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By R. A. L. Black

Between March and June 1962, the privilege of holding a Carnegie Corporation Fellowship enabled R. A. L. Black to travel extensively in the northeastern and western U.S. and in Canada, seeing mining schools, mining research establishments and a cross-section of the American and Canadian mining industry. Visits were paid to 12 university mining schools, 7 research establishments and 19 mining operations. The author had previously spent two months in Britain in a similar manner and eventually returned to his home in South Africa after a short period studying mining problem in Australia. Thus, although the following remarks are mainly concerned with the educational problems of mining in North America, a comparison of impressions of American and Canadian conditions could be made with impressions gained from first-hand experience of other mining centers in the English-speaking world. The conclusion was reached that the problems and conditions of mining, research and mining education are very similar in all areas visited.

Jan 4, 1963

Lieut. Louis J. Brunel, now in France, was commissioned on July 27, 1917, as Second Lieutenant in the Engineers Reserve Corps, assigned to the 7th U. S. Engineers, Dec. 10, 1917, and has been with the American E. F. since Mar. 26, 1918. He was assigned to the staff of the General commanding the 5th Field Artillery Brigade, as Engineer Officer, on Aug. 6, 1918. E. Ross Housholder writes that "the record for pontoon bridge building was broken Sept. 25, 1918, by Section A, Co. 4, 5th Engineer Officers' Training School, at Camp Humphreys, Va., of which I am a member. The time was 15 min. 11 3/5 seconds. We then proceeded to break the record for dismantling in 9 min. 57 1/5 seconds. The length of the bridge section was 200 ft. The post band was sent out to meet us, and we feel proud of this record. I have met quite a few A. I. M. E.

Jan 11, 1918

By Bailey, Lewis Newton

Bailey, Lewis Newton, Master Engineer, Senior Oracle, 4th Regiment, U. S. Engineers, Headquarters Company, died of pneumonia, at Camp Merritt, N. J., on April 30, 1918. Baird, Louis, Lieut., Royal Field Artillery, British Army, died on the battlefield in 1915. Ballamy, John H., Capt., 103d Engineers, killed in action near Fismes, Aug. 9, 1918. Burt, Andrew, died in active service, 1916. Cobeldick, William Morley, Royal Engineers, died from gas poisoning on October 7, 1915. Dougall, Ralph, 4th University Co., Princess Patricia Regiment, killed in action early in the war. Evans, Alfred Winter, Lieut.-Col., New Zealand Rifle Brigade, D. S. 0., D. C. M. killed in action on October 12, 1917. Gorman, Thomas C., Lieut., Canadian Engineers, killed in France, Mar. 18, 1918. Hague, William, 1st Lieut., Engineer Officers' Reserve Corps, died in active service, Jan. 1,, 1918. Hall, William T., Capt., Royal Flying Corps, killed in action, May 19, 1917.

Jan 11, 1918

By Walter R. Hibbard

Whether we have occasion to think of it or not, an adequate and economic supply of energy fuels is vital to each of us. It is interesting to look ahead at the way in which fuels from supplementary sources will begin to enter into the energy mix to help meet the long-term national energy needs. From 1947 to 1965, the average annual rate of growth of energy consumption was 2.7%, with total energy demand in 1965 being equivalent to 54 quadrillion Btu's. During this short period of 18 years, the cumulative output of coal in the U.S. was 9.6 billion tons; natural gas, 193.5 trillion cu ft; and crude oil, 45.9 billion bbl. During the next decade and a half the nation's energy requirements are expected to grow at an average rate of 3.3% yearly, with consumption of energy expected to reach an annual rate of about 88 quadrillion Btu's by 1980, or 63% over the 1965 level.

