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By F. Milton Lewis, Roshan B. Bhappu

In Part I of this article, published in the September issue of MINING ENGINEERING, Edward S. Frohling and Robert M. McGeorge of Mountain States Mineral Enterprises, Inc., reviewed the general overall financial aspects and methods of raising the necessary capital for developing the mine. In Part 2 of this two-article series, we will present several case histories to show how realistic feasibility studies are used for evaluating the choices and options entailed in mining ventures. Basically, after a potential ore body has been discovered, and the necessary funds obtained for the development of the deposit, the next major problem is one of ascertaining what specifically is to be produced, and the costs of production. The profit potential of the mining venture can then be accurately assessed by the mine owner, operator, or loan officer.

Jan 10, 1975

By Sherwin F. Kelly

LITERALLY from the four corners of the earth, from Jerusalem and China, from Mysore and Uganda, as well as from geophysicists in the United States, came contributions from workers in magnetic and electrical geo-physical methods, most of them unfortunately unable to be present themselves. The most lively discussion centered on the phenomena of natural potentials in the earth, dealt with in M. B. R. Rao's paper from Mysore, and in Parke Dickey's contribution, which he presented in person. In the oil fields, the weak potentials observed in sedimentary strata traversed by bore holes have traditionally been ascribed to phenomena of electro-filtration and electro-capillarity. Research tending to refute this theory was presented by Dickey, who reported the existence of natural potentials in core samples, and between strata exposed in underground workings. This precipitated a lively discussion as to the possible role of electro-filtration, selective adsorption of ions by mineral particles, and electrolytic potentials, in the production of this phenomenon.

Jan 1, 1943

By Wells A. Hutchins

Water laws important to the mining industry are those which govern or affect the right to use water, to dispose of water after using it in mining or milling, and to discharge waste material into water-courses. They include statutes and court decisions having general applicability, as well as others that pertain specifically to mining. THE INDUSTRY'S CONTRIBUTION TO WESTERN WATER LAW Despite sharp differences of opinion, the water law the Spaniards brought to the Southwest appears to have included some form of appropriation of water. The Mormons, who settled in Utah in the mid-nineteenth century, also developed a system of appropriative water titles. But by far the most profound impact on western water law was made by the gold- seekers who flocked to the Sierra Nevada foothills of California after the discovery of gold in 1848. Much of the gold was extracted from the ground by hydraulic or placer mining, and so the-miners' rights to the use of water became fundamentally important. Since there was no organized government in the foothills and no laws other than those made by the miners, they helped themselves to the land, the gold, and the water needed to work their claims.' They established and enforced regulations governing the acquirement and holding of mining claims and their rights to the water they needed.'In 1879 Justice Field, former Chief Justice of the California Supreme Court, spoke for the U. S. Supreme Court in saying that the miners were "emphatically the law-makers, as respects mining, upon the public lands in the State.""

Jan 2, 1960

By Fred H. Lippold, Wm. H. Wolf

Methods of fair payment for excavating, supporting, and concrete lining tunnels have been sought by various owners for years. Tunneling techniques have changed with the development of equipment-from the hand-mucking operation to the machine mucker and, most recently, to machine-boring; from tunnel supports using timber sets to steel sets to rock bolts and, most recently, to shotcrete support; and from hand-placing the concrete lining using wooden forms to pumping or pneumatic placing using steel forms. As tunnel construction techniques advanced, so did methods for payment for the work performed. The recent development of tunnel-boring machines, or "moles," is precipitating another change. These changes have led to some difficulty in providing proper payment for the various items of work for different types of tunnels. As a major construction agency engaged in water-resources development in the western states, the U.S. Bureau of Reclamation has long been aware of the need for clarification of payment provisions in tunnel construction. The Bureau has some 150 miles of tunnels completed on its projects and about 50 miles of tunnels under construction. In this construction, the Bureau has benefited by the advance made by contractors in improving the techniques of tunnel excavation. To assure that the Bureau has an up-to-date approach to payment provisions, the Chief Engineer recently established a "standard" method of payment for all types of tunnels. It is believed that this new method of payment will be equitable for all contractors bidding on various types of tunnels using the diversity of methods of excavation now available to them. These payment provisions provide for different quantities for excavated tunnels using the blasting technique or using machine-boring techniques. In this way, the contractors have a choice in excavation methods and an equal opportunity to be low in their bids. We believe this will be an incentive to all contractors to be as progressive as the development of new equipment economically allows.

