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By Christian F. Baiz

Industrial minerals can have similar financing requirements to those needs of metaliferrous and coal mining projects. Although, one may see many similarities in the fundamentals of the various risks that must be evaluated in lending to any specific project, one of the outstanding differences is the understanding of the many different markets that these industrial minerals represent. There are in excess of 30 principal industrial minerals ranging in terms of annual production from the largest quantity such as sand and gravel, to possibly the smallest quantity of production of a legitimate industrial mineral which may be defined as industrial and rough gem diamond. If we assume that it is necessary to finance independent projects of ore bodies of industrial minerals for development, the financing techniques are similar to the fundamentals that we would use for financing coal projects or metaliferrous deposits. Therefore, let's begin by redefining project financing in the traditional banking or private sector area, and then in the later development of this paper, we will apply these techniques to industrial minerals in general and cite it with several specific examples.

Jan 1, 1982

By Michael Chender

INTRODUCTION The project financing described elsewhere in this book is available to major mining companies on the basis of a strong balance sheet, a significant equity position in a project of proven feasibility, and a demonstrated ability to bring ore deposits into production. "Junior" mining companies, which are most active in Canada, Australia, the US, and South Africa, by definition do not meet these criteria. In many cases, junior companies will need to raise money simply to cover the costs of acquiring and exploring potential deposits. In what follows we will look primarily at junior financing practices in the US and Canada, although the same general principles will apply in Australia and South Africa. The principal vehicles for junior mine company financing are limited partnerships, the private placement of securities and debentures, and public offering of securities, and property deals with stronger companies, in the form of leases, earn-ins and co-ventures. The cost (in terms of dollars or equity) and, to some extent, the applicability of using these difficult approaches varies with the stage of development of the property and with the corresponding degree of risk to the investor. Much junior company fund raising is, in fact, "interim" financing in that it allows the company to improve its properties and develop its assets to the stage where more favorable financing arrangements may become available. Companies will therefore often use several of the approaches described above during the development life of a specific property. LIMITED PARTNERSHIPS Limited partnerships and syndications are a popular way of structuring the initial private financing of mine developments because of their attractive tax consequences for the well-to-do investor. Costs of exploration and development can in many countries be passed through as deductions to the limited partners, who are thus able to gamble on a possible windfall at little real cost. In addition to private Canadian funds, much German money flowed into Canadian exploration ventures on this basis, but stopped in 1982 due to economic conditions in West Germany. In the US, recent regulations have, in the great majority of cases, taken away the ability to "shelter" income in mining limited partnerships. Deductions taken by the individual investor cannot exceed the amount of money he actually has at risk. Nevertheless, the allowable deductions are still attractive and some of the major mining companies are now beginning to look at limited partnerships as a vehicle for attracting additional exploration funding. Ranchers Exploration and Development has successfully put together several drilling funds on this basis. THE PRIVATE PLACEMENT Initial funding for the acquisition and preliminary exploration of prospects is often accomplished through a private placement of unregistered securities or, where it is not a problem to carry debt on the statement, by a private placement sale of debentures. A fledgling company wishing to do a public offering may well be advised by an underwriter to accomplish a small private placement as a precondition of the larger offering. In this way, the sale of the registered securities is not inhibited by the company starting out with a debt-ridden balance sheet and no demonstrated ability to secure the additional financing generally necessary beyond the proceeds of that offering. In the US, the securities offered in a private placement are not registered with the Securities and Exchange Commission (S.E.C.) but are restricted as to their resale, and could be further restricted by a underwriting agreement

Jan 1, 1985

By William L. Young

I think I should let you in on one of Canada's best-kept secrets, if you will promise not to tell it all over the place. Believe it or not, good, honest, enterprising capitalism is still alive and flourishing north of our common border, and I am living proof that capitalism is still working for the little guy. My personal story of mining development in Canada isn't all that rare -- you've probably heard something like it from other areas and other days several times -- but my case brings it up-to-date. I would like to Tell you briefly the history of Northumberland Mines Limited, a contemporary case of individual enterprise getting a mining operation underway. And if I can do it you probably can too.