Jan 12, 1967

By ALFRED KAUFFMAN

NO matter what position we hold, workman, foreman, superintendent, manager, president, or what not, let us fail to give or to make good products, then see how quickly we'll be called to account for- our work by the buying public. The waves of progress taught us that millions were wasted in unnecessary strikes-we also learned that many losses were due to neglect on the part of manufacturers to give the same consideration and attention to the human element of their factory as they gave to their machinery. The employees learned also that the employer was their agent who found purchasers for the product of their labor. So between the two we learned that many years of labor were needed in order for a worker to recover his wasted savings, or for the manu¬facturer to replenish his loss. Treat 'em rough, and tell 'em nothing, was not very far from the true relationship between management and employees in manufacturing plants in the early days. Today just exactly the opposite views are held by executives whose function is the handling of employees. Men today want to know what it is all about. They are intelligent enough to comprehend the facts, and to use them constructively, and it is good business to give them the information.

Jan 1, 1929

By Walter English

THE four papers making up this symposum have been prepared espe-cially for those who have no knowledge of seismograph prospecting. To many people mathematics is a formidable subject, and many are discouraged from studying seismograph prospecting under the mistaken assumption that the mathematical requirements are severe. In the papers presented here there is not a single mathematical equation. We believe that considerable competence in dealing with some of the most important problems of this work can be attained without any mathe-matical training whatever. At the present time, there is a real need for interpretation of results by persons thoroughly competent to bring geologic experience and imagination to bear on data that are subject to multiple interpretation from a strictly physical viewpoint. Likewise, those charged with the responsibility of planning seismo-graph exploration campaigns would do well to become familiar with as much as possible of the technical aspects of the work. They would then be in better position to judge of its success in individual cases. It has often been said that the seismograph is a new structure-finding tool for the geologists to use. Using a tool and using its product are two different things. One does not use an automatic screw-threading machine when he buys a box of screws at the hardware store. Neither does the geologist

Jan 1, 1939

By AIME AIME

This volume, an octavo of 626 pages, is now ready for delivery. By its aid, any subject treated or alluded to in the Transactions can be instantly tracked. The names of persons, mines, works, towns, etc., have been included; and abundant cross-references and classified sub-headings have been added to facilitate rapid consultation. Thus, the student remembering the name but not the locality, or the locality but not the name, or neither the name nor the precise locality of a gold-mine, can find it under ?Gold-mines," or under either of the other heads. For a more extended statement of the nature and use of this Index, which is intended specially for the benefit of those who do not possess complete sets of the Transactions, and who consult the Library by correspondence, see the Bi-Monthly Bulletin for September, 1907. The price of the Index bound in cloth is $5, delivery charges prepaid. Half-morocco binding costs $1 extra. Buy at once a copy of this Index, and also as many back-volumes of the Transactions as you can afford. Every such purchase from the stock on hand is so much added to the income of the Institute. As far as possible, the money thus received will be devoted to maintaining and perfecting the Library, and making it useful to members in all parts of the world.

Jan 11, 1907

By Walter A. English

The four papers making up this symposum have been prepared especially for those who have no knowledge of seismograph prospecting. To many people mathematics is a formidable subject, and many are discouraged from studying seismograph prospecting under the mistaken assumption that the mathematical requirements are severe. In the papers presented here there is not a single mathematical equation. We believe that considerable competence in dealing with some of the most important problems of this work can be attained without any mathematical training whatever. At the present time, there is a real need for interpretation of results by persons thoroughly competent to bring geologic experience and imagination to bear on data that are subject to multiple interpretation from a strictly physical viewpoint. Likewise, those charged with the responsibility of planning seismograph exploration campaigns would do well to become familiar with as much as possible of the technical aspests of the work. They would then be in better position to judge of its success in individual cases. It has often been said that the seismograph is a new structure-finding tool for the geologists to use. Using a tool and using its product are two different things. One does not use an automatic screw-threading machine when he buys a box of screws at the hardware store. Neither does the geologist

