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By Donald W. Scott

Generally speaking, there is nothing very difficult about taking good microgrztphs of photogenic thin sections or grains with a petrographic microscope-camera setup. However, sometimes it is desired to show some detail that cannot be illustrated satisfactorily by the usual micrographs taken with parallel polarized light, with crossed nicols, or even with two micrographs. A simple procedure giving good results has been used at Battelle Memorial Institute for subjects falling into this classification, and it is believed to be of interest, especially to research people who must sell a point to executives through the medium of well-illustrated reports. The following problem illustrates a typical application: It is desired to photograph a thin section of an iron ore to illustrate the character and association of the iron oxides and the individual quartz crystals. A magnification of 75 dia. is acceptable. A micrograph of the field in question (Fig. Ia) was taken with parallel polarized light. Due precaution was taken to provide critical illumination, correct exposure, a sharp focus, a good darkroom technique, and other essential conditions. It illustrates correctly the iron oxides, but it fails to show the individual quartz crystals. A micrograph of the identical field (Fig. Ib) was taken under the same precise conditions, but with crossed nicols. It gives a better idea of the character of the individual quartz crystals but is likely to be misinterpreted unless accompanied by a lengthy descriptive note. This micrograph suggests that the centrally located, large black area is composed entirely of iron oxides. That this' is an incorrect interpretation is evident by reexamining the micrograph of Fig. Ia. The correct interpretation is that the dark area contains quartz crystals oriented with their optical directions parallel to, or nearly parallel to, the vibration directions of the polarizer and analyzer of the microscope. Thus, the executive, or anyone who had not done the work personally, would get no more than a fair interpretation, even if two micrographs were included; and in the interests of both brevity and clarity, one micrograph usually is more desirable. Exactly how many quartz crystals occur in this region cannot be told from the two micrographs, and a printing of the two negatives in register would likewise not show the detail desired. Thus, it is evident that some subjects cannot be satisfactorily illustrated by the usual procedures. In photographing Fig. Ic the light was subdued and, during the entire exposure of 75 sec., the analyzer nicol was rotated uniformly in its mounting from a crossed position to 45° uncrossed position to introduce the desired amount of contrast in the various individual quartz crystals. The true reproduction of the character and association of the iron oxides, and the additional structure and detail in the quartz areas, is apparent. It might be

Jan 1, 1949

By G. W. Josephson

SINCE the earliest years of recorded history the durability and protective qualities of asphalt and tar have been known and utilized. The mummies of early Egyptian kings were coated with asphaltic materials, and asphalt mastics were common in Babylon. However, according to various authorities, it was not until 1780 that the first forerunner of present-day composition roofing was discovered,1 and the large-scale expansion of the industry has taken place since 1900. HISTORICAL BACKGROUND Development was stimulated by the growing popularity of manufactured gas. The by-product tars from these operations accumulated in large waste piles that had no commercial value and were a source of annoyance and expense to the gas companies. These tars were offered at very attractive terms to anyone who would take them away, and the infant "composition" roofing industry benefited accordingly. At first the process consisted simply of dipping sheets of burlap or other fabric in a tank of molten tar or asphalt. The long strip of roofing was rolled up for convenient handling, and the early experimenters soon found that it was necessary to dust the surface of their new "roll roofing" with some kind of material that would prevent the tarred surfaces from sticking together. Any finely divided, low priced local material like sand or fine gravel served this purpose and from its application the roofing-granule industry grew. As time went on other characteristics of a properly applied mineral surfacing were recognized. As with wooden shingles, tar and asphalt can be ignited by flying embers from near-by fires. It was found that by increasing the largest particle size to the maximum that could be successfully embedded, and by properly controlling the amount of smaller fractions retained in the grade so as to cover the asphalt completely a Nigh degree of resistance to fire was attained. Needless to say, in this early period asphaltic roofing needed such selling points to gain acceptance in a field dominated by wood, slate, and tile. When asphalt is protected from the sun's rays it is extremely durable, but when exposed to sunlight its surface is comparatively rapidly decomposed. Completely covering asphalt roofing with mineral surfacing protects the asphalt and adds materially to the life of the roof-conservatively, 500 per cent. Slate Granules In the production of split slate shingles a large quantity of waste slate is accumulated, as 60 to go per cent of the rock quarried is discarded. This waste was a continuing burden on the industry. Some was marketed as ground slate flour for filler in paint and linoleum, and there is a record that as early as 1906 two carloads of coarse screenings from slate flour were marketed as granules for surfacing roofing. This new field appeared to the slate pro-

Jan 1, 1944

By G. B. Gould

Every mathematical statement of a measure of anything (as distinguished from a count') is followed by a qualification—always implied if not explicity stated—-that the statement is only an estimate, which may vary from absolute accuracy within certain limits, according to the accuracy of the measuring instrument. This basic fact, so obvious to engineers, is not so well understood by many that make use of laboratory coal tests. The tolerances that must be allowed in measurements of coal quality are very important in both their commercial and engineering applications—and the significance of these tolerances depends upon the use made of the laboratory coal test. Only in recent years has there been any intensive study of this question of tolerances as applied to measurements of coal quality. There is very little in our published literature on the subject, and what has been published is not readily comprehended by those who sell coal, or buy coal and use it, unless they happen to have made a study of the subject themselves. There is great need for more widespread understanding of what lias been discovered and how it applies to the use of laboratory coal tests. What follows is an attempt to condense into a few pages the results of the major investigations so far reported, and to explain their meaning in simple nontechnical language, with the addition of some recent illustrative experiments. Determining Deviations in Quality It is necessary at the outset to distinguish between: (I) the accuracy with which one test indicates the quality on one lot of coal; and (2) the accuracy with which a test of one lot of coal represents the average quality of a commercial product, of which the buyer will presumably receive a series of shipments—perhaps many thousands of tons. It is necessary to make this distinction because coal is a variable material—a heterogeneous mixture of a variety of components—the quality of which will vary from one lot to another. Therefore an absolutely accurate determination of the quality (if that were possible) of one lot of a coal is an