Jan 1, 1981

By Stuart McGill

This case-study of the financing of the Ok Tedi project illustrates the nature of project financing and outlines the arrangements made in the case of this project; it also demonstrates that the limitation of financial exposure is an important goal for Governments involved in developing the resources sector. The account includes a chronological description of the process by which the sponsors prepared for the financing of the project and the lenders became involved in it. The type of security arid loan documentation required for such financing is described, together with a broad analysis of their content and the manner in which the various risks involved in development are apportioned among the sponsors and lenders. The ability to apportion and limit financial liability is an important development for the owners of capital and resources.

Jan 1, 1985

The smaller mining company with full ownership of, or participation in, a mining project is generally unable to obtain funding as easily as the major mining house. While the equity market remains the main funding source for small projects, debt fund- ing options are becoming more available. Many international banks possess in-house mine fin- ancing expertise which can assist the smaller company in financing its share of project development. A clear understanding is necessary of both the benefits and limitations of bank funding, to ensure that all potential sources of funds are properly considered and integ- rated into the financial plans of the smaller mining companies.

Jan 1, 1984

By Peter A. Allen

INTRODUCTION Lac Minerals Ltd., a significant North American producer of gold and other metals for over three decades, recently completed the financing for its third discovery in an eight year period. From 1975 to 1982, three important gold deposits in Quebec and Ontario: namely Bousquet, Doyon and Hemlo, were located and tested by company geologists. When current development plans are complete, Lac will have injected $400 million into these deposits. A discussion of these projects and their financing reveals some extraordinary challenges faced by top mining management. Responses to these challenges developed by Lac management may interest executives planning to proceed with new North American gold or base metal mines. MINE DE BOUSQUET In 1976, we explored a property containing a large low grade surface gold deposit. The geologial setting was exciting and we tested recent rethinking about the volcanigenic genesis of gold and base metal occurrences. These ideas helped pus to persist in drilling a nearby conductor and 600,000 ton, 0.22 ounce/ton orebody was outlined. With gold at $Cdn.150 per ounce the feasibility was approved and work started February 1978. Availability of a company custom mill 35 miles away reduced our immediate capital needs to $8.5 million. First of all, understanding the geological significance of results at Bousquet was critical. Mine and surface exploration geologists at Lac are continually and closely working together to better understand the nature of gold deposits in the Shield. This management emphasis on both pure and mine geology meant that a much larger ore reserve could confidently be predicted. (A proposal to quickly develop and ship the ore to a nearby company mine was discarded.) Instead of designing just for the initial plan of 500 tons per day we therefore included headframe, shaft and hoisting capacity for 1,700 tons and provided a compartment for future shaft deepening. These prebuilt additions were welcomed within two years. The type of collaboration whereby surface and mine geologists make study and field projects of each other's problems sets the foundation for this predictive ability. At Lac, the traditional responsibility for and supervision of the mine geologist by the mine manager is modified by this collaboration. This adds interest and scope to the geologist's work and lets him think beyond production requirements. Besides such management considerations, dedicated, professional geologists with integrity and lots of practical experience are needed to plan successful developments like Bousquet. Second, projecting future bullion revenue was critical and our experience selling production for future delivery gave us a way to ensure that loan repayment at term would not be jeopardized by falling metal prices. Output from a single mine is often reduced or curtailed for numerous reasons, so "selling forward" is done best and with least risk by companies like Lac with more than one or two producing locations for that metal. At first, a forward marketing program was considered unwise, speculative and unorthodox by analysts and other producers. Declining markets in the early 1980s prolonged gold project capital recoveries however, and critics were better able to appreciate the usefulness of such a tool. The notion that gold miners shouldn't sell forward is rooted in the belief that long-run gold prices will rise as modern social theory implementation in democracies inevitably erodes currency values. Selling against this trend goes against this industry belief or "ethic" and is at odds with the company shareholder who expects the gold price to rise not fall. Nonetheless, an efficient tool is available to the gold producer (not to most other metal producers) to quickly disengage from adverse price trends or to lock in spot prices instantaneously for two years or more of profits. Gold had recently retreated from U.S.$200 to $104 and now had reversed to $150. Lac had been forced to close several of its producers during the late 1960s because central bank-controlled

