Rare Element Resources
Bear Lodge Project
Canadian NI 43-101 Technical Report
October 9
th
, 2014
10035-200-46 - Rev. 0
22-9
Property tax on land for the project is calculated as shown in Table 22.10.
Table 22.10 - Property Tax on Land Cost Summary
Site
Acreage Value
Land
Value
Mill
Rate
Annual
Tax
Mine
1000
$3,000
$3 million
76
$20,520
Upton
1000
$3,000
$3 million
76
$20,520
Total:
$41,040
(Roche, 2014)
22.4.1 Taxes Calculation Assumptions
•
The property tax on land calculation is assumed constant for the life of the
project;
•
Property tax on the plants is calculated as the book value of the capitalized
assets multiplied by 11.5%, then assessed at the 76 mil rate;
•
Severance and Ad Valorem taxes are computed by first calculating the
percentage of total revenue considered taxable revenue. This is
accomplished by identifying the percentage of mining costs (costs incurred
prior to “mouth of mine”) as a percentage of total mining and processing
product costs. This percentage is multiplied by total revenue to establish total
taxable revenue (“state taxable revenue”). The resulting state taxable
revenue is then multiplied by the severance and ad valorem rates to compute
the respective taxes;
•
Wyoming does not have a state income tax;
•
Federal taxes are estimated based on estimated taxable income calculations
within the model, taking into consideration the Company’s historical net
operating loss carry-forwards as well as alternative minimum tax regulations.
The estimates utilize a percentage depletion rate of 14%.
22.4.2 Tax Impacts
•
The tax burden associated with property, severance and ad valorem taxes
peaks in the first two years of production. As the capitalized assets depreciate
and their corresponding book values decline, the liability for property tax on
capitalized property decreases;
•
The federal tax burden varies throughout the mine life based on factors driving
revenues and expenses such as ore recovery and associated
hydrometallurgical operating costs, sustaining capital expenditures and
depreciation, among other factors.