Jan 1, 1970

By AIME AIME

FOLLOWING careful study of the relations of the Institute to students and the younger members of the profession, the Membership Committee recommended to the Board a change of plans abolishing the Junior Associate class of membership, substituting a -Junior membership and providing for Student Associates. The Board adopted this report at its meeting on Nov. 23, and asked Counsel to draft the necessary amendments to the By-laws, and gave formal notice of intentions to amend as provided in Section I, Article XI1 of the existing By-laws. The By-laws as it is proposed to amend Article I, 11, 111, IV, X, and XI follow. The new plan requires no changes in the other Articles. The matter will come before the Board for vote on Jan. 25.

Jan 1, 1929

By G. S. Anderson

PRIOR to 1912 the only rail outlets for a large part of the coal regions of Carbon and Emery Counties. Utah, were over single-track lines of the Southern Utah R.R. and Castle Valley Ry. Companies, forming a route extending from Mohrland and Hiawatha, Utah, to a point of connection at Price, Utah, with what is now The Denver and Rio Grande Western R.R. Co. These two tap lines were poorly and inadequately constructed, with impracticable grades, lacking in equipment, and incapable of being put into condition to serve this region and handle the output of the mines, to say nothing of making possible increased production and new development. Any plans for the new development and increased output necessarily involved new and adequate railroad service. It was essential, not only that additional facilities be provided but that these facilities be in the form of an efficient and up-to-date railroad providing an independent through operation from the coal mines to a point of direct connection with the lines over which the product would be distributed to consumers. For this purpose, the Utah Railway Co. was incorporated in

Jan 1, 1948

By Edgar F. Cruft

INTRODUCTION It is sometimes said that "mines are made, and not found." I rather doubt that the exploration geologist would be overly sympathetic to that statement, and, of course, like most one-liners it is only partly true. Access to different financial markets are important at the mineral prospect stage. The modern mine financier has a much more complex, and interesting, job than the financiers of an earlier era, for example, the Canadian financiers of the 40's and 50's who had one simple set of options; i.e. float a company, promote it, and sell an equity stock issue, and then promote it some more. QUALITIES OF A FINANCIER Because technical people are seldom taught financing in their basic training, and because they are usually not involved in it until at quite a senior level in their careers, the whole field often acquires a certain mystique. The engineering professions have too often believed financing is the province of the accountant or financial executive and just as we in the technical world are often too quick to bristle if the latter try to tread on our domain, the opposite can just as easily be true. Unfortunately, this is another example of a compartmentalized individual, and that is one thing the successful financier cannot be. However, to be a successful financier one does not need extensive training or experience in accounting or finance. In fact it can sometimes be a disadvantage to get too buried in working only from the standpoint of discounted cash-flow analyses, ROI's, etc. It must be stressed, however, that one had better know how these analyses are made, and be knowledgeable in understanding a balance sheet, and have a good understanding of financial terminology. The difference between a simple project-type debt financing with a commercial bank and a more inventive and creative financial package comes from an intuition and an experience relating to risk-reward factors. The most important element is "common-sense", based on knowledge and experience. The goal is structure a financial package that fits the project, and in so doing it is important to recognize that it must fit within the limitations of the group supplying the money. I find insensitivity to recognize these constraints the most common mistake made in the field. Put yourself in the other person's place and understand his sources of funds and financing limitations. The engineer has an advantage in financing, as he or she has (or should have) a better idea than anyone of the value of the product, be it the mine, prospect, or company i.e. the intangible or potential worth which cannot be put on a pro-forma. He also knows, or should know, the risks involved. Two projects might look the same on paper, but a good financier must have a sense of when to take whatever deal he can get, and when to hold out based on his evaluation of future developments. It is essential to have a good sense of commodity values and trends, trends affecting the general economy (money supply, interest rates, effects of energy costs, etc.), and political considerations. He must also have a good understanding of the science and art of taxation as deals can often be financed using the government as a silent and unwitting partner by proper use of the tax laws. WHEN TO SEEK FINANCE The first critical decision to make in financing a mineral prospect is "when". At the exploration level, when it is only a dream in the geologist's eye, the alternatives are more limited than when it is a fully-engineered project. The "when" decision depends on how much in internal funds the company has to play with, and how desirable it is to invite financial participation to spread the risk. Assuming that decision is not taken out of lack of money, no one can categorically say when to do it. There is

