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By David P. Kimball, Dalva L. Moellenberg

On May 21, 1990, EPA released its Strawman II draft program for mining wastes. It proposes to expand RCRA regulation of mining operations to include materials other than wastes. Strawman I1 would establish strict standards for the states to follow, rather than technical guidance. It proposes to establish performance standards; design criteria; monitoring requirements; and corrective action, closure, post-closure, and financial assurance requirements. It suggests "pollution prevention" concepts for mining operations. This paper explores the Strawman II proposals, particularly the technical criteria, and addresses several of the important concerns raised by industry.

Jan 1, 1991

By W. G. K. Fleming

Mr P. Bermingham introduced paper 9.1, describing the development and trials of a new pile load-testing technique that the Authors had termed "Statnamic". The system involved launching a test weight mounted on the head of the pile by igniting chemical fuel in a pressure combustion chamber between the pile head and the test weight. The expansion products from the burning fuel generated large pressures which were used to launch the weight upwards at high velocity. The reaction from this force generates an equal and opposite force at the pile head. This force is typically of much longer duration compared with, for instance, dynamic load testing by drop hammer. In addition the pile experiences a much lower acceleration - typically of less than one g. Because of the long duration blow, the pile is loaded at below its natural frequency and is therefore under a uniform high stress over its full length throughout the duration of the test. The pile behaviour is not dominated by the complex action of an impulsive stress-wave as with standard dynamic testing. The test technique is thus essentially quasi-static. It was anticipated that a ram test weight of 16 tonne would be sufficient to provide the test reaction for a 600 tonne load test. It was pointed out that the device was still at the research stage, but had yielded encouraging results to date. Testing would proceed from model testing and computer simulation to full scale field testing.

Jan 1, 1991

By Richard C. Marshall

The heightened concern over the environment which has developed in recent years has caused activities on National Forest lands to come under more intense public scrutiny. This has been especially true for activities oriented toward the production of commodities. Cattle grazing, mining, timber harvesting, and oil and gas leasing and drilling have all been increasingly subject to appeal and litigation. As a result, environmental analyses being conducted by the Forest Service have become more comprehensive, and measures to reduce or eliminate adverse impacts on resources have been given more attention. The costs of such environmental mitigation measures can be significant even when viewed in the context of the millions of dollars a company may spend, for example, to develop a mine. Using the Montanore Project in northwestern Montana as a case study, this paper examines the costs of alleviating some of the detrimental effects which may occur as a result of a mining operation. Although many of the general issues that have been raised about Montanore are common to other mineral projects, the scale of the project, as well as the fact that the ore body is within a wilderness area, the site is in grizzly bear habitat, and the surface waters are considered to be pristine, all combine to make Montanore particularly challenging from an environ- mental standpoint. Much of the information which follows is contained in the most recent version of the Draft Environmental Impact Statement (DEIS) which is scheduled to be published in several weeks. Based on agency and public comments, some of the information presented in the paper will change before the Final Environmental Impact Statement is issued in 1991.

Jan 1, 1991

By R. J. Hickson

The Grasberg copper-gold deposit was discovered in Spring 1988, just one year prior to the planned closure of Freeport Indonesia's original Ertsberg open pit copper mine. In spite of Grasberg's remote location, 600m above the Ertsberg, atop a hitherto inaccessible mountain, Freeport-McMoRan brought their latest open pit mine into production in the last week of 1989, less than two years after discovery. This paper describes the start-up of the operation, highlighting synergies drawn from both the original Ertsberg experiences and the current Freeport Indonesia underground mines.

