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By C. Richard Tinsley

INTRODUCTION Project financing has been defined by various authors in this book. It is founded on reliance upon the project's own future cash flows and secondarily on the collateral value of the asset base developed. It is chiefly provided by the banking community who, after an assessment of the risks involved (See Chapter 9) analyse the company's presentation (See Chapter 10) in order to structure a financing package often at a leverage of up to 80% debt. This paper describes the various support and structuring techniques used to delimit and abate the risk components perceived from the banks' experience on project development especially for the period before cash flow is generated (pre completion). ADVANTAGES The advantages of project financing extend beyond the offloading of risks to banks. Among the advantages are the following: 1. Longer loan maturity than conventional, unsecured financing; 2. Loan disbursement and repayment tailored to specific mine; 3. Ability of a joint venture without a "track record" to raise financing; 4. Obtain financing where further direct borrowing (corporate credit) limited by existing indentures; 5. Possibility of arranging finance off-balance sheets; 6. Leverage return on equity; 7. Obtain tax savings with certain project financing structures; and 8. Obtain flexible loan repayment conditions. It can also be said that from the point of view of the company, project financing has certain disadvantages which can be summarised as follows: 1. Perceived higher cost (risk premium) compared with straight corporate credit; 2. More documentation; and 3. Need to negotiate risk-sharing aspects. The main attraction of project financing is the ability to pass certain risks on to the lenders within a flexibly funded transaction. (For a more detailed description of the specific risks see the author's paper at the beginning of Chapter 9. The same risk system is followed here.) The typical project financing has corporate support prior to completion and will usually carefully control the resultant cashflow after completion to ensure the bank does not unnecessarily assume further risks of an equity nature. WITHIN THE COMPANY'S CONTROL Operating Risk This is broken into three interrelated segments for ease of description. Technical Component: This must be specifically addressed if new technology or unproven adaptations are to be used. The banks will have scrutinized the sampling and bulk testing work, perhaps grilling the geological, mineral processing, metallurgical, and mining engineering staff or consultants directly. A number of supports are available such as: TECHNOLOGY GUARANTEE: Either the company itself or the process developer will guarantee that the technology will work for a period of, say, six months to two years after startup. If not, then financial penalties will apply although these are rarely sufficient to repay the loan. Many process developers are weak financially and may have little substance to back such a guarantee.

Jan 1, 1985

By William I. Rau

This presentation will examine the role commercial banks will be expected to assume in financing international minerals projects, including a discussion of various financing techniques such as project loans, production loans, and production payments. A discussion of the necessity for completion guarantees, finalized sales contracts, reserve evaluations, management contracts, and marketing undertakings in conjunction with financing availability are also included.