Jan 1, 1985

Joseph G. Butler, Jr., who represented this Institute on the American Industrial Commission to France, has presented a report to the Chairman of the Commission regarding the steel industry of France in war time. In this report Mr. Butler calls attention to the fact that only a few steel works were visited and that he thinks it probable that there are many plants in France more up-to-date than these. He noticed especially in the plants visited a dearth of labor-saving devices and not very great attention to the safety of the employees. He also noticed that the whole of the iron and steel interests in France are being used at the present time by the Government for war purposes, and he was told on good authority that the production has doubled since May, 1915. When the war is over, it is thought that France can send large quantities of iron ore from Algeria to the United States and take in return American coal to France, an interchange which would doubtless be of mutual advantage. In Mr. Butler's opinion the shortage of coal in France may be overcome to some extent by the use of water-power and by electrical processes for steel manufacture, and lie believes when the war ends France will be able to compete with other countries in exports of general iron and steel products, this trade being facilitated by the port improvements at Bordeaux and Marseilles. The French labor situation is much better than that in the United States from the standpoint of labor unions, but the wages are less and many women are now being employed to do men's work. This has a tendency to keep wages low, but is probably a war expedient only. The cooperation among manufacturers in France is at a high level and both local and national organizations exist for the discussion and voicing of trade problems. The national body which is a combination of the individual organizations is the Comite des Forges de France and it is an interesting fact that many of the members of this body are office holders under the Government, or heads of Government Committees which are organized to look after the very business in, which the individuals are engaged.

Jan 12, 1916

By C Gunther

The purpose of this book is to present the practical side of economic geology concisely and in convenient form; established facts and the applications of accepted views are emphasized; theoretical discussions and questions of genesis are avoided. Coal, iron, and placer deposits are omitted; they are subjects of specialized study that are fully and concisely treated in other works. The reader is assumed to possess a knowledge of mineralogy, petrography, and elementary geology. The arrangement adopted is based on Kemp's theory of magmatic waters, on Lindgren's conclusions on hydrothermal and secondary alterations, and on the theories of secondary enrichment enunciated by Emmons and Weed. No general classification of ore deposits is attempted, nor is any attempt made to fill by hypothesis the wide gaps, nor to explain the apparent contradictions that rank economic geology among the most inexact of sciences. The present knowledge of the subject is too incomplete to warrant such broad generalizations. The demand for good properties generally exceeds the supply. While mines of the first rank will undoubtedly be discovered from time to time, it is probably true that a great proportion of deposits having outcrops of commercial grade or of evident promise have been recognized and explored. A review of mining conditions over long periods shows that the rich discoveries belong to pioneer days, and that as time goes on the more important developments are the result of lower working costs, improved metallurgical processes, and an increasing knowledge of economic geology. As engineers in search of developed mines no longer expect to find properties having positive ore of greater net value than the price asked, so those in search of prospects should not expect to

Jan 1, 1932

By AIME AIME

THE technical material in hand and the plans under way for the 141st meeting of the Institute clearly indicate a well-rounded program of unusual excellence. The meeting will be held in the Engineering Societies Building, Feb. 15 to 18, and while it is too early to announce definitely the time of the various sessions much of the detail has been organized up to that point. Every group in the Institute membership will find much of special interest, and several features should prove generally attractive. The various committees in charge of the lighter side of the meeting are hard at work to emulate the standard established last February In this connection and in this paragraph it will suffice to say-there will be a Smoker-dinner! The Committee on Mining Methods plans two sessions for which these papers are in prospect:

