Terrene Investments, Ltd., Deerbrook Construction, Inc., Tax Matters Partner - Page 21




                                       - 21 -                                         
          pressure between the wall and pit than would a hole filled only             
          with air.  Both these factors make the pit wall more stable.  It            
          also keeps the soil of the pit’s edges moist and therefore even             
          more cohesive.  Although some portions of the pit walls may well            
          crumble over time, that crumbling is why the setbacks are needed.           
          We also take judicial notice that the Houston area more closely             
          resembles a swamp than a desert--there is plenty of water in the            
          area to fill in the property when mining is done.  We therefore             
          find in favor of Terrene on this point, and agree with its                  
          experts that the pit walls can be left at a 75-degree slope.                
          Ebanks credibly testified that at this angle, approximately 3% of           
          the volume would be lost, so we will subtract another 94,643                
          tons.10                                                                     
                 iv.  Waste                                                           
               The final reduction we must consider is the waste that                 
          inevitably occurs during extraction and processing.  Terrene                
          makes no adjustment; the Commissioner wants us to use 10%.                  
          Neither side introduced any especially compelling evidence on               
          this point, but we found Moritz credible in saying that some                
          waste is inevitable in any mining operation and that 10% is the             
          industry’s rule of thumb.  So by a bare preponderance of the                
          evidence, we side with the Commissioner.  Using the                         


               10 The math thus far:  3,899,696 - 248,310 - 496,620 =                 
          3,154,766.  3,154,766 (tons remaining after setbacks and work               
          area accounted for) x 97% = 3,060,123.                                      





Page:  Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next 

Last modified: November 10, 2007