Jan 1, 1938

By G. B. Gould

Every mathematical statement of a measure of anything (as distinguished from a count') is followed by a qualification—always implied if not explicity stated—-that the statement is only an estimate, which may vary from absolute accuracy within certain limits, according to the accuracy of the measuring instrument. This basic fact, so obvious to engineers, is not so well understood by many that make use of laboratory coal tests. The tolerances that must be allowed in measurements of coal quality are very important in both their commercial and engineering applications—and the significance of these tolerances depends upon the use made of the laboratory coal test. Only in recent years has there been any intensive study of this question of tolerances as applied to measurements of coal quality. There is very little in our published literature on the subject, and what has been published is not readily comprehended by those who sell coal, or buy coal and use it, unless they happen to have made a study of the subject themselves. There is great need for more widespread understanding of what lias been discovered and how it applies to the use of laboratory coal tests. What follows is an attempt to condense into a few pages the results of the major investigations so far reported, and to explain their meaning in simple nontechnical language, with the addition of some recent illustrative experiments. Determining Deviations in Quality It is necessary at the outset to distinguish between: (I) the accuracy with which one test indicates the quality on one lot of coal; and (2) the accuracy with which a test of one lot of coal represents the average quality of a commercial product, of which the buyer will presumably receive a series of shipments—perhaps many thousands of tons. It is necessary to make this distinction because coal is a variable material—a heterogeneous mixture of a variety of components—the quality of which will vary from one lot to another. Therefore an absolutely accurate determination of the quality (if that were possible) of one lot of a coal is an

Jan 1, 1938

By L. C. Raymond

Valuations in the mineral industry differ from those of other enterprises because mines and oil wells have a definitive life so cannot be considered a perpetuity. This requires that in any mineral-property evaluation the recovery of invested capital is necessary during the life of the property. Capital writeoffs for nonextractive industries are assumed to be continuously plowed back to sustain the operation and produce yields on the capital invested. The extractive or mineral industry, however, generally attempts to return to the investor both interest and principal during the life of a property. Normally this is done currently and the dividend includes both items. Where the mineral properly possesses large reserves and the life factor approximates a perpetuity, the return on investment is generally comparable to that of industrial stocks. The valuation of a mineral property, at best, is based on educated estimates and judgment factors. This is particularly true as it relates to estimating selling prices over a long term or assessing the quality of management. Also, it is possible to make various assumptions as to rapidity of working out the deposit, varying time for start-up of operations, varying earning rates, so as to obtain different results with the same basic facts. Thus it is not surprising that two engineers, irrespective of their abilities, may not agree exactly even when given the same facts, but their results should be close enough to be used in establishing a fair value for trading purposes. The valuation is no better than the source of basic data and the soundness of judgment factors. Fundamentally the basic principles of mineral valuation are similar for base metals, sulphur, oil, or any other mineral. Each mineral, however, requires an engineer to have a knowledge of such factors as its occurrence, distribution, mining and processing methods, and marketing problems in order to gather and analyze all the facts and data that have a bearing on the earning potential of the property. PRESENTVALUEOFAMINERALPROPERTY In essence the present value of a mineral property is a sum of money in today's dollars that future earnings from the property are worth. It differs

Jan 1, 1959

By L. C. Raymond

Valuations in the mineral industry differ from those of other enterprises because mines and oil wells have a definite life so cannot be considered a perpetuity. This requires that in any mineral-property evaluation the recovery of invested capital is necessary during the life of the property. Capital writeoffs for nonextractive industries are assumed to be continuously plowed back to sustain the operation and produce yields on the capital invested. The extractive or mineral industry, however, generally attempts to return to the investor both interest and principal during the life of a property. Normally this is done currently and the dividend includes both items. Where the mineral properly possesses large reserves and the life factor approximates a perpetuity, the return on investment is generally comparable to that of industrial stocks. The valuation of a mineral property, at best, is based on educated estimates and judgment factors. This is particularly true as it relates to estimating selling prices over a long term or assessing the quality of management. Also, it is possible to make various assumptions as to rapidity of working out the deposit, varying time for start-up of operations, varying earning rates, so as to obtain different results with the same basic facts. Thus it is not surprising that two engineers, irrespective of their abilities, may not agree exactly even when given the same facts, but their results should be close enough to be used in establishing a fair value for trading purposes. The valuation is no better than the source of basic data and the soundness of judgment factors. Fundamentally the basic principles of mineral valuation are similar for base metals, sulphur, oil, or any other mineral. Each mineral, however, requires an engineer to have a knowledge of such factors as its occurrence, distribution, mining and processing methods, and marketing problems in order to gather and analyze all the facts and data that have a bearing on the earning potential of the property. PRESENT VALUE OF A MINERAL PROPERTY In essence the present value of a mineral property is a sum of money in today's dollars that future earnings from the property are worth. It differs

