Discovery

Federal statute does not describe what constitutes a valuable mineral deposit, therefore the government has adopted the "prudent man rule."  This rule determines value based on whether a person will consider investing time and money to develop a potentially viable mineral deposit.  The U.S. Supreme Court approved this definition in 1905.

Since that time, the definition has evolved to include the need to show that the mineral could be mined, removed, and marketed at a profit. The U.S. Supreme Court concurred with this definition in 1968. The marketability test supplements the prudent man rule and considers deposit economics and market entry. The claimant is required to show a reasonable prospect of making a profit from the sale of minerals from a claim or a group of contiguous claims.

Department of the Interior (DOI) decisions require a discovery on each claim based on an actual physical exposure of the mineral deposit within the claim boundaries. The DOI's holding in Jefferson-Montana Copper Mines Co., 41 L.D. 321 (1912), established the full test for a lode claim:

"To constitute a valid discovery upon a lode claim, three elements are necessary:

1. There must be a vein or lode of quartz or other rock-in-place; 
2. The quartz or other rock-in-place must carry gold or some other valuable mineral deposit;  
3. The two preceding elements, when taken together, must be such that as to warrant a prudent man in the expenditure of his time and money in the effort to develop a valuable mine."

For traditional placer claims, in addition to proof of a discovery of a pay streak, each 10 acres must be shown to be mineral-in-character; that is, that there is a reasonable expectation of further economic mineral under these lands. An actual exposure of the valuable mineral deposit is not necessary.