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By Kyle Wightman

INTRODUCTION CRA Limited is the largest mining group in Australia by value of sales and the second largest company in Australia in terms of share market capitalisation. In the past 25 years, CRA, its predecessors and affiliates have been involved in a number of mining and further processing developments in Australia and elsewhere. Many of these have been financed using project financing techniques. These include Comalco's development of the Weipa bauxite deposits in Northern Queensland in the late 1950's, the Hamersley iron ore developments in the Pilbara region of Western Australia in the mid 1960's, the Queensland Alumina Limited alumina refinery in Gladstone, Queensland, at about the same time, and the Bougainville copper project in 1969/70. In the past three years CRA has again utilised project financing techniques to fund its Tarong steaming coal project in Queensland, the Blair Athol steaming coal project also in that State and CRA's interest in the Argyle diamond project in the Kimberley region of Western Austrlia. PROJECT FINANCE DEFINED Nevitt Definition Nevitt's is the most frequently quoted definition - "A financing of a particular economic unit in which a lender is satisfied to look initially to the cash flows and earnings of the economic unit as the source of funds from which a loan will be repaid and to the assets of the economic unit as collateral for the loan." Risk and Balance Sheet Treatment It is important to focus in more detail on two aspects of project financing, risk and balance sheet treatment. The assessment of the various elements of risk in a project and the sharing of that risk between sponsors and lenders is the most critical feature. At one end of the spectrum is full absorption of risk by the sponsor(s). This can be described as "on risk" or "on credit" or "full recourse" to the sponsor(s) and is effectively a corporate financing. At the other end of the spectrum the lenders absorb the whole risk in a non-recourse financing which is "off risk" or "off credit" for the sponsor. The other aspect is the sponsor's balance sheet treatment. If the balance sheet of the economic unit undertaking the project and the financing need not be consolidated into the balance sheet of the sponsor (because ownership does not exceed 50%) then the financing may be described as off-¬balance sheet. If consolidation is required then the financing is described as on-balance sheet. Most project financings involve some recourse to the sponsor, i.e. they are limited recourse. Very few are non-recourse or off credit to the sponsor. Limited recourse financings may be on-balance sheet although many may also be off-balance sheet insofar as consolidation is concerned. However, sponsor support may very well be a contingent liability to the sponsor and require disclosure by way of note to the balance sheet should consolidation not be required. CORPORATE FINANCE CONTRASTED A financing which is on credit or full recourse to the sponsor, whether it is directly borrowed or guaranteed by that sponsor, is a corporate financing. Lenders will tend to base their credit assessment on a historical assessment of the sponsor's activities and its financial results rather than an assessment of the project or a detailed assessment of the future activities and prospects of the sponsor. PROJECT FINANCE - A BORROWER'S PERCEPTION Although CRA could choose to arrange all finance on a corporate basis (except perhaps for the very largest projects or acquisitions), project financing techniques provide a number of specific advantages which CRA has noted and which should be carefully considered by a project sponsor. Advantages

Jan 1, 1985

By Carroll Wegemann

THAT Colorado was producing oil and gas before the fields of the Mid-Continent were discovered is a fact too frequently overlooked. As early as 1862, oil was obtained in the Florence district (see Fig. 1) from seepages and shallow holes. The first well that could be regarded Fig. 1. as being truly commercial was drilled in this field in 1876. The field is now producing 100,000 bbl. per year, and is credited with a total production of approximately 11,000,000 bbl. The small field near Boulder, Boulder County, was opened in 1901; production has now practically ceased but the field is credited" with a total production of 610,000 bbl. Oil was discovered at Rangeley in 1901, and the field supports a small local refinery at the present time. The first shallow well in the White River gas field was drilled in 1892, and the wells now producing have been