Jan 1, 1932

THE award from the fund established by Mrs. John-son, in memory of her husband, J. E. Johnson, Jr., to be given to some promising engineer, not over 40 years of age, because of meritorious research, inven-tion or contribution to the professional literature of iron and steel along the lines of blast-furnace process, has been given, for, 1928, to P. H: Royster. Mr. Royster was born at Raleigh, N. C., in 1888. and graduated from the University of North Carolina, in 1907, taking his A.M. degree at, the same school in 1908. He then went to Harvard where he continued research work in physics. After engaging for a while in commercial research in the turbine department of the General Elec-tric Co. and with Cutting and Washington he joined the staff of the Bureau of. Mines in 1916 and was assigned to work on the physical chemistry of the blast-furnace process. He worked with A. L. Feild on slag viscosity and they jointly presented-to the Institute the. papers on "Temperature and Viscosity Relations in the Ter-nary System CaO-A12O3-SiO2" (TRANS. LVIII, 658) and "Slag Viscosity Tables for Blast-furnace Work" (TRANS. LVIII, 650). He also presented a paper on "Production of Ferromanganese in the Blast 'Furnace" .(TRANS. LXII, 18), and jointly with T. L. Joseph contributed a paper on "Effect of Coke Combustibility on Stock Descent in Blast Furnaces" (TRANS. LXX, 236), and another on "Pyrometry in Blast-furnace Work" which was included in the special pyrometry volume published in 1920. The titles of these works perhaps sufficiently indicate the part Mr. Royster has played in the notable research work on the blast-furnace process carried on by the Bureau of Mines, and for which the committee recommended him to the Board of Directors to receive the Johnson award.

Jan 2, 1928

By Ray W. Ballmer, K. H. Matheson

Since start-up in 1906, Bingham had been a rail pit, beginning with steam locomotives and converting to electric locomotives in 1923. Ore production was maintained by effective utilization of avail- able rail equipment. From time to time, as it became necessary to deepen the pit and as stripping ratios increased, studies of alternative material haulage systems such as diesel locomotives, conveyor belts and trucks were made. Conversion from rail haulage with electric locomotives could not, however, be justified. Because of a gradual decline in ore grade, a program was approved in 1963 to raise ore production to 108,000 tpd. The decision posed a serious problem: due to built-in inflexibility and other limitations, a parallel expansion of the rail haulage system was impractical. (Track and trolley wire relocation causes greater shovel downtime than required for normal maintenance; instability of the dumps and the resulting additional track maintenance increases greatly as the daily volume of waste material increases.) Studies indicated that economically the most favorable course of action would be the replacement of rail haulage on the upper levels of the mine by truck haulage.

Jan 11, 1965

By AIME AIME

THE difficult problem of visitors is being met by the Hudson Coal Co. at Scranton in an ingenious fashion. The Company had long made it a point to have dealers selling its coal visit the mines, whenever possible. "The excellent reaction obtained from these dealer visits brought up the question of whether it would not be possible to open one or more mines to the public, and give the consumer an opportunity of seeing for himself how anthracite is mined and prepared. Ac-