Jan 1, 1981

By Grover R. Castle

INTRODUCTION "Project Financing" or "Project Loans" have become increasingly popular in recent years, and commercial banks are being asked to consider more and more of such financing. However, the analysis of this type of loan is quite different from the analysis of a loan to a financially sound corporation based on the company's balance sheet. For this reason Chemical Bank did a study of project loans in an attempt to be more sophisticated in our approach to them. As part of this study, we examined 29 project financings for which information was available. In this article I shall describe project loans and set forth the guidelines we developed, as an aid to credit officers who might have occasion to analyse this type of financing. DEFINITION OF "PROJECT FINANCING" OR "PROJECT LOAN" The terms "project financing" and "project loan" commonly describe the various methods that banks and institutional lenders use to finance the construction of new projects on a basis whereby payout is anticipated from the revenue stream generated by the project. A project financing often involves a loan to a new entity formed specifically to own the project. The analysis of a project loan proposal is quite different from the analysis of other term-loan proposals since it involves a credit decision based on the review of a projection or forecast rather than of historical earnings and/or it involves the reliance on contractual obligations of third parties. Lenders are asked to assume the added risks associated with project loans because: 1. Project financing may permit a company to obtain additional leverage. It is possible for companies to arrange financing on a project basis that could not be arranged as a direct borrowing. For example, a company may not be permitted to borrow more money directly, due to a limitation in a bond indenture. However, a project financing can sometimes be negotiated on a basis not prohibited by the indenture. 2. Often the sponsors of, or the stockholders in, the project are seeking an off-balance-sheet financing. For example, 11 of the 29 projects in our study were arranged on an off-balance-sheet basis and one showed on the balance sheet as a deferred income item. An off-balance-sheet financing, for the purpose of this article, is a financing which does not show as a direct liability on the balance sheet of the sponsors of or stockholders in a project. 3. Projects are often located in a foreign country. The financing is arranged so that the lenders assume the political risk on the loan because many companies rightly believe that this arrangement affords a degree of insulation from political risk not otherwise obtainable. 4. Many projects are jointly owned by several sponsors. This form of financing lends itself well to a situation where a new entity is formed to own a project and do the borrowing. Project loans can be used to finance a variety of activities including development of iron-ore deposits and associated pelletizing plants; development of coal reserves; construction of pipelines, alumina plants, fertilizer plants and refineries; etc. The specific areas of analysis can be quite different, depending upon the type of project being financed. It is important, therefore, to classify the proposal according to the type of project, and also by the nature of the financing - nonrecourse financing, financing covered by a guarantee of completion and financing supported by an undertaking lasting for the life of the financing. I will discuss each of these types in more detail later, but first, I should like to make some

Jan 1, 1985

By Eugene Guccione

For at least 10 years, various industry people had warned about the alarming decline in the nation's oil and gas reserves. Then, in October 1973, the Organization of Petroleum Exporting Countries launched an oil embargo and sharply increased crude oil prices. Suddenly, everybody discovered the "energy crisis." In November 1973, former President Nixon advocated a Project Independence program so that ". . . by 1980 we shall be able to meet America's energy needs from America's own energy resources."

Jan 5, 1975

By R. W. Shoenberger, J. D. Clendenin, W. L. McMorris, N. Schapiro, B. R. Kuchta, A. A. Terchick, R. J. Gray, J. G. Price

INTRODUCTION * The United States is fortunate in having enormous reserves of metallurgical-grade coals. Although these coals are better in quality and more accessible than most coals found throughout the rest of the world, the best grades of these coals are being depleted. Consequently, more efficient exploration tools and techniques, such as advanced methods of core drilling and logging, correlation by palynology,** stratigraphy, paleontology and petrography are being used to help assess the extent and quality of the remaining coal reserves. Exploration and assessment of new and existing coal properties become of utmost importance in determining (1) the economic justification for mining the coal, (2) the optimum design of the preparation plant and (3) the most effective use of the coal. Fortunately, the cost of mining coal has remained stable because of better mine planning, more efficient operations and increased mechanization of mining operations. However, increased mechanization raises the amount of impurities in the coal mined, and this requires more and better coal beneficiation to meet the more stringent quality requirements set by the market. Besides, mechanical miners also produce relatively fine coal and, to ensure maximum liberation of impurities, much of the coal presently being used must be crushed to a finer size prior to preparation. The bulk of all coals presently used in this country is mechanically cleaned, much of it at a lower specific gravity than in the past. This necessitates the use of new and improved processes and equipment for coal washing and recovery, such as heavy-medium cyclones and vessels, and froth flotation cells. However, because wet-cleaning processes are pre- dominant in the United States and fine coal retains large amounts of moisture, the increased production of cleaned fine coal accentuates the need for new or improved methods and equipment for dewatering and drying this coal. The larger amounts of coal being beneficiated and the use of new and improved beneficiation processes will aid in controlling and ultimately eliminating sources of pollution. Modem coal markets demand coals that meet rigid specifications. Most coals are purchased under contracts that specify moisture, ash, and sulfur contents, or heating value, depending upon the end use. There has also been a growing trend toward specifying other properties, including particle size and coking capability. These specifications may include not only the * Editor's note: Because of the numerous and varied contributions of the associate authors of this chapter, the text does not differentiate between sections prepared by each individual as has been done in other chapters. ** Palynology is the study of plant microfossils, especially spores, pollen, and other types of fossils not usually studied by paleontologists.

