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By Dennis J. McCarthy

TAX TREATMENT OF EXPLORATION AND DEVELOPMENT EXPENSES Exploration Expenditures General Principles. Exploration expenditures are expenses incurred within the United States or the Outer Continental Shelf for the purpose of ascertaining the existence, location, extent or quality of any deposit of ore or other mineral. Section 617 of the Internal Revenue Code permits a taxpayer to elect to deduct these expenditures currently. In default of election, exploration expenditures must be capitalized and included in the basis of the mineral property for purposes of determining cost depletion. Entitlement to Deduction. In order to qualify for current deduction, exploration expenditures must be incurred prior to the commencement of the development stage, i.e., when mineral deposits are shown to exist in sufficient quantity and quality to reasonably justify commercial exploitation. Generally, expenditures for geological and geophysical investigations, reconnaissance, surveying, testpitting, trenching, drilling, driving of exploration tunnels and adits and similar types of work constitute exploration expenditures if incurred prior to the commencement of development. However, expenditures to further delineate the extent and location of an existing commercially marketable deposit are not exploration expenditures. Exploration expenditures may be incurred from within a producing mine to ascertain the existence of what appears to be a different ore deposit. Expenditures for property which is subject to an allowance for depreciation are not deductible under §617. However, depreciation properly allowable on assets used in exploration is an exploration expenditure. Election to Deduct Exploration Expenditures. The election to deduct exploration expenditures is made by deducting these expenditures in the return for the first taxable year for which such treatment is desired. The election applies to all properties of the taxpayer. Once the election is made all exploration expenditures, in the year of election and thereafter, must be deducted, unless the election is revoked with the prior consent of the Commissioner. The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) made substantial changes in the treatment of exploration expenditures. For exploration expenses incurred after 1982 and before 1984 by a corporation, the amount currently deductible is limited to 85% of the expenditure. The remaining 15% must be capitalized and recovered over a five-year period. Although exploration costs capitalized under this provision are not part of the basis of the property for cost depletion purposes, investment credit may be claimed with respect to these expenditures. Further changes have been added by the Tax Reform Act of 1984 with respect to expenditures made after 1984. The Act reduces the amount of otherwise currently deductible costs from 85% to 80%. Additionally, it limits the availability of the investment credit for capitalized mineral exploration costs to deposits located in the United States. TEFRA also allows individuals a special method of recovery under which exploration expenditures may, at the election of the taxpayer, be amortized ratably over a 10-year period beginning with the year in which the costs are paid or incurred. If taxpayer does not use this method, the excess of the exploration expenditures actually deducted over the amount that would have been deducted if 10 year amortization had been elected is an item of tax preference subject to the alternative minimum tax.

Jan 1, 1985

By R. R. Unterberger

Three different physical techniques have been used to see through or probe into rocks, so miners might know what is ahead or overhead. These are radar, sonar, and a unique type of sonar called nonlinear sonar. Five radar systems have been developed. The highest frequency used is 4300 MHz for detecting small fractures at close range. This gives the best resolution. For longest range (over 2000 m, or 6560 ft) we use the 30 MHz radar for finding faults ahead of mining or ranging to salt dome flanks. Two types of salt, dome and bedded, are recognized. Radar works well in dry (dome) salt, but not in bedded salt which contains small amounts of water. The dipole moment of water absorbs energy from the radar. Thus was born the 30 MHz radar system and sonar probing systems. These can probe to 100 m (328 ft) even into wet salt. All probing systems measure data in time, which are converted to distance by measuring the time of travel of radar or sonar through salt pillars of known thickness. Ranges of probing in salt are from less than 1 m (3.3 ft) to more than 2000 m (6560 ft). Uses of radar and sonar probing in mines include mapping the top of salt above a mine; mapping salt dome flanks; finding impurities in salt such as anhydrite, sandstone, or potash stringers; locating old boreholes in salt pillars; locating fractures in salt; and finding faults or water zones ahead of mining.

Jan 1, 1985

By D. R. Weir, R. M. G. S. Berezowsky

Pressure oxidation of gold containing concentrates and ores is an effective pretreatment for liberating refractory gold. This is particularly true when an appreciable portion of the gold is associated with sulfides and is not amenable to conventional cyanidation. A brief review of the literature on pressure oxidation of refractory gold materials is presented. The chemistry of the aqueous oxidation of arsenopyrite and pyrite is discussed. Data obtained on pressure oxidation and subsequent cyanidation of concentrates and ores tested at the Sherritt Research Centre are also presented.

