Natural Resources Research Institute Technical Report

There still exists in the non-ferrous minerals industry a perception that Minnesota is a hightax state, making it unattractive for hard rock mineral investment. This perception is reflected by the most recent industry survey performed by the Canada-based Fraser Institute, in which Minnesota was ranked near the bottom in the categories of: 1) mineral potential, 2) policy potential, and 3) investment attractiveness, relative to several U.S. states, Canadian provinces, and most other foreign countries. To address this negative perception issue, an up-to-date, rigorous, and objective comparative economic analysis is being performed to quantify the economic impact that Minnesota’s current tax and royalty policies have on potential non-ferrous mining projects. This ongoing analysis uses hypothetical mining project models that are patterned after realistic mining operations worldwide, with an emphasis on Cu ± Ni ± PGE and PGE deposits, given Minnesota’s widely acknowledged mineral potential for both. Both underground and open pit mining methods are addressed in what will ultimately be a multi-state (Minnesota, Wisconsin, Montana, Arizona, Alaska, and Nevada) and multi-province and country (Ontario, British Columbia, Western Australia, Chile, and Sweden) comparison, against which the tax and royalty policies of each regime are applied. Economic measurement tools - like discounted cash flow rate of return (DCFROR) and sensitivity analyses - are used to provide quantitative results. Multiple economic scenarios will provide a range of outcomes that can be evaluated by both the private and public sector. For example, the specific example presented herein shows that Minnesota compares well with the Canadian province of Ontario with respect to mining taxes and royalties