Jan 1, 1968

By R. W. Shoenberger, J. E. McNulty, B. R. Kuchta, William Spackman, A. A. Terchick, M. E. Hopkins, Norman Schapiro, R. J. Gray, A. F. Duzy, M. P. Corriveau

INTRODUCTION * The United States is fortunate in having abundant reserves of metallurgical-grade coals. Although these coals are better in quality and more accessible than most metallurgical-grade coals found throughout the rest of the world, the best grades of these coals are being depleted. Consequently, more efficient exploration tools and techniques, such as advanced methods of core drilling and logging, correlation by petrography, paleontology, palynology, † physical stratigraphy, and geophysical methods are being used to help assess the extent and quality of the remaining coal reserves. Exploration and assessment of new and existing coal properties become of utmost importance in determining ( 1 ) the economic justification for mining the coal, (2) the optimum design of the preparation plant, and (3) the most effective use of the coal. Recent progress has been made in relating mineral matter, especially pyrite, in coal to geologic conditions and paleogeographic trends. l * Editor's note: Because of the numerous and varied contributions of the associate authors of this chapter, the text does not differentiate between sections prepared by each individual as has been done in other chapters. † Palynology is the science concerned with plant microfossils, especially spores. pollen. and other fossils of microscopic size.

Jan 1, 1979

By J. C. Lee

This investigation considers the penetration of a crack through an interfacial boundary separating two materials. The interface is assumed to be an imperfect bond characterized by frictional resistance and the cracks are assumed to be pressurized. The formulation is achieved through the use of complex variable methods together with the application of dislocation solutions. Results are given in the form of dimensionless variables that represent the injection of an incompressible liquid.

Jan 1, 1984

By Z. T. Bieniawski

The importance of understanding the phenomena associated with rock fracture has long been fully appreciated in rock mechanics. This is clearly apparent from the special attention paid to rock fracture in the comprehensive papers published within the past four years.l-5 These papers present a picture of how the knowledge of brittle fracture of rock was gradually enriched and also show that what was often taken for granted three or four years ago is no longer considered as valid today. The Griffith hypothesis,6 thought in the past to predict the strength of rock, is now known to be applicable to fracture initiation only. The knowledge of a failure criterion for fracture initiation is not sufficient, however, as after fracture initiation the rock is still a useful material even possessing increasing load-bearing ability. The importance of the fracture propagation process, subsequent to fracture initiation, is thus obvious. Yet, relatively little attention has so far been paid to brittle fracture propagation in rock. As it is now realized that understanding of this process is a prerequisite for practical rock mechanics applications, studies of propagation of brittle fracture in rock constitute an important aspect of rock mechanics research. It has been pointed out 4 that it is essential that the failure mechanism is fully understood before a failure criterion is postulated. Many failure criteria have been propounded in the past on the basis of theoretical reasoning alone and could not be verified by experimental evidence. Recently, a hypothesis for the mechanism of brittle fracture of rock was propounded, 4 describing the events taking place in the rock from the initial application of gradually increased load to complete disintegration of the material.

Jan 1, 1972

By Bieniawski, Z. T.

The importance of understanding the phenomena associated with rock fracture has long been fully appreciated in rock mechanics. This is clearly apparent from the special attention paid to rock fracture in the comprehensive papers published within the past four years. These papers present a picture of how the knowledge of brittle fracture of rock was gradually enriched and also show that what was often taken for granted three or four years ago is no longer considered as valid today.