Jan 3, 1925

By G. W. Tower

THE YEAR 1931 was for most American copper producers one of restricted output but extremely low production cost.. When compared with 1929, the marked reductions in costs achieved in 1931, operating at rates in many instances a third to a half of capacity, can only be regarded as remarkable. In fact, the recent shut-down of several large operations suggests the probability that 1931 costs represent a bare minimum for many properties. Before discussing the 1931 results a few remarks on cost data are appropriate. The type of cost tabulation here presented was first published in 1929, (A. B. Parsons. E. & M. I. June 8, 1929), and has appeared each, succeeding year following in general the calculation method and company set-up of the original article. (. G. W. Tower, E. & III. L, July 8. 1930; S. D. Strauss, E. & M. J.; July 27, 1931). As far as possible the leading American copper companies are included. In considering these cost tabulations it must be borne in mind that the information from which they have been prepared is entirely contained in the annual report of each company; and that a multiplicity of interests and a condensed income statement for some of the larger companies, such as Cerro de Pasco and Kennecott, make the cost figure an arbitrary one depending upon sundry metal credits, metal products, miscellaneous income, etc. For Granby, Howe Sound. Magma, and Noranda, sundry metal credits are important. Furthermore Andes, Chile and Greene Cananea give costs only against copper sold. Although the individual costs here figured are by no means absolute they are computed by the same method each year and offer a basis of annual comparison; and with attention to footnotes the premises on which the costs are based may be easily followed.

Jan 1, 1932

By Zay Jeffries

OF the new production of non-ferrous metals in 1930 gold will rank first in value. We usually think of copper as the most important non-ferrous metal. The copper industry as a whole, that is, adding copper production to copper fabrication, is the largest non-ferrous metal industry. Prior to the world war; however, gold led in value of new metal produced. During the war copper passed gold in value, but gold regained its position during the 1921 depression. For the past several years copper has again passed gold, but in 1930 gold promises again to regain the lead. The gold producer has at times been called a social parasite, largely because we ' cannot eat or drink gold, or because we cannot use it for clothes or for the construction of buildings. Let us briefly examine this accusation.

Jan 1, 1930

By Forest Mintz

Many oil and gas producers find it advantageous to borrow against the value of their hydrocarbon re- serves. This paper considers the requirements for a reserve based loan and the calculations that a bank would perform to arrive at a loan amount. Three of the most common loan structures, i.e. a term loan, a production payment, and a revolving credit/term loan will be discussed. A typical outline for each type of loan is presented. Finally, a comparison of major considerations in the three financing techniques is shown.

Jan 1, 1982

By AIME AIME

THE Board of Trustees, made up of three from each of the four societies, conducts the business com- mitted to United Engineering Society by its Founder Societies under its Charter, the Founder's Agreement and the Library Agreement. A draft of a budget of revenue and expenditures for the ensuing calendar year is presented each September to the secretaries of the Founder Societies for the information and comment of their governing bodies. After revision, the budget is adopted, by the incoming Board of Trustees at its meeting in January.

Jan 1, 1929

By Joseph Jensen

MANY fields have been zoned by nature with shales and intermediate waters between oil zones. Limitations thus imposed have been the basis on which the field was developed. In contrast thereto, in the Ventura Avenue Field, nature proved more generous. Always expecting to find such similar limitations, operators drilled deeper and deeper into the oil zone without finding any distinctive shale bodies other that the Gosnell shale and only one intermediate water, which became the point below which the final water shut-off of each well was made. Thus, on top of the structure, about 3300 ft. of oil-bearing zone has been penetrated below this intermediate w9ter-a distance of 4000 ft. below the Gosnell shale. At first it seemed that the greater the penetration in the zone, the better the well. The error of this assumption became evident