Jan 1, 1985

By A. K. Sinha

The market for thermal coal has recently been growing rapidly and it is projected to continue to do so in the foreseeable future. Both the national and international markets often demand high-Btu low-sulfur thermal coal in order to minimize the cost of utilization and meet the environmental restrictions. High quality thermal coal can be prepared to compete in the utility market by desulfurizing the high-Btu midwestern coal and blending it with low-sulfur western coal which is usually low in Btu content. The methods that can be used for optimizing the coal preparation plant operating parameters for physically desulfurizing coal are presented.

Jan 1, 1985

By P. J. Ehret

By and large, I agree with many of the precepts discussed in the Saperstein paper. I believe there is much more that can be done on the local level to involve both government and planning in the mine permit review process. Admittedly, much can be done to improve discussion between the state regulatory authority, local authorities, and mine operators. However, I strongly disagree, as suggested in the paper's conclusion, that such a system, as outlined in Saperstein's paper, could result in a reduction of review time or a lowering in the cost of permitting. The implementation of such a system by its very nature would only add a new level of bureaucracy to an already cumbersome process. This system, in my opinion, would only add to the cost of permitting and the time necessary to obtain a permit. Admittedly, it would achieve the result of adding local influence into the permitting process, but at what off-setting cost? It has been my professional first-hand experience and observation in the permitting and lands unsuitable processes to note that under the present system, local governments that do feel they have a stake in local mines and actively advocate their position (not simply comment), have had significant input into the conduct of mining and reclamation plans in their areas. Mining companies that mine in these areas are aware of local interests and attitudes, and do consider them in their plans. Simply put, local governments that want to get involved and want to play significant roles can and do. Those that do not advocate a position or have no input to offer do not. Although the present system is not as direct in effect in regard to local control as Saperstein's, it does work. It does so without the red tape that would result from developing miniature regulatory authorities in every county in which mining occurs. Although local input is important, there are many more sections of the Surface Mining Control and Reclamation Act (SMCRA) than Sections 508(a)(8) and 522(a)(3)(A) that also are important. It appears Saperstein's paper may overindulge these sections. An additional specific comment is made in regard to the statement that while local areas benefit from mining (wages, salaries, and purchases), they also endure environmental deterioration caused by mining affects. It is believed that the whole purpose for which SMCRA and its resulting regulations were enacted and developed was so mining would not be permitted if significant environmental deterioration could occur. Therefore, it could be argued that this point under current law is moot.

Jan 1, 1985

By D. W. Fuerstenau

A detailed study of the residence time distribution in an industrial balling circuit is presented. Using fired recycle pellets as a tracer impulse in each experiment, material was found to pass through the drum under plug flow conditions with a mean residence time of about 20 seconds. The time for a single pass through the entire circuit is about 60 seconds. Approximately three passes are required for fresh feed to report as product. Segregation of the tracer pellets in the system, according to their diameter, was observed and reasons for this are suggested. These results should be of potential use in the modeling and control of ball balling circuits in the iron ore industry.

Jan 1, 1985

By Z. M. Zavodni

The stability of waste dumps depends to a great extent on the physical properties of the underlying foundation. These physical properties are evaluated through surface geotechnical surveys, subsurface exploration, and field and laboratory testing. Sufficient information must be obtained to define and assess the strength, consolidation, distribution, topographic and hydrogeologic properties for these materials. Important foundation data collected in the field include: surface infiltration rates, downhole hydraulic conductivities, ground water levels, bedrock structural parameters, soil types and soil thickness. Laboratory testing should identify the classification, strength, moisture content, hydraulic conductivity, attenuation and consolidation characteristics. Summarized in this paper are procedures and typical results of porphyry copper leach dump foundation investigations. Laboratory properties and design recommendations for potenia1 foundation liner materials are described. Back analysis and laboratory foundation strengths are compared. The topographic effect of the foundation on dump behavior is discussed and a foundation pore pressure monitoring experiment at the toe of an active waste dump is described.