Jan 1, 1991

Pictured on these pages are the eight RMCMI Scholarship Award Winners for the 1989-1990 year followed by a brief profile. All winners, except Emmet Roache from New Mexico, were present as guests of the Institute at the June convention in Steamboat Springs, Colorado to receive recognition at the Welcome Session Monday, June 25, 1990. Each state vice president served as the host for the collegiate winner. In addition to receiving a plaque from the Scholarship Chairman, Dr. Donald Gentry, each winner receives $750 tuition credit for the coming academic year. As this is a continuing award, the winners from the previous year will receive another $750 for tuition credit in their senior year if they have maintained good academic standing and are recommended by their university. Criteria for these awards to be made in the spring annually is (1) That the award be made to a sophomore student and used as tuition during the junior year. (2) That the recipient be both a U.S. citizen and a resident of the state involved. (3) That the recipient have good academic standing, be pursuing a degree in a mining related field and have an expressed interest in Western coal as a possible career path. The scholarship program includes curricula other than those in the mining departments, but in the engineering disciplines, such as geology, mineral processing and metallurgy. Contributions to this worthy project are tax deductible to each individual RMCMI member or his firm. Through annual donations of $100 or more, the Patrons of the Institute fund the scholarship program, and the various vice presidents contribute the travel expenses to conventions for these outstanding young collegiates. Donations to this worthwhile program may be made payable to RMCMI Scholarship and mailed to the RMCMI Office, 3000 Youngfield Street, Suite 324, Lakewood, CO 80215. Profiles of the 1990 Scholarship Winners follow. [ ] Mildred Benally University of Arizona Tuscan, Arizona Mildred has attended San Juan College in New Mexico, and will graduate from the University of Arizona in May, 1991. Upon completion of her, schooling she hopes to pursue a career in the coal mining industry. In preparation for her goal, her work experience includes being a lab technician, a mining engineer intern, and a lab technician assistant; she also is very skilled in various computer applications. She has been a member of SME-AIME, and secretary to the U of A Student Chapter, and recipient of the SME Coal Division Scholarship and past recipient of the Navajo Tribal Scholarship. [ ] Joshua Olmsted Colorado School of Mines Golden, Colorado Josh is a sophomore majoring in mining engineering at the Colorado School of Mines. He is an outstanding student as well as an accomplished athlete. Josh was on the Academic Honor Roll 1988-1989 and has been awarded an athletic scholarship. He plays varsity soccer and intramural basketball.

Jan 1, 1990

By R. Hendrickson

In the 1940's a top blown water-cooled oxygen lance was developed to inject oxygen into liquid iron. This process, the LD or BOF process technique, today is used in 65% of the world's steel production, and represents the largest oxygen market for temperature enhancement in steel and non-ferrous smelting applications. There are three major approaches to the use of oxygen in metallurgical processes: (1) general enrichment of the air supplied to burners or tuyeres, (2) under-flame enrichment or injection, and (3) the use of an auxiliary oxy-fuel burner as a heat source. With each of these techniques there are technical and economic trade-offs.

Jan 1, 1990

By Donald A. Voigt

This publication is intended as a guide for persons responsible for obtaining classifications and approvals Tor explosive compounds, mixtures, or devices from the U.S. Department of Transportation (DOT). It deals with the procedures for obtaining a recommendation for classification of an explosive compound, mixture, or device through the Bureau of Mines. Completion of the procedures detailed in this guide is necessary to obtain a final classification of an explosive compound, mixture, or device and assignment of an "EX" number by DOT, which will allow the producer to offer the explosive for shipment within the United States. This guide also gives procedures for obtaining United Nations (U.N.) classification for shipping outside the United States.

Jan 1, 1990

By C. R. Tinsley

Investment activity in the Pacific Rim of Fire has seen a phenomenal surge from epithermal gold exploration. Individual countries are attractive because of lower up-front minerals lease costs (US, Canada), better geological prospectivity (Chile, Indonesia), or cheaper equities (Australia). Since the October 1987 stock-market crash, large companies are shedding minority joint venture interests to focus on core businesses. Some vertical integration is evident in Japanese coal investments in the Pacific Rim. This paper does not cover the aluminum industry oligopoly which is multi-national in character nor does it cover the many Canada to US minerals investments. It will be interesting to see if the new US-Canadian free-trade treaty will reverse that investment flow.