Jan 1, 1972

By A. S. Richardson

THE recent installation of a high-pressure propeller type fan at the Moose shaft of the Anaconda Copper Mining Co. at Butte, Mont., is of interest on account of novelty of design and also because an appreciable saving was made over the cost of a reversible centrifugal fan such as is ordinarily used where a high pressure is required. The lower cost is due solely to the fact that by means of controls on the power supplied to the three-phase, alternating-current, induction motor, directly connected to the propeller it is possible to reverse the direction of rotation of the propeller and thus reverse the direction of air flow. The extra air ducts and reversing doors required for this purpose with centrifugal fans are not necessary, and their elimination greatly reduces these construction charges, which form a great part of the total expense. The Badger State mine for which the Moose shaft is used as the main outlet air course is now being developed to the 4100-ft. level. The old centrifugal fan, formerly used at the collar of the shaft, was installed 15 years ago at a time when most of the stoping was being done above the 2400-ft. level, and when the temperature of the rock was much lower than it is now on the bottom levels recently opened. The old fan, therefore, became inadequate to maintain desirable ventilation conditions, on account of the increase in resistance to air flow incident to the greater depth of the mine workings and because a much larger volume of air is required to offset the higher rock temperatures. Propeller, or disk, fans commonly used in the ventilation of mines are not suited to high-pressure work, but economies in the cost of their installation have long been recognized. In South Africa use has been made of a number of propellers placed in series along a common shaft, the number of propellers used being varied with requirements for meeting different conditions of mine resistance, but the mechanical efficiency is described as being low. In Butte, experimental work was done by the writer along similar lines under somewhat different conditions, but with poor results as to both pressure capacity and mechanical efficiency. Tests were also made of two different types of propeller fans of moderate size, which were said by the manufacturers to be suited to high-pressure mine ventilation.

Jan 1, 1932

By A. S. Richardson

THE recent installation of a high-pressure propeller type fan at the Moose shaft of the Anaconda Copper Mining Co. at Butte, Mont., is of interest on account of novelty of design and also because an appreciable saving was made over the cost of a reversible centrifugal fan such as is ordinarily used where a high pressure is required. The lower cost is due solely to the fact that by means of controls 'on the power supplied to the three-phase, alternating-current, induction. motor, directly connected to the propeller it is possible to reverse the direction of rotation of the propeller and thus reverse the direction of air flow. The extra air ducts and reversing doors required for this purpose with centrifugal fans are not necessary, and their elimination greatly reduces these construction charges, which form a great part of the total expense. The Badger State mine for which the Moose shaft is used as the main outlet air course is now being-developed to the 4100-ft. level. The old centrifugal fan, formerly used at the collar of the shaft, was installed 15 years ago at a time when most of the stoping was being done above the 2400-ft. level, and when the temperature of the rock was much lower than it is now on the bottom levels recently opened. The old fan, therefore, became inadequate to maintain desirable ventilation conditions, on account of the increase in resistance to air flow incident to the greater depth of the mine workings and because a much larger volume of air is required to offset the higher rock temperatures. Propeller, or disk, fans commonly used in the ventilation of mines are not suited to high-pressure work, but economies in the cost of their installation have long been recognized. In South Africa use has been made of a number of propellers placed in series along a common shaft, the number of propellers used being varied with requirements for meeting different conditions of mine resistance, but the mechanical efficiency is described as being low. In Butte, experimental work was done by the writer along similar lines under somewhat different conditions, but with poor results as to both pressure capacity and mechanical efficiency. Tests were also made of two different types of propeller fans of moderate size, which were said by the manufacturers to be suited to high-pressure mine ventilation.

Jan 1, 1932

By T. H. Troller

FOR a long time propeller-type fans have been considered a very adequate means to move great quantities of air against small static pres-sures. They have been in use for this purpose in mines, as well as in other installations. For static pressures of over 2 or 3 in. of water, the centrifugal blower almost ruled the field until very recently. Some attempts were made to use a number of propellers in line. Such arrange-ments made it possible to obtain pressures higher than 2 in. of water, but they complicated the construction and increased its expense, and the efficiencies were not improved. The more recent development of propeller-type fans has been decidedly influenced by the intensive aerodynamic research in connection with aeronautical development, which has taught us, in particular, how to use airfoils properly. The characteristic that makes an airfoil so valuable is the fact that when it moves through the air a high force component, the "lift," acts on it vertical to the motion, while the "drag" in the direction of the flow is small. The ratio of lift to drag is approximately 20 to 1 at the angles at which the profile is used in practice. An element of the turning blade, the movement of which, relative to the air, is mainly in the direction of the plane of rotation, thus experiences only a small "drag" FIG. 1.-DIAGRAM OF FORCES ON WING SECTION. opposing its rotation, and for this reason a relatively small torque is required at the driving shaft. At the same time there is a strong force component at 90° to the plane of rotation. This force is parallel to the propeller axis in the direction opposite to that of the flow of air, with a correspondingly high pressure increase.

