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Limestone and Gravel Royalty Rates

Aggregate companies that produce limestone or sand and gravel rely on sources of minerals to run their business. When searching for aggregate reserves, producers look for specific attributes - commonly leasing those properties.

Can royalty rates be used to value a mining property?

Our answer: with great care.

Understanding Mineral Property

Mining companies incur significant expenses in employing geologists and engineers because:

  1. They determine what, in reality, can be mined from the property and processed into finished goods.

  2. They understand the geologic context and analyze the property in comparison to alternate deposits.

An appraisal without great care applied by geology or mining engineering professionals is not likely to be anchored in accurate property or market data. Simply stated, measuring the mineral property and its market position is a task requiring rigor and specialized knowledge.

For this reason, the mining industry has instituted standards to characterize mineral property. These requirements are designed to protect investors from numerous types of errors that frequently occur when appraising mines. They facilitate confidence that minerals not only occur on the property but may also be economically developed. They have been adopted by numerous countries and even codified into US law for activities such as public stock reporting.

How to value Minerals with Crushed Stone or Gravel Royalty Rates

For typical commercial real estate, rent rates are highly correlated with the type of asset and surrounding market. For example, downtown office buildings may command rent that is 2-5x that of the surrounding suburbs. Similarly, in analyzing mineral royalty rates, trained mineral appraisers measure mining and geologic productivity using industry standard practices.

Industry Standards for Measuring Mineral Properties

Because minerals are below the earth and unseen, industry standards exist to measure portions of the property that are truly minable and profitable. In the United States, these industry standards are the SME (Society of Mining, Metallurgy & Exploration) Guide.

The SME Guide is depended upon by mining engineers and geologists because it provides clarity - a recognized, consistent framework for performing mining productivity analysis.

At a mine, there is no rent roll or other means of verifying the economic units (such as historically rented square feet) like typical commercial property.

Therefore, geoscientific and risk measurements are used in appraisal settings because mineral availability is not something that can be visually seen (it is underground) or directly measured.

Mining valuations are easily influenced by geologic assumptions (for example, assuming that a zone of minerals exists, is capable of being excavated, or is even profitable to mine and process). Therefore, industry standards such as the SME Guide, SEC regulations, and many US states require the estimator to be registered and accountable to an ethical board, for example, to the state engineering or geologic licensing board.

Once these factors are accounted for, royalty rates are often evaluated based on the productivity assessment of the engineer or geologist.

Sand and gravel mine

Property Rights

In many instances, aggregate companies purchase mining land outright and control the property indefinitely while running their quarry or sand and gravel operations. Another typical arrangement is for the construction aggregate companies to lease the aggregate reserves.

In a lease arrangement, the property is occupied, and absorption of the economic portions of the mineral estate occurs over time (See our Quarry Appraisal Primer). The property is typically different after mining - the mining project transforms it into something with an altered character, use, or set of liabilities.

What are Common Limestone Royalty Rates or Gravel Royalty Rates?

Overall, royalty rates are driven by unique property attributes and specific, localized market settings. Rock Associates performs mineral appraisals day after day utilizing our extensive, nationwide database of transactions and can authoritatively say there is no one-size-fits-all regarding limestone royalty rates or sand and gravel royalty rates. The lease rates applied to each property vary considerably, based on geologic, mining, and other market-based factors.

The cost of leasing a mineral depends on specific circumstances. However, professionals can accurately evaluate its value by utilizing well-established geological, mining, and mineral appraisal methods. Here are a few examples of lease rates we’ve encountered from state to state.



Royalty Rate

Aggregate Quarry



Granitic Alluvium



Granitic Alluvium



Aggregate Quarry



Aggregate Quarry



Sand and Gravel



Aggregate Quarry



Rock Associates provides the highest-quality, certified mineral appraisals for litigation, government, estate, lending, and other uses. Our appraisals are comprehensive, including all aspects of mineral property such as land, buildings, processing infrastructure, and business going concerns.

Rock Associates will review mineral appraisals that you receive. Our work is expansive - having reviewed more than $800 million in valued mineral property for clients.

Evan Mudd, PE, is a professional mining engineer, certified mineral appraiser, and certified real estate appraiser. He holds degrees in Mining Engineering, Environmental Engineering and an MBA with nearly 20 years of combined mining and valuation experience. He appraises minerals throughout the US for clients such as privately owned and operated quarries, NYSE publicly traded mining companies, governments, estates, investors, and banks.

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