Jan 1, 1985

By Barrie A. Wigmore

There are two aspects of financing western coal development -- whether there is going to be enough money to finance the prospective large development of the industry, and the specific techniques of raising money for that development. To take the first question of whether there is going to be enough money around to finance your industry, I think it is quite clear that the restrictions on the development of western coal are going to be non- financial. Environmental impact problems are creating the greatest delay in coal mine development, at the moment; but getting enough personnel, mining equipment, railroad equipment, and failure of the Department of Interior to act on leasing federal coal lands all appear likely to create significant bottle- necks in the development of western coal -- larger bottlenecks than financing. Financing appears straightforward for the industry. There are many projections of the financing required to meet Project Independence goals. The National Academy of Engineers estimated that development of 500 million tons per annum of western coal would be necessary by 1985 to meet the Project Independence goals which might require $20 billion of capital spending. It is generally agreed that 500 million tons a year is not a realistic possibility. Carl Bagge?s estimate of production of 250 million tons a year by 1983 appears a more reasonable projection. Development

Jan 1, 1976

By Chris McBean

Due diligence mistakes ? lost opportunity ? High profile write-downs and cost overruns ? Result ? tight market for financing ? Implications for due diligence ? need to get it right ? maybe only one chance ? Where should focus be?

May 1, 2013

By M D. Rosengren, G Gregor, M F. Young

Over the last 15 years the silver/lead/zinc ore treated at Mount Isa became increasingly complex and lower grade. Metal recoveries dropped dramatically, causing a serious decline in profitability. The ætraditionalÆ response of increasing tonnage to reduce unit cost was unsuccessful, since the additional tonnage was even lower quality ore. A major technical and capital program in the 1990s restored metallurgical performance, but business return was still too low and ore quality continued to decline. In 1996 a new, holistic approach integrated the steps of geology, mining, concentrating, smelting, and refining. Previous assumptions about æfixedÆ and æmarginalÆ costs in mining and processing were shown to be wrong. Detailed analysis showed that some ore sources were reducing profit. This led to a fundamental redesign and downsizing of both Mount Isa and Hilton mines. The result was dramatic increases in head grades, metallurgical performance and plant stability without any capital expenditure. The business is now smaller, but more profitable.

Jan 1, 1998

By A Murphy, I Samsonova, N Eastwood, D Whittle

Part XI of the United Nations Convention on the Law of the Sea (UNCLOS or the Convention) (United Nations (UN) Division for Ocean Affairs and the Law of the Sea, 1982) establishes a comprehensive regulatory framework for the conduct of deep seabed mining (DSM) activities of mineral resources in the Area (defined in Article 1(1) of UNCLOS as ‘the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction’). Under that framework, DSM activities can only take place in the Area pursuant to an approved Plan of Work in the form of a contract with the International Seabed Authority (ISA) (the Authority), a 168-member international body created under UNCLOS to administer the Area. Private contractors can undertake DSM activities if they are sponsored by Member States of UNCLOS, providing a dual system of international and domestic regulatory control and oversight for activities in the Area.

Sep 1, 2024

By L. Clark

Despite near-record commodity prices, the mining industry continues to search for ways to maintain profits in these times of steadily increasing energy prices and steadily decreasing grades. The pressure is still on today’s miners to continuously improve their operations because they know that one day prices too will drop. Some, however, have seized the opportunity to employ systematic methods to reduce costs and increase the efficiency of their workforce and equipment. As a result, closer attention is being paid to scheduling and the value that could be added by defining the extraction sequence that maximizes the net present value [NPV] of a project. This paper will discuss the challenges faced by Newmont Mining Corporation [Newmont] at its operations and the application of sophisticated software tools and methods in its search of solutions to this problem.

Jan 1, 2007

By Julian Malnic

Various natural, commercial, engineering and operational factors govern the evolution of approaches taken in the exploration for Seafloor Massive Sulphides (SMS) and in delineating the resource. These stages are prerequisites to the proposed mining of SMS deposits. This paper presents and analyses these factors from the view of an SMS exploration company that is pioneering the exploration of this rich alternative source of zinc, copper and gold. Current exploration practices developed by Marine Scientific Research (MSR) workers for SMS deposits are expected to give way to industry-generated methods as the SMS exploration industry gathers momentum. The exploration process falls into three phases that are described below: Prospecting (locating targets), Indicating Resources, and Measuring Mineral Resources Considerable streamlining of the SMS exploration process will accelerate the rate of discovery. The economics of SMS mining are projected to be superior to comparable terrestrial mining operations in both operating cash cost and capital terms.