Jan 1, 1940

By Walter A. English

The four papers making up this symposum have been prepared especially for those who have no knowledge of seismograph prospecting. To many people mathematics is a formidable subject, and many are discouraged from studying seismograph prospecting under the mistaken assumption that the mathematical requirements are severe. In the papers presented here there is not a single mathematical equation. We believe that considerable competence in dealing with some of the most important problems of this work can be attained without any mathematical training whatever. At the present time, there is a real need for interpretation of results by persons thoroughly competent to bring geologic experience and imagination to bear on data that are subject to multiple interpretation from a strictly physical viewpoint. Likewise, those charged with the responsibility of planning seismograph exploration campaigns would do well to become familiar with as much as possible of the technical aspests of the work. They would then be in better position to judge of its success in individual cases. It has often been said that the seismograph is a new structure-finding tool for the geologists to use. Using a tool and using its product are two different things. One does not use an automatic screw-threading machine when he buys a box of screws at the hardware store. Neither does the geologist

Jan 1, 1940

By George Anagnostache

AMONG the petroleum-producing countries of the world, Roumania occupies the fifth place; in Europe, it occupies second place, coming after Russia. The extraction and the use of petroleum in Roumania, may be trace( as far back as 1856, but the production on an industrial scale started in 1896, when the "Steaua Romana," was formed. From that time until the beginning of the war, the petroleum industry had a rapid growth the number of the producing companies increased to 37, and production FIG. 1.-ROUMANIAN OIL AND GAS FIELDS. increased from 81,571 tons, in 1896, to 1,898,545 tons, in 1912, when the greatest production was reached. In 1916, when the Germans invaded Roumania, the oilfields, at the order of the Allies and under British supervision, were destroyed, to pre vent their exploitation by the Central Powers; the wells were blown in the refineries and the storage tanks burnt, and pipelines put out of order This voluntary destruction, which weakened the resistance of the Central Powers, set back the petroleum industry at least one decade. Reconstruction after the war was slow, because of bad transportation conditions the scarcity of drilling and refining material, the insufficiency of. electric power, and the continuous depreciation of the Roumanian money, which made difficult the buying of the necessary materials for reconstruction.

Jan 3, 1925

The four papers making up this symposum have been prepared especially for those who have no knowledge of seismograph prospecting. To many people mathematics is a formidable subject, and many are discouraged from studying seismograph prospecting under the mistaken assumption that the mathematical requirements are severe. In the papers presented here there is not a single mathematical equation. We believe that considerable competence in dealing with some of the most important problems of this work can be attained without any mathematical training whatever. At the present time, there is a real need for interpretation of results by persons thoroughly competent to bring geologic experience and imagination to bear on data that are subject to multiple interpretation from a strictly physical viewpoint. Likewise, those charged with the responsibility of planning seismograph exploration campaigns would do well to become familiar with as much as possible of the technical aspests of the work. They would then be in better position to judge of its success in individual cases. It has often been said that the seismograph is a new structure-finding tool for the geologists to use. Using a tool and using its product are two different things. One does not use an automatic screw-threading machine when he buys a box of screws at the hardware store. Neither does the geologist

Jan 1, 1940

The four papers making up this symposum have been prepared especially for those who have no knowledge of seismograph prospecting. To many people mathematics is a formidable subject, and many are discouraged from studying seismograph prospecting under the mistaken assumption that the mathematical requirements are severe. In the papers presented here there is not a single mathematical equation. We believe that considerable competence in dealing with some of the most important problems of this work can be attained without any mathematical training whatever. At the present time, there is a real need for interpretation of results by persons thoroughly competent to bring geologic experience and imagination to bear on data that are subject to multiple interpretation from a strictly physical viewpoint. Likewise, those charged with the responsibility of planning seismograph exploration campaigns would do well to become familiar with as much as possible of the technical aspests of the work. They would then be in better position to judge of its success in individual cases. It has often been said that the seismograph is a new structure-finding tool for the geologists to use. Using a tool and using its product are two different things. One does not use an automatic screw-threading machine when he buys a box of screws at the hardware store. Neither does the geologist

