to show the extent of the discovery on the claim(s), but cannot be used alone.

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