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By W. C. McBee, B. W. Jong, T. A. Sullivan

A sulfur concrete technology has been developed by the US Bureau of Mines, where chemically modified sulfur is used with suitable mineral aggregates to produce construction materials that are resistant to corrosion by acids and salts. This report presents a summary of the basic technology and results of testing the materials under actual operating conditions in 50 corrosive environments in 40 commercial plants. After four years of testing, there was essentially no evidence of material degradation or loss of strength. Regular concrete materials were attacked and, in some cases, completely destroyed under the same conditions. Testing is continuing to establish ultimate longevity and durability of the sulfur concretes. The materials are finding widespread applications in metallurgical, chemical, and fertilizer processing plants.

Jan 1, 1986

By D. R. Hanson

The acoustic vibrational spectra of impacted rock slabs were examined at the Denver Research Center, US Bureau of Mines, in an attempt to characterize the behavior of partially detached mine roof rocks. The ultimate goal of this study was to develop a technique or instrument that could provide a quick, accurate, quantifiable measure of mine roof stability. The power spectra of unstable rock slabs were found to contain more energy in the range of 200 to 1000 Hz than solid rock. Comparison of the power contained between 500 and 1000 Hz with that between 3000 and 3500 Hz provided a quantitative measure of rock stability. A lightweight prototype field instrument was designed, constructed, and field tested. This battery-powered instrument computes the power contained in the two frequency bands, compares their magnitude, and displays a number related to the stability of the block tested. Field tests showed the instrument provided reliable measurements of block stability even under conditions of noise that would have seriously degraded the accuracy of the standard methods of roof sounding.

Jan 1, 1986

By R. E. Ray, J. W. Stevenson, J. A. Berry

Conventional concrete block plastered with a cementitious coating is the most common material used in the construction of permanent stoppings to direct airflow in underground mines in the US. All mines experience various degrees of strata convergence depending on depth of overburden, geological conditions, and type of roof support employed. Strata convergence will cause cracks and joint openings in masonry stoppings, resulting insignificant air leakage losses. Where strata convergence is severe, complete structural failure of the stopping can ultimately occur. Reconstruction of damaged or destroyed stoppings adds expensive overhead to mining operations, and even greater expenses are incurred from the additional fan horsepower required to overcome leakage losses. Ideally, a stopping should maintain high resistance to airflow while yielding to strata convergence. By properly incorporating a polyisocyanurate rigid foam material within the masonry block structure, stopping service life can be increased in mines experiencing strata convergence problems such as floor heave, roof loading, and lateral rib movement.

Jan 1, 1986

By F. F. Aplan, E. C. Dowling, R. R. Klimpel

Numerous flotation models have been proposed in the literature. Thirteen of these have been applied to batch flotation data and evaluated with respect to one another using statistical techniques. Flotation tests were carried out on samples of a US porphyry copper ore (Pinto Valley, AZ). The ore was tested using various collector and frother systems to produce different time-recovery profiles. These were used to calculate flotation rate and ultimate recovery parameters for each model. The models were then evaluated statistically to determine the overall fit of the calculated to the observed data and to test the range of significance of the parameters in each model.

