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By William J. Potter, Roger N. Pyle

Introduction The primary ingredient for survival of mining companies during a recessionary period is to be innovative and resourceful in the structuring and financing of operations. Over the past decade, many mining companies have had to retrench and restructure their operations and to redeploy their assets just to survive. During the same period, traditional sources of financing for mining companies -- commercial banks, subsidized export credit loans and long term straight debt financing in the public markets -- became less available and more expensive. Meanwhile, new markets and new financing instruments provided new alternatives for mining companies. Those companies which exploited these alternatives greatly enhanced their capacity for survival and even for profitability. This article considers the strategies adopted by some companies to adapt to changes in this recessionary environment; the inadequacy of traditional sources of financing; certain of the new financing instruments, structures and markets which have become available; and how several mining companies have utilized these new instruments, structures and financial markets to improve their competitive positions. THE IMPACT OF RECESSION ON MINING COMPANIES AND TRADITIONAL FINANCING SOURCES In its 1983 year-end article "The New Economic Order" Mining Journal characterized many of the large private sector mining companies with operations in the industrialized countries as being "gripped between the jaws of high working costs and stagnating metal commodity prices." The article went on to characterize the Canadian mining industry in particular as being "in the difficult position of having to seek to sell the bulk of its output in a world market characterized by over-capacity, where production costs were determined by internal political and economic factors while prices were set by external competitive forces of supply and demand." Miners of a wide range of commodities in the industrialized countries have come to realize that their domestic mineral resources are in many cases no longer competitive with global sources of supply. To compete and survive they would have to rely on their technical and financial expertise in mineral exploration and development and in mining and processing. Strategies For Survival Global competition has compelled management in the extractive industries to improve their worldwide cost position. This is the only means whereby a mining company can differentiate its product and attain a substantial competitive advantage. During the past decade, for example, ASARCO Inc. and Inco Ltd. chopped their payrolls, postponed expansion plans and otherwise retrenched. ASARCO reduced its capital expenditures and cash requirements for operations in 1984 to a level almost equal to its internally generated cash. The company's finances were also strengthened by increasing total lines of credit from outside sources, by selling common stock, and by reducing annual pension funding through a change in actuarial assumptions. Other companies returned to their traditional organizational structure where they had a demonstrated competitive strength. Consolidated Gold Fields, for instance, resumed its operation as a mining finance house. Its capital investment programs are now devoted solely to resource development. In mid-1984, at a time of firming zinc prices, Union Miniere S.A. used the opportunity to integrate its smelting capacity and to direct investment to certain subsidiaries at the expense of less viable operations. Smaller corporations realized that it was not enough just to be the low-cost producer. For example, Drummond Coal Company in Alabama, which dominates its regional market due to its low-costs, has also developed a world-wide trading capability and has placed incremental tonnage from its own mines as well as brokered coal produced by others, thereby minimizing capital risk. In Canada, Campbell Resources has exploited difficult times by acquiring assets cheaply. In the process it improved its capacity to withstand cyclical economic swings by diversifying from solely a copper and gold producer to a company based upon asbestos, coal, copper, gold and natural gas.

Jan 1, 1985

By A. L. Stomberg

Federal and State surface coal mining regulations require special handling of prime soil materials which result in additional costs, and no actual benefit when prime and non-prime soils are similar. The Coteau Properties Company proposes to mix both prime and non-prime topsoil and subsoils at the Freedom Mine in Mercer County, North Dakota, based on an analysis of soil physical and chemical characteristics which show these materials to be comparable.

Jan 1, 1985

By F. C. Bond

Nature of Empirical Calculations The size reduction of large tonnages of ore and rock is an operation of great magnitude. It is a necessary and important part of industry. Its development has been motivated by practical need and has followed the path of an industrial art without much help from theoretical science. Knowledge has been accumulated from experience. Trial and error established the methods; then collected data were tabulated and served as the basis for empirical equations that have been continually modi¬fied and amplified as new data became available. These equations now constitute the bulk of our present knowledge of comminution. There is no accepted scientific theory that is basic to comminution. In electrical, mechanical, and civil engineering, as well as in many other industrial activities, such theories exist and are extremely help¬ful, but rock is essentially heterogeneous, and the zones of weakness that control its breakage are thoroughly diversified. No theory has yet been discovered which can account for the variability of rock, although many attempts have been made. Empirical equations tell nothing of the why of a phenomenon, but if they are properly derived they can tell much about the how. They always represent only an approximation of behavior but never a law. In a proper empirical equation a symbol is assigned for each of the variable quantities that obviously affect the relationship. In a grinding mill these include mill diameter, mill speed, and feed rate among them. In setting up and revising an empirical equation the cardinal princi¬ple in establishing and modifying it is this: any change must be strictly ascribed to the variable which caused it. A useful empirical equation is rendered useless when a change in any convenient coefficient or exponent is made to make it fit a particular set of data, without certainty that the altered coefficient or exponent is the responsible variable in the new data. Such indiscriminate revisions have brought the use of empirical equations into some disrepute. When existing equations are changed to accommodate new data it is a good rule to make a change which gives results intermediate between the new and the old. A halfway point is usually a good choice.