Jan 1, 1929

By Philip Henry

THERE is a difference of opinion among engineers on the subject of depreciation in general, and still more on its application to any given case. The committee which was appointed by the American Society of Civil Engineers to make a report on Valuation of Public Utilities, states "There is no subject connected with valuation about which there are more diverse views than those relating to depreciation;" and in the discussion which took place upon the presentation of the preliminary report of this committee in January, 1914, that part of the report dealing with depreciation called forth more discussion than any other. From this discussion it was evident that the word " depreciation" was not always used in the same sense, so it is quite important that some definition be adopted. As this paper relates to the proper method of treating depreciation by corporations or individuals operating oil properties, both of which must make a return of annual net income to the government in connection with the income tax, it will be in order to adopt the definition of the Internal Revenue Bureau. Under date of Mar. 29, 1910, the Commissioner of Internal Revenue of the Treasury Department stated "Deduction on account of depreciation of property must be based on lifetime of property, its cost, value and use." Again, on Form 1035, "Return of Annual Net Income" for miscellaneous corporations (Section 2, Act of Congress approved Oct. 3, 1913), a deduction from gross income is allowed for "Total amount of depreciation for the year." This item is defined more particularly as follows: "The amount claimed under Item No. 5 (b) for depreciation should be such an amount as measures the loss which the corporation actually sustains during the year in the value of buildings, machinery, and such other property as is subject to depreciation on account of wear and tear, exhaustion, or obsolescence. The amount taken credit for on this account in order to be allowable should be so entered on the books as to constitute a liability against the assets of the corporation. The amount claimed under this item should not cover losses in the value of stocks and bonds. Decrease in the book value of securities owned, so far as such decrease represents a decline in the actual value of such securities, should be deducted under item 5 (a) of the return.

Jan 1, 1915

On July 25, the first copper ore From American Smelting & Refining Co.'s Mission open pit nine was sent into the new 15,000-tpd concentrator : three clays later, the first rail cars containing the Mission concentrate were sent north to the smelter at Hayden, Ariz. Thus two y,ears after stripping was started, Asarco's new mine, located south of Tucson. went on stream several months ahead of schedule. The plant, designed and constructed by Western Knapp Engineering Co., is expected to be operating at full capacity about September 1. with present plans calling for the copper concentrate from Mission to be shipped to Asarco's smelters at Hayden and El Paso.

Jan 9, 1961

By William L. Langdon

PRELIMINARY COMMENTS Recent years have been difficult for the mining industry, as reported in the most recently published Minerals Yearbook (Volume III), the estimated value of world crude mineral production has been generally declining since an historical peak in 1979 (16).* The costs of mineral extraction have, however, been rising rapidly. Individual project costs are, in general, exceeding the growth rate of mining companies, while operating and technical risks continue to increase (16). Risks resulting from currency flotation and political actions in the host country are also on the increase. Labor difficulties (such as those experienced by Phelps Dodge) and the Reagan Administration's recent rejection of a proposal by the International Trade Commission for higher tariffs and/or quotas on copper imports have also contributed to the mining industry's difficulties. The net result of these factors has been financial difficulties for mining companies with respect to paying for their current financial obligations as well as trouble finding new financing. It may be that one of the main factors in determining the future of the mining industry will be centered upon capital structure, i.e. how its assets are financed. Historical Perspective on Capital Structure In The Mining Industry As discussed by Isreal Borenstein in (4) and Thomas Navin in (7), mining firms typically have used a financial model based upon high financial leverage, i.e. large amounts of debt relative to equity. This has been especially true for American firms developing orebodies discovered overseas. Problems sometimes occurred for those who were forced to commit themselves to completion guarantees in order to obtain bank loans. Mines under these circumstances must be brought into operation regardless of market conditions. Politicians in overseas countries also may use the high profits required by these high risk ventures to argue for nationalization of mines. Coupled with the frequent use of high leverage, mining companies traditionally have paid out a higher percentage of earnings in the form of dividends than manufacturing firms. This is significant, in that such funds paid out in dividends are not available for other uses. Hence, a greater reliance upon debt and/or additional stock issues than would ordinarily be the case for manufacturing firms. Thomas Navin has stated in (7), that the theory behind the high dividend payout was that, "most mining investors thought of themselves as investing in a wasting asset, one that would gradually deplete over time until it ultimately became valueless." Investors, therefore, required a receipt, in the form of dividends, of a percentage of current earnings and a return on original capital. This view of reality, apparently, has not changed in some quarters, even though modern mine management ordinarily replaces depleted mines with new ones. It may be that this practice of high dividend payout coupled with relatively high financial leverage should be reexamined. Current capital structure theory could prove interesting and useful for those concerned with current conditions. Capital structure patterns and related practices in this industry are not, in many cases, congruent with those thought by some to be theoretically optimal. Prelude to Capital Structure Discussion With a few notable exceptions (such as the Guggenheims and Anaconda's chief operating,. officer in 1971) mining companies' chief executives and boards of directors have not been persons with financial backgrounds. This, one could conjecture, might have accounted for the relatively nonsophisticated nature of capital structures of mining companies. In order to appreciate the possibilities with respect to alternative influence on a firm's performance, one must be acquainted with the basics of financial theory. This paper is an attempt to familiarize the reader with (1) capital structure in general, (2) the usual components of this structure, (3) the general theory behind the use of financial leverage, and