Jan 1, 1986

By G. F. Leaming

The paper by R.V. Ramani and R.J. Sweigard is a wonderful description of the labyrinthine web that has been spun about the mining industry by energetic bureaucrats and politicians over the past 50 years. The remedy for the problem, however, is not more of the same, but less. That may be difficult for the industry to achieve, for it is not a technical solution but a political one. And the current fervor for more detailed planning at all levels of government and private enterprise has become deeply ingrained. The authors recommend the provision of more information about mining and mineral resources to "macro" (i.e., government) land use planners. They apparently overlook, however, the already strong tendency on the part of most government land use planners to consider themselves omniscient. Thus, giving them more information about the technical problems of mining will only make them want to get more and more involved in the "micro" (private, site specific) mine development and production plans of the individual mining firm. In fact, this has already happened at all levels of jurisdiction from municipal to federal government. Examples are legion. The most effective way to ameliorate the adverse impacts of government land use planning on existing and potential mining operations is to: (1) introduce greater flexibility in the definition of land use zones by local and state governments; (2) adopt realistic and relevant ambient environmental performance standards in governing relationships between mineral land uses and concurrent or subsequent nonmining land uses; (3) allow greater leeway for economic considerations in land use decisions in contrast to the explicit legalistic approach now in vogue; (4) recognize that all minerals are not the same and that sand and gravel mining should not be treated the same as underground metal mining, coal stripping, oil field production, or in situ leaching; and (5) eliminate the notion that mining operators should be responsible for determining in detail the use of land by subsequent owners of mined land. This last bit of conventional ethic really makes no more sense than requiring the builders of every shopping center or government office complex to provide detailed plans for the use of that land when its use for shopping or government is ended. Did the builder of Ebbetts Field plan for Brooklyn after the Dodgers went to Los Angeles? Should the developer of the Bingham Pit plan for suburban Salt Lake City after the copper mining goes to Chile? The nation's mining industry must address these questions before further bankrupting itself to provide more data to planners and spending thousands of dollars per acre to create land that when reclaimed is worth only a few hundred dollars per acre. ? Reply by R.V. Ramani and R.J. Sweigard We thank Mr. Learning for his valuable contribution. His views on the problems of land use planning and mineral resources are most welcome additions to our paper. As the title indicates, our paper was more concerned with the impacts of land use planning on mineral resource conservation than with the details of the planning process. On the whole, his five recommendations would be helpful for mineral resource conservation. However, we would suggest that the argument he presents for his final recommendation does not address the differences between mining as a land use and commercial or institutional uses. We believe that this difference is the crux of the issue. We share Mr. Learning's desire to ameliorate the adverse impacts of land use planning. Possibly the most detrimental impact is the loss of mineral resources. Any development, whether mineral or community, that does not give proper consideration to other resources can result in permanent loss or sterilization of resources. With proper planning, some of these losses can be avoided. As our paper indicated, one factor that limits the consideration of mineral resources, and ultimately leads to their sterilization, is the generally inadequate levels of resource characterization and understanding of the unique nature of mineral resources and mining operations. The last point raised by Mr. Learning is also important. In terms of reclamation and land use planning in mining districts, we certainly do not advocate spending more than what the results are worth. The main thrust of the paper was to explore the avenues for conserving the mineral resources so that, at some appropriate time, the issue of mining and reclamation can still be addressed. ?

Jan 1, 1986

By D. L. Blakeman, Trimble. J. W., S. W. Banning

Noranda's Grey Eagle mine and mill, in the Siskiyou Mountains of northern California, began shakedown operations in the late fall and early winter of 1982. This paper describes some of the unique features in mineralogy, milling, and water treatment operation at Grey Eagle. In addition, major start-up problems in the mill and water treatment plant are discussed along with measures taken to correct these problems.

Jan 1, 1986

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 Dean S. Rogers

The conventional role of exploration, development and grade control is examined in this paper within the context of the many and varied types of gold occurrences which are found at the Dome Mine. The account endeavours to trace the development of the total ore evaluation process, from diamond drilling through the exploration and drifting stage, to the stope development and planning phase of the operation, with an emphasis on sampling techniques and assaying procedure. The concept of ore reserve calculations is developed and the practice of grade control is described. In summary, the role of the geological, the engineering and the mining department is presented in relation to the contribution each has to make in the evaluation and exploitation of ore from one of the world's classic Archean gold deposits.

Jan 1, 1985

By Breaux B. Castleman

The ultimate test of a business strategy is whether it achieves the owner's objectives. Most shareholders are interested in growth and profits, and share values on stock exchanges are very often closely correlated with profit growth and profitability measured as return on equity (ROE). Strategic management, then, involves managing investments or resource allocations to optimize long-term growth and real return on equity, within reasonable limits of risk. Figure 1 shows a plot of the five year, weighted average ROE of a number of communications companies against their stock market valuations in 1983, measured as a ratio of market value to book value. The principal explanation of the differences in the relative valuations of the individual stocks is historical ROE, weighted toward the most recent years. Further analysis demonstrates the added importance of growth in explaining the differences in stock market to book ratios. [ ] Research conducted by Booz Allen and others in recent years suggests that the relationships between ROE and market to book multiples hold true in industry after industry. Furthermore, we have found that in assessing business strategies for companies in these industries, the analyses should focus on whether proposed strategies are likely to lead to consistent long-term growth in real ROE, without excessive leverage. Our research also reveals, however, that these approaches to strategy assessment are not consistently applicable in the natural resource extractive industries. Figure 2 shows a similar comparison of market to book values against five year average ROE for a group of nine mining companies in 1983. Market value of the shares shows little correlation with ROE. [ ] Analysis of the data for other extractive industries indicates a similar pattern; that is, low correlation between share values and

Jan 1, 1985

By J. E. Lawver, W. D. Carrier

During the past 20 years, millions of dollars in research effort have been spent to improve methods of phosphate clay dewatering and disposal. Although to date no proven large-scale system has been developed that will result in ultimate below ground storage without the use of at least temporary dams, considerable progress has been made and a variety of techniques are being tested, some on a large scale. This paper summarizes the use of mathematical and centrifuge (physical) models that can analyze and evaluate various systems for the consolidation of phosphatic clays. These provide a powerful tool for engineers responsible for land management and mining waste disposal.