Jan 1, 2001

By Karen Munro

Importance of Aquatic Studies for Mining ?Aquatic habitat is usually the first area where a mine interacts with the ?real world? outside the mine footprint ?Water management is a key consideration for a mine?Effects on the aquatic environment often extend to wildlife and human uses ?There is a lot of regulatory focus on issues of water quality, fish and fish habitat

May 1, 2011

By Mark Vardy, Kate Dobson, Isobel Yeo, Paul Lusty, Bramley Murton

In response to anthropogenic climate change, the way in which we use and generate energy is changing. To facilitate these developments, it is essential that we increase and diversify the supply of ‘E-Tech’ elements essential for cleaner energy generation and more efficient usage. The vast majority of these materials (e.g. cobalt, lithium, niobium, platinum group metals, rare earth elements and indium) come almost exclusively from mining and new resources must be found and developed in order to secure supply and meet the demands of the future. Ferromanganese (FeMn) crusts are rich in cobalt, tellurium and rare earth metals, and are common on seafloor hard grounds at water depths over 1000 m. The mining of both FeMn crusts and nodules is potentially viable dependent of the balance of cobalt and nickle prices (Martino & Parson, 2012), however, crusts need to be at least 4 cm thick with cobalt contents of at least 0.8% (International Seabed Authority, 2008). The difficulty for those wishing to exploit these resources is firstly finding them, and secondly assessing their potential remotely. Such capability would not only save time and money, but also allow mining operations to be more focused, reducing needless destruction of seafloor habitats from exploratory mining or mining of noneconomically worthwhile deposits. In this contribution, we examine the distribution of crusts on a single Atlantic Gyot (Tropic Seamount), the morphology of FeMn crusts, their variable growth patterns and the characteristic geophysical response from crusts in various datasets, including ship based 60 m resolution multibeam and high resolution bathymetry, backscatter and sub-bottom profiler data acquired using an Autonomous Underwater Vehicle (AUV).

Jan 1, 2017

By Fernando J. A. S. Barriga

Exploration for active seafloor hydrothermal vent fields has been highly successful, and more than 300 such fields have been discovered to date. Some will most probably be mined, given their high metal grades (Cu, Zn, Au and others). However, the current practice detects active systems, and activity rates, not the size of the deposits. This strategy may leave undetected some of the best targets, for several reasons as follows: 1. Large hydrothermal plumes are a measure of dispersion of ore components, not of efficiency in the generation of orebodies; 2. Deposits formed a few hundred years (or more) before present will generally have ceased their activity and will not be detected by plume studies; 3. Deposits formed under a cover rock (up to a few meters of sediments, volcaniclastics, or the like) may exhibit only minor seafloor hydrothermal activity, possibly diffuse flow. Cover rocks will often host hanging wall rock alteration, expressed in geochemical and mineralogical haloes. It has been demonstrated in many instances, especially for deposits formed in the geological past, now exposed on land, that ore genesis under a cover rock is one of the most suitable processes for generating large massive sulfide deposits. One of the great challenges for submarine resource knowledge will be to develop adequate exploration strategies for sizeable orebodies, not necessarily hydrothermal vent fields, sometimes hidden under a cover rock.

Jan 1, 2011

By N Power, A D. Costar

There has been significant growth in mining and energy exploration in South Australia, which has identified new major potential opportunities. This sector generates significant economic value to the state and their support remains a priority for the state government. The delivery of this economic and associated community value to the state is dependent on the mining and energy sector being able to access reliable water supplies.The vast majority of priority areas for the mining and energy sectors are located in areas that have traditionally been of low priority from a water-use perspective and hence, data and knowledge levels are generally low.Recent studies have identified a potential increase in demand for water in the mining and energy sector for potential developments from approximately 40 GL to over 170 GL over the next ten years. The studies found that water and water infrastructure is the second highest proportion of planned infrastructure capital investment by resource companies. The South Australian GovernmentÆs Plan for Accelerating Exploration (PACE) initiative (PACE 2020), also identifies addressing the issues of location, use and management of South AustraliaÆs water resources as a key priority for the growth of the mining and energy sector.The Department of Environment, Water and Natural Resources (DEWNR) has developed the facilitating long-term outback water solution (FLOWS) initiative. DEWNR is currently undertaking a suite of programs to provide groundwater information at the regional scale to better target water supply options for mining and energy developments and community water supplies.The Goyder Institute for Water Research has leveraged significant research investment of $3 M to develop methodologies to interpret airborne geophysics to map groundwater sources.The FLOWS Initiative will provide key content for the PACE Water Program and will also assist in the development of water supplies for remote far north communities by identifying alternate groundwater sources to improve water supply security.This paper will discuss how developing an appropriate science and knowledge base will encourage and secure development where appropriate, enable prudent decision-making and policies regarding water allocation, accounting and licensing, whilst ensuring the protection of environmental assets.CITATION:Power, N and Costar, A D, 2013. Finding long-term outback water solutions, in Proceedings Water in Mining 2013 , pp 191-196 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 26, 2013