Jan 1, 1936

By J. A. MacLellan, John C. Bowling, J. R. Davenport, G. M. Ellis

Six months out of the year the cold is always there, and it seems to be waiting for someone to make a mistake. The simplest things can shut down a multi-million dollar plant besieged with -40°F temperatures and a 40 mph wind. It takes only one man-door improperly latched to feeze up all the pumps on the bottom floor. Someone can poke a one inch hole in an outside wall in July and six months later, the whole plant is flooded because the main water line just froze up and burst. Some important things must be remembered in plant design for cold and remote areas. For one thing, everything in these areas is more expensive due to long and difficult supply lines. Fuel is expensive and would be a major cost item even if it were not expensive, due to the extended periods of low temperatures. Building volumes should therefore be kept to an acceptable minimum. Service areas, on the other hand, must be adequate, because maintenance generally has to be conducted inside in a heated area. Supply vehicles, for instance, have to get completely inside the building to unload. If you try to unload a supply vehicle with the door open at -50°F, you won't be able to find the vehicle for fog and if you take more than 5 minutes half the water lines in the plant will freeze UP.

Jan 1, 1972

By E. C. Wilson

The knowledge concerning the lubrication of open gearing for mining machinery has contained many unknowns and at its best has relied to a great degree on a "Rule of Thumb" procedure. It will be within the scope of this paper to explain what we have learned to date and what must be learned in the future. Action of Two Gears in Mesh Let us review some of the basic fundamentals concerning the action of two gears during mesh. Most of the gears we use are involute and may be spur, helical, or herringbone. The gear contact is a combination of rolling and sliding action.

Jan 12, 1968

By G. G. Luther, C.E. Jackson

The relationship between hardenability and weldability has been mentioned many times. The ease of making a hardness survey has led to its wide use as a criterion of weldability and with a given class or series of steels for which the ductility under weld heat-treatment is known the test is entirely suitable. However, in studying a new steel the hardness survey is of less value, since it is based on the assumption that there is a correlation between hardness and ductility. Several attempts have been made to derive indices for weldabilityl and hardenability from the chemical analysis. In most of these proposals the effects of the different elements were considered to be additive, but recently Grossmann2 proposed a novel method of calculating the hardenability of a steel from its chemical composition. In the method proposed, a steel is considered as having a base hardenability due to its car- bon content and grain size, and this base hardenability is multiplied by a factor for each chemical element present. The final product is the hartlenability. The purpose of the present study is to point out the possible relationship between hardenability and the effect of welding on hardness and ductility for a number of plain carbon and low-alloy steels. The composition of the 25 steels reported in this paper as determined by chemical analysis is given in Table I. To eliminate the effect of variations in finishing temperatures, the 1/2-in. plates were normalized after heating for one hour at 1650°F. in a con-trolled-atmosphere furnace. In making comparative tests, it is essential to hold conditions as Constant as possible; hence full automatic weltling control was used. The electrodes, all supplied by