Jan 1, 1940

By Eric S. Cheney

The often-heard question "How can we interest young geologists and engineers in AIME?" is virtually the same as "How can we interest young geologists and engineers in the glamorous mining industry?" Many persons would reply that AIME and industry should improve their image by various devices aimed at high school students and teachers, boy scouts, and even grade school children. For more immediate results, I suggest that we concentrate our efforts at the professional level on students already identified as geol¬ogists and engineers. Why does our glamorous profession appear distinctly unglamorous to most of the engineers and geologists currently in college and graduate school? The answers seem quite simple to me. First, the profession talks almost exclusively to itself, seldom to the engineering or geologic public, and almost never to the lay public. Second, the industry has been overly conservative in all aspects of recruiting during an especially competitive and affluent period. Consequently, mining has taken a terrific public drubbing from preservationists who still portray its leaders as robber barons. SME and AIME have, of course, various commendable programs for enticing student interest, including student membership, the low dues for this membership, the somewhat reduced prices at which students can attend AIME meetings and buy AIME volumes, and the large number of AIME Student chapters on campuses. Obviously, more active encouragements are needed.

Jan 1, 1971

By U. N. Bhrany, N. Arbiter

F. C. Bond (Consulting Engineer, Processing Machin-Dept., AllisChalmers Manufacturing Co., Milwaukee) This is a very comprehensive paper. It deals with 1) size distribution functions, 2) energy-particle size relationships, and 3) criteria for grinding efficiency. The method of analysis used consists of tracing the increase and decrease of successive Tyler scale screen fractions as grinding progresses. The treatment is based upon the assumption that the work done in grinding is concentrated entirely upon the coarse size fractions in the mill. It is postulated that when a feed consisting entirely of particles of one size fraction is batch ground that finer fractions increase at a constant rate as grinding progresses, until finally each in turn begins to be ground and to decrease in amount. It is shown that under these conditions the empirical Gates-Gaudin-Schuhmann log-log size distribution plot can be logically explained. It is difficult to imagine any condition of ball mill operation, or any probability analysis, which would result in no grinding contacts on the finer particles present. However, the authors' postulate must be accepted if their conclusions are to be sustained. They conclude that the equation expressing the for mation rate of each size fraction can be resolved into the G.-G.-S. size distribution equation, and that the curvilinear portion of the log-logsize distribution line represents the only particle sizes which are being ground as well as produced. The author's statement that the G.-G.-S. Eq. 4 applies only to the finer portion of the size distribution while the Rosin-Rammler Eq. 6 applies over the whole size distribution range certainly supports the view that an exponential equation of the Rosin-Rammler type corresponds more closely to actual size distribution than does the power law G.-G.-S. equation. However, the G.-G.-S. equation is used to derive Eq. 8 and Eq. 9, which state that the energy required to grind a ton through a particular mesh varies inversely as the particle size to the exponent -a , whic h is the slope of the extended G.-G.-S straight line. This is stated to apply to both batch and continuous grinding. The G.-G.-S. slope exponent thus becomes very important in all crushing and grinding analyses by this method. The authors include some data which can be used to test their conclusions, as described below: We will consider grinding a feed composed of 14 mesh (1190u) to -200 mesh (74u). The average of 17 Allis-Chalmers grindability tests on quartz gives a work index (Wi) of 12.77. The -200 mesh product should have 80 pct passing 41.6u or P = 41.6. The equivalent 80 pct passing size of the 14 mesh feed particles is considered to be the particle diameter, as is true for spherical particles. Thus F is 1190u. In the work index equation 10 wi 10 wi 127.7 127.7 P f 41.6 1190 = 16.1 kw-hrperton. In Table I the ball mill exponent for quartz is 1.0 and from Eqs. 9 and 10: w=kw-hr/ton =Constan/(do/di) = 16.1 ton so that (1190) Constant/ Constant and the Constant equals 259. The tons per horsepower-hour value is 0.0464, in agreement with Table IV. The exponents for other minerals are listed in Tabl e 11. In Table IIA, the kilowatt hours per ton required to grind these minerals between the same sizes as the quartz, both by the authors' method and the work index equation, are listed. According to the authors kw-hrperton = 259/(16.1)".

