Cynthia Baldonado

(623) 518-2982

Reclamation/Land Restoration Bonds

If you are someone who has been hurried off the phone by countless other bond companies as soon as you uttered the dreaded word "reclamation" or if you're really lucky and found me first, I CAN HELP in a lot of cases, often without requiring the bond to be collateralized.

While this is certainly not an all-inclusive list, here are some common land use types that require reclamation bonds to be in place:

  • Surface mining of all types
  • Oil well drilling and plugging
  • Recycling facilities of all types
  • Storage of hazardous materials

Reclamation bonds are some of the most difficult bonds to obtain. Why are these bonds so hard to get, you ask? Well, the main reason is that traditionally these bonds are non-cancellable. Surety companies have a hard time agreeing to write a bond, even if you look excellent on paper today, when the bond could potentially drag on for a couple of years, or in really extreme cases, decades. Of course, the hope is that your venture is wildly successful and profits roll in, but in the even the unthinkable happens and things just don't go as planned, the surety company doesn't have the option of cancelling your bond to protect themselves as they do with most other bond types. They are forced to remain on the bond until you can either replace the bond with cash or another surety, you complete your operations and restore the land to its original state, or there is a claim on the bond.

If that isn't enough, throw in hazardous conditions in many cases, and you have a combination that sends most surety companies running.

What to Expect

Due to the reasons listed above, the underwriting involved with reclamation bonds is somewhat stringent. As I mentioned, I have options that don't involve collateral in the right cases. The two biggest hurdles are credit of the owners, and financials - both business and personal. If either of these have any major issues, chances are the only option will be to provide collateral to secure the bond. If, on the other hand both are fair to strong, we may be able to offer a non-collateralized option.

Just to give you an idea of what we'll require in order to underwrite your request, general requirements are as follows:

  • A short 1 to 2 page application
  • Business financial statements (P & L and Balance sheet) for previous year end and year-to-date
  • Personal financial statements for all owners
  • Bond form(s) required by obligee
  • Bond requirement in writing from the obligee - should include permit numbers, mine ID's/property ID's or whatever I'll need to prepare the bond form

Once a submission is received, I can tell you pretty quickly what your options will be. The process can take anywhere from a few days to a few weeks.

Cost

Reclamation bond premiums can range anywhere from 2 to 10% annually, depending on what we see in your submission. It is not uncommon for the surety company to ask for multiple years prepaid since the obligations generally drag on for many years.

Specialty Conditions

Not all reclamation bonds require collateral, but if the underwriter feels it necessary, collateral may be introduced as an option to write a bond when otherwise it would have been declined. Forms of collateral accepted by surety companies are either a cashier's check or an irrevocable letter of credit (ILOC) from a bank acceptable to the surety company. The amount of collateral required is determined on a case by case basis. Collateral is NOT a fee. It is held by the surety company for the duration of the bond obligation as an extra security measure and is returned to you once the bond is released. Collateral may be held for a period of time once bonds are released to cover statutes of limitations for bond claims.

By: Cynthia Baldonado

Do you have a question or need a bond? Call me at (623) 518-2982. I'm always happy to help! I'm available Monday thru Friday between the hours of 8AM and 5PM Arizona Time. After hours or you'd rather contact me electronically? You can also fill out the Contact Me section on this page and I'll contact you during business hours.

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CynthiaBaldonado

Cynthia
Baldonado
(623) 518-2982

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SuretyBonds.Biz is a website for Viking Bond Service, Inc. producers to provide information about frequently requested surety bonds in their words. Viking producers specialize in surety bonds of all types. Since bonds are the sole product provided by Viking, the producers are an excellent resource for information and assistance.