RENO - A huge swath of Northern Nevada high desert, a non-contiguous stretch about the size of Rhode Island, is being targeted by its new owners for more mineral and geothermal development.
Fountain Investments Inc. of Miramar Beach, Fla., purchased 483,000 acres of land, as well as mineral rights to another 800,000 acres, for $31 million from Pico Holdings Inc. of La Jolla, Calif.
With 85 percent of Nevada owned by the government, the 1.28 million acres - stretching along Interstate 80 from Reno to the Utah line - involved in the transaction represents 12 percent of privately-owned land in the state, said Steve Lehr of CBRE Group Inc., Pico's sales broker. His company announced the sale Thursday.
"It was an extremely complex transaction due to its sheer size, and the buyer pool for this type of asset is quite limited," said Lehr, CBRE's senior managing director. "(The sale) represents a trend of investors seeking hard assets in the U.S. and as hedges against inflation."
The land represents a portion of the Nevada property given by the federal government to the Central Pacific Railroad in the 1860s as an incentive to build the transcontinental railroad. The land was sold by later railroads to Pico in 1995.
Fountain's owners assigned their rights to the latest purchase agreement to another entity, Conduit LLC. New Nevada Land and New Nevada Resources, wholly owned subsidiaries of Conduit, will oversee the land and mineral rights, said Don Pattalock of Reno, theirpresident.
"We see a fairly bright future as to the development of those minerals," Pattalock told The Associated Press. "Basically we're looking at moving the asset to its highest and best use."
Pico had stressed the sale of surface rights as the land business took off while it owned the land, said Pattalock, who formerly worked for thecompany.
There currently are grazing leases on all 483,000 acres of land recently purchased outright, he said, as well as scattered geothermal, oil, gas, utility and billboard leases.
"There's a real opportunity left on the minerals," Pattalock said. "Pico also pursued mineral development, but not to the extent we're looking at now."
Nevada currently ranks fifth in the world in gold production behind China, Australia, South Africa and Peru.
"We're aware of the resources and the potential we have, but we're not a mining company," Pattalock said. "We lease the mineral rights to third parties who are exploring."