Jan 1, 1961

By Theron Wasson

The year 1942 in Michigan was devoted largely to the development of fields discovered in 1941 but was also characterized by a great increase in prospecting for new productive horizons below the Dundee limestone. Some new fields were discovered but as yet these have shown few signs of being of major importance. Michigan's total production for 1942, of 21,754,000 bbl. of oil, as reported by the U. S. Bureau of Mines, was second only to the record year of 1939 when 22,799,000 bbl. of oil were produced. All important fields were prorated throughout the year, and it is obvious that without proration a new all-time high would have been established for the state this year. From 1925 to the end of 1942, Michigan has produced annually the following amounts of oil: Year Barrels Source 1925 4,000 1926 94,000 1927 435,000 1928 592,000 1929 4,641,000 1929 Michigan Geological Survey 1930 3,928,000 3,785,000 1932 6,925,000 1933 7,942,000 1934 0,603,000 1935 15,776,000 U.S. Bur. Mines, 1937 1936 11,928,000 U.S. Bur. Mines, 1938 1937 16,628,000 U.S. Bur. Mines, 1939 1938 19,211,000 U.S. Bur. Mines, 1938 1939 22,799,000 1940 19,764,000 1941 16,361,000 1942 21,754,000 Total 183,170,000 This tabulation shows the steady growth of the industry in Michigan since the first discovery of oil in 1925. Maes A map of the oil and gas fields of Michigan in 1941, published in the report for 1942, shows the main producing areas and should be referred to if information in regard to their location is desired.* The main producing zones were shown in the columnar section in the same publication. Development in Fields Reed City Field.—During 1942 the Reed City field, which ended 1941 with 112 producing oil wells, added 70 new producers to bring the total at the end of the year to 182 wells and 4700 proven acres. A south extension of the field developed during the year was in large part responsible for the increase. Approximately 9,000,000 bbl. of oil was produced from the field during the year, bringing the total accumulated production to the end of the year to roughly 11,750,000 barrels. Headquarters Field.—The Headquarters field, which started the year with ro producing oil wells, ended the year with 41 wells aid 1240 proven acres. Approximately 2,300,000 bbl. of oil was produced in 1942. Kawkawlin Field.—Although not a 1941 discovery, the Kawkawlin field has been actively developed on the 40-acre spacing plan during the last year, 42 producers having been completed, bringing the total number of wells at the end of the year to 77. Nearly 500,000 bbl. of oil was produced during the year.

Jan 1, 1943

By Theron Wasson

The year 1942 in Michigan was devoted largely to the development of fields discovered in 1941 but was also characterized by a great increase in prospecting for new productive horizons below the Dundee limestone. Some new fields were discovered but as yet these have shown few signs of being of major importance. Michigan's total production for 1942, of 21,754,000 bbl. of oil, as reported by the U. S. Bureau of Mines, was second only to the record year of 1939 when 22,799,000 bbl. of oil were produced. All important fields were prorated throughout the year, and it is obvious that without proration a new all-time high would have been established for the state this year. From 1925 to the end of 1942, Michigan has produced annually the following amounts of oil: Year Barrels Source 1925 4,000 1926 94,000 1927 435,000 1928 592,000 1929 4,641,000 1929 Michigan Geological Survey 1930 3,928,000 3,785,000 1932 6,925,000 1933 7,942,000 1934 0,603,000 1935 15,776,000 U.S. Bur. Mines, 1937 1936 11,928,000 U.S. Bur. Mines, 1938 1937 16,628,000 U.S. Bur. Mines, 1939 1938 19,211,000 U.S. Bur. Mines, 1938 1939 22,799,000 1940 19,764,000 1941 16,361,000 1942 21,754,000 Total 183,170,000 This tabulation shows the steady growth of the industry in Michigan since the first discovery of oil in 1925. Maes A map of the oil and gas fields of Michigan in 1941, published in the report for 1942, shows the main producing areas and should be referred to if information in regard to their location is desired.* The main producing zones were shown in the columnar section in the same publication. Development in Fields Reed City Field.—During 1942 the Reed City field, which ended 1941 with 112 producing oil wells, added 70 new producers to bring the total at the end of the year to 182 wells and 4700 proven acres. A south extension of the field developed during the year was in large part responsible for the increase. Approximately 9,000,000 bbl. of oil was produced from the field during the year, bringing the total accumulated production to the end of the year to roughly 11,750,000 barrels. Headquarters Field.—The Headquarters field, which started the year with ro producing oil wells, ended the year with 41 wells aid 1240 proven acres. Approximately 2,300,000 bbl. of oil was produced in 1942. Kawkawlin Field.—Although not a 1941 discovery, the Kawkawlin field has been actively developed on the 40-acre spacing plan during the last year, 42 producers having been completed, bringing the total number of wells at the end of the year to 77. Nearly 500,000 bbl. of oil was produced during the year.

