Beginner’s Guide to Mineral Rights — Part 1 — Introduction

I was very fortunate to inherit mineral rights from my mom, who inherited them from my grandmother. It wasn’t very much property, just a…

C.W.Morton

Jun 22, 2024

Source : Straico AI. Prompt : Desert Scene with Horned Lizard

I was very fortunate to inherit mineral rights from my mom, who inherited them from my grandmother. It wasn’t very much property, just a small patch of land mining magnesite in Texas, and it yields a few hundred dollars a every month or two.

I have since expanded and purchased mineral rights on my own.

Had my family never owned this asset, I would likely have no idea about it, nor would I have investigated it.

My assumption was that people who were extracting with mines and other operations were mostly wealthy industrialists and large companies, and this just wasn’t something an individual could take part in. At best, maybe I could own stock in a company or something. After all, my family inherited this property from an Oil guy. He definitely wasn’t poor, and he worked for major companies.

Fortunately, as with many of my uneducated initial assumptions about things, I was wrong. It’s totally possible for individuals to get into.

Mineral rights provide the owner with the legal authority to extract and profit from valuable minerals, oil, gas, coal, and other precious metals found beneath the surface of a property. Oil, gas and coal are often very hard to source, and usually cost prohibitive, so many people stick to investing in companies that extract those resources.

Metals, and minerals like magnesite, gypsum, etc = much easier to source without being cost prohibitive, and a great way to enter the world of passive income.

Source : Straico AI. Prompt : The world of Minerals

The demand for natural resources is “evergreen”, making mineral rights a highly attractive investment opportunity that can yield a steady stream of revenue over time.

When I was searching to acquire more minerals, I still had no idea how to approach it.

Inheriting something doesn’t make you an expert on it.

After a few months of reading and talking to people, I realized that I didn’t need to start a company or be an insanely wealthy landowner, but I did need to know what I was doing. Navigating the intricacies of the mineral rights market requires a solid grasp of the process and a strategic approach to identifying profitable opportunities.

In this guide, I will share my insights and what I have learned in finding and purchasing profitable mineral rights, offering practical advice, key resources, and best practices to help you make informed decisions and maximize your investment potential.

The Land and it’s Minerals Are Often Divorced

One key thing to understand : the legal difference between the surface land, and the minerals on it.

Source : Straico AI. Prompt : The Land is Separate from the Minerals On It

The surface and underlying minerals were originally sold together.

In other words, the surface and minerals were owned by the same individual, company, government, etc.

Over time and thanks to industrial activity, this has changed.

There are two legal ways to separate the surface land from the minerals….you can sell the surface and retain the minerals or sell the minerals and retain the surface.

Most real property that individuals own consists of the dwelling or buildings on the land, and the right to use the surface land from the government.

Older properties and inherited properties, the owner might still have ownership of both land and the minerals, if the two weren’t explicitly separated at some point.

I discuss how to find that information in Part 2.

It’s somewhat rare for someone to own both and not know about it, but it can happen.

Most mineral rights investors fall into three categories:

1. Land/Mineral owners selling mineral rights to the minerals on their property.

2. Stock investors investing in the companies that extract or process, minerals.

3. Buying mineral rights and profiting off your share of the minerals.

The first class is usually far more expensive to get started if you do not already own the land, but can be wildly more profitable.

The second and third options are generally more accessible to everyone.

If you already own land and want to know if you might have minerals on it, research the minerals in your surrounding area, if there are any, what kind, who is profiting from it, etc.

Geological surveys, historical production data, and reports from industry experts can provide valuable insights into whether or not your area has a high mineral potential.

If you suspect you might have minerals, the next step is to contact mining companies and surveyors to come out and find the minerals, assess the feasibility of extraction, and then appraise the value.

But before you do that — there is a complication.

You need to verify if you own the minerals at all.

You cannot get mining companies to really waste any time if you cannot demonstrate you own the minerals, and might even risk them purchasing the mineral rights out from under you if you do not own them.

Stay tuned, in the next chapter I will share the important details of how to search for that information….

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