Accounting Procedures For Joint Mining Operations

During the past decade, there has been significant reemphasis in developing alternative energy sources resulting from increased energy demands, changes in end-use of energy, the need to discover new reserves and the change in the relative pricing among energy types. This reemphasis has created a significant increase in mining activities, specifically (at least in this part of the country) those related to the exploration for, and development of, coal and uranium reserves. Existing mining companies have increased their mining capabilities, while new companies and ventures have been lured to the mining industry. Major oil and gas companies have continued to strengthen and diversify their operations into the mining industry and utility companies have increased their efforts to seek captive supplies of coal and uranium for expected future demand, in many cases as a participant with other parties in a joint venture or in joint operating agreements.

Recognizing the extensive capital requirements associated with the exploration, development and ultimate production of reserves, joint operating agreements similar in concept to oil and gas joint operating agreements have been utilized with increased frequency. As an example, established mining companies which offer a wide range of technical talents to evaluate prospects and to direct the exploration and development phases have j