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By Herbert P. Haschke

I. Changes made by the Economic Recovery Tax Act of 1981 (ERTA) which have an effect on investing in tax shelter investments A. Maximum ordinary income tax rate on individuals is now 50%. B. Maximum tax rate on long-term capital gains for individuals is now 20%. C. Maximum tax rate on alternative minimum taxable income for individuals is now 20%. D. Although not changed, the "add-on" 15% minimum tax on tax preference items and the possibility of paying the alternative minimum tax cause individual U.S. income tax planning to continue to be very complex. II. Real Estate A. The new Accelerated Cost Recovery System of depreciation (ACRS). 1. Mandatory for assets placed in service after 1980. ACRS will eliminate most if not all controversies with the IRS over depreciation. 2. Real property now depreciated over 15 years. Component depreciation is not available. 3. Accelerated depreciation is available - a 175% declining balance method with an automatic shift to straight line method at the optimum point in the asset's life. Alternatively, a taxpayer can elect to use the straight line method.

Jan 1, 1982

By Eugene Guccione

The US mining industry today is fighting for its existence. We are plagued by the shortage of materials, of equipment, of fuels, of capital, of manpower. If we solve those shortages, we are then frustrated in our attempts to open a new mine or, perish the thought, a new smelter. If we manage to make a profit, demagogues will accuse us of stealing from consumers; and, if we do not make a profit and have to shut down, the same demagogues will accuse us of creating unemployment. Meanwhile, in every aspect of our business - from research, exploration and development, to production, marketing and selling - we are hindered in every way by the bipartisan mismanagement and crippling controls of a government bureaucracy gone amok. We are fighting a war on every front. Some of you realize that ours is a war of ideas. In order to win, our industry must make its ideas heard. But to be heard, we must have something to say - which means: we must know our case logically and consistently, all the way down to essential principles. A principle is a primary truth applicable to a great number of instances. A principle is like a road map: it shows you all the possible alternatives for getting from where you are to where you want to go. Although practically everybody recognizes the usefulness of a map and the need to consult it to find the best way' to get from one city to another, most people are not as careful in charting the course of their life, or the course of their industry, or the course of their nation. And so they act blindly, at random, by the whim of the moment, and get nowhere fast.

Jan 1, 1975

By Tomek Ulatowski

This article discusses four principal areas relevant to financing direct reduction facilities: (1) Lenders' differing requirements with respect to projected cash flows; (2) The impact of leveraging on project viability; (3) The importance of appropriate debt structure; (4) The significance of accurate and complete capital cost estimates. The overall findings emphasize the inseparable connection between the project economics and its financeability, and particularly how direcly intertwined they both are in the project planning.

Jan 1, 1978

By Dan Witkowsky

In an increasingly environmentally conscious world, mining's importance to society has often been misunderstood and even maligned by the public. Extreme and impractical ideas have often been presented to children because of the lack of accurate, timely resource materials available to educators. In the late 1960s. two mining engineers, S.P. "Pi" Warren and C.L. "Lindy" Barker, became aware of this situation. They proposed to develop a summer field course to provide a factual overview of the minerals industry for teachers. The pair believed that teachers could become better informed to educate students, and future generations, about mining. These two Colorado Mining Association (CMA) members felt that such a course could reduce much of the misunderstanding about this vital industry. This could be done by providing a balanced perspective of mining, not only for kindergarten-through-grade-12 teachers, but also for the students they would be teaching during their careers. Students who better understood the minerals industry could better formulate an unbiased view of it. The course would seek recognized authorities from industry, academia and government who would lecture in their respective fields of expertise. The course would provide a total concept of the coal, aggregate, metals and industrial minerals industries. It would include geology, geophysics, exploration, mining, processing, marketing, product applications, economic, mining history, careers, and environmental responsiblity. When possible, site visits would permit educators to view operations and to meet the men and women who are industry leaders. Teachers would pay a small tuition fee. The balance of the program expenses for each teacher would be paid through scholarships provided by industry and individuals. The "total concept" idea obtained the support of the minerals industry. The support of CMA's Education Committee and the Colorado School of Mines (CSM) was obtained in 1968. Colorado's Commission on Higher Education approved teacher recertification credits through CSM's Office of Special Progams and Continuing Education for those successfully completing the program. The first six-week series of classes presenting the total concept of the indus¬try was held at CSM in 1969. In 1977, the CMA Education Foundation Inc. (CMAEF) was established as a Colorado nonprofit corporation. The "Total Concept of the Mining Industry" (Total Concept) course was placed under its sponsorship. CMAEF is dedicated toward this continuing education program (Table 1). In 1994, the course was streamlined to four-weeks for six hours recertification credit.

