Arizona Administrative Code › Title 15 - REVENUE › Chapter 4 - Department of Revenue - Property Tax › Article 2 - VALUATION OF MINES › Section R15-4-202 - Definitions

Current through Register Vol. 30, No. 28, July 12, 2024
A. "Extracted for commercial purposes" means extraction on a
				  commercial scale at an operating production rate, with a significant amount of
				  the mineral becoming subject to the Arizona severance tax on a continuing
				  basis. Public announcements shall be considered an indication of producing
				  status. Extraction of mineral for assay, research or development purposes does
				  not constitute extraction for commercial purposes.
B. "Mine" means a producing mine, nonproducing mine or mine
				  unit and includes all taxable properties located within the state and operated
				  in conjunction with or formerly used in a mine, including but not limited to,
				  the following:
1. All facilities and equipment situated within the state
				  used in, or formerly used in mine operations, including mine plants, mills,
				  concentrators, smelters, refineries, chemical plants, electro-winning plants,
				  and all related facilities which directly or indirectly contribute or
				  contributed to the production of the mine revenues. Manufacturing facilities,
				  such as a rod plant, incorporated railroads, utilities and custom facilities
				  shall not be included in the mine. Custom smelters are those which are not
				  operated as an integral part of the mine facilities and/or located at the mine
				  site.
2. Land which is being used or formerly used for production.
				  The outer boundary shall be 1 claim beyond the producing claims, or, in the
				  case of a fee interest, 1500 feet beyond the boundary of the fee parcel. The
				  mine unit includes land on which the items described in subsection (B)(2) are
				  situated, all ore reserves, ultimate pit or subsidence limits, all waste
				  storage, leach and tailing dump sites, water facilities used for production,
				  rights-of-way used for mine-operated unincorporated railway lines, conveyor
				  lines, water and utility lines. Land shall include patented and unpatented
				  mining claims, fee simple interests, severed mineral rights, leased land and
				  surface rights used in the mine operations.
3. Health care facilities situated in proximity to the mine
				  which are operated primarily for the benefit of the employees.
C. "Ore" means mineralized rock, which can be mined,
				  processed, and made to yield saleable metal or other mineral products at a
				  profit.
D. "Ore reserves" means that estimate of ore which is in
				  existence and can reasonably be estimated to be capable of extraction,
				  processing and sale at a profit.
E. "Reproduction cost" means the cost of construction of an
				  exact duplicate at current prices using the same materials, construction
				  standards, design, layout and quality of workmanship.
F. "Depreciation" means the loss of value from any source and
				  includes:
1. Physical deterioration which is normally caused by wear
				  and tear.
2. Functional obsolescence which is the decrease in the
				  capacity or efficiency to perform the function for which it was intended in
				  terms of current standards.
3. Economic obsolescence which comes from factors outside the
				  property itself.
G. "Capital expenditures" for the purpose of the income
				  approach shall be classified as follows:
1. Original capital investment, such as original land
				  acquisition, exploration, development including pre-mine stripping and initial
				  plant construction.
2. Expansion capital, such as plant construction and
				  additional equipment that results in increased plant capacity or increased
				  production of the mine unit as a whole; expansion capital does not include
				  equipment or construction necessary to maintain production levels.
3. Replacement capital, such as necessary replacements of
				  plant, equipment, or construction required to maintain production
				  levels.
4. Mandated expenditures, such as environmental or safety
				  facilities and equipment.
H. "Temporary shutdown" means a shutdown on a continued
				  maintenance basis with the intention to restart when conditions improve. The
				  mine will be valued on the basis of the residual cost approach.
I. "Permanent shutdown" means a shutdown due to complete
				  depletion of the orebody or the lack of commercial value of the orebody. The
				  mine shall be considered a nonproducing mine and valued on the basis of
				  salvage.
J. "Liquid supplies" means supply inventory items which are
				  readily marketable, such as tools, fuels, cable, pipe, electric motors, lumbers
				  and the like.
K. "Salvage value" means the sum of the salvage value for
				  plant and equipment, construction-in-progress and supplies. Salvage value shall
				  include a value for land.
L. "Residual value" means the sum of the residual value for
				  plant and equipment, ore reserve, supplies and construction-in- progress. The
				  residual value shall include a value for land. The residual value for plant and
				  equipment is determined by applying the Department's residual factors contained
				  in the Department's percent good factor table.
M. "Prolonged shutdown" means reduction in production to 20
				  percent or less of the recent historic production for more than 6
				  months.