Jan 1, 1985

Accurate modeling of the semivariogram is an extremely important step in the geostatistical analysis of mineral deposits. Automatic fitting of a mathematical model is often possible but not necessarily desirable. Significant geologic and statistical information must be taken into account in the fitting process, which is not always available to the computer. Manual model fitting is, on the other hand, extremely time consuming. Interactive graphics are best suited to optimize the process. Many interactive methods are described, which are adapted to modeling semivariogram in one-, two-, or three- dimensional environments.

Jan 1, 1985

By Peter M. Fozzard

The San Bartolomt silver deposit was discovered by a United Nations team of geologists working with a counter- part team of staff of the Ecuadorian Government's General Directorate of Geology and Mines (DGGM). The Phase I project over five areas of operation during which this discovery was made was financed through a United Nations Development Program contribution of $860,000 and an Ecuadorian Government participation of about $680,000 equivalent. Existence of mineralization at San Bartolomé was first recognized in 1966 when a reconnaissance geochemical stream-sediment program was carried out over a 10 500 km2 (4,054 sq mile) area centered around the city of Cuenca in southern Ecuador. Over the course of this project more than 10,000 samples of stream-sediment, soil, and rock materials were collected. Average costs per sample were $10.00, as follows: collection, $5; sample preparation, $1.60; assay work, $3.40. Initially in the program (1965-1966) sediments were collected along all motorable roads and tracks. Routine analyses, originally by colorimetry and later by AAS, were for Cu, Pb, Zn and occasionally As, Ni, and Co. Discovery geochemical samples from the San Bartolomé drainage area were among the first to be taken in 1965. As luck would have it, the road along which this traverse was taken passes only some 100 m (328 ft) downstream from the mineralized suboutcrop. The relevant two streams sampled are of inconsequential size, some 1 m (3.3 ft) in width, with a limited flow volume throughout the year. Original anomalies were recognized through cold-extractable Cu/Zn analyses. The pH of all river waters was also recorded at sample sites. Resampling the discovery sediments when AAS became available showed total extractable values of between 150 ppm-300 ppm Zn, 550 ppm Pb, and 10 ppm Ag. In 1967 the first followup was by rough-and-ready means. Dithizone field-kits (THM) were used to rapidly test soils from the surrounding area. The area has no outcrop. This work allowed the definition of an area of interest of some 2 km (1.2 miles) x 500 m (1640 ft). Six approximately 1 km (0.6 mile) to 1.5 km (0.9 miles) lines spaced at approximate 250 m (820 ft) intervals were established and used for IP surveys and soil sampling at 50 m (164 ft) intervals. Where one of the lines crossed the westernmost geochemical discovery creek a first-priority geophysical anomaly coincided with a major Zn/Pb (and later Ag) soil anomaly. A pit was sunk and encountered mineralized vein material at a depth of 1.5 m (5 ft). This lucky glory hole confirmed the geochemical discovery and prompted systematic followup. Immediately, costeaning of the west bank of the discovery creek, the Quebrada Ocashuaico, was carried out and exposed weathered and leached mineralization. Nearly 100 mineralized veinlets ranging in thickness from 0.5 cm (0.2 in.) to 8 cm (3 in.) were exposed across the 180 m (59 1 ft) costean. Sixty mineralized veinlets were determined over a 90 m (295 ft) wide zone. Sampling delineated minable widths averaging between 0.16 and 0.31 kg/t (5 and 10 oz per st) Ag with associated copper (very sporadic) lead and zinc. Over the period 1968- 1972 a considerable amount of detailed work was completed: detailed IP, EM Turam, magnetic and mise-a-la-masse geophysics, very detailed soil- sampling, trenching, drilling and glory-hole drifting, and cross-cutting. Numerous problems were encountered: the area was found to be a most difficult geoelectrical target; zero outcrop; pyrite (nonargentiferous zones) associated with faulting; mineralized groundwater; extensive clay development; loss of diamond drill-core, and no two-dimensional surface information. As the program developed the complexity of the structure was slowly unravelled, using a degree of good guesswork. Apart from photogeological and ground geological mapping at various scales, the following

Jan 1, 1985

By B. S. Taylor, J. D. Fraser, W. L. Chen

Steam coal quality is less stringent than metallurgical coal quality. Steam coal is prepared either by cleaning a full-size range of raw coal or cleaning coarse coal only, leaving the fine coal raw. The latter scheme is more cost competitive. It is particularly applicable to US eastern soft coal where low ash coal is concentrated in fine sizes. For raw coal size separation the Rotating Probability Screen, developed by the British Coal Board, may be used for easy change of raw coal separating size, and to avoid screen deck plugging when handling wet and clayey raw coals.