Jan 1, 1997

By Donald W. Gentry

This section deals with one of the most fascinating aspects of mining the evaluation of mine investment opportunities. Be-fore proceeding further, it is important to clarify the meaning of some fundamental terms used frequently in the text. 6.0.1.1 Mine Valuation vs. Evaluation The words "valuation" and "evaluation" in a mining context are often used interchangeably. However, for the purposes of this section, a distinction is made between the two terms in accordance with commonly accepted practice. The word valuation in a mining project context has the rather narrow meaning of placing a dollar or other currency value on the worth of the project as a whole. In other words, the value of a mining project refers to a measure of the desirability of ownership of that property. As such, the major item of interest is, "what is the mine worth?," or `what is the value of the mine?" The value of a mining project may actually be determined in the marketplace at any specific point in time, or it may be estimated by one of several methods. The topic of mine valuation is discussed in more detail in Chapter 6.1. The word evaluation in a mining project context connotes the broader meaning of determining the numerical values of all

Jan 1, 2008

By Michael Rieber

Mineral economics interfaces the mineral sciences and engineering with finance and economics in the analysis of appropriate questions facing the minerals and energy industries. Its practitioners include those trained in the earth sciences; mining, petroleum, and geological engineering; metallurgy and mineral preparation; as well as finance, information systems, economics, and statistics-most usefully in one or more combinations. Allowing for some overlap, three general areas may be identified: evaluation, economic analysis, and resource appraisal. Evaluation begins with mine investment analysis (exemplified by Gentry and O'Neil, 1984) and process costing, for which the STRAMM Handbook (Anon., 1977) provides a well-known basis for mining and beneficiation. But it extends from property appraisal, often used for the determination of taxes and royalties, through the determination and comparison of transport costs (e.g., Richer and Soo, 1977), and to benefit/cost analyses of externalities. Economic analysis, the subject of this section, is displayed in rigor and extent both theoretically and as applied to commodity classes in Vogely (1985), but it is implicit though apparent throughout Lefond (1983). The text edited by Vogely places minerals in their aggregative context with economic growth and trade, proceeds to the theoretical analysis of minerals and their markets, analyzes the structure and performance of the major mineral sectors, and concludes with policy issues: fuel, nonfuel, and environmental. Resource appraisal employs quantitative methods for the estimation of mineral and energy resources. It moves through geologic, geophysical, and geochemical properties to the identification of estimation procedures for mineral endowment and for the economic measure of stocks and flows of specific minerals (Harris, 1984). It can be used to estimate the probable amount of a specific resource remaining in a given region and has been used to project sites in a specific