Jan 1, 1985

By Bo R. Arvidson

The strongest magnetic roll separator available on the market enhances certain industrial minerals purity to levels not reached previously. Exceptionally strong forces can also be utilized for processing relatively fine particles at feed rates several times greater than for prior art electromagnetic induced roll separators. Since the unique machine does not work with an air-gap, coarser particles than what has been considered practical can be separated at rates up to 20 tph per single machine unit and 40 tph for a double machine unit. Examples for all these three application areas will be given. While the roll separator can be used only for dry processing presently, the other new separator can be used for both wet and dry applications. It is a medium-intensity, high- gradient magnetic separator employing a filamentary matrix. It was primarily developed for recovery of weakly magnetic iron ore fines, but it is finding applications for cleaning of industrial minerals such as wollastonite, calcite, clay and talc. Its main advantage is a simple design resulting in a very lm cost machine both with regards to total capital investment and operation. A significant technical advantage exists also. The metallurgical performance is similar to conventional electromagnetic separators, while the cost per ton is about half of such separators.

Jan 1, 1985

By J. P. Hager

The formation of the vapor complex AgFeC14 (g) baa been identified and its thermodynamic properties determined. The vapor pressure of silver chloride can be enhanced by a factor of 15-20 due to the formation of the vapor complex. The vapor pressure of both AgCl (g) and AgFeC14(g) were measured using a double-zone transpiration .technique. Gibbs free energies have been determined for the vapor transport reactions. Laboratory kiln tests were conducted to confirm the enhanced recovery of silver through the formation of the AgFeC14(g) vapor complex and to indicate the opportunities for process development using this new vaporization chemistry.

Jan 1, 1985

The introduction refers to observations made in the early days of the Nationalisation of the Coal Industry in the United Kingdom, indentifying the underground transportation problems. Statistical information is presented, highlighting the considerable developments which have been made in recent years with an evaluation of the manpower and cost involvement.

Jan 1, 1985

By R. D. Hendry, R. A. Pearce, Allyn J. Steward, Dennis C. Martin

This paper outlines the geotechnical exploration and design approach utilized for the Km 80 and Km 86 Tunnels on the British Columbia Railway Tumbler Ridge Branchline. Information from surface mapping, trenching and diamond drilling was used to prepare a rational support design using accepted rock mass classification systems. Four possible support types were developed and used as a basis for preparing a cost estimate and contract documents for the tunnels. A unit price contract was selected to provide flexibility and to enable rational selection of support based on actual ground conditions encountered during excavation. Although ground conditions along the tunnels are variable, the general geology and quantities of support installed were consistent with those estimated from the geotechnical investigation and design.

Jan 1, 1985

By William H. Pomroy

Fires in underground metal and nonmetal mines pose a threat to the safety of underground miners and to the productive capacity of this Nation's mines. Contaminated air (smoke, carbon monoxide, and other products of combustion) is the primary life safety hazard created by a mine fire. The most reliable defense against the hazard posed by the rapid spread of contaminated air underground is early warning fire detection and rapid evacuation. This Bureau of Mines report describes the design and operation of four prototype early warning fire detection systems, for underground noncoal mines, presently undergoing prolonged in-mine testing by the Bureau. The systems are described within the context of the underground mine environment.

Jan 1, 1985

By J. Douglas Causey

In 1984, at the request of Bureau of Land Management, the U.S. Bureau of Mines studied the 13,730-acre Burnt Lodge (MT-065-278) Wilderness Study Area (WSA) in order to evaluate the mineral resources. The WSA is located in Phillips and Valley Counties, MT, about 55 miles south of Malta adjoining the Charles M. Russell National Wildlife Refuge. It is underlain by near horizontal sedimentary beds of the Hell Creek Formation, Fox Hills Sandstone, and Bearpaw Shale. No mines or prospects were found in the WSA. Bentonitic beds were examined, but are generally less than 1 ft thick and, except where exposed, are deeply buried. Kaolin-bearing sandstone in the Colgate Member of the Foxhills Sandstone was sampled and may have potential for use in structural clay products. However, remoteness and inaccessibility of the area make it unlikely that the material could be economically extracted even though some of the material is marginally useful.

