Untitled Document

NZ Fee Minerals

Prepared by: J.D. Sphar, former NZ geologist

NZ's fee minerals are considered valuable because of their:

1. Mineral resources: especially, uranium

2. Intrinsic worth:

As real property: a titled right, an estate

Speculative element: mineral rights could possibly represent substantial future wealth of currently indeterminate character; the unknown aspect creates a speculative value in and to the mineral right. Such speculative values are amenable to geologic comment, but seldom to ultimate economic resolution. To the contrary, creative geologic investigative often creates prospective mineral targets and potentials, thus, actually increases speculative value.

Certain deposits of natural resources have been delineated over the years on NZ's mineral rights including in order of their discovery: petrified wood, coal, potash, industrial clay, uranium, travertine, and oil. Beyond the possible future values from exploitation of these discovered resources, the mineral rights per sec also remain intrinsically valuable because of their potential for future mineral discovery. Given the amount of research and exploration to date, the potential for new discovery is more constrained than wide open. Geologic data is relatively sparse and, hence, the potentials for discovery less constrained on the blocks of Indian Reservation minerals. Economically, the more important issue is likely to remain the exploitation of the known resources on NZ's mineral rights.

Uranium has the potential to be the most economically important natural resource on NZ's fee mineral lands. In the Crownpoint-Hosta Butte vicinity of New Mexico, uranium reserves are now calculated at 38 million pounds. This uranium occurs in two well defined deposits amendable to in-situ leach mining methods at costs in the $20+ per pound range. Historically, this uranium deposit has yielded NZ one million dollars in leasehold payments.

Travertine limestone having a calcium carbonate content of over 95% crops out astride NZ's checkerboard fee lands on Mesa del Oro, which is located some 40 miles west of Albuquerque. The overall deposit, including that on intervening BLM lands, contains over 1 billion tons and is well defined by drilling. The potential uses include: flue gas scrubbant, the manufacture of cement or lime, use as dimension stone, as ballast or rip-rap, or as aggregate either for concrete or road metal. NZ retains six sections in fee (surface and minerals) in support of this highly tangible deposit. There is little doubt that it will be developed for one or more of the above uses in the future.

Petrified wood resources remain only on the Milky Ranch. The Frisco Railroad, NZ's parent company, lost most of its petrified wood when the Petrified Forest National Park was established in 1906. Petrified wood is a semi-precious gemstone widely used in lapidary products. NZ's fee lands bordering the PFNP once contained world's largest commercial supply of this lapidary product. Petrified wood has been widely stolen from NZ's lands and other wise marketed by NZ's lessees since the 1930s. Something more than $300,000 was generated from royalties paid to NZ prior to 1998. More recently, the bulk of NZ's petrified wood resources were sold for $500,000. The value of the remaining resource on the Milky Ranch is put at $350,000.

Oil on NZ's lands was widely rumored as early as 1912, but was not produced until 1986, and then as a follow up to a random oil show found in a uranium research core hole drilled for the Department of Energy back in 1982. The resulting "Nose Rock oil Pool" produced about 60,000 barrels of light, sweet crude before its depletion. Geologically similar small oil pools are possible in the same general vicinity but exploration costs are difficult to justify for such small oil pools. Elsewhere, all of NZ's other potential petroleum prospects must be classified as rank new basin wildcat. In Cibola County, New Mexico previous wildcat wells contained prolific porosity or permeability. The best follow-up to these trace finds would be to drill on the Acoma Reservation where NZ has mineral rights, but that has never been politically acceptable to the Acomas. NZ's large mineral holdings in Northeastern Arizona have shown little petroleum promise to date, albeit, based upon rather sparse drilling and that done without the benefit of even two dimensional seismic. Overall, the prospects for new petroleum discovery on NZ's lands is considered difficult at best.

Coal resources were readily identified in the first reconnaissance geological surveys of NZ's mineral rights in McKinley County, New Mexico. Estimated reserves were maximally estimated in 1962 from outcrop studies at 160 million tons. The coal occurrences were better defined by drilling in the frantic exploration days of Jimmy Carter's "Energy Crisis". One isolated coal deposit of only 2 million tons of strippable coal was actually permitted but never mined. The remaining coal is not likely to become economic under any predictable future economic conditions.

Potash was the first mineral to be discovered on NZ's mineral rights by drilling; however, the discovery came at about the time the rich and logistically favored Saskatchewan deposits were being developed. No value is placed on NZ's remaining potash resources.

Klannerite is the trade name for a deposit of highly altered bedrock ("clay") on 80 acres of NZ's mineral estate in Mohave County. It may have some industrial value, but given the small size of undemonstrated continuity of the material, development is highly dubious.