Jan 1, 2008

By Alexander Sutulov

It is calculated that since the beginning of last century, which practically coincides with the beginning of the Industrial Revolution, our civilization has consumed around 239.5 million tons of copper (see: Table 1). According to the most pessimistic projections of today, with only a 2.5% annual growth rate in demand, we are bound until the end of this century to consume another 200 million tons of copper in remaining 17 years. A recent study made by US Bureau of Mines (1) indicates that the proven ore reserves of 150 major operating mines and about 120 deposits sufficiently explored for development and feasibility studies accumulate a total mass of 49.3 billion tons of ore, assaying an average of 0.82% Cu and containing around 324 million tons of recoverable copper. Consequently, there is a high grade of probability that the bulk of our future ore supplies, for our demand of, say, next 25 years will cane precisely from these mines. The interesting point in USBM study is that it indicates the recoverable byproduct content of these ores and which is: 118.2 million troy ounces of gold 2277.4 million troy ounces of silver 7.1 million tons of lead 24.7 million tons of zinc 1.3 million tons of nickel 3.1 million tons of molybdenum 765 thousand tons of cobalt, and 720 thousand troy ounces of platinum. This information gives us a relatively reliable profile of our future ores for next 25 years, and thus makes possible evaluation of byproduct credits in our future copper mining and producing activities.

Jan 1, 1983

By B. K. Baird

The application of cutoffs during and after pit optimization is examined for a lower-grade multi-metallic copper deposit. Pit optimization requires calculation of the net revenue associated with each mining block, incorporating parameters such as metal prices, grades and expected recoveries, mining and processing costs, smelting and refining charges, and penalty element and royalty charges. Sensitivity analysis during pit optimization reveals which of these parameters have a significant effect on the total contained resource tonnage and total contained non-discounted revenue in the optimized pit. The cumulative effect of changing several of the more significant parameters is investigated. Application of a copper cutoff grade to a block inside the optimized pit could result in the less than optimal extraction of the resource. A block with copper grade below the applied cutoff could be economic due to the presence of other metals. Conversely, a higher copper grade block may be sub-economic. The relative merits of applying a copper grade cutoff, "equivalent grade" cutoff and dollar value per ton cutoff to blocks inside the optimum pit are discussed.

Jan 1, 1999

By G. W. Toth

The coal mining cost models described in this paper represent a computerized estimating procedure for analyzing mining costs and requirements of proposed coal mining projects. Both surface and underground mining analyses can be conducted through the use of these models. These models were developed by the NUS Corporation for the Electric Power Research Institute (EPRI). The methodology design of the cost models follows a process engineering approach for determining mining requirements and costs similar to the logic typically employed in preliminary mine feasibility studies. All capital and operating costs associated with a new coal mining project are thereby estimated. The results of these analyses are then entered into a financial analysis framework which computes annual cash flow summaries, utilizing a profit and loss statement approach, to solve for either the coal value/ton (minimum required selling price) or the rate of return on equity for the project. The coal value/ton is also referred to as the economic cost of production (F .O . B. mine, including preparation).

Jan 1, 1980

By Peter Chou, Pooyan Asadollahi, Danny Lin

To maintain flexibility and ductility of tunnels crossing active faults, various mitigation measures are being utilized depending on fault offset movements and seismic design criteria. Examples of those approaches are simple bell and spigot joint, articulated joint, and complex deformable longitudinal bolt and spring joint system with seismic isolation washer. This paper presents a summary of tunnel fault crossing mitigation approaches and design considerations using previous relevant experiences in California as well as case histories from Japan, Taiwan, Turkey, Greece, and Italy found in literatures. Comparisons are made between large and small diameter tunnels, transportation, and utility tunnels, as well as bored, mined and cut-and-cover tunnels. Recent innovations, such as Japanese and Italian techniques, for tunnels crossing active faults are also discussed.

Jun 13, 2021

By Gerald L. Colborne

The major role of financial institutions in the free world in the development of mineral resources is to provide the necessary capital in the form of loans to underwrite the development of these resources by the industry on a stable and continuous basis. This capital provided by the depositors to the bank must be invested in sound projects where the degree of risk is relatively small, the return on the investment is reasonable and the time to retire the loan is of short duration. Money is, therefore, one of the important ingredients along with technology, manpower and an exploitable resource that will provide a sound economic base in this region of development. Canadian banks are similar to banks of other western nations, although each country has some differences in their banking systems. The basic difference between the American and Canadian systems is that the former employs unit banking while the Canadian utilizes the more mobile branch system, which is prohibited or restricted in the United States and some other countries. Canadian banks are the subject of this paper, so, subsequent material will relate to Canadian banks unless indicated otherwise. It will be realized by everyone that the mineral industry is only one area of the economy in which the banks are interested and to cover the subject matter in the time allowed, the topic is restricted to mineral resource development. In Canada this is a vital sector of our economy and before we outline some of the details of financing and services involved in various aspects of mineral development, a review of the Canadian mineral industry is a necessary part of the sequence of presentation. The writer presents this material as a resource engineer advising a major bank in mineral matters, so the presentation may relate more to the financial problems of the developer