Jan 1, 1985

By H. H. Kellogg

The thermochemical properties of molten solutions in the binaries Cu-Bi, Cu-Sb and Bi-Sb, as well as the ternary Cu-Bi-Sb, have been correlated and described in mathematical form by use of the associated species concept combined with the three-suffix Margules equations to account for the non-idea 1 behavior of the solution species. Agreement of the correlations with experimental data is excellent (relative deviation of less than 2.5% in the values of the activity coefficients) in most cases. The correlations are applicable over the entire composition range of each system, and in the temperature range 700°-1250°C.

Jan 1, 1985

By L. C. Bird, A. I. A. Salama, M. W. Mikhail

"A program of sampling in Canadian washeries was carried out by the Coal Research Laboratory (CRL) over a period of two years to evaluate the performance of various density separators in these operations(1). Operating data on quality and recovery of products, separation efficiencies and cutpoints for each separator type are compared with data predicted using computer models developed from previously existing data.The Heavy Medium Cyclone (HMC), Heavy Medium Bath (HMB) and jig models give predictions of recoveries and qualities of products for sizes coarser than 10mm with absolute value of error mean less than 7 per cent, whereas predictions of the Water Only Cyclone (WOC) model for -10mmfine coal are with absolute value of error mean less than 8 per cent. Although less accurate for -10 mm fine coal, the HMC and jig models produce predictions of recoveries with absolute value of error mean less than 2 per cent and quality of products predictions with absolute value of error mean less than 28per cent which are generally acceptable because more liberation in the fine fractions appears to compensate for any difference in the accuracy of separation, resulting in good prediction of the clean product. However, ash content of the actual fine refuse was lower than predicted. The difference is attributed to the highly friable nature of Canadian coals which tends to cause an excessive loss of coal fines to the fine refuse.A comparison study based on quality and recovery of products is made between the Dutch State Mines (DSM) models and the recently modified models, both produced comparable predictions."

Jan 1, 1985

By Brooks J. Klimley, Daniel M. Higgins, Grover R. Castle

Measuring The Economic Viability Of Resource Projects (A Western Surface Coal Project) The bankers approach to the analysis of a new "green fields" mining project is similar but different from the approach that the pining company might take. The purpose of this paper shall be to discuss the techniques that are used by mining companies and bankers as they try to measure the economic viability of mining projects. The analysis of these new projects (by both the mining companies and the banker) is based on a projected revenue stream and not on historical earnings or past perfomance because these projects are start up situations with no history to look to. The starting point in the analysis of these projections is the choice of the assumptions to be used in preparing these projections. After the assumptions have been determined and the projections are prepared then the projections are submitted to various tests in order to determine whether the project measures up to previously agreed upon minimum standards. In order to illustrate the analytical procedures used in evaluating a mineral project the writer has constructed a hypothetical case involving the development of a western surface coal mine (Property). The basic data in connection with this hypothetical new project is described in the next section of this paper. After the Description of the Project is a section which shows the type of analysis that a mining company might prepare in order to approach a bank for a loan and the final section illustrates the type of analysis that a bank might prepare in evaluating this loan request. Description Of The Project or Basic Data In Connection With Undeveloped Western Surface Coal Property An independent mining/geological Consultant's report has been completed on the Property which confirms that the Property contains 175 million tons of economically recoverable coal subdivided into the following reserve categories in accordance with U.S. Bureau of Mines and U.S. Geological Survey definitions: Measured or Proven 90,000,000 Indicated or Probable 50,000,000 Inferred or Possible 35,000,000 The owners of the reserves have chosen to drill up those reserves that are nearest to the subcrop and have not spent as much time on those portions of the Property which are on the fringes of the deposit where the overburden is thicker because the stripping ratio and hence the operating costs and capital requirements are higher down dip. The proven reserves are based on an average thickness of 80 feet, of which a mining recovery of 90% is projected. The overburden thickness varies from 0' to 280' with an average thickness of 127'. The overburden consists mainly of scoria, sandstone, gravel, shale and silty clay. 134 holes were cored (and analysis done on five foot increments) in the measured reserve on the following spacing: 100 foot centers to define the burn line; 1,320 foot centers to define the early mining areas; 2,640 foot centers to identify the later mining areas.

Jan 1, 1985

By A. S. C. Owili-eger

Coal mining is one of the major activities that may affect the natural or existing hydrologic equilibrium of a basin. Consequently, the mining industry is committed to the conservation and protection of the hydrologic balance within and around mining environments. This commitment embodies thorough and careful consideration of the quantitative and qualitative variations and, in general terms, the environmental impacts of mining activity on the natural water systems. A research program was undertaken to study the impacts of full extraction coal mining on the ground water systems at one of the coal basins in the Appalachian region. The primary objective was to provide reliable information for determining the local and possibly the regional effects of longwall mining on well yields, and the hydraulic and hydrogeochemical parameters of the immediate surface and subsurface water resources.