Jan 1, 1985

By Jesse E. Wyrick

Gases and vapors are being safely stored in caverns constructed in salt formations. The storage of gas is cost competitive with other methods of gas storage and offers many advantages. Storage can be designed for high gas recovery rates and many operating caverns allow gas recovery rates in excess of 300 million cubic feet per day. Fenix & Scisson has constructed or consulted on many of these storage projects and presents some case histories beginning with the conversion of a bedded salt cavern to gas storage in 1961. Discussion includes basic considerations for storage construction, confirmation, and operation.

Jan 1, 1985

By M. S. Klima, P. T. Luckie

An evaluation of the operating performance of a recently designed pneumatic centrifugal classifier is presented. This classifier has been modified from a separate air and feed input design to an entrained solids in air feed input. The evaluation first required determining the size distributions for the three streams (feed, fine, and coarse). Using size distribution data and mass flow rates, a size selectivity curve was calculated for each operating condition tested. This curve, in turn, was characterized by appropriate selectivity parameters (i.e., the equiprobable or cut size, the sharpness index, and the apparent bypass values). The variation of these parameters with classifier operating conditions was examined. From these evaluations, the "best" operating conditions for the classifier were then determined.

Jan 1, 1985

By J. C. Draper, R. J. Houston, R. E. Pepperman

Duquesne Light Co. and CAI Consultants, Inc. conducted a demonstration program to establish permanent vegetative cover directly on acidic, deep coal mine refuse. Several plots were treated with formulas varying in soil amendment application rates and plant speak. Periodic monitoring of refuse chemistry indicated when maintenance applications of seed and soil amendments were required. To establish drainage control, the site had to be regraded. The most successful experimental formula was used as the bank for the formula applied to regraded portions of the site. Specific treatment for acidic spots has been initiated. Results of the program indicate that adequate permanent vegetation has been established.

Jan 1, 1985

By Fred M. Phillips

Jan 1, 1985

By R. V. Ramani, T. S. Kovach

In many instances, the actual production from a longwall face does not equal the planned capacity. General problem areas that have been identified include face length and panel depth, face area and gate entry roof support, face conveyor and shearer wear, outby haulage system failures, number of entries in longwall gate development, and longwall move time. The performance of a longwall face is totally dependent on the interaction of these and other factors. To explore fully these interactions, a systems analysis of longwalls has been performed. In this paper, the systems approach, the factors considered in the analysis, and the results of the analysis are presented.

Jan 1, 1985

By R. C. Jensen

Jan 1, 1985

By James E. McNulty

Coal reserve estimates are prepared using a simple equation: the product of area, bed thickness, density and recovery factors. Each of these elements involves a degree of risk based on certain assumptions. Reserve area, thickness and density rely on certain physical data whose accuracy, reliability and sufficiency may be problematical. Estimates of recovery factors for mining and coal preparation are often subjective. Most reserve estimates assume, sometimes incorrectly, that the subject reserves will be completely extracted. The principle that certain coal resources are reserves, if they can be considered economically recoverable at the time of determination, needs to be reexamined in the light of recent market cycles. Reserve estimating requires the exercise of judgments, the validity of which reflect the qualifications, experience and objectivity of the estimator.

