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By William P. Lohden

INTRODUCTION It is recognized that, for a variety of reasons, some companies in the mineral industry today are by no means cash-rich and, in fact, are reporting a growing proportion of long-term debt in their capital structures. A review of recent balance sheets of small, medium-size, and some larger companies, indicates that a fair number still have substantial positions in cash equivalents such as U.S. government issues and other short-term money market instruments. In part, this paper concerns itself with companies which have sufficient cash and equivalents and/or cash generation to internally finance mining projects or expansions but which, for some reason, choose to borrow funds. Misconceptions which appear to frequently underlie so-called "leveraging" decisions are explored in this paper. Also considered arc' those circumstances under which any company, including one that is cash rich, should consider borrowing for a project in an amount beyond what would otherwise be necessary based upon its internal financing ability. I do not attempt to cover the raising of equity capital in public markets in this paper. OVERALL RETURN ON INVESTABLE CASH If you approach an individual with an investment which can be financed from savings, or by borrowing at a rate higher than one is earning on savings, that individual will quickly tell you that to pay interest at a rate higher than is being earned on savings would reduce overall income. Assuming that additional investment opportunities are not currently being considered, the individual concludes that a draw-down on savings, leaving a cushion for contingencies suited to individual circumstances, is the correct financial decision. For reasons discussed later, the simple mathematical logic leading to this conclusion tends to become obscured at the corporate level. When Leveraged Studies Are Inappropriate or Premature Surprisingly, I have heard of a number of companies that could afford to finance an investment solely with internal funds, which have made DCFROR (i.e. discounted-cash-flow rate-of-return) studies not only on a 100% equity basis but also on a leveraged basis. Certainly, a leveraged study would be appropriate if additional projects were competing for more capital than was available internally. Often, however, other projects are not far enough along to warrant a leveraged study and there is some danger that a project may be undertaken because it has an estimated acceptable rate of return, on a leveraged basis, that is not ultimately earned because some of the other projects are postponed or abandoned and borrowing is less than expected. For the above reasons, until it has been determined that (1) borrowing is a reasonable certainty for a particular project and (2) the timing and amount to be borrowed has been determined within a reasonable range of accuracy, I believe it is inappropriate and misleading to calculate DCFROR for a project other than on a 100% equity basis. Even when there are several projects currently competing for funds and borrowing will be required to finance one or more of them, using the common yardstick of calculating DCFROR on a 100% equity basis is a safer method to initially evaluate and compare the attractiveness of the projects. Many companies, whether they would have to borrow or not, will reject projects that on a 100% equity basis do not meet their minimum rate of return standards. Some companies which have to borrow will undertake a project provided the project's DCFROR on a leveraged basis meets its minimum return standards. The danger of this approach is that even moderate shrinkages of estimated cash flows could plunge return below

Jan 1, 1985

By M. T. Erickson, C. A. Rowland

Ball mills 5.5 m (18 ft) in diameter and larger tend to use energy delivered to the mill less efficiently than smaller diameter mills, particularly when the large mills carry 40% by volume ball charges. This paper will explore factors used in scaling up ball mills, showing where the advantages of one factor can possibly be negated by another factor. The paper will propose possible operating limits and areas for further study to establish selection and design limits.

Jan 1, 1985

By Otto C. Kopp, Thomas B. Crattie, Dennis R. Owen

Whole-rock analyses of limestones, fine-gralned dolostones and coarser-grained dolostones adjacent to mineralized breccias (Coy mine, Mascot-Jefferson City district) were compared with similar lithologies adjacent to apparently non-mineralized breccias at the new Thorn Hill section located approximately 39 km north of the Coy mine. Specimens were analyzed for Ca, Mg, Si, Al, K, Fe, Mn, Sr, Br, C1, S, Ti and P using X-ray fluorescence analysis. The concentrations of the major and most minor elements for Thorn Hill specimens fall within the range of concentrations for Coy mine specimens; however, significant differences (probability < 0.05) were noted for Fe, C1 and Br for fine-grained dolostones and for MgO, Fe and Mn for the coarser-grained dolostones. No significant differences were detected for the limestones.