Jan 1, 1985

By John G. Whellock

Over the last decade new constraints have emerged in the metallurgical industry which challenge the very basis of design and construction of smelters and refineries. The hackneyed designs of the past will not now serve the revised objectives of: - minimal cost of ownership - improved productivity - reduced energy consumption - greater flexibility in feed or product - minimized recycle loops and by-products - more stringent environmental control The impact of these constraints has been channeled constructively into process intensification - exemplified at the large scale by the introduction of flash smelting technology and at the smaller scale by the application of rotary process vessels and converters for augmented heat and mass transfer. The design of successful process plants depends on the understanding of the unit operations and their interactions which is the discipline of systems engineering. With the advent of increased process intensification the importance of a systems approach to process design and implementation becomes paramount. This paper describes the systems approach with specific reference to medium scale projects in the primary and secondary metallurgical industry.

Jan 1, 1985

By Michael E. Henderson

The U.S. Bureau of Mines (BOM) constructed the Hydraulic Transport Research Facility (HTRF) to investigate the hydraulic parameters relating to the transport of coarse coal. To achieve these goals in a timely and efficient manner, the Bureau contracted to Boeing Services International, Inc. (BSI) the responsibility of operating the HTRF and providing technical support. This data report is a summary of the testing and data results for the period from 16 September to 1 November 1983. The testing covered herein is for coarse 2-in by a (minus 50 mm) Pittsburgh Seam coal in a 12-in (3 00 mm) pipeline, at velocities ranging from 5 to 18 ft/s (1.5 to 5.5 m/s) and at concentrations ranging from 15 to 55 pct.

Jan 1, 1985

By George White

On June 25, 1876 Lt. Colonel George Armstrong Custer led the Seventh U.S. Cavalry Regiment., comprising 31 officers and 637 enlisted men, into the valley of the Little Big Horn River in southern Montana. His assigned mission was a reconnaissance-in- force to locate the Indians reported to be assemblying in that area. Custer was extremely successful in locating the Indians. Unfortunately he located more than 3000 Cheyenne and Sioux under the leadership of the great war chiefs Crazy Horse and Gall. Custer's entire battalion of more than 200 men was annihilated; there were no survivors. While I don't seriously suggest that things will be all that bad in the uranium industry, I do suggest that some very fundamental changes have occurred in the uranium market. Conventional thinking based on past truths will no longer suffice. Geology, economics, politics, nuclear growth pat terns, technology, and utility attitudes have all changed. New thinking is in order. It is at this point that I would offer my usual disclaimer. My views regarding the future are simply that--my personal views. My belief that certain events will come to pass does not mean I view those events as appropriate, wise, good, equitable, or economic.

Jan 1, 1985

By J. A. Corbyn

An analysts of mining investment from the point of view of financial optimization is presented. The method uses differential equations to describe financial performance rather than the more usual method of modeling mine accounts from year to year. The analysis shows there is a optimum mine life that can be easily determined if certain simplifications are made. Tables are given to facilitate computation of the optimum life.

Jan 1, 1985

Weinberg, born and educated in Germany, worked in'the American West for 10 years as a mining engineer and metallurgist. He was the first head of the Queensland Smelting Co. and from 1889 through 1915 was a prominent mining figure in Queensland. He was a competent manager at Aldershot, Dapto, and Chillagoe, but always lacked huge ore deposits for his smelters.

Jan 1, 1985

Drainage aids are designed to assist in filter cake dewatering by reduction of surface tension. By the early 1980's severalspecialist chemical manufacturers had developed drainage aids specific to the alumina industry. Thus, after some initial laboratory work, drainage aid addition to the product hydrate filter cake was first tried at Gove in early 1981. Encouraging results led to further plant trials and a laboratory trial comparing eight different products. Fromthis last trial a product was chosen and a plant trial run in March 1982. The results achieved encouraged a further plant trial to be run during April and May, 1982 and a decision was then made to adopt the full-time use of drainage aid on the plant.Optimisation work with the drum filters and drainage aid continued until late 1983. This work not only led to optimisation of dose rates, concentrations etc., but also to significant improvements in the mode of operation of the product filtration area.

Jan 1, 1985

By Oldrich Machacek

Seismic explosives are very important tools in the search for oil and gas. Changes and new techniques in seismic exploration methods are also demanding new developments in seismic explosives. This article concentrates on three problems, characteristics of surface seismic explosives,causes of fires in application of surface seismic explosives and new developments in downhole seismic explosives.

Jan 1, 1985