Jan 1, 1972

By S. M. Carpenter

In an ever increasing ?carbon? society; management and growth will be measured by one?s carbon footprint (or output). Industries, especially mining, are under an ever increasing scrutiny of carbon, water and environmental mandates. These mandates are measured by the emissions caused by the combustion of fossil fuels. The fundamental building-block for any business, strategic or management decision must be based on an understanding of one?s ?footprint?. The scrutiny is most stringent for the commodities producers, power producers & fuel suppliers in the energy market. An overview of currently acceptable standards, application of those standards and nuances experienced in collecting the data necessary to analyze and complete a company?s carbon footprint will be presented. A lack of regulation, the fear and expectation of new and ever constraining rules, regulation and a change in the federal administration is a recipe for uncertainty in the marketplace.

Jan 1, 2010

By D. R. Wilburn

This summary of international mineral exploration activities for the year 2009 draws upon information from industry sources, published literature and U.S. Geological Survey (USGS) specialists. The summary provides data on industry exploration budgets by region and mineral commodity, identifies significant mineral discoveries and areas of mineral exploration, discusses government programs affecting the mineral exploration industry and presents analyses of exploration activities by the mineral industry based upon these data. Two types of information are reported and analyzed in this annual review of international exploration for the year 2009: 1) budgetary statistics expressed in U.S. nominal dollars provided by Metals Economics Group (MEG) of Halifax, Nova Scotia, and 2) information on regional and site-specific exploration activities that took place in 2009 and were compiled by the USGS. The MEG information summarizes planned company budgets for worldwide exploration activities in 2009, primarily for base metals (copper, lead, nickel and zinc), diamond and precious metals (gold, platinum-group metals and silver). Information on uranium exploration was included in the MEG overview for the first time in 2007, although this information was not included in the USGS analysis prior to 2008. The MEG survey methodology was changed in 1999 to include companies with exploration budgets greater than $100,000, as well as those companies included in prior studies whose anticipated budgets were above $2.9 million. MEG estimates that its post-1999 surveys cover at least 90 percent of world nonferrous nonfuel mineral exploration budgets. The 2009 survey is reported by MEG to cover an estimated 95 percent. Companies who chose not to participate in the MEG study, private companies that do not publish data and government-funded exploration activities make up the majority of the remaining 5 percent. MEG included 86 more companies in its 2009 survey than it did in 2008.