Jan 1, 1985

By Jack M. Jodrey, Neil D. Donnell, O&apos

Bituminous sands of the Lower Cretaceous McMurray Formation in northern Alberta constitute the ore for the surface mining operation at Syncrude Canada Ltd. These sediments represent a complex succession of fluvial, estuarine and marine depositional environments. Grade prediction is realized through a combination of geological interpretation, computer modeling, and reference to past mining experience. Accurate forecasts of feed grade permit reliable predictions of volumes for removal to meet budgeted synthetic crude oil production. This planning facilitates efficient allocation of mining equipment and resources. The feed grade to the Extraction Plant is monitored at various points along the delivery system.

Jan 1, 1985

By Richard D. Mills

Throughout the mining industry, many companies perform sophisticated business and financial analyses of proposed capital investments. However, once the project is approved, it is never reevaluated. At best, there is an attempt to control capital costs and minimize overruns. The post-installation appraisal, a formalized review of investment performance, may prove helpful. Typical Project Review A typical capital investment is approved after business and financial benefits have been reviewed with management.* The financial data shown to management often include a net income statement, cash flow analysis and summary economic data similar to those shown in Table 1 overleaf. These financials report the expected impact of the project on the corporation financial statements. This project is a rudimentary example of a capital investment decision. An actual project would undergo a more sophisticated analysis incorporating depletion benefits, deferred taxes and a detailed cost breakdown. The example project has several financial benefits that could result in management approval. For example, it provides an immediate net income benefit to the company, generates positive cash flows every year of the project life and has a discounted cash flow rate of return of 25 percent. However, it also has the disadvantage of a long payback period. A sensitivity analysis would show which areas of the analysis have the greatest impacts on profitability. Post-Installation Program Objectives The post-installation appraisal goes beyond the analysis shown in Table 1 by comparing actual results to those projected in the original economic analysis. The post-installation program has three primary objectives: 1. To provide a periodic performance review of major spending programs. 2. To review decision-making and evaluation procedures. 3. To provide a means of controlling individual project investments. The first major function of the post-installation program is the periodic review of actual performance of projects and investment programs, identifying those factors which proved critical to the health of investments. This review will serve to keep management abreast of progress, provide a comparison of actual performance against expectations, and provide valuable information that can be used for improving future economics. The second major function of the program is to perform a continuous review of the decision-making process. This includes testing of evaluation procedures, forecasting techniques, and logic used in making decisions. An information system should be set up whereby original evaluations and historical performance data gathered under the appraisal program are documented for use by evaluators and management when assessing past and future investment proposals. Such data should be particularly useful in evaluating new and developing types of operations and in activities where companies repeatedly reinvest. The primary purpose of this feedback system is to sharpen estimates to assure that they are realistic and attainable. The appraisal program also provides assurance that consistent evaluation procedures are being used throughout a company, leading to improved procedures

Jan 1, 1985

By D. J. Spottiswood, C. N. Robinson, D. E. Spiller, E. G. Kelly

This paper describes the performance of a new design of spiral that is optimized for fine coal cleaning. Reduced Performance (Tromp) curves are presented to compare this spiral with the older design, as well as with other commonly used coal cleaning equipment. As an aid to equipment selection and circuit design, data are also presented to show how variables, such as flow rate, pulp density, and particle size, affect efficiency and the separation specific gravity.

Jan 1, 1985

By N. Arbiter, C. C. Harris

Analysis of ball and pulp flow in ball mills indicates that three factors may become critical with increasing mill diameters: ball size, fraction critical speed, and average pulp flow velocities. Ball diameters may need to be decreased and fraction critical speeds increased with ores which show decreased breakage rate coefficients above 1.2 mm (14 mesh). With 5.5-m (18 ft) and larger mills at higher circulating loads, pulp flow velocities may become capacity limiting and also may limit increases in ball mill diameters.