Jan 1, 1930

By T. L. Joseph

A DEMAND for specialized knowledge has directed engineering curricula towards competency in some particular field or occupation. Preparation for life in a broad sense of completeness has received little consideration. Ways and means are needed for weaving some of the threads of liberal education into the fabric of engineering education. Any effort to develop a humanistic-social stem of engineering education will depend largely upon the content of the courses and the type of instruction offered. Many of the courses in college curricula are intended to lay a foundation for more advanced courses to be taken later by those. who specialize in some particular field. Students in other fields lack the background necessary to take the advanced courses and have too much detailed information, soon forgotten, forced upon them if they pursue the foundation courses. To develop a humanistic-social stem for engineering education existing catalogue courses selected should follow some general plan aimed towards broad educational objectives. Courses packed with detailed factual information are necessary for the stu-

Jan 1, 1947

By Jim F. Lemons

INTRODUCTION A nickel doesn't buy much anymore. That's even true in the cost of recovering nickel -- the commodity. A 5[C] per pound (11 [c] per kilogram) increase in the nickel price won't cover a 10-percent increase in fuel costs for processing laterite ores, nor will it cover a 10- percent increase in wages for recovering nickel from a sulphide ore. It won't even cover a 5- percent increase in the capital cost necessary to mine and process ocean nodules. The basis for this statement and a quantitative analysis of the variations in costs to recover nickel from different types of nickel ores will be discussed in this paper. During the early part of the 1970's, the interest in nickel and its potential development was shifting from Canada to the Pacific Basin area. Canadian growth rate was slowing and each additional increase in nickel capacity was very expensive (Argall, G.O., 1970). Laterite ores were attractive to developers since they were easy to mine at a low labor cost, and technologies were being developed that would allow the recovery of nickel in marketable forms (Mohide, T.P., Warden, C.L., Mason, J.D., 1977). During the last decade, new laterite production was achieved in the Philippines and Botswana, and a significant increase in production from Indonesia and New Caledonia occurred. However, recent reports on nickel identify numerous problems plaguing the industry, i.e., high energy costs that are forcing shutdowns (INCO, 1980), (Mohide, T.P., Warden, C.L., Mason, J.D., 1977), high Canadian sulphide mining labor costs (Anon., 1976), and rapid inflation of nickel capital costs (Anon., 1981b). No definitive study has been made to determine how sensitive the total cost of production is to rising energy, labor, or capital costs, or to identify to what extent increased byproduct revenues could be used to offset these production costs. The purpose of this paper is to quantify the effects of increases in energy, labor, capital costs, and by-product credits on the future cost of production from nickel reserves and/or resources. METHODOLOGY OF ANALYSIS In order to evaluate the sensitivity of nickel production costs to changes in energy, labor, and capital costs, and in byproduct revenues, an analysis was made of existing and proposed nickel operations, their costs, and their sensitivity to change. The data for these analyses were obtained from numerous sources including international govern¬ment and university publications, professional journals, company reports, private communications, U.S. Bureau of Mines contracts, and estimates by Bureau of Mines personnel. These data were collected, in part, as an ongoing effort of the U.S. Bureau of Mines Minerals Availability System (MAS) to systematically measure and classify identified mineral resources according to their respective extraction technologies, economics, and commercial availability. The MAS Program is currently evaluating the present and potential availability of nickel to the United States in relation to mining, beneficiation, smelting, refining, leaching, transportation, infrastructure, environment, land use, labor, productivity, technology efficiencies, operating capacities, deposit life, and political factors. As a summary of this data, the following briefly describes nickel ore types as each relates to energy, labor, capital, and byproducts. Sulphide Operations Nickel is currently available from sulphide deposits. Roughly 55 percent of the current world nickel production in market economy countries is from sulphide ores, although only about 20 percent of the known land-based nickel reserves and/or resources are sulphides (INCO, 1981). In 1979, the Western World sulphide reserves were estimated at about 9.2 million metric tons of nickel (Little, A.D., 1979). Sulphide ores are typically mined underground, thus resulting in high mining costs; however, these ores can often be upgraded by flotation prior to final nickel recovery and require about one-third of the energy required to recover nickel from laterites (Anon., 1981c). In addition, nickel in sulphide ores may be associated with economically recoverable byproducts, which include copper, cobalt, gold, silver, and other precious metals. Laterite Operations Forty-five percent of current nickel production is from laterite deposits. Laterite deposits account for 80 percent of the known land-based nickel reserves and/or resources (INCO, 1981). In 1979, the Western World laterite reserves were estimated at over 35 million metric tons of nickel (Little, A.D., 1979). Nickeliferrous laterites are residual soils formed by weathering, typically under tropical or near tropical conditions. They can be easily mined by open-cut methods, but generally cannot be beneficiated; thus, recovery of nickel must entail processing of the total mined ore. Usually, these ores have high moisture content (20 to 30 percent by weight) that result in additional fuel costs to dry the ore. Nickel silicates, garnierites, are, processed by pyrometallurgical methods; limonite nickel oxides are normally leached. Byproduct cobalt is not recovered from most ferronickel operations, and is only recovered to a limited extent from many leach operations.