Jan 1, 1990

By William C. Spindler

Five industrial installations of large lead-acid battery energy storage systems in operation in the United States, West Germany and the 'Republic of South Africa will be described. One example is for a deep mine shaft in which air ventilation and personnel evacuation require the highest reliability for emergency power. The battery system is designed for additional cost-effective benefits of peak load lopping and reactive power control. Commercially available lead-acid batteries of the following types are in use1 traction, truck, submarine, high power, and gel. Electrode grids of both the calcium and antimony alloy types are used. Applications include deep and shallow cycling as well as float and intermittent use. The advantages of sealed lead-acid batteries in UPS (uninterruptible power source) systems are well established throughout the world, and such system suppliers could readily develop markets for industrial emergency and peak power lead-acid storage battery installations.

Jan 1, 1990

Companies involved in the mining industry are exposed to risks, referred to as corporate risks, as part of the business process. Directors and management should be aware of these risks and make appropriate business decisions to address each risk. If business risks are not addressed on a timely basis the consequences are likely to be serious and will adversely impact the ultimate success of the business.The key corporate risks are:Poor cash flow and treasury management. ò Incompetent or unmotivated staff.ò Poor product quality.ò Accounting systems that do not provide meaningful and timely information.ò Computer system deficiencies. ò Ineffective credit screening.ò Assets not adequately protected.ò New ventures undertaken that are either inappropriate or not adequately researched.Exposures to corporate risk should be dealt with by Directors and management by systematically identifying major risk areas and implementing appropriate internal and management controls to deal with such risk areas. Proper management controls and procedures include the setting of overall corporate objectives and policy, monitoring adherence to such policy, establishing early warning systems to highlight problem areas and maintaining security over assets.

Jan 1, 1990

By R. Kola

Since more than 15 years the Waelz process at "Berzelius" in Duisburg has proved suitable for reprocessing the zinc and lead containing dust and .sludge which inevitably occur in making steel in EAF-plants. The produced Waelz-oxide is agglomerated in a hot-briquetting plant and charged to an Imperial Smelting Shaft Furnace to recover the valuable elements in form of metallic zinc and lead. In view of the actual importance of the dumping problems of the EAF wastes a description of the "Berzelius" treatment route is given but also the situation in Western Europe is illustrated. Dust from stainless steel production is successfully treated in the Scan Dust Plasma Process in order to recycle Chromium and Nickel, while the resulting Zinc-Dust is treated via the Waelz-ISF-Route. For treatment of low Zinc-containing dust, sludge and fines from integrated steelworks, pilot scale tests have been carried out successfully in the Circulating Fluid Bed in order to recover metalized iron and .zinc/lead fume. A 30,000 tpy Demonstration Plant is planned?.

Jan 1, 1990

By Richard M. Winar

In September of 1988, the United States Environmental Protection Agency (US EPA) published final regulations that effect owners and operators of underground storage tanks (USTs). These regulation include stringent technical requirements for owners and operators of USTs containing petroleum and certain hazardous substances. The technical requirements effect both new (those installed after December 1988) and existing USTs and include notification; performance and operating standards; release detection, reporting, investigation; release response and corrective action; and closure requirements for out-of-service USTs. The USEPA also published final regulations regarding financial responsibility requirements for owners or operators of petroleum USTs in October of 1988. These regulations require owners or operators of petroleum USTs to demonstrate financial responsibility for the costs of corrective action and compensating third parties for bodily injury or property damage caused by releases from petroleum USTs. Like thousands of other industries, the mining industry must become thoroughly familiar with these new regulations in order to properly manage their UST systems, ensure compliance, and understand other ramifications imposed by these regulations.

