Possible Modes of Government Participation in Marginal Mining Operations

"The start of mining operations often raises serious financial problems. In marginal cases promoters frequently demand financial aid from governments.In the past, the financial assistance has taken the form of gifts, procurement contracts, etc., but aid in such form has been severely criticized. A new formula has been developed to provide a more equitable distribution of the revenues accruing to the government and to private capital.The benefits to these two parties have been evaluated in an hypothetical case and compared in terms of internal rates of return on their investment, their shares of the undiscounted cash flows and their primary profits.The method based on the non-zero sum game theory provides a means for suggesting the lowest feasible annual production and the optimal sum contributed by the government in the form of outright gift, equity capital and convertible bonds. Other financial hypotheses can also be optimized by the computerized analysis."