Jan 1, 1982

Both drilling and production of oil decreased in Rumania during 1935. The drilling totaled 1,042,041 ft. and production 61,973,938 bhl., being a decrease of 8.5 and 1.6 per cent, respectively. Wells completed during the year totaled 198, of which 168 were oil wells, compared with 238 and 215, respectively, of 1934. No important discovery was made during the year. The only new field found was Valea Calugareasca, where the Credit Minier completed a small well on the westward plunge of the anticline. Drilling higher on the structure will probably prove the field to be of greater importance than the results of the discovery well indicate. The only other developments of importance were the extension of the Bucsani field, the opening up of a new area on the northeast of the salt at Moreni by Credit Minier and a minor extension of the West Gura Ocnitei field. At Calinesti, on the cast extension of the Moreni field, exploration work continued and a gas well was completed, but oil in commercial quantities is yet to be found.

Jan 1, 1936

Both drilling and production of oil decreased in Rumania during 1935. The drilling totaled 1,042,041 ft. and production 61,973,938 bhl., being a decrease of 8.5 and 1.6 per cent, respectively. Wells completed during the year totaled 198, of which 168 were oil wells, compared with 238 and 215, respectively, of 1934. No important discovery was made during the year. The only new field found was Valea Calugareasca, where the Credit Minier completed a small well on the westward plunge of the anticline. Drilling higher on the structure will probably prove the field to be of greater importance than the results of the discovery well indicate. The only other developments of importance were the extension of the Bucsani field, the opening up of a new area on the northeast of the salt at Moreni by Credit Minier and a minor extension of the West Gura Ocnitei field. At Calinesti, on the cast extension of the Moreni field, exploration work continued and a gas well was completed, but oil in commercial quantities is yet to be found.

Jan 1, 1936

By TSUYEE PEI

I FEEL greatly honored and appreciate this opportunity to be able to say a few words about that rather perplexing subject, silver. The constant decline in the price of this metal has now reached the stage where it is of much concern and the cause of serious discussion among the leading financiers, economists, and statesmen of the world. Further- more, it is significant that this subject is so important that almost every day one can read articles pertaining to it in the newspapers and trade publications. Being essentially a banker, and not an economist, I do not claim to be an authority on the silver question. These remarks are merely some of my observations in, regard to the many puzzles which-I came across in my recent studies of this very important question.

Jan 1, 1931

By L. BENEDICT

COMMENTING on the report of the latest Royal Commission for India, the September, 1926, issue of the National City Bank's monthly letter states, among other things, that "The decision of the Royal Commission is against the proposal for a gold coinage, but in favor of placing the silver coins and paper currency now redeemable in silver on a gold basis." Also, it quotes the following from the Royal Commission's report: The essence of the proposal * * * * * is that the ordinary medium of circulation in India should remain as at present the currency note and the silver rupee, and that the stability of the currency in terms of gold should be secured by making the currency directly convertible into gold for all purposes, but the gold should not circulate as money. It must not circulate at first, and it need not circulate ever. In this connection it may be stated that during the last one hundred and fifty years or so unsuccessful attempts have been made by the governments of different nations of the world to devise a plan or plans by which gold and silver could be used concurrently for money purposes and, particularly, as standard money; such, for example, as bimetallism, which, of course, is impracticable. But, since none of such plans has been adopted generally it is logical to conclude that their proponents did not shape them so as to conform to the basic principle of standard money, or else political issues were deemed to be dominant, or, perhaps, it was partly due to each.

