Universal Energy Corp (UVSE)

[eddy2]

http://en.wikipedia.org/wiki/Mine_reclamation


As with many projects capital is put a side for this purpose by ordinance of the state or province in charge of the reclamation project.


A company will often sell a project to a firm who specializes in this process.


The building and structures are given a value based on the cost of removal and this value is sold to the public. As the process goes into effect wages and costs and costs come into effect but should there be any over run in the project it is the shareholders who take the hit.


Capital surplus is put aside for this purpose and should there be a deficit occur in the process a debt will be shown as share debt owed to share holders on the balance sheet that is best estimate at the time of the project.


Now that does not mean that the whole project could run a deficit. There could be a portion were consumable prices drop for copper and there is a deficit but if the copper is put aside in inventory and sold later when of if the price should rise then you would have the opposite effect to the balance sheet.


Universal reclamation has been successful for some time but as competition comes on board the margins have fallen as bidding for the projects have shot higher this along with less capital surplus put aside for the projects.


To understand how this works is should a company put out to tender a reclamation project and the capital surplus for the project falls short of the cost then it is up to the government to after the company for those costs in a chapter 11 filing " third party law suit were there is really no debt to speak of except a short fall in funds to cover a reclamation project.


The company can attach this short fall in one of two ways one is to rezone the property into a industrial dump site if remote enough and if it should have deep shafts under ground that could harbor the president or a legal pot growing operation or who knows maybe turn the buildings should there be any into remote telescope site any how a long shot but has been done to offset the cost of reclamation.


Now we don't want to forget that when bidding the project that the bidders want to take in effect the cost savings too depreciated assets have to offer or in some cases to be able too sell back those assets to the company who put the reclamation project up too tender. Then there is the option of tendering back the depreciated assets to the government but this takes a court of the federal,state or other wise " third party chapter 11 undertaking for that to happen.