May 1, 2010

By R. L. Miller

"Miners worldwide use a tremendous amount of energy in producing finished minerals for the end user market. In accomplishing this goal, they incur energy costs that can range from 20% to 30% of the total cost of production, so there is fertile ground for cost savings. To unlock this huge value in cost reduction, energy analysis is the key and is broken into several segments: 1. Fuel analysis for power generation 2. Energy supply & demand 3. Opportunity cost for lack of power 4. Backup power 5. Power contracts 6. Energy efficiency 7. Renewable energy 8. Continuous energy management FUEL ANALYSIS FOR POWER GENERATION What is the first thing we evaluate when looking at power supply alternatives for the mining industry’s large power requirements? Is it 1) site, 2) engineering, procurement, and construction companies, 3) independent power producers, 4) turbine vendors, 5) grid connections, or 6) fuel supply, logistics, and infrastructure? In evaluations of power supply alternatives for mining companies with special emphasis in developing countries, there is one over-riding conclusion: reliable fuel supply drives the energy generation economic engine. Evaluating several different fuels including liquefied natural gas (LNG), natural gas, diesel, heavy fuel oil, and liquefied petroleum gases (LPG) among others, the best project outcomes are those where fuel supply, pricing, logistics, and infrastructure are given an extensive amount of time during the analysis stage. In an assessment of the twenty-year costs of generating power from multiple fuels, each fuel’s costs were placed into three separate net present value (NPV) buckets of: 1) capital, 2) operating and maintenance, and 3) fuel. Within a range of 65% to 85% for all fuels, fuel cost was the largest component of the NPV of the life cycle power generation costs. So if 65% to 85% of your life cycle power generation cost is one item, shouldn’t miners spend a corresponding amount of time in the analysis stage fully understanding this key determinant for a successful power project? In developing countries where power generation infrastructure may not exist or does not exist at the same level as is found in North America and Europe, fuel analysis becomes even more important. One of the key questions for fuel importation in developing countries is the draft at existing ports to allow larger vessels to dock at the jetty. Can larger ocean-going tankers dock at the port for off-loading, or is the port’s draft too shallow, thus forcing a Single Point Mooring (SPM) system or Conventional Buoy Mooring (CBM) system to be constructed at substantial capital expense? Once fuel can be imported, sufficient onshore storage capacity should exist, or must be built to off-load the entire fuel cargo from the larger ships. Additionally, the throughput capacity of the pipeline from SPM/CBM must allow a rapid unloading of the fuel from ship to shore to eliminate steep demurrage costs for the project."

Jan 1, 2017

By Paul Wellman

The energy problem of the U. S; was emphasized by the oil embargo of late 1973 and early 1974 and it seemed for a time that the Federal Government, under pressure from the general public, might take some corrective action. However, this was not the case. With the gasoline lines gone and an apparent plentiful supply of petroleum products, public concern quickly dissipated., This country is more vulnerable to an oil embargo today than we were in 1973-1974 and this fact should be of concern to all our people. Since 1968, we have used oil and natural gas at a much more rapid rate than we have been able to find new domestic sources; thus, there is an increasing gap between domestic production and consumption and we have filled the gap with ever increasing oil' imports. These imports have increased at an alarming rate in the recent past, some 58 percent in 1976 compared with 1975. Imports are nearing 8 million barrels per day. Then, by applying some simple arithmetic, at $12 per barrel, the resulting trade deficit is $96 million per day or $35 billion per year. Obviously, this cannot be tolerated by our economy over a long period of time. Historically, we have shifted from one fuel to another as is shown in this slide. In 1850 about 90 percent of our fuel requirements came from direct combustion of wood, by 1900 we shifted to coal for 70 percent of our fuel, and now about 78 percent of fuel requirements comes from oil and natural gas. The difference is that the previous shifts were voluntary and the one facing us now is of necessity.

Jan 1, 1977

By Hitch M.

Many mining wastes, especially those from the metal mining industry, have traditionally been treated as a matter of little or no value and in practice a cost burden. Some wastes, due to their reactivity characteristics, have emergent values that go beyond purely economic and into the environmentally beneficial realm. This paper discusses the changing paradigm of mine waste management. Such fundamental parameters such as cut off grade, and strip ratio, are positively impacted by the revaluation of waste rock material. Mine rock waste can now be seen as a commodity of value, similar to the underlying ore being mined and influences the economic performance of suitable projects. This valuable material can be used for industrial purposes including acid neutralization as well as the capture and long-term disposal of anthropogenic carbon dioxide. The Turnagain Nickel project, located in northern British Columbia serves as an example of how waste rock material can become an important matrix for carbon capture and sequestration and can benefit economically from it. By producing material that has emergent economic value as well as carbon capture and sequestration capabilities, the sequestration matrix producer is a beneficiary of new carbon credits that have a market value and is looked upon favourably by regulatory authorities and affected stakeholders.