Jan 1, 1964

By Rush Greenslade

The oil and gas lease is the basic contract of the oil and gas industry; it is the foundation stone upon which the producing industry, particularly, is based. As the industry is precarious and highly speculative, the foundation contract should be of the utmost integrity and certainty. But right there an anomaly exists; the oil and gas lease is the most obscure, most uncertain, doubtful contract in the realm of law today. That is a condition that must be considered when taking oil and gas leases, and when buying, selling, and holding them. It may fairly be asked why should this industry rest upon so insecure a foundation. Why should not the oil industry rest upon the contract that is the basis of all industry, the warranty deed? There are many contributing reasons, but the principal one is business expediency. The Anglo-Saxon idea of ownership of land is that every land owner owns from the center of the earth to the sky—all that is above and all that is below—consequently the oil and gas are owned by the person who owns the surface. That idea is not exactly true with reference to oil and gas, for many states have adopted the doctrine that oil and gas are like wild animals; they are fugacious and migratory and belong to the man that traps them. But, except for that doctrine, we believe that oil and gas are owned by the owner of the surface, wherein we differ from the Latin-American countries where the mineral rights are owned by the government. The United States was settled largely by homesteading. The owners of land were, in the main, farmers, who did not have the means or the faith to drill for oil or gas. The operators or speculators did not want to buy the land on the mere possibility of finding oil; hence a compromise resulted by which the land owner gave the speculator or the operator what he called an oil and gas lease, or a right to go upon his land and drill for oil and gas. What is supposed to be the first oil lease placed on record reads as follows: Agreed this 4th day of July, a.d. 1853, with J. D. Angier of Cherrytree township in the county of Venango Pennsylvania that he shall repair up and keep in order the old oil springs on land in said Cherrytree township, or dig and make new springs, and the expense to be deducted out of the proceeds of the oil, and the balance, if any, to be

Jan 1, 1924

The Enquirer of October 13, 1835 carried a letter signed "G," calling attention to the great number of Virginians who were leaving the state and to the lack of enterprise shown in not developing the ample natural resources available. He mentioned coal in particular and in closing said: "Besides the coal mines owned by individuals, the Black Heath company of colliers are carrying on extensive operations. Owing to the derangement of the currency, and the immense expenses incurred in boring and sinking new shafts, I understand that their dividends have not yet been so large, as they may be confidently expected in future.-Another company, under the title of the Midlothian Coal Mining Company, is now about being organized by the Messrs. Wooldridges of Chesterfield, for the purpose of establishing an extensive coal business. Having examined the lands embraced in the charter and the principles upon which the company is designed to be organized, I am persuaded that more productive stock can no where be found. The charter embraces a space nearly equal to a mile square, adjoining the mines of the Black Heath company, those of Mr. N. Mills, and those of Stone Henge, which space must contain coal of great thickness of excellent quality, as the strata of coal of those other mines pass through it; exhibiting a field so extensive, that centuries may elapse before it is exhausted. A shaft has been sunk on these lands, from which a very large quantity of the best coal is being raised. The terms of the charter require the Proprietors to sell one-half of these lands and mines, from the sale of which they will appropriate $100,000 as permanent capital, to purchase hands and engines, and to sink other shafts to work the property and thus going into operation with such decided advantages, as to produce a profit as great as a reasonable man should desire. Here is an opportunity for investing capital, which I think should satisfy the wishes of many Virginians who speak of emigrating. Will they not embrace it?-I have confined my remarks to the coal mines, because they are in the heart of our State, and their operations are familiar to many who can verify the statements. I might extend them to the other mineral treasures of our State; but if I do so, they must be reserved for another number, this being longer than I intended, and perhaps longer than you can conveniently find room for in your crowded columns. G." In January 1828 the Tuckahoe Canal Company was authorized to construct a canal along Tuckahoe Creek, from the James River up the stream about five miles; later this was amended to allow the use of the stream with a depth of water of two feet, no tow path was required, or provided: A toll of one cent per bushel was collected and the canal company made large profits. The service was so poor that in December 18, 1835, John G.,

Jan 1, 1942

By C. E. Lesher

THE Disco* process for the production of low temperature coke and its immediate predecessor, the Wisner or Carbocite process have been described in the voluminous literature of low temperature carbonization.1 This paper will describe the development of the process from the first attempt at commercial operation by the American Gas and Electric Co. at Philo, Ohio, Yn the 1920's to the successful operation in 1949 by the Disco Co., a division of the Pittsburgh Consolidation Coal Co., of the 1000-ton per day Disco plant near Pittsburgh, see Figs. 1-2. In the 1924 coal industry depression following the hectic post World War I expansion, the northern Appalachian, unionized bituminous coal fields were affected first and foremost, and Western Pennsylvania as hard as any. Competitive market pressure was heaviest on the lower grades of steam coals, notably the from the Panhandle district where ash and sulphur are inherently higher than in the same Pittsburgh coal bed to the east along the rivers. The firm structure of Panhandle coal while favoring the prepared sizes, depressed the usefulness and value of the finer sizes. Panhandle slack and nut slack were marketed with difficulty at consistent, and at times considerable, loss. Many solutions were suggested, and the Pittsburgh Coal Co. investigated all. Lower delivered prices through lower mine costs and more advantageous freight rates were obvious goals, but equally obvious were the difficulties of self attainment of either in any substantial measure. Selling Btu's in pipes was abandoned as an idea after a thorough study of the economics of distribution of what was then, and is even now, the only developed continuous process of complete gasification of bituminous coal-producer gas. Although the coal company purchased huge blocks of electric power, it sold not a car of coal to the central power stations. Public utilities controlled the markets for electric current, and it was found that no matter at how low a cost current might be put on the bus bars by the coal company, distribution to its widely scattered coal mines made such an enterprise practically impossible. Consolidation of underground operations and a huge modernization program of mining operations in the 1920's were but preparation for the introduction of mechanical cleaning of the coal for market, particularly the smaller sizes of steam, gas, and by-