Jan 1, 1943

By G. G. Luther, C. E. Jackson

The relationship between hardenability and weldability has been mentioned many times. The ease of making a hardness survey has led to its wide use as a criterion of weldability and with a given class or series of steels for which the ductility under weld heat-treatment is known the test is entirely suitable. However, in studying a new steel the hardness survey is of less value, since it is based on the assumption that there is a correlation between hardness and ductility. Several attempts have been made to derive indices for weldabilityl and hardenability from the chemical analysis. In most of these proposals the effects of the different elements were considered to be additive, but recently Grossmann2 proposed a novel method of calculating the hardenability of a steel from its chemical composition. In the method proposed, a steel is considered as having a base hardenability due to its car- bon content and grain size, and this base hardenability is multiplied by a factor for each chemical element present. The final product is the hartlenability. The purpose of the present study is to point out the possible relationship between hardenability and the effect of welding on hardness and ductility for a number of plain carbon and low-alloy steels. The composition of the 25 steels reported in this paper as determined by chemical analysis is given in Table I. To eliminate the effect of variations in finishing temperatures, the 1/2-in. plates were normalized after heating for one hour at 1650°F. in a con-trolled-atmosphere furnace. In making comparative tests, it is essential to hold conditions as Constant as possible; hence full automatic weltling control was used. The electrodes, all supplied by

Jan 1, 1943

By F.M. Walters

In order to isolate the effect of an element on some property of an alloy, the effect of the other alloying elements must be elimi-nated, either by reducing their quantity to the extent that they may be neglected or by determining the specitic effect of each. The success of Grossmannl in calculating hardenability from chemical composition by means of factors suggested such a

Jan 1, 1943

By F. M. Walters

In order to isolate the effect of an element on some property of an alloy, the effect of the other alloying elements must be elimi-nated, either by reducing their quantity to the extent that they may be neglected or by determining the specitic effect of each. The success of Grossmannl in calculating hardenability from chemical composition by means of factors suggested such a

Jan 1, 1943

By Robert H. Hafner, Irvin R. Kramer

In recent years considerable interest has been shown in surface-alloyed metals, particnlarly those of chromium (chromized steels), which have excellent corrosion resistance under a variety of severe conditions, and may undergo bending and flanging operations without spalling. An early method1 employed to produce a high-chromium case on steel was developed by Kelley in 1921. It consisted of heating a low-carbon steel in intimate contact with powdered chromium in the presence of hydrogen at temperatures sufficiently high to permit diffusion of chromium into the steel. The usefulness of this process was limited because the extremely high tem- peratures of 1200º to 1400ºC. (2200° to 2550°F.) caused excessive grain growth and warpage. Louenstein and Ulmer2 packed iron castings in ferrochromium and com- mon salt, and heated for approximately three hours at 930º to 1040°C. (1700º to 1900ºF.). A recent and more practical method of depositing chromium on steel surfaces has been developed in Germany by Daeves, Becker and Steinberg3-8 and in Russia by Izgaryshev and Sarkisov.9 This process consists of passing gaseous chromium chloride over the steel to be chromized at temperatures of 900º to 1000ºC., or packing them in a porous, ceramic material that previously had been saturated with chromium chloride. They reported obtaining a Chromized layer, 0.004 in. thick, on low-carbon steels. Later, Daeves4 established a relationship between the carbon content

Jan 1, 1943

By Robert H. Hafner, Irvin R. Kramer

In recent years considerable interest has been shown in surface-alloyed metals, particnlarly those of chromium (chromized steels), which have excellent corrosion resistance under a variety of severe conditions, and may undergo bending and flanging operations without spalling. An early method1 employed to produce a high-chromium case on steel was developed by Kelley in 1921. It consisted of heating a low-carbon steel in intimate contact with powdered chromium in the presence of hydrogen at temperatures sufficiently high to permit diffusion of chromium into the steel. The usefulness of this process was limited because the extremely high tem- peratures of 1200º to 1400ºC. (2200° to 2550°F.) caused excessive grain growth and warpage. Louenstein and Ulmer2 packed iron castings in ferrochromium and com- mon salt, and heated for approximately three hours at 930º to 1040°C. (1700º to 1900ºF.). A recent and more practical method of depositing chromium on steel surfaces has been developed in Germany by Daeves, Becker and Steinberg3-8 and in Russia by Izgaryshev and Sarkisov.9 This process consists of passing gaseous chromium chloride over the steel to be chromized at temperatures of 900º to 1000ºC., or packing them in a porous, ceramic material that previously had been saturated with chromium chloride. They reported obtaining a Chromized layer, 0.004 in. thick, on low-carbon steels. Later, Daeves4 established a relationship between the carbon content

Jan 1, 1943