Jan 1, 1985

By Keith G. Papke

Jan 1, 1985

By Douglas R. Cook

The discovery of the gold deposits of the Jerritt Canyon district, with proven recoverable reserves in excess of 67.6 Mg (2.4 million oz) of gold, has contributed greatly to the tremendous resurgence in exploration for disseminated gold deposits in Nevada and throughout the west. The Jerritt Canyon project, including the Bell mine, is a 70130 joint venture between Freeport Gold Co. and FMC Gold Corp., both of which are wholly owned affiliates of the respective parent companies, Freeport-McMoRan Inc. and FMC Corp. The Jerritt Canyon district is located in the center of the Independence Mountains in north-central Elko County, Nevada, approximately 48 km (30 miles) northeast of the Carlin gold mine and 68 km (42 miles) north of Elko. Although the discovery of a commercial gold mine at Jerritt resulted from Freeport&apos;s exploration activities, the initial identification of a gold prospect in this area was a consequence of a program by FMC in the search for antimony. Their program was, in part, based on data in the Nevada Bureau of Mines Bulletin 61, "Antimony Deposits in Nevada." Work on the property began in 197 1 with geologic mapping followed by sampling and geochemical analyses. FMC geologists, including Robert Hawkins, Russell Hayden, and Hal Hurst recognized the striking similarity of the area to the geologic environment of Newmont&apos;s nearby Carlin gold deposit and soon focused on the gold potential. Increases in the price of gold served to stimulate interest and support for the exploration program. Geochemical samples were collected and analyzed for gold and trace elements usually associated with gold. A strong gold anomaly was found on the North Fork of Jerritt Canyon, which was called the Alchem anomaly. Drill-testing of this anomaly in 1973 revealed significant grades and thicknesses of gold mineralization in the lower portion of the Roberts Mountain formation. This initial discovery and subsequent close-spaced drilling proved the existence of several small pods of low-grade, gold-bearing material which cropped out at their up-dip edges, causing the surface anomaly. The mineralization was very encouraging, but was not, by itself, of economic importance from the standpoint of either grade or tonnage. Freeport Exploration Co. established a district office in Reno in late 1974 with responsibilities for exploration of hard minerals in the Basin and Range Province. Emphasis of the program was directed to the discovery of precious metal deposits. Enfield Bell, as District Manager for this new office, was particularly interested in the Independence Mountains and when the opportunity for a joint venture with FMC became available in 1976, it was aggressively pursued. Enfield Bell and David Stevens evaluated the FMC data and with the support of management formulated a bid in competition with 23 other companies. Freeport was selected by FMC as partner and a joint venture agreement was successfully negotiated. In mid-summer of 1976, Freeport Exploration Co. began an expanded program of detailed mapping and geochemical sampling under the direction of Bell and Stevens that led to new interpretations of the structural and alteration patterns. Hawkins&apos; contribution during this period must be recognized since he not only was one of the original geologists assigned to the antimony and subsequently the gold investigations, but shortly after the start of the joint venture exploration, he was hired by Freeport Exploration Co. as the project geologist for the venture. Hawkins had studied the central Independence Mountains for his thesis and his understanding of the regional geology provided an excellent background for the continued exploration of the gold de- posits. His interpretation of the structure in the vicinity of the Alchem anomaly was of significant help in the Freeport exploration program. Drilling, based on this new under- standing of the geology, revealed the edge of the Marlboro Canyon ore body, which is now being exploited in the Bell mine. Although a classic bullseye geochemical target led to the discovery of the Alchem mineralization, the bulk of the reserves known today in the Marlboro Canyon area lay

Jan 1, 1985

By J. H. Wright

Longhole sublevel stopes excavate ore with which the production geologist has only remote contact; therefore, predicting grade and tonnage from such a stope can be a problem. However, the longholes themselves yield data that can be used to improve those predictions. Here, a radial distribution method of weighting sample data is discussed, which is useful in forecasting grade and tonnage from certain longhole sublevel stopes.