Jan 1, 1943

By A. C. Lane

Relations de la profondeur de plissement avec la gravita-tion et la hauteur des montagnes dans les Alpes. Par A. Heim (Zurich) 50me Anniversaire, Livre Jubilaire Soc. Geol. De Belgique, Rome, Fascicule 1, 17 to 28. Measurements show a negative anomaly, less densities of .the material below sea level. The author expresses it in terms of the thickness of rocks of an arbitrary density, 2.4, which might be considered wanting. The accordant heights of the summits, the depths of the folds, the deficiency in .gravity, and denudation he finds to be connected. The Alps float on the lightness of the folds of "sal" of weight 2.6 to 2.75 plunged into the heavier "Sima" according to a for-mula: P = h (2.7/2.8-2.7) where - P is the depth of fold-ing below sea level; 2.7 is the weight of the material accu-mulated in folding; 2.8 is the weight of the material dis-placed by it; and h is the mean height of the mountainous regions. For instance, between the valley of Saar and the Val de Bagne in Valais the depth of the folds according to Ar-gand's profiles is between 30 and 40 kilometers. The loss of gravity has been estimated in this region as 1450 X 2.4 = 3480 in units of weight. Obviously errors in the densities would profoundly affect the estimates of the thickness of folding, but his depths of folds are obtained from sections, and from them he works back to the densities. Of course other densities might be placed in the formula. Zur Dichte bestimmung von Tonen. By J. Koenigsberger, Berg u. Hüttenmannisches Jahrbuch, 75, I. Discusses Dr. B. Wilser's investigations as to the best way of obtaining the weight of rocks per unit volume. The use of mercury for rocks affected by water as there recom-mended may easily give too large volumes unless 1 to 3 atm. pressure is used. Thick machine oil is recommended for large lumps of clay.

Jan 4, 1928

By R. C. Hirschfeld, H. H. Einstein, R. W. Bruhn, R. A. Nelson

The objective of the model studies described in this paper is to determine the effect of planar discontinuities on the strength and deformability of a rock mass. A model material was used because it satisfied concurrently three requirements that available natural-rock samples did not: (1) low strength, which was desirable for minimizing the loads that had to be applied in the laboratory; (2) ease of producing test specimens with geometrically regular joint patterns; and (3) uniformity of the test specimens. The model tests were performed on specimens made from a single modeling material and tested under triaxial stress conditions with [u,=u,]. Results are presented in this paper for tests on specimens that had (1) a single joint set inclined at several angles to the major principal direction, including 0º and 90°, and (2) two joint sets that were mutually perpendicular, one set perpendicular to and one set parallel to the major principal direction. Several different joint spacings were used in each series. Future tests will include a series with two sets of joints that make oblique angles with each other and with the major principal direction. The results of model tests and tests on cores of jointed rock by several investigators (e.g., Müller and Pacher,l Moore,2 Krsmanovic and Milic,3 Hayashi,4 Rosenblad,5 Jaeger,6 and Lane and Heck 7, have contributed significantly to the design of these experiments, which are believed to be the first in which a comprehensive study has been made of the combined effects under triaxial loading of joint spacing and joint orientation (Fig. 1).