Jan 1, 1990

By C. O. Bounds

Management of emission control dust from electric? arc furnace (EAF) steelmaking as an RCRA-EPA listed hazardous waste places economic and environmental pressures on the steelmaking industry. Horsehead Resource Development Company, Inc. (HRD) serves the industry by recovering nonferrous metals from the dust in rotary kiln plants in Palmerton, PA and Chicago, IL, and has demonstrated the commercial viability of its patented coal-fired FLAME REACTOR Process. However, because of location and/or regulation, many steelmakers could be more economically served via on-site processing of its dust. Therefore, in 198-7, through a contract with the Gas Research Institute, HRD embarked on a program to develop a gas-fired reactor and test a prototype unit. The development program has successfully proven the environmental, technical and economic performance of the concept. Consistently high zinc, lead and cadmium recovery to an oxide concentrate as well as production of a nonhazardous, delistable slag have routinely been achieved. The gas-fired FLAME REACTOR field experiment results and the economic performance of on-site or smaller regional plants will be highlighted.

Jan 1, 1990

By D. D. Rodier

Most zinc concentrates contain some silver and varying amounts of such valuable trace elements as gold, indium, germanium and gallium. With increasing similarities in plant installations, the predominance of electrolyte process and the increasing environmental constraints on iron disposal, it is essential that zinc smelters optimize the recovery of any valuable elements in their feed stocks. The process options, to date, of smelting, flotation or leaching of silver-rich leach residues cannot be applied economically to all installations. It is therefore necessary that new innovative processes, to recover silver and other valuable metals from relatively low grade feeds, be developed. This paper attempts to place this strategy in the context of today's constraints and will also provide a simple evaluation tool for any process alternatives.

Jan 1, 1990

By Henry E. Reed

This presentation is about a small company, Industrial Mineral Products, that was formed in 1972 with one product and one customer and by a series of value-added changes avoided disaster and increased sales many times over. The principal of the company stopped by my office in Seattle looking for industrial mineral opportunities in the Northwest. We got together and went through all the minerals in Ladoo's "Industrial Minerals" from Abrasives to Zircon to see if we could find something available on the vast holdings of the Burlington Northern. At that time one of our lessees was operating a silica sand mine near Ravensdale, Washington and indicated that he might be interested in selling out. This sounded interesting to my client and within two weeks the transaction was completed.

Jan 1, 1990

By James Matlock

The announcement of a minable reserve of 13.6 Mt (16 million tons) averaging 0.9 g/t (0.027 oz per ton) Au and 2.4 g/t (0.71 oz per ton) Ag for the open pit-heap leach reserve at Red Mountain No. 3 in Ouray County, Colorado, by Cornucopia Resources in November 1985 brings another open pit-heap leach precious metal ore body to the production stage. With about 8.2 Mt (9 million tons) of waste and metallurgical studies showing acceptable recovery rates, low reagent consumption, and good final percentage recovery, Red Mountain is a discovery that will add to the precious metal inventory of the US. Frank Baumgaruler of Denver, CO, recognized the precious metal potential in Red Mountain No. 3 and acquired all of the old claims. James Matlock conducted a field reconnaissance over Red Mountain No. 3 independently of the Baumgartner activities and recognized epithermal alteration and mineralization in the Tertiary volcanics. He recommended acquisition of the ground and was able to obtain rights and drill six core holes for Amoco in 1982. Amoco drilled a further nine core holes in 1983, but then dropped the property. Cyrano Resources examined the data and through its consulting geologist, V.F. Hollister, acquired the rights dropped by Amoco. In 1984 Cyrano began further drilling of the ore zone demonstrated by Amoco but they were then acquired by Cornucopia Resources. Cornucopia completed development of the property and commenced the permitting process in 1986. The property was recognized as a disseminated gold deposit by both Baumgartner and Matlock, and both deserve credit for properly evaluating mineralized outcrop in the Tertiary volcanics. However, Cornucopia recognized the profit potential in the heap leach exploitation of the ores and de- serves credit for completion of premine feasibility studies. The discovery is clearly a geological one, but the premine engineering studies were essential to the conversion of the prospect to a commercial mining enterprise. The deposit lies on the circular bounding fault of the Silverton caldera. Two reprints follow that help understand the geologic setting of the ore controls.