Jan 1, 1953

By C. E. Lesher

THE Disco* process for the production of low temperature coke and its immediate predecessor, the Wisner or Carbocite process have been described in the voluminous literature of low temperature carbonization.1 This paper will describe the development of the process from the first attempt at commercial operation by the American Gas and Electric Co. at Philo, Ohio, Yn the 1920's to the successful operation in 1949 by the Disco Co., a division of the Pittsburgh Consolidation Coal Co., of the 1000-ton per day Disco plant near Pittsburgh, see Figs. 1-2. In the 1924 coal industry depression following the hectic post World War I expansion, the northern Appalachian, unionized bituminous coal fields were affected first and foremost, and Western Pennsylvania as hard as any. Competitive market pressure was heaviest on the lower grades of steam coals, notably the from the Panhandle district where ash and sulphur are inherently higher than in the same Pittsburgh coal bed to the east along the rivers. The firm structure of Panhandle coal while favoring the prepared sizes, depressed the usefulness and value of the finer sizes. Panhandle slack and nut slack were marketed with difficulty at consistent, and at times considerable, loss. Many solutions were suggested, and the Pittsburgh Coal Co. investigated all. Lower delivered prices through lower mine costs and more advantageous freight rates were obvious goals, but equally obvious were the difficulties of self attainment of either in any substantial measure. Selling Btu's in pipes was abandoned as an idea after a thorough study of the economics of distribution of what was then, and is even now, the only developed continuous process of complete gasification of bituminous coal-producer gas. Although the coal company purchased huge blocks of electric power, it sold not a car of coal to the central power stations. Public utilities controlled the markets for electric current, and it was found that no matter at how low a cost current might be put on the bus bars by the coal company, distribution to its widely scattered coal mines made such an enterprise practically impossible. Consolidation of underground operations and a huge modernization program of mining operations in the 1920's were but preparation for the introduction of mechanical cleaning of the coal for market, particularly the smaller sizes of steam, gas, and by-

Jan 1, 1953

By M. G. Cheney

Careful estimates indicate that during 1942 new discoveries and extensions in West Central Texas added oil reserves slightly in excess of the eight million barrels produced. Drilling activity fell 40 per cent below 1941 and 82 per cent below the normal drilling activity of the late 1920's. Total production for the district continued its downward trend, now being less than % of the 42.7 million barrels peak in 1921. Rapid revival of activity is not probable under existing conditions, as costs of discovery, development and operations on the average probably now exceed current market price for the oil, the latter having remained constant since the spring of I941. Costs have advanced materially since the third quarter of 1941, when reports to the Tariff Commission indicated a margin of profit of 13.3 per barrel. Physical as well as economic conditions are holding back the amount of drilling in this district. The lenticular sands are not suited to 40-acre spacing regulations. There is no surplus of experienced oil-field labor. To reduce costs, much second-hand material is used for all except the deeper wells.. Price controls have retarded movement of used equipment by prescribing maximum prices that arc too low for the better grade materizl, thus making , owners reluctant to sell. On the other hand, buyers are unwilling to pay ceiling prices asked by sellers for poor material. Seventeen new oil fields and five new gas fields were found during 1942. Extensions and deeper 'drilling brought favorable results in eight older fields. The most significant new developments appear to have been in Coleman, Jones, Shackelford and Taylor Counties. A 5800-ft. completion in Wise County brought this county into the producing column for the first time. None of these new discoveries can he rated above one million barrel reserve on the basis of present development. Probably the most important development was discovery of a deeper pay (Gunsight lime) in the Wimberly field of Jones County, which shows promise of producing over an area of about 1000 acres. Jones and Shackelford Counties still lead the district in total annual production. Discovery of the Reddin pool, north central Taylor County, is credited to geochemical methods, making one success out of five or more wildcats based on such methods. Geophysical surveying increased decidedly during 1942 and returns from these studies are expected during coming years. Most of the wildcatting in the district is still based on surface and subsurface geological structural mapping, study of log data as to distribution of prospective producing reservoirs, and drilling in proximity to previous showings of oil and gas. Geological debate continues as to the proper correlation of the 100 to 300 ft. of gray lime that has produced more than 100 million barrels in the Parks, Brecken-ridge, Curry, Eliasville, Ibex, Pioneer and other important fields of this district. Fossils indicate that this limestone is younger than the Atoka beds of Oklahoma. On a structural basis most geologists include this formation with the Bend but a number of paleontologists believe it is more properly classified with the Strawn.

