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|If the past is the key to the future, we will have ?tough? times maintaining Industrial Mineral reserves we have and proving new reserves around our plants and in new locations. The tough times will come from resources being more difficult to find, more hoops to go thru to make them Proven or Probable reserves. As always, Industrial Minerals require competitive quality, location, and costs. Since in most cases the market has suppliers, you will have to take away customers from their present supplier. This may take years or not happen even with lower cost higher quality raw materials. To determine the finished cost for a new deposit you need to design, determine capital costs, and operating costs for a new plant . Stripping, mining, hauling, processing, and transportation costs are part of the equation. After satisfying that your costs are in line you will need to do production tests to make sure the process works on the ore. You may want to complete permitting before purchasing the property. If you are new in the business you will have to prove you can deliver the right quality, the right quantity, on time consistently year after year at lower cost to take away a customer. Without being in the market this will be hard. The cut off grades to enter a market may be much lower than sale indicates because a competitor often lowers the price to keep you out of the market. We have many more items to check before the new deposits can be put on reserves. Our old reserves will require drilling to check for new products and prove that they do not contain items that would make them unusable for our product line or cause permitting problems. Archeological checks, wetlands, more water discharge testing, county zoning, and endangered species are among many items that have been added to mine permits. There will be more. A 4-6 page mining permit becomes 30-300 pages and consists of 5-15 permits, any of which might be a fatal stumbling block. It is not guaranteed that we can mine what we have on reserves. We may fight and lose. Oil-Dri?s loss in Reno and LaPort?s in England are examples where permitting failed. The NOx, sulfur, and carbon problems are just starting. Dioxin is in the background requiring monitoring on food products to Europe. What other anions, cations, endangered species, and land types are going to be problems in the future are guesses now. What new products are we going to have to test for and cause out of balance reserves? If there are none we probably won?t be here. We are competing for land use with ?Endangered Species?, wetlands, farming, forestry, cities, roads, and hunting. We?ve mined the best quality, low overburden, easiest to mine and process raw materials. The price of land and taxes are increasing. Old royalties are 2-3 times the present acre value instead of 8-10 times the property value when leased. Land taxes are up. It was and is best that we get the land in Fee Simple Title. This isn?t always possible. However, plants are closing and people have overlooked, made mistakes in drilling or interpretation of deposits. These may be opportunities. China is eating up high quality ?Industrial Minerals ?which have caused prices to rise. We may need to change our cutoffs? in terms of smaller pit sizes and higher overburden ratios. This is money in the bank. Overburden ratios and other items increasing cutoff costs need to be rethought. Suddenly doubling cutoff ratios for overburden and decreasing pit sizes are good alternatives to looking elsewhere where we might not be able to mine for a number of reasons. The higher prices make them competitive, especially when a competitor goes out of business. However, our low overburden ratios and short hauls around our plants are not safe from new roads, condemnation by county or city governments (N. J.), zoning changes (Reno, FL., CA, and environmental regulation changes (Buffers GA, MS). New roads ?Interstates? can take reserves, increase hauling distances and reduce tons per load. Let?s combine the Refractories, fullers earth, and bentonite industries and use the last 40 years as a guide to the future looking for problems and opportunities. Some or most of the following will apply to other minerals. WHERE DO WE LOOK? First, on our own properties, those next to our properties and on properties near our competitor?s plants. Where the profit margin has increased, the distance from the plant and thickness of overburden we can use is increased. The thickness of clay is decreased. For new locations we pick the ideal location and look at deposits and closed or open operations in ever increasing distances away from that location. We need to be aware of: 1. Increased transportation costs a. Access to Roads -Backhauls b. Haul with doubles and triples c. Railroads - Loading on sidings - Ability to get switches - Cars/backhauls versus rates 2. Cost of building a new plant 3. Cost of infrastructure 4. Cost of repair or new equipment when purchasing an operating or shutdown plant. 5. Local, state, and federal mine and environmental permitting. When exploring around an established operation expect that property acquisition, drilling, mining, stripping, and hauling costs will be greater due to them having second, third, or even fourth the pick of the deposits. I found this in New Jersey looking for refractories and around Quincy, Florida looking for attapulgite. You may be able to get some better properties because the operating company has angered some land owners, their drillers missed the clay, or the property wasn?t available when they were actively exploring for reserves. You may have some product lines your|