Jan 1, 1990

By Anna H. Connard

SUMMARY The discussion focusses on developments in the debt/equity swap market since the Marte project was negotiated in early 1988. It emphasises carrying forward the recent market trends to anticipate the breadth and scope of debt/equity conversions for mine development in the 1990s. Secondary market prices of LDC paper, conversion values and political influences in the host countries and the use of near debt and commodity-based instruments as components of mine financing in debt/equity deals will be placed in the perspective of recent trends and expectations for the future. THE MARTE PROJECT The Marte mine is a gold porphyry deposit in Chile's high Atacama, for which financing was put together at the beginning of 1988. The Marte project was financed by a combination of common equity and loans. It was unusual that the equity infusions were made under different programs. Some of the international equity was infused with fresh funds via DL 600. Other common foreign equity was provided through the conversion of Chilean bank debt under Chapter XIX. On the loan side,. export credits for the import component of machinery and equipment were sought. Local bank financing was negotiated for the remainder of ' the project's anticipated cost. The debt conversion market in Chile was at its apex in terms of interest, activity and government support when the mine financing was arranged. The price of Chilean paper in the secondary market hovered about 62 to 66 cents per U.S. dollar of face value. Meanwhile, the Chilean government was negotiating conversion redemptions significantly closer to full face value. The government differentiated between debt paper exchanged for corporate investors who had sourced that paper in the secondary market, and debt paper held by bank investors who would incur a transaction loss in the conversion. The use of a combined DL 600lChapter XIX equity financing created different yield calculation bases for the various investors. Chapter XIX prevents remittance of profits before year 5 and capital repatriation before year 11. Investors choosing this vehicle have either for a corporate policy in the target project not to declare dividends until repatriation is allowed, or they have to seek uses for the peso liquidity that would be generated through dividend declarations in the early years. However, DL 600 investors face no such waiting period on dividends, nor do they have restrictions imposed on cashing out of the investment before the 11th year. Therefore, any equity structure with components of both investment mechanisms will have inherent differences in cost basis and future income flows for the various participants. This equity imbalance is defensible if the investment motivations of the parties are analyzed: a mining investor using fresh funds looks for a hurdle return on equity calculated at conservative commodity prices, with as much flexibility to reap upside benefits as possible; a mining investor choosing to invest through a debt conversion mechanism will realize a modest short term gain on the conversion, reducing his effective cost basis, but sacrificing some return because of the waiting period on repatriation of dividends. INVESTMENT OBJECTIVES A bank investor exchanging his own paper for an equity participation in a mining project realizes a conversion loss on the transaction. He seeks a risk adjusted acceptable hurdle rate of return to recoup that loss over time. Motivation for the bank investor to take that loss may be derived partly from a strategy to diversify its existing portfolio by internal policy and externally regulated guidelines. The bank will compare yields on its loan portfolio to that country with anticipated dividend flows discounted back at a risk adjusted rate. It will analyze the project with return objectives of yield enhancement over time and with

Jan 1, 1990

By R. E. MacDougall

Very few mineral properties spend their entire lifespans from discovery to depletion in the hands of one owner. More likely, properties will have several owners, and partial interests may change quite often. Similarly, mineral companies are bought and sold with frequency, in recent years at what appears to be an accelerating rate. The reasons for selling a property can be manifold -need for additional capital in other parts of the business, need for development capital, realization of a large gain at a perceived high point in the market, pessimistic commodity outlook, retirement of principals, or resolution of estate problems. Regardless of the reasons for a sale, there are specific steps that logically follow. Spruce up the business, package the information, market the property, negotiate the terms, close the sale, and make sure it stays sold. Adherence to certain very basic ground rules in property sales can maximize the profits and minimize the effort.