Jan 1, 1985

By Feridun A. Albayrak

Jan 1, 1985

By W. W. Roepke

One phase of Bureau of Mines research deals with reduction of primly respirable dust generated by bit cutting action at a coal seam face. This paper presents a summary of coal cutting technology addressing this problem. All aspects of the cutting system affecting miner health and safety are discussed. Cutting design concepts are considered that minimize dust generation, energy used, and Ignitions, while maintaining production. With present equipment, an operator can maintain production and minimize dust energy and conditions by cutting at maximum depth (maximum sumping or advance rate) at all times, at minimum rpm with fewest possible bits, and with lowest possible included bit tip angle, i.e., minimum bit wear.

Jan 1, 1985

By G. F. Swindle

This paper discusses a Personal Computer (PC) software package that reduces the time required to evaluate a mineral reserve. It provides for: •Entry of borehole data onto PC diskettes and the creation of a borehole database; •Capture of map data using an attached X-Y digitizer; •Calculation of uniform square grids for thickness, mineral qualities, overburden ratio, etc., •Compilation of multiple such grids into a digital model, and iterative evaluation of the model with the user applying constraints and cut-off values; and • Graphic display of grid cells (blocks) showing which cells failed, and on which constraint(s), and a complete reserve report showing tonnages, averages, histograms, and quality arrays.

Jan 1, 1985

By James R. Piper

Jan 1, 1985

By K. A. Grace

Reserves are the basic foundation of any mining enterprise, but a lack of understanding of the concept of resources and reserves is still a frequent cause of failure in mining ventures. A review of the development of the resource-reserve concept emphasizes the necessity for a common language, and the classification system as set out by the US Geological Survey and Bureau of Mines is advocated as the basis for this. Because of its strong economic connotation, the term reserves should be severely restricted in its use, and should encompass mining and processing factors. Modifications to the basic definition of reserves to accomplish this are proposed. Caution must be used in the quantification of undiscovered or hypothetical resources, particularly in juxtaposition with known resources data.

Jan 1, 1985

By Georges Caraghiaur

INTRODUCTION A small, independent mining enterprise (SIME) is an independently owned and operated business concern engaged primarily in mineral development, from the exploration to the production stage. By definition, a SIME is not dominant in its field and has no long-term financial backing. It is not a major producer of minerals, nor is it a petroleum company, a government organization or a subsidiary of such organizations. A SIME may or may not be listed on stock exchanges. The SIME is also called small miner, junior mining company, speculative mining company, and penny-stock mining company. The survival and growth of a SIME is most often controlled by an independently minded entrepreneur, who not only conceives and carries out new projects, but is materially affected by the success or failure of these projects. Usually, a SIME does not have a large or constant cash flow. Such a lack of long-term financial backing forces the SIME to meet the challenge of finding capital for its activities on a step-by-step basis. Its survival strategy is thus based on finding funds at the right time, of the right type and in the right quantities. The purpose of this paper is to show that the type of venture in which a SIME is involved affects the difficulty of raising new capital and the choice of possible sources of funds. The Small, Independent Mining Enterprise (SIME) The SIME is not a figment of the imagination of financial speculators. In Canada, there are more than 1,800 small mineral enterprises which spend on the average less than $1,000,000 per year on activity which is directed at bringing forth new mineral supply. In the United States, 64% of the non-fuel mining operations are conducted by nine or fewer men, and the coal industry is characterized by several thousand smaller independent producers, still predominantly family owned or controlled. In Chile, 80% of the mines can be classified as small mines. In the Philippines, approximately 60% of metal mining operations are classified as small mines. The SIME is actively engaged in mining all over the world, and very much so in the Pacific Rim. The Mineral Supply Process The whole process of bringing forth new mineral supply involves a dynamic sequence of activities, ranging from the initial exploration for a mineral occurrence to the production of a marketable product. A typical sequence is outlined in Figure 1. At the grass-roots exploration stage, a series of geological, geophysical and geochemical tests is aimed at locating a mineral occurrence. Especially in the early phases of such activities, the uncertainty (risk) surrounding a venture is high, since only general geological information exists on which to base a judgement of the economic viability of the venture. Such risk is attractive to few investors. As the information-gathering process continues, uncertainty diminishes. Once exploration efforts result in the discovery of a mineral occurrence, i.e. when indications of mineralization and mineable widths are obtained by drilling, there is still uncertainty concerning the extent of mineralization and the probability of having located an economic mineral deposit. The expected return on investment at such a stage may well be negative but the slight possibility of a very high positive return will make a number of financial sources available to an exploration company. At the development stage, much of the uncertainty