Jan 1, 1985

By Charles Willis

THE time is no longer when a man can act as an independent unit; the appreciation of the interdependence of one man upon another has emphasized the importance of the social unit. Epidemics have made us recognize that even a man's health is not distinctly his own to control as he pleases. The physical examination of workmen previous to employment started with an effort to prevent the spread of tuberculosis, for tuberculosis may be .detected in its early stages and cured. But it was soon found that many other diseases were detected and the saving of lives made possible. The physical examination does not mean the elimination of the unfit-on that basis it would utterly fail- but rather the measuring of a man's physical fitness and placing the man where he can do the best for himself, his fellow worker, and the company. Industry as a whole cannot expect to live up to the standard of physical examination set for the army, nor should it expect to do so, for in all branches of industry there are types of work that do not require -the same amount of endurance as does army work, and the placing of men with physical limitations in the work for which they are' capable permits a higher average of physical fitness for the work requiring physical excellence.

Jan 7, 1919

By A. Tobey Yu

Despite its inherent low Btu content, western coal's low sulfur content may provide a near-ideal answer to satisfy US goals for clean air and energy self-sufficiency. Vast reserves, amenable to low-cost strip mining, serve as a powerful economic basis for its viability as a primary and dependable source of energy for the coming decades. A major consideration, the solution of which may not be obvious, is the transportation cost. These deposits are remote from the utilities of the heavily populated eastern regions of the US (Fig. 1). A coal mine in Montana is likely to be more than 1500 miles from its utility market, while an eastern coal mine may be situated only 200 miles away. Thus, the question raised is: how can the haulage cost of western coal be substantially reduced to an acceptable level?

Jan 7, 1975

By Philip W. Guild

Approaching exhaustion of areas where traditional prospecting methods can pay off and sharply rising costs require increasing sophistication in planning exploration. Most outcrops, not only of ore and gossan but also of obvious zones of alteration, have been examined; many of the anomalies readily detectable by geophysical means have been drilled; geochemical surveys now cover extensive tracts. How should the explorationist proceed to find the ores that will keep his company in business and supply the world with the energy and raw materials it needs? Two courses are open to him: (1) saturation coverage by geology, geophysics, geochemistry, and drilling in the expectation that something will turn up or (2) critical analysis of the factors responsible for the concentration of valuable minerals in the earth's crust. The successful explorationist applies both methods to the limit of his resources. The second course, analysis of geologic factors, also comprises two principal lines of research: (1) ever more detailed study of the chemistry (including isotopic analysis) of the ore and gangue minerals of known deposits in an effort to understand how they were formed and (2) increasingly detailed mapping of their environment to determine the reasons for their localization. Again, both are very necessary.

Jan 1, 1971

By J. A. Benell

DIOXIDE of silicon, commonly called silica, is one of the greatest single constituents of modern in-dustry. It is brought most clearly to the mind when we consider the various kinds of sand and their rela-tion to industry. The major portion of.all sand is silica, and should be its principal component part in building materials. As an abrasive for cutting, polish-ing and sand-blasting, sand serves a vital purpose in many industries. Even lumber is now being sand-blasted, to cut away the softer grains of wood, leaving the harder grains in relief. The result not only in-creases the beauty of the wood, but adds to it an ap-pearance of antiquity. The common uses of silica in industry may be classified about as follows: Chemical industries-filtering medium; manufacture of carborundum; manufacture of water-glass. Paint-inert extender. Mineral fillers-wood filler; filler in rubber, hard rubber, pressed and molded goods, phonograph records.

Jan 5, 1928