Jan 1, 1985

By William L. Langdon

PRELIMINARY COMMENTS Recent years have been difficult for the mining industry, as reported in the most recently published Minerals Yearbook (Volume III), the estimated value of world crude mineral production has been generally declining since an historical peak in 1979 (16).* The costs of mineral extraction have, however, been rising rapidly. Individual project costs are, in general, exceeding the growth rate of mining companies, while operating and technical risks continue to increase (16). Risks resulting from currency flotation and political actions in the host country are also on the increase. Labor difficulties (such as those experienced by Phelps Dodge) and the Reagan Administration's recent rejection of a proposal by the International Trade Commission for higher tariffs and/or quotas on copper imports have also contributed to the mining industry's difficulties. The net result of these factors has been financial difficulties for mining companies with respect to paying for their current financial obligations as well as trouble finding new financing. It may be that one of the main factors in determining the future of the mining industry will be centered upon capital structure, i.e. how its assets are financed. Historical Perspective on Capital Structure In The Mining Industry As discussed by Isreal Borenstein in (4) and Thomas Navin in (7), mining firms typically have used a financial model based upon high financial leverage, i.e. large amounts of debt relative to equity. This has been especially true for American firms developing orebodies discovered overseas. Problems sometimes occurred for those who were forced to commit themselves to completion guarantees in order to obtain bank loans. Mines under these circumstances must be brought into operation regardless of market conditions. Politicians in overseas countries also may use the high profits required by these high risk ventures to argue for nationalization of mines. Coupled with the frequent use of high leverage, mining companies traditionally have paid out a higher percentage of earnings in the form of dividends than manufacturing firms. This is significant, in that such funds paid out in dividends are not available for other uses. Hence, a greater reliance upon debt and/or additional stock issues than would ordinarily be the case for manufacturing firms. Thomas Navin has stated in (7), that the theory behind the high dividend payout was that, "most mining investors thought of themselves as investing in a wasting asset, one that would gradually deplete over time until it ultimately became valueless." Investors, therefore, required a receipt, in the form of dividends, of a percentage of current earnings and a return on original capital. This view of reality, apparently, has not changed in some quarters, even though modern mine management ordinarily replaces depleted mines with new ones. It may be that this practice of high dividend payout coupled with relatively high financial leverage should be reexamined. Current capital structure theory could prove interesting and useful for those concerned with current conditions. Capital structure patterns and related practices in this industry are not, in many cases, congruent with those thought by some to be theoretically optimal. Prelude to Capital Structure Discussion With a few notable exceptions (such as the Guggenheims and Anaconda's chief operating,. officer in 1971) mining companies' chief executives and boards of directors have not been persons with financial backgrounds. This, one could conjecture, might have accounted for the relatively nonsophisticated nature of capital structures of mining companies. In order to appreciate the possibilities with respect to alternative influence on a firm's performance, one must be acquainted with the basics of financial theory. This paper is an attempt to familiarize the reader with (1) capital structure in general, (2) the usual components of this structure, (3) the general theory behind the use of financial leverage, and

Jan 1, 1985

By J. E. Schiller, S. E. Khalafalla

To improve technology for treating process water, US Bureau of Mines research has shown that magnesium oxide (MgO) has many advantages over lime or caustic soda for precipitating heavy metals. Sludge produced by MgO occupies only 0.2-0.3 times as much volume as the precipitate made wing a soluble base. While a settled, lime-formed precipitate is easily resuspended, the MgO-metal hydroxide sludge becomes cemented together on standing. Settling of the metal hydroxides from a dilute suspension is more complete than precipitates formed with other bases. Virtually any metal that can be precipitated by raising the pH can be treated using MgO. A three fold to fourfold stoichiometric excess of solid reagent is added. The mixture is reacted for five to 10 minutes. Polymer is added, and settling or filtration completes the process. Because of the greater cost of MgO compared with lime, large-scale practice of this technology will probably be limited to water containing 50 mg/L (3 gr per gal) or less of dissolved metals. For such dilute solutions, chemicals are not a large fraction of total treatment costs, so more desirable sludge properties might justify higher chemical expenses. While the MgO process is technically suitable for widespread application, the extent to which it is adopted will probably be determined by a trade-off between the greater cost of MgO compared with lime and the superior properties of the precipitates and their corresponding ultimate disposal costs.