Jan 1, 1970

By Bernard York, John J. Reed

J. P. Zannaras (U.S. Tungsten Corp., Congress, Ariz.) —In the investigation described in the paper by Bernard York and John J. Reed, the 8x8x8-in. square block was subjected to compressive forces from three sides, top, side, and rear. Let us refer to the stresses set up by these forces as Sz due to top pressure, Sy due to side pressure, and Sx due to rear pressure. At the section across the 2-in. hole (when failure occurred at 317 psi) the compressive stress Sy was equal to 317 x 8/6 = —422 psi, the top compressive stress S; is of the same intensity, —422 psi, and the rear compressive stress S, equals —317 psi. The true stress is T = Sy — S — S Taking as 0.2,* Taking the case when the opening was ½ in. and failure occurred at 517 psi, 8 Sy - 517 x -----= —537 psi 7.5 8 Sz = 517 x-----= —537 psi 7.5 Sx = —517 psi The true stress T = Sy — Sz — S, T - —537 + 0.2 x 537 + 0.2 x 517 = —327 psi. It can be shown that the above fundamental formula holds good not only for the above two examples but for all sizes of openings used, because when this formula is expressed in terms of the external pressure and size of the opening it agrees perfectly with the experimental results obtained by the authors and given in Fig. 12 of their paper. General formula: T = Sy — s: — S....

Jan 1, 1955

By John R. Caldon

INTRODUCTION Leasing has become a major industry in many countries because of the advantages it affords. Whilst the accounting, legal and tax treatment of leasing varies from country to country, there is far more similarity than difference. The general approach to the subject is largely the same. This paper looks to the basic financial considerations in the decision to lease or buy. TYPES OF LEASES Before embarking upon the subject, it would seem appropriate to define a "lease". A lease may be defined as: "an agreement granting one party the right to use, for a specified period of time, property owned by another party in return for a series of payments of rental by the user to the owner''. Ownership, of course, generally entitles the owner to unrestricted use of the asset over its useful life in contrast to a lease which gives the lessee use over a limited period. The distinction between the status of owner and a lessee often is fairly small. In this case we are dealing with what is generally termed a "finance lease". A finance lease is one which substantially transfers the risks and benefits of ownership from the legal owner to the lessee. For example, a finance lease would exist where the lessee enters into a lease of an asset for most of its useful life and has an option to buy the asset at the end of the lease for a price which takes cognisance of the rentals already paid. Where a lease does not substantially transfer the benefits and risks of ownership to the lessee, i.e. those benefits and risks remain with the owner and lessor, the lease is termed an "operating lease" and is an agreement for the renting and usage by the lessee of an asset owned by the lessor for a limited period. An example of an operating lease might be where a tenant leases a building for a defined period say 6 years with the rent and occupancy subject to renegotiation at the end of the lease term. The economic consequences of the distinction between a finance and an operating lease is very important. With a finance lease, the lessee has a de facto economic interest in the asset and the alternative to a finance lease is some form of purchase; with an operating lease, the lessee does not have a basic economic interest in the asset and consequently a comparison with a purchase option involves far more than simply a funding comparison. Some of the principal differences between finance and operating leases can be summarised as follows: (a) finance leases: -the risks and benefits of ownership are substantially transferred to the lessee; -the lessor normally recovers his investment during the term of the lease; -the lessor in entering into the transaction is relying more on the creditworthiness of the lessee than the underlying value of the asset; - the lease is either non-cancellable or a large penalty will apply for unilateral cancellation by the lessee; (b) operating leases -the risks and benefits of ownership remain essentially with the lessor; -the lease rental income would not normally cover the recovery of the lessor's investment; -the lessor evaluates his risk in terms of the underlying value of the assets;

Jan 1, 1985