The population and the per capila consumption of mineral resources have both grown dramatically during the century past. It is argued that growth will continue through the century ahead but that the magnitudes of undiscovered resources are probably adequate to meet demands. The challenge that the mineral explorer of the future will face is finding deposits beneath several kilometres of barren rock.It is further argued that the principal challenge that society will face in the century ahead is the amelioration of environmental stress.

Jan 1, 1993

By R Lewis

Drill hole magnetometric resistivity (DHMMR) is a relatively recent addition to the explorationistsÆ suite of techniques for finding further resources in the vicinity of a drill hole. The method relies on gathering of an applied current into zones which are less resistive than the country rocks and it was first applied to exploration programs looking for weakly conductive sulphides, such as, for example, carbonate-hosted zinc deposits. More recently, it has been applied to a wider range of deposit styles, including highly conductive nickel sulphides. It has been found that the technique is capable of not only detecting mineralisation not seen by conventional electromagnetic (EM) techniques, but it can detect at a greater distance. Also, whilst EM is superior at defining tabular-shaped conductors, DHMMR may be more effective at finding cigar shaped sulphides. This paper presents a number of examples illustrating these findings.

Jan 1, 2000

By S Arnold

Properties of the soil profile fundamentally control water-limited ecosystems. Soil water availability affects vegetation dynamics of plant communities, but is also affected by these communities in return. Understanding this eco-hydrological interplay and the role of physical soil restoration is crucial for successful rehabilitation and management of post-mining landscapes in semi-arid areas. However, uncertainties exist in both the mathematical description of plant communities within ecological submodels and the predictability of future rainfall events. This study uses information gap decision theory combined with an ecohydrological system model to investigate how both uncertainties impact decision-making in the context of ecosystem rehabilitation. A range of management strategies are investigated to identify the optimal soil thickness for successful rehabilitation of native plant communities in Central Queensland. The results emphasise that thicker soils can counterbalance uncertainty in mathematical description of plant communities by increasing the simulated survival probability of plant communities. However, the influence of thicker soils on the robustness of plant communities against a change in future rainfall amount is rather marginal. By allocating an economic value for restoring a particular thickness of soil layer, these results can be used to evaluate the costs of ecosystem re-establishment with regard to two target measures - the survival probability of the plant community and their robustness against climate change.CITATION:Arnold, S, 2012. Finding optimal soil restoration strategies in the face of uncertain future rainfall amount, in Proceedings Life-of-Mine 2012 , pp 91-96 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 10, 2012

Patterns of successful metallic mineral discoveries in Australia are analysed for the last three decades. A trend towards more discoveries of poorly expressed and blind ore- bodies is evident and can be expected to continue. Discoveries using traditional and conceptual geological techniques have proportionally declined but are expected to continue at a significant level for a decade or so. Improvements in the quality and numbers of geological exploration models and in the quality of available basic geoscience data have aided successful discovery in recent years. Although some orebodies for the Year 2001 have already been found maintenance of a strong mineral inventory demands that more and better geological models are applied. Empirical models need to be improved by critical multi- disciplinary integrated studies of mineral occurrence at all scales. New models can and will be developed by various means. If application of these models is made with all the innovation, initiative and unorthodoxy that can be mustered then new discoveries will result. Greater attention to the surface expression of orebodies will also lead to new discoveries. Review and follow-up of old data in the light of new concepts will provide yet another discovery route.

Jan 1, 1981