Jan 1, 1990

By Charles F. Herbert

It is difficult to decide who most deserves credit for discovery of a mining district that has produced over 19.8 Mg (7,000,000 fine oz) of gold and still contains a large reserve of low grade ore. Fred Culver may have made the first discovery. In the summer of 1867, the ship's log of the Hudson's Bay Co.'s steamer Otter stated that Fred Culver had been found nearly lifeless from wounds, without provisions, but with some 2.3 kg (80 oz) of rough, placer gold in the bottom of his canoe; he told of finding a rich creek and an attack by Indians that caused the death of his two companions. The place of rescue was about 24 km (15 miles) southeast from the present site of Juneau. Possibly John Muir, the hero of modem environmentalists, should be given important credit. In 1879 he reported finding mineralization along what later became to be known as the Juneau Gold Belt, and it was his report that induced the cantankerous German mining engineer, George Pilz, to grub- stake some of the prospectors who had drifted into Sitka from the declining gold placers of Cassiar, British Columbia. Pilz also offered rewards to Indians who might report gold discoveries.

Jan 1, 1990

By Jan H. Hommen

TRENDS IN MINE FINANCE Reviewing historical trends may help in dealing with future funding strategies. The first trend is the increase in the use of debt to fund corporate America. Surprisingly, when comparing that with other corporates in the global marketplace, the U.S. does not look too poorly. Japanese, in particular, but also German companies, are much more leveraged than their U.S. counterparts. Note that in Japan and Germany the government and the consumer have shown substantial restraints when it comes to credit. Not so in the U.S. where the savings rate (4%) is much lower than that in Japan (20%) and in Germany (14%). As a result, the cost of leverage is substantially lower in Japan and in Germany than in the U.S. Lower debt costs in these countries allows one to obtain more of it for the same price. The close relationships between financial institutions, corporations and governments in Japan and Germany also make the risk of leverage more bearable and understandable. Also note that interest rate volatility in these countries is more subdued. The investor base in common stock is also changing. Private pension funds have been net sellers of equities during the last few years while public pension funds have been net buyers. Individuals are basically out of the market. It is estimated that over $330 billion of equity was retired in the U.S. through 1986-1988. The reasons are well known: restructurings, buy-backs, takeovers, mergers, and buy-outs. This de-equitization is likely to continue as the cost of equity capital is higher than the cost of debt capital, even on a before-tax basis. Because there has been no market for equity since October 19, 1987, junk bonds have replaced equity capital in the corporate finance structure. The non-investor-grade borrower has access to the public markets through high-yielding debt securities that often look like senior equity. Deregulation has also provided 24-hour markets; securitization can now liquify assets that before were rusting on balance sheets; information processing and communication tools give facts that are instantaneously available, creating the need for products to cover risk and exposures unknown before the start of the information and technology explosion. Thus we now have swaps, options, futures, options on futures, caps, as well as program trading, portfolio insurance, index funds, etc. Globalization will be unstoppable. Today's environment demands it. Corporations are now global competitors, even though they may have never shipped a product off-shore. Boundaries are disappearing and impediments have been removed. Stocks can be issued in a global offering with distribution in all major financial centers of the world. The high leverage of Japanese companies has made common stocks very scarce, which with the high savings rate, makes equity capital inexpensive in Japan. If markets were perfect everyone would issue stock in Tokyo and buy it back in New York. This would certainly stop the bleeding on the balance of payments. With the deficit balance of payments in America, it is no surprise that the cost of money is expensive here. The risk-return relationship on U.S. equity is not favorable enough to appeal to Japanese equity investors. The Tokyo-market, helped by a stronger yen, surpassed New York as the most important equity market in the world. The question is, will the Tokyo market hold up when Japanese domestic consumption increases at the expense of savings? In the U.S. debt markets, the plain vanilla debenture is making a comeback after a period of absence. Commercial paper has replaced short term bank borrowings for working capital funding by larger corporations. The banks have made an interesting comeback with loan sale programs that will continue to attract borrowers. There will be a continuing

Jan 1, 1990