Jan 1, 1943

By M. G. Cheney

Careful estimates indicate that during 1942 new discoveries and extensions in West Central Texas added oil reserves slightly in excess of the eight million barrels produced. Drilling activity fell 40 per cent below 1941 and 82 per cent below the normal drilling activity of the late 1920's. Total production for the district continued its downward trend, now being less than % of the 42.7 million barrels peak in 1921. Rapid revival of activity is not probable under existing conditions, as costs of discovery, development and operations on the average probably now exceed current market price for the oil, the latter having remained constant since the spring of I941. Costs have advanced materially since the third quarter of 1941, when reports to the Tariff Commission indicated a margin of profit of 13.3 per barrel. Physical as well as economic conditions are holding back the amount of drilling in this district. The lenticular sands are not suited to 40-acre spacing regulations. There is no surplus of experienced oil-field labor. To reduce costs, much second-hand material is used for all except the deeper wells.. Price controls have retarded movement of used equipment by prescribing maximum prices that arc too low for the better grade materizl, thus making , owners reluctant to sell. On the other hand, buyers are unwilling to pay ceiling prices asked by sellers for poor material. Seventeen new oil fields and five new gas fields were found during 1942. Extensions and deeper 'drilling brought favorable results in eight older fields. The most significant new developments appear to have been in Coleman, Jones, Shackelford and Taylor Counties. A 5800-ft. completion in Wise County brought this county into the producing column for the first time. None of these new discoveries can he rated above one million barrel reserve on the basis of present development. Probably the most important development was discovery of a deeper pay (Gunsight lime) in the Wimberly field of Jones County, which shows promise of producing over an area of about 1000 acres. Jones and Shackelford Counties still lead the district in total annual production. Discovery of the Reddin pool, north central Taylor County, is credited to geochemical methods, making one success out of five or more wildcats based on such methods. Geophysical surveying increased decidedly during 1942 and returns from these studies are expected during coming years. Most of the wildcatting in the district is still based on surface and subsurface geological structural mapping, study of log data as to distribution of prospective producing reservoirs, and drilling in proximity to previous showings of oil and gas. Geological debate continues as to the proper correlation of the 100 to 300 ft. of gray lime that has produced more than 100 million barrels in the Parks, Brecken-ridge, Curry, Eliasville, Ibex, Pioneer and other important fields of this district. Fossils indicate that this limestone is younger than the Atoka beds of Oklahoma. On a structural basis most geologists include this formation with the Bend but a number of paleontologists believe it is more properly classified with the Strawn.

Jan 1, 1943

By A. C. Wallace

THE development of the natural resources of any district of any magnitude, inevitably gives rise to many problems off title, usually due to the greatly enhanced value of the land. The development of the mining industry in the Quapaw Agency has been no exception to this general rule. Our problems, how-ever, have not been many or particularly serious. The Quapaws were allotted and patents issued by the United States Government in 1895. These patents contained a restriction against alienation for a pe-riod of twenty-five years. The effect of the restric-tion was to prevent the Indian from selling, leasing, or in any way encumbering his land. The Govern-ment, in a paternalistic spirit, sought to teach the Indian thrift and industry and to insure him a place of residence. This is evidenced by the first Leasing Act passed by Congress, which permitted only incom-petents and those physically disabled to lease their land for either agricultural or mining purposes. The able-bodied Indian was denied the right to lease. It soon became apparent to the Government, how-ever, that this was a mistaken policy, and in 1897 a General Leasing Act was passed by Congress and it was under this act that the mining industry in the Quapaw Agency was developed. The act, reads as follows: "That the allottees of land within the limits of the Qua- paw Agency, Indian Territory, are hereby authorized to lease their lands, or any part thereof, for a term not ex-ceeding three years, for farming or grazing purposes, or ten years for mining or business purposes. And said al-lottees and their lessees and tenants shall have the right to employ such assistants, laborers, and help from time to time as they may deem necessary: Provided, That when-ever it shall be made to appear to the Secretary of the Interior that, by reason of age or disability, any such allottee cannot improve or manage his allotment properly and with benefit to himself, the same may be leased, in the discretion of the Secretary, upon such terms and conditions as shall be prescribed by him. All acts and parts of acts inconsistent with this are hereby repealed." It was the interpretation of this Act that gave rise to our first serious problems. It will be noted that the Act says that "allottees of land" within the limits of the Quapaw Agency are authorized to lease their land. Thus, the first question was presented by the use of the term "allottee," and the question was as to whether or not Congress intended to limit the Quapaw Indian to the leasing of his own allotment or did Congress mean that the term "allottee" was synonym-ous with "Indian" and intend to give the Indian a right to lease both his allotment and his inherited land and was an Indian without an allotment an "allottee" even though he was a member of the Qua-paw tribe and the owner of the Quapaw land by in-heritance, and not being an allottee, could he lease his inherited Quapaw land under the authority granted in this Act?