Jan 1, 1926

By Ira B. Joralernon

THREATS of a coming metal famine in the United States have filled many columns in magazines and newspapers in the past three years. This asserted menace has diverted attention from the actual results of recent exploration. Because no one had bothered to look into the facts, the statistical experts assumed that little ore was being found. They often subtracted the staggering tonnage of metals produced during the war from earlier published reserves, and assumed that the difference was all we had left. Naturally, they shuddered, with all possible publicity. For their figures showed an imminent lack of nearly all the metals needed for an industrial civilization, as well as for mechanized war. They concluded that only wholesale imports and development and production of metals by Federal agencies could avert the famine.

Jan 1, 1948

By Scott, Turner

MY whole life has been spent in the mining business, PO I naturally tend to address my remarks particularly to the newly-graduated mining and metallurgical engineers among you. To a certain extent, all forms of engineering principles are involved in the training of the mining engineer, and most sorts of engineering are certainly utilized by him, so every one of this graduatins class is concerned with the field I propose to discuss.

Jan 1, 1932

By S. S. PRENZ

Discussion held at the sessions of the Canal Zone meeting, November, 1910. [SECRETARY'S NOTE.-As a result of this discussion, an expression of opinion covering all points of unanimous agreement was adopted and signed by members of the Institute party as individuals. This statement, which was printed in the Bulletin of December, 1910, is reprinted below, as an introduction to ,the detailed report of the discussion. It should be clearly understood that it does not constitute an official declaration by the Institute, the rules of which forbid any such action. At the New Haven meeting of February, 1909, a free discussion of the plan of the canal took place, in which the critics of the present scheme had full opportunity to state their views. That discussion was continued at considerable length in the newspapers ; but the Institute was never committed to either side. In this latter instance, the situation is precisely similar. Certain members and guests of the Institute, having had the advantage of later developments and of personal inspection, have expressed the conclusions at which they have arrived on their own responsibility ; and these conclusions are published by the Institute, subject to further discussion, like any other part of its proceedings. The general statement referred to contained a promise that the full discussion, of which it was a result, would be subsequently printed ; and this promise is fulfilled, so far as practicable, in the subjoined report, concerning which I beg to offer the following explanations: 1. It is made up of the remarks of the members of our party, as subsequently written out and mailed to the Secretary. 2. In editing these contributions, I have condensed the material considerably by cutting out much repetition of opinions and phrases ; and in such excision, I, frankly confess, the authors whose communications were delayed, have been the sufferers. Nevertheless, there is a good deal of repetition left, as there must be, when so many persons had talked so much, and come to agreement upon so many points. 3. It has been found impossible to preserve in this report the actual order of the free and informal oral discussion represented. Consequently the several contributions have been arranged in alphabetical order under the names of their authors. References to "preceding speakers," etc., must therefore be construed as referring to other speakers, preceding or following.-R. W. R.] S. S. PRINZ AUGUST WILHELM, AT SEA, November 14, 1910. We, the undersigned, members and guests of the American Institute of Mining Engineers, after a visit to the Isthmus of Panama, and inspection of the work of the United States Isthmian Canal Commission, and after full discussion of our individual impressions, find ourselves in unanimous agreement as to the following conclusions:

Jan 1, 1911

By E. C. Wright

FOR many years the cost of making pig iron and steel in the Birmingham district has been about the lowest in the United States. The close proximity of the important raw materials such as coal, iron ore, limestone, and the large available scrap supply made it possible to assemble all of the important ingredients necessary for steel- making with only nominal costs for transportation. Both iron ore and coal were being mined in this district at one time for about $1 per ton from underground operations. At that time mining wages were low everywhere and the labor rate in the South was considerably below that of other mining districts. This situation persisted until the emergence of labor unions as an economic and political force, emigation of southern labor to northern plants, and continued growth of industry in the South in the years following the depression of 1932. Since that time union organizing of miners and steel workers throughout the nation has increased labor costs in mining and steelmaking. This influence has been felt particularly in underground mining operations since the proportion of labor cost to total cost is still high. The previous advantage in basic labor rate in the South has been almost entirely eliminated by the equalization of labor rates in basic industries by national unions. Since 1945 these influences have been especially noticeable in increasing the cost of mining coal and iron ore in the South. The northern steel districts are still being largely supplied with iron ore from the Minnesota open-pit mines and the cost of this ore has not increased nearly as much as the cost of ore obtained from underground mines in Birmingham. A similar situation exists in coal mining; the thinner seams in Alabama are not so amenable to mechanization as the northern mines and, as a result, the output per man-day in southern mines is only about three tons of coal as compared to five or six tons per man-day in the large captive mines of West Vir-

Jan 1, 1950

By Donald H. McLaughlin

PRICES paid for goods and services in paper currencies are undoubtedly determined by many interrelated factors, but among them none is more specific in pushing prices toward higher and higher levels than the vast increase in debts and monetary obligations of our own and practically all major governments. There is nothing unorthodox in the situation in which the gold miners find themselves today. With wages and the prices of all materials required in the production of gold at the high levels characteristic of a period of prosperity, phony or otherwise, and with shortages of both men and machinery to contend with as well, the spread between the returns in paper dollars that must be accepted for gold in the United States and the cost of producing it is rather painfully small for most producers. Technical

Jan 1, 1948

By CARL B. SNYDER

PERHAPS the most extraordinary thing about business, the trade and production of the country as a whole, is its amazing continuity and growth, its momentum and energy. It goes on year after year, growing steadily, almost without breaks, in spite of every kind of disturbance. We have been grossly deceived into the idea that business is highly variable. We have taken a few things like pig iron, and the like, constructional activity broadly, and imagined that these are a trustworthy measure of trade. Actually they are the worst that we could find. They do not apply to more than 10 per cent or, at the most, possibly 15 per cent of the total of the country's industrial activity. The other 85 or 90 per cent, or even more, goes on growing surely and steadily just like the growth of population and the steady advance in technique, invention, discovery, and improved methods of production Let me give you what seems to me one of the most remarkable examples of this amazing momentum and regularity. You know that 90 per cent or more of the business of the country is done 'by means of checks. About seven-eighths of the total of all checks drawn are reported regularly every week in the newspapers. Let us follow these reports from week to week, just as they come, and plot them up against the correspond- ing weeks of last year, and the year before, and the gear before that, as far back as you would like to go. Take especially the figures for 140 selected cities out- side of New York.

Jan 1, 1929

By M. M. Leighton

THE engineers of Illinois have been submitting to the State Geological Survey an increasing number of requests for advice on their geological problems, including landslides, unequal settling of fills, laying pavements across peat bogs, shattering and heaving of pavement by frost action, etc. The authors discussed the behavior of landslides, their effects, their causes, a tentative classification, and remedial measures. In the latter connection the efficacy of drainage and how it should be handled in order to be most effective was considered. The principles and efficacy of other remedial measures, such as subsurface blasting, rock anchoring, installation of wood, concrete or steel piling, construction of retaining walls, construction of cribbing and reduction of slope were also discussed. Attention was also given to the matter of applying geological knowledge to avoid undesirable highway locations, and a specific example was cited.

Jan 1, 1929