- 4 - In fact and contrary to the above representations in the OM, the S-J partnerships obtained coal mining leases on only 400 acres of property. Significantly, with regard to the remaining 10,600 acres, mining leases were not available because in 1976, at the time the S-J partnerships were promoted and sold, a Federal moratorium was in place on the issuance of mining leases for coal reserves owned by the Federal Government. Attached to the OM was a feasibility study in which estimates of probable coal reserves on the property were made and in which it was again suggested that leases to mine the coal reserves on the property could be readily obtained. In the feasibility study, additional misrepresentations were made with regard to the market price of coal, the estimated amount of coal reserves on the property, and the sulphur content of coal reserves on the property. The author of the feasibility study was not a geologist, as represented in the OM, and he had no special qualifications to prepare the feasibility study. In the OM, it was represented that advanced royalties that the S-J partnerships agreed to pay were negotiated at arm's length between unrelated parties and that such advanced royalties would give rise to large net operating losses for the S-J partnerships and its limited partners. Stated advanced royalty obligations of the S-J partnerships under the lease agreement were in fact not negotiated at arm'sPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011