Jan 5, 1928

By C. A. Hartinagel

During 1941, the total production of crude oil in New York state was 5,185,000 bbl. This represents a small increase over the average for the past five years. From 1921, when the annual production of the state amounted to only 988,000 bbl., there was a regular annual increase in production (excepting one or two years) until the 5,000,000-bbl. mark was reached in 1937, After more than 20 years of oil recovery by flooding methods, it was generally believed, until a few months ago, that the rate of production was nearly at its peak and within a few years the fields would experience a gradual decline as the thicker sands became exhausted and the thinner ones could be worked only at increasing costs. As a result of the present emergency, however, unusual efforts are being made, in spite of higher costs of operation, to increase the output of Pennsylvania grade oil, to which the New York product belongs. Since most of any increased production would be obtained by flooding, and since floods travel slowly, no large increase in production can be expected for some months to come. During the first year, 10 or 15 per cent increase could be obtained, but maximum production, an increase of perhaps 40 per cent, could not be expected until some time during the second or third year. In the Allegany fields, which account for two thirds of the state's oil production, 1246 wells, including water-intake wells, were drilled during the year; 390 more than in the preceding year and 590 more than in 1939. It is evident that much of the best oil territory has already been developed. As producers move toward edge properties and thinner sands, returns will be smaller, whereas costs remain the same or, under war conditions, become higher. It is estimated that at least 60 million barrels of oil is in sight and will be produced from the thicker sands by present recovery methods. In the thinner sands and edge properties, some 35 million additional barrels can be produced at a profit only if prices become higher. In view of the fact that there is little hope of finding new oil pools in New York, one of the future problems of the oil producer will be to obtain adequate returns for increased production costs. The year started with a posted price of $2.15 per barrel of crude. There were five successive price increases until the high of the year was reached at $2.98 on Aug. 14. Eight days later the Office of Price Administration directed that the price be reduced to the June level of $2.75 a barrel, which remained in effect to the end of the year. With rising costs of operation, it is feared that many of the smaller properties cannot continue production unless the Federal price cut is revoked. During the year, Allegany Refiners Inc., a local enterprise founded in 1933, with plant at Bolivar, western Allegany County, increased its refining capacity from 1000 to 1500 bbl. daily. At the same time equipment was added to make the plant a complete lubricating-oil refinery, including facilities for the refining of wax into the finished product. Previous to the enlargement, it was necessary to sell the wax

Jan 1, 1942

By John J. McCabe

INTRODUCTION Over the years, Congress has written into the Internal Revenue Code various provisions aimed at lessening at least one financial burden faced by taxpayers in the mining industry - the federal income tax burden. These provisions include the election to deduct exploration expenses, the election to defer deduction of development expenses, and the percentage depletion deduction. Careful tax planning from the very beginning of a mining venture is essential in taking maximum advantage of these tax benefits. A major decision to be made is the choice of organizational structure. (For a more detailed discussion of this subject, see McCabe, John J., "Developing Structures for Investments in Mineral Property," New York University Institute on Federal Taxation, 42 NYU 24, 1984). One such structure is the use of multiple corporations, with mining activities conducted by one corporation and nonmining activities, such as manufacturing, financing and administration, conducted by the other corporation. This technique, which will be discussed in detail below, can be particularly advantageous in delaying recapture of previously deducted exploration expenses and in maximizing depletion deductions. TAX BENEFITS IN MINING Exploration Subject to certain restrictions discussed below, exploration expenditures (i.e., expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development state of the mine are deductible at the election of the taxpayer (Section 617(a)).* Were it not for this option, exploration expenditures would be required to be capitalized and recovered through depletion, after production begins. Exploration of a mineral deposit can be very costly and may not result in commercial production for some time. If the taxpayer has income to he offset by the deductions, a mining venture can usually be structured in such a way as to allow the offset of mining losses against the other income. With today's high interest rates, this election can be quite valuable in present value terms. Corporate and noncorporate taxpayers are subject to different restrictions on this tax benefit. Corporations may elect to deduct only 85 percent of eligible exploration expenditures (Section 291(b)). (The Tax Reform Act of 1984 reduced this to 80 percent effective for expenditures after December 31, 1984, in taxable years ending after such date). The remaining 15 percent (20 percent after December 31, 1984) is capitalized and recovered at the same rate as five-year ACRS property (Section 291(b)). Individual taxpayers are not subject to this 85 percent rule; however, any amount deducted in excess of ten-year straightline amortization is a tax preference item for individuals (Section 57(a)(5)). Individuals may avoid the tax preference by electing to capitalize exploration expenditures and amortize them over ten years (Section 58(i)). In order to prevent the taxpayer from, in effect, converting ordinary income into capital gain by selling property that has given rise to exploration expense deductions, the Code requires recapture of such deductions upon the occurrence of certain events (Section 617): 1. Upon disposition of the property, adjusted exploration expenditures are recaptured to the extent of gain realized on the disposition (Section 617(d)). 2. If the property is leased, the lessor is disallowed any depletion deduction until his adjusted exploration expenditures have been recaptured in the form of foregone depletion deductions (Section 617(c)).