Jan 1, 1985

By L. G. Austin

My first contact with industrial milling was during the time I worked in the electricity generating industry in the United Kingdom. In visits to power stations to investigate either deposits in the boiler furnaces or polluting deposits settling around the stacks. I had to check the performance of the vertical coal pulverizers, since poor pulverization aggravated both problems. Naturally, then, when I came to the USA in 1957 to take a PhD in fuel technology at Penn State, I was put to work to review the science of coal pulverization. After this reviewing, I was completely confused. On one hand, there was a well-developed understanding of stress-strain equations, and a rapidly developing knowledge of how stressed, brittle solids fractured, based on the Grifith crack theory. On the other hand, reading in the grinding literature gave me: -Kick's Law, which was clearly not correct in the light of modem fracture theory; -Rittinger's Law, which was also clearly not correct; -Bond's Third Law of Comminution, which was claimed to have something to do with the Grifith crack theory, but where the connection between the two was made by intuitive pseudo-scientific reasoning I could not accept; -the choice of mill motor power for the most common type of coal mill, the Raymond pulverizer, was calculated from the fan power required to move air through the mill. Although I could accept the empirical connection between the two, it made no sense from the point of view of fracture energy. Even today, most books or review chapters on size reduction start from these laws. Incorrect statements abound in the literature, such as "the Hardgrove Index is based on Rittinger's Law," which it is not, "The Bond theory states that work input is proportional to new crack tip length produced in particle breakage," which is not true, etc. My own test work showed that these "laws" did not fit the data for grinding of coal. At about this time, Epstein (1948) and Broadbent and Callcott (1956), following the original work by R.L. Brown (1941) at the British Coal Utilization Research Association, proposed describing breakage as a series of fracture stages. I took their concepts and developed the basic differential equation for a batch grinding process continuous in time, analogous to a batch chemical reactor. Robin Gardner then joined the project and did his PhD on treating batch grinding in the same way as a batch chemical reactor. He found that the basic equation had already been partially derived by Sedlatschek and Bass (1953) in Ger- many. We confirmed experimentally the validity of the equations for describing batch grinding (1962) and formulated the equation describing steady-state continuous grinding in a fully-mixed mill. At about the time this work was published, Gaudin and Meloy (1962) and Filippov (1961) independently published essentially the same equations, but without experimental proof of the validity of the concepts. I will give a brief overview of what these beginnings had led to in the design of mills for size and power, and show some of the results of this more detailed understanding of grinding processes. Concepts of Fracture Mills such as tumbling ball, rod, pebble and autogenous mills and vertical mills such as the Raymond, and E-type, apply compressive stress to lumps or particles relatively slowly. Compressive stress applied to a particle of an elastic brittle solid imparts overall strain energy to the solid and produces local regions of tensile stress, [(Fig. 1)] (Berenbaum and Brodie, 1959).

Jan 1, 1985

By G. J. Borbely, E. A. Devuyst, V. A. Ettel

Introduction Of the techniques reported for cyanide removal from effluents, alkaline chlorination is the most common (Fisher and Wasser, 1969; Reidt, 1969). Shortcomings with this technique are the high reagent costs, chlorine contamination, and potential formation of cyanogen chloride. Chemical oxidation methods are also not suitable to remove cyanide from effluents containing sulphides in suspension, such as flotation tailings. An inexpensive method for removing cyanide, combined cyanide and related species from waste waters has been developed in Inco laboratories. The method is based on the use of sulfur dioxide (or a sulfite), lime, and air as the reagents. The decomposition reactions of cyanide, combined cyanide, and related species are catalyzed by copper in solution. Complete removal of cyanide species, most of which are oxidized to cyanate, is obtained by treating copper containing cyanide effluents with sulfur dioxide-air mistures while maintaining the pH between 6 and 10 with addition of lime. The new approach can also be applied to selective destruction of cyanide and combined cyanide in effluents containing sulphides in suspension, such as pyrrhotite. Again, a sufficient amount of dissolved copper must be present or added. Metals and precious metals present in the effluents are recovered as hydroxides by adjusting the pH of the treated effluents to about 9-10. Using the new method, the anionic species are removed in the following order: Free CN- > Complex CN- > Thiocyanate The above removal sequence is unusual as oxidants such as chlorine and ozone oxidize thiocyanate preferentially over the combined cyanide.

Jan 1, 1985

By L. H. Ketchum, T. L. Theis, W. H. Engelmann

The use of a suspended growth system of Thiobacillus ferrooxidans attached in a film to individual particles of bentonite and operated as a sequencing batch reactor is shown to be a practical way of oxidizing ferrous iron in acid mine drainage. This component, followed by limestone neutralization, is both a technically and economically feasible approach to treating these waste waters, compared to existing and other proposed methods. The advantages, in addition to less expense, are greater safety, acceptable treatment at a lower pH, lower solids buildup, less danger of overtreatment, and greater flexibility in operational characteristics. In this paper, data on the continuous bench scale operation of the system under a variety of conditions shows sustained levels of oxidation in excess of 98%. Capital and operating costs are projected to be $80/1000 m3 ($80 per 35, 000 cu ft) of waste water.

Jan 1, 1985