Jan 1, 2010

By L. J. Vincze

The program of study of pellet binder materials was begun by the ORF in 1963 to examine various Canadian materials as substitutes for bentonite which is imported in large tonnages (199,270 tons in 1969) from the U.S.A. for Canadian pellet plant operations. Most of the raw bentonite used in Canada originates in Wyoming, North Dakota and more recently Greece, resulting in relatively high transportation costs to pellet producers. Some Canadian bentonites available in Western Canada (Alberta) can be beneficiated for uses as pellet binders but could not compete in cost with U.S. sources due to the cost of beneficiation and the higher rail transport charges to Eastern Canada. It is difficult to find a substitute for bentonite, and many materials have been investigated by research groups but, so far, no economic substitute is in use. However, some success is apparent in studies of low cost materials such as clays, sea weed, peat moss and low grade coal, The work done by the ORF over several years has covered systematic test¬ing of Ontario clays, lignite, some types of tree bark, waste sulphite liquors of various kinds, and peat moss as binders for iron ore pellets. The major effort has been concentrated on peat moss and has included a study of the influence of different additives. Since analysis of peat moss for humic acid is difficult and time consuming, a certain amount of time was devoted to development of improved methods, the most useful of which was a spectrophotometric method based on extraction of peat by sodium pyrophosphate for determination of humic substances. In the present paper, only the most recent work concerning the use of peat moss with suitable additives is discussed in detail, since it is the most conclusive and best documented portion of the program.

Jan 1, 1971

By C. L. Schaidle

Computers and communications technology have revolutionized many industries. In earthmoving, this revolution has just begun. The major changes are still to come, but they are just around the corner. This paper presents a vision of this up-coming revolution in our industry. This vision is comprehensive. It includes basic communication, machine monitoring and diagnostics, job and business management, planning and operations, and machine control. For our industry to realize maximum benefits from the information age, we must have a vision of the future that is shared by technologists, machinery producers, and miners.

Jan 1, 1994

By D. A. Karvonen

Although the economy in the Province of Saskatchewan has historically been agriculturally oriented, a major new source of wealth has been realized through natural resources such as petroleum and natural gas, coal and uranium and since the 1960's - potash. Potash or potassium chloride, in the form in which it is presently produced in Saskatchewan is used primarily as fertilizer, a source of potassium, one of three essential elements required for healthy plant growth with about 5 percent of production sold to the chemical industry for use in such products as soap and liquid detergent, glass and ceramics, textiles and some pharmaceuticals. Saskatchewan is estimated to have approximately 40 percent of known world potash reserves and its ten active mines account for some 25% of annual world production. The development of this resource was recognized to be important to the development of Saskathcewan. In an effort to guarantee a fair and lasting economic benefit to the Province of Saskatchewan the Potash Corporation of Saskatchewan (PCS) was created on February 4, 1975 through an Order-in-Council under the Crown Corporation's Act and later on April 1, 1976, the Potash Corporation Act provided for its continuation. PCS was given the mandate to acquire ownership of a significant portion of the potash mining capacity in Saskatchewan and to establish an organization capable of operating the facilities, marketing the product and conducting all of the other activities necessary for a successful corporation competing in the world potash industry.

Jan 1, 1983

By MATT RENAUD, Mustafa Kumral

As high-quality mineral deposits are thoroughly exploited, mines of the future will have to move towards more remote and lower quality projects. With these projects comes an increased business risk to the operator. Even now, mining companies often turn to foreign countries for new deposits to produce, introducing the concept of country risk into their portfolio. Furthermore, feasibility studies often fail to accurately quantify the risks associated with various projects, and as such, this study proposes a technique of risk quantification which can both aid mining companies to evaluate the viability of investment and assist in risk disclosure to public investors for the mining industry of the future. This paper aims to quantify the effects of country risk on the valuation of potential mining projects, using a combination of modular and risk-weighting techniques to evaluate the country risk premium (CRP) required to obtain capital for operation of risky foreign mining projects. The techniques proposed in this paper are demonstrated using fictional examples and then evaluated for accuracy against a recently developed debt-funded precious metal project in a country in the Americas.

Sep 30, 2021