Jan 1, 1985

By John K. Hammes

INTRODUCTION This introductory paper presents a description and definition of what the finance function is and what it specifically means for the mining industry. In its simplest terms, finance is, "management of money matters". As an area within the discipline of business administration it draws heavily on the related fields of economics and accounting, and to a lesser extent on marketing and production. MINING FINANCE DEFINED In preparing to write about what finance means to the mining industry, I asked a number of mining people the question, "What does mining finance mean to you?" Most responded that mining finance was "How a company borrowed money for mine development", and perhaps half those questioned included "raising equity" in the definition. It is not surprising that the mining industry concept of finance is the providing of funds needed for the objectives of the business, for that was once a view shared by authorities in the field of business administration. Further, it is certainly the area where much of the emphasis has been placed in the past ten to fifteen years as the industry struggled with the development of more remote and more refractory or lower-grade orebodies while profitability and internal cash flow were below expectations. No wonder project finance became such a popular topic. Twenty years ago it is probable that the emphasis would have been on mine valuation, for that subject was the area of finance then most often examined in industry publications. Papers concerning the pros and cons of payback, internal rate of return, and discounted cash flow appeared regularly. Let's examine the following situations, each the result of a financial decision: - Funding the exploration program in a developing country was accomplished by buying the next six-months budget needs in local currency. One week later the currency devalued 30 percent. If the purchase had been delayed or the local currency borrowed short term, a substantial saving would have been made in funding the program. - A major mining company borrows heavily to finance both expansion of its primary mining business and its entry into several new industry segments. When markets for all of the commodities it produces turn down for a prolonged period, there is concern over the adequacy of cashflow to cover debt service in addition to other company needs. The company's financial officers, however, had arranged very large committed credit facilities from numerous financial institutions which assured the availability of funds for several years. This enabled the company to implement a strategy to conserve cash, sell assets and survive until conditions improved. Further, short term suppliers of credit also were comfortable with the assurance that longer term credit was there to support them. -A medium size mining company financed several mines independently with limited obligations on the part of the parent company. The company decided to refinance the operations under one agreement. More flexible terms, lower interest cost and a longer tenor financing were achieved in return for assuming the risk as a direct obligor. - The exploration and development group of a large mining company proposes to develop a new mine in a country in which the company does not presently operate. When the investment is rejected they are advised that one reason was that the reinvestment assumption inherent in the discounted

Jan 1, 1985

By C. A. Hartinagel

During 1941, the total production of crude oil in New York state was 5,185,000 bbl. This represents a small increase over the average for the past five years. From 1921, when the annual production of the state amounted to only 988,000 bbl., there was a regular annual increase in production (excepting one or two years) until the 5,000,000-bbl. mark was reached in 1937, After more than 20 years of oil recovery by flooding methods, it was generally believed, until a few months ago, that the rate of production was nearly at its peak and within a few years the fields would experience a gradual decline as the thicker sands became exhausted and the thinner ones could be worked only at increasing costs. As a result of the present emergency, however, unusual efforts are being made, in spite of higher costs of operation, to increase the output of Pennsylvania grade oil, to which the New York product belongs. Since most of any increased production would be obtained by flooding, and since floods travel slowly, no large increase in production can be expected for some months to come. During the first year, 10 or 15 per cent increase could be obtained, but maximum production, an increase of perhaps 40 per cent, could not be expected until some time during the second or third year. In the Allegany fields, which account for two thirds of the state's oil production, 1246 wells, including water-intake wells, were drilled during the year; 390 more than in the preceding year and 590 more than in 1939. It is evident that much of the best oil territory has already been developed. As producers move toward edge properties and thinner sands, returns will be smaller, whereas costs remain the same or, under war conditions, become higher. It is estimated that at least 60 million barrels of oil is in sight and will be produced from the thicker sands by present recovery methods. In the thinner sands and edge properties, some 35 million additional barrels can be produced at a profit only if prices become higher. In view of the fact that there is little hope of finding new oil pools in New York, one of the future problems of the oil producer will be to obtain adequate returns for increased production costs. The year started with a posted price of $2.15 per barrel of crude. There were five successive price increases until the high of the year was reached at $2.98 on Aug. 14. Eight days later the Office of Price Administration directed that the price be reduced to the June level of $2.75 a barrel, which remained in effect to the end of the year. With rising costs of operation, it is feared that many of the smaller properties cannot continue production unless the Federal price cut is revoked. During the year, Allegany Refiners Inc., a local enterprise founded in 1933, with plant at Bolivar, western Allegany County, increased its refining capacity from 1000 to 1500 bbl. daily. At the same time equipment was added to make the plant a complete lubricating-oil refinery, including facilities for the refining of wax into the finished product. Previous to the enlargement, it was necessary to sell the wax

Jan 1, 1942

By William H. Shockley

There was an extensive mining and industrial exploitation of Russia, about 20 years ago, by Belgian, French and British capitalists; but the results were discouraging. It is said that the Belgian and French public together lost approximately $400,000,000, chiefly in the coal and iron industry of southern Russia. This loss is largely accounted for by the fact that most of the companies were formed, as usual in " boom" times, to sell stock; and that thorough investigations were not made. I11 1906, renewed interest was taken in Russian mines, especially in those of gold and copper, and a considerable literature is growing on this subject; but as yet I have seen no account of one of the large Russian mining estates. The following notes on such property, where the conditions are so different from those in the mining regions of the United States, should be of interest: This inadequate and probably somewhat inaccurate account is made up, partly from my own notes made on the ground, in the summers of 1904 and 1905, and partly from a volume on the geology and resources of the estate issued several years ago, containing surface- and mine-maps, and from a pamphlet published in 1904, giving a general account of the condition and prospects of the property. This pamphlet includes a report made in 1899 by Arthur L. Pearse, a member of this Institute. Both these books are in Russian, and were prepared by the Bogoslovsk Mining Co., which owns and operates the property. Articles in many other languages have appeared dealing with various matters connected with the estate; but I know of no other general account of it. In numerous books and articles on the Urals and Siberia, however, localities are described in which somewhat similar conditions prevail. Recent papers by