Jan 1, 1985

By B. Yarar

Jan 1, 1985

By S. A. Hoenig

In an earlier publication, the application of exoelectron technology to the monitoring of dry grinding in a ball mill was reported. Recently, the author has investigated the ball mill problem in more detail with the system shown in [Fig.1]. Here, some of the current generated in the ore-ball-water mixture was picked up by the metal chains and served as a measure of the rate of grinding. While the mechanism of current generation has not been completely clarified, a parallel study of electrical effects associated with rock drilling indicated that the major driving force is the zeta potential*, while oxidation of the freshly fractured material provides the remainder of the current. Both of these effects are sensitive to the exposed surface area, and it might be expected that the observed currents would provide a measure of the grinding rate. This "surface area" effect allows the measurement system to be used in any type of rock or ore grinding. Some studies with sulfide copper ore indicate higher currents than those observed with silica sand, but the overall pattern of current versus grinding rate is essentially the same. Experimental Studies The experimental system was set up as shown in [Fig. 1]. The initial studies were done with silica sand because of its availability and for comparison with the data of reference 1. The sand was sized to an average of 425 /MI (40 mesh); a typical charge consisted of 2.5 kg (5.5 lb) of sand, 0.85 L (0.22 gal) of tap water and 2.5 kg (5.5 lb) of iron grinding balls 25.5 mm (1 in.) in diameter. For a typical "run," the mill was loaded with a fresh charge of ore and operated for periods ranging from 10-60 min. During this time, the current was measured with a Keithley 417 picoammeter and a chart recorder. At the end of the grinding period, the charge was removed and sieved to recover the 425, 300, and 212 µm (40, 50, and 70 mesh) fractions which were then drained and weighed. A fresh charge was used for each test and every attempt was made to keep the draining and weighing processes uniform.

Jan 1, 1985

By J. C. Norman

Jan 1, 1985

By K. N. Han, H. Lee, M. C. Fuerstenau

An investigation of the recovery of finely-divided cassiterite and silica particles less than 1 µm (1200 mesh) in size has been carried out using packed and fluidized beds. The bed particles used included cassiterite and silica particles ranging from 44 to 210 µm (325 to 70 mesh). Effects of various system parameters on the recovery and selectivity of cassiterite fines were investigated. System parameters included pH of the slurry solution, superficial velocity, slurry concentration, and bed particle sizes. High recoveries of cassiterite fines were obtained at pH 4.0 and slow slurry flow rates. In a packed bed system, recovery of cassiterite fines was greater than 95%, while that of silica fines under the same conditions was about 35%. Although the total recovery per pass is not as good as the packed bed, the fluidized bed system exhibits good recovery in general and an excellent selectivity of cassiterite fines. There is an optimum superficial velocity, vo, for the rate of fine particle uptake and the apparent rate constant has the form of Kvo1/2- K&apos;vo, where K and K&apos; are system constants.

Jan 1, 1985