For purposes of “discovery” of a valuable mineral deposit, the Interior Board of Land Appeals (IBLA) has recently held that the “prudent man” test does not require that Bureau of Land Management (BLM) consider the current high price of gold. Instead, the IBLA recognized that “[t]he prudent person formulation predicts likely future prices based on the historic range of prices for the mineral on the marketability date, and accounts for fluctuations in price by averaging them for the period under consideration.” In so finding, the IBLA rejected the claimants’ arguments that the test is whether a prudent man at some point in the future under more favorable circumstances might expect to develop a profitable mine.
The IBLA has articulated multiple and varying definitions of the Marketability Test over time. In a recent case, IBLA framed the marketability test as follows:
“To show that the mineral deposit is marketable, the minerals on the claims must have a reasonable prospect of being sold into an existing market at a profit. A present market encompasses what reasonably could be sold at the time of valuation; actual sales data is not required. . . . A discovery of a valuable mineral exists when there is a reasonable prospect that the commercial value of the deposit exceeds the cost of extracting, processing, transporting and marketing it.”
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