Jan 1, 1909

By Douglas A. Karvonen

INTRODUCTION Although the economy in the Province of Saskatchewan has historically been agriculturally oriented, a major source of wealth has been realized through natural resources such as petroleum and natural gas, coal and uranium and since the 1960's - potash. Potash or potassium chloride, in the form in which it is presently produced in Saskatchewan, is used primarily as fertilizer, a source of potassium, one of three essential elements required for healthy plant growth, with about 5% of production sold to the chemical industry for use in such products as soap and liquid detergent, glass and ceramics, textiles and some pharmaceuticals. Saskatchewan is estimated to have approximately 40% of known world potash reserves and its ten active mines account for some 25% of annual world production. POTASH CORPORATION OF SASKATCHEWAN In an effort to guarantee a fair and lasting economic benefit to the Province of Saskatchewan, the Potash Corporation of Saskatchewan (PCS) was created on February 4, 1975 through an Order-in-Council under the Crown Corporation's Act and later on April 1, 1976, the Potash Corporation Act provided for its continuation. PCS was given the mandate to acquire ownership of a significant portion of the potash mining capacity in Saskatchewan and to establish an organization capable of operating the facilities, marketing the product, and conducting all of the other activities necessary for a successful corporation competing in the world potash industry. The corporation is the largest potash producing and selling organization in the Western World - or third largest in the world. (See also Figure 1). PCS through its wholly-owned subsidiary, PCS Mining, has acquired a whole or partial interest in five geographically distinct producing properties or divisions, representing today more than 40% of Saskatchewan's potash producing capacity. The acquisition of each division was followed by a program designed to exploit and maximize the particular opportunities at each minesite for increased production. To that end, PCS Mining has taken an active lead in expanding to meet future demand and has implemented expansion programs at all properties except for its Esterhazy Division where it has a long-term processing agreement with International Minerals & Chemical Corporation (Canada) Limited. Through its wholly-owned subsidiaries, PCS Mining, PCS Sales and PCS Transport, this provincial crown corporation has the ability to operate as a producer and marketer of Saskatchewan's potash. In certain instances PCS, the parent company, assists in the financing of various projects undertaken by the subsidiaries and in other cases the subsidiary involved arranges its own financing. POTASH RESERVES As a background to the specific issue of financing, it is helpful to describe briefly the nature of the deposit which supports the industry - our collateral, if you like. The potash beds underlying Saskatchewan are sedimentary rock deposits formed by the gradual evaporation of an inland sea during the Middle Devonian period roughly 400 million years ago. Now known as the Prairie Evaporite, this formation stretches from North Dakota and Northeast Montana through Southern Saskatchewan into North-Central Alberta. These beds lie at mining depths ranging from 950 - 1000m (3,000 ft) below the surface, where conventional mining methods can be used, and to 1,650m (5,000 ft), where solution mining must be

Jan 1, 1985

By Olaf N. Rove

YEAR 1951 has been bright for the mining geologist. He has arrived after struggling for a generation or two to sell his wares through service to the operator, the mine superintendent, and the manager. But as he establishes himself on the operating front, he is faced with even greater challenges; namely, the development of basic geologic principles governing ore-forming processes and the occurrence and distribution of mineral deposits. These principles are needed to guide his ever-widening search into new areas. He must now stimulate the interest, confidence, and imagination of the mining executive and layman in fostering the research essential to expand rapidly the basic science of geology and its more specific applications to the mining industry. The hallowed time-tested tools of the prospector and the industry are no longer adequate. New basic data, principles, and ideas are needed to guide industry's exploration. The entry of Government into exploration, by lending money to prospectors and operating companies to partly finance exploration, is one of the major events of the year. This was one of the activities for which the Defense Minerals Administration was established in the Department of the Interior. DMA was staffed largely with men from industry, but the Bureau of Mines and the Geological Survey have acted as its technical advisors and have provided its field staff. Since the start of this work in May 1951 to November 19, 1951, the DMA has approved 208 exploration projects while denying 318 others. The contracts involve about eleven million dollars worth of exploration, of which Government's share is about sixty percent. A few contractors have already made discoveries and are into production to repay their loans; others have completed their projects without making a discovery. In November, the DMA was split into two successor units. The Defense Minerals Exploration Administration was set up in the Interior Department to carry out the exploration program. The Defense Materials Procurement Agency was organized as a separate agency to carry out the other functions of the former DMA, as well as general strategic materials procurement. The strategic materials group of the Economic Cooperation Administration was transferred to DMPA in order to centralize the procurement from foreign sources into one agency, although the authority and scope of activities of this group have not been announced as of the middle of December. The DMA-DMEA-DMPA programs are making large demands upon the technical manpower of the Geological Survey and Bureau of Mines. It is still too early to evaluate with confidence the productiveness of this diversion so far as the immediate and long-range effects are concerned. Many of the individuals associated with these programs, as well as others in the industry, are convinced that from a long-range national viewpoint, the regular programs of both the Survey and the Bureau equal or even exceed in importance the current emergency mineral activities of these two agencies. Uranium Uranium continued to be the glamour-girl metal of the mineral industry, and at the request of the Atomic Energy Commission uranium and thorium were included in the DMA exploration program. Industry's intensive prospecting and mining activities in 1950 were further expanded early in 1951 when the Atomic Energy Commission announced an increased price schedule and a new bonus payment

Jan 1, 1952