Jan 1, 1985

By Michael A. Gustafson, Fernando B. Sotelino

INTRODUCTION The degree of success of any new project will ultimately depend on two factors: (i) the underlying economic strength of the project; and (ii) how successfully the parties involved can coordinate their interests to establish a financing structure which indeed capitalizes on the project's inherent economic attractiveness. A project's underlying economic attractiveness is determined by its inherent comparative advantage in accessing the factors of production, combining these factors of production to create a product and marketing this product. Initially, the decision regarding whether to go ahead with the project - the go/no go decision - has to be based on its total ability to generate cash flow returns to project participants to compensate them for resources committed and risks undertaken. The extent to which project sponsors will actually benefit from the project's inherent economic attractiveness is fundamentally dependent on their ability to establish the long-term financing arrangement which best meets the objectives and constraints of each project participant and sources the most advantageous funding. The decision regarding the financing of the project, the "how-to-go" decision, is then an attempt to find the capital structure, consistent with market terms and conditions and sound financial management policies which will best: (i) match planned outflows with cash inflows; and (ii) maximize the return for project sponsors. This article makes use of a case study to illustrate the analytical process involved in dealing with the go/no go and the how-to-go decisions on a project. Though most commonly applied to project finance situations, the guideline described herein is equally applicable to other financing situations, such as leveraged buyouts and debt restructurings, where timely repayment of debt depends largely on the future cash flows to be generated by the entity being financed. Our case study is of a hypothetical expansion of an existing copper mining operation in Latin America. The company, Latin American Copper (LAC) currently has 147 million metric tons of proven sulphide ore reserves. The existing mine complex consists of an open pit mining operation and a conventional flotation plant with a processing capacity of 20,000 metric tons of ore per day. LAC sells copper concentrates primarily to Japanese custom smelters. The mine has been in operation for 5 years, fine copper production last year was 108,240 metric tons, and LAC currently has assets of $175 million and net worth of $135 million. Due to a recent increase in proven reserves, LAC is considering doubling the treatment capacity of its flotation plant to 40,000 tons per day, and expanding its mining capacity to meet the additional concentrator capacity (the "Project"). Project capital expenditures and incremental working capital have been estimated at approximately $210 million. The construction period is expected to cover one year, including a three-month start-up phase. The Project is to be funded by a combination of equity, senior debt, including both supplier credits and/or commercial bank term loans, and subordinated debt. LAC's shareholders are willing to commit a maximum of $50 million to the Project. A government development agency, which is also a minority shareholder, might be willing to lend approximately $40 million to LAC in the form of subordinated notes, depending on the ability of the Project to generate foreign exchange reserves. Commercial banks cannot be expected to offer loans with maturities longer than ten years. The Project is expected to increase the value of the firm because: (i) It will solidify the Company's position as a low-cost copper producer by taking advantage of economies of scale. As a result of the expansion, cash production costs are expected to decrease 7.0[c]/lb. and all-in costs 11.0[c]/lb; (ii) The potential earnings stream from the sulphide ore reserves will be realized

Jan 1, 1985

By C. Allen Born

INTRODUCTION As the title of this paper suggests, the author does not believe that risk can be managed. Rather, the objective is to identify the risk which will be present in a given venture and assess the level of that risk which is acceptable. More often than not, the risk which is present is subject to little or no modification. After identifying and measuring the risk a corporation will decide to accept it and proceed in such a way that it will be less exposed, or it will decide not to proceed at all. The exercise for a corporation is different only in degree from everyday judgements made by average people in average situations. However, that word "degree" means that it is considerably more complex on the corporate level. There is good reason for the additional complexity of corporate risk evaluation. The variables influencing a company's decision can be more numerous and the penalties for miscalculation much greater than those normally encountered by an individual. It should be understood that no analysis of risk, certainly not one as brief as the following, can do more than touch on some of the high points. Before examining the sorts of risk which affect the development and operation of specific mines, let us consider the broader aspect of the term with which mining companies, and all other business corporations, must deal. Companies must determine their long-term objectives and strategies within the context of a constantly changing world. To plot their direction they must attempt to read the future by seeking answers to questions such as: How will society evolve? Which businesses will thrive? In which of these should we place our emphasis? If a company hopes to be around five or ten years from now it must make the attempt to answer such questions in order to judge the impact of changing patterns in the evolving business environment. Information is available to allow the lessons of the past to be projected on the future. We have data on birth rates, economic booms and busts, patterns of conflict within and between nations, drought and other forces of nature as well as individual events which cannot be predicted, but which over time, do seem to occur in regular cycles. Ultimately the question "where will we be and what will we be doing a decade from now?" must be answered by one or more senior people with responsibility for the company's future. The compilation and interpretation of hard data by competent support staff, can only be used up to a certain point in determining future corporate strategy since there will be alternative possible futures and a high degree of risk will always remain. At this point those elusive qualities of experience, instinct, and - "gut feeling" - become important factors in choosing a long-term corporate direction. The goals of a company have a significant bearing on its attitude towards risk. This in turn dictates the "hurdle rate of return on investment" which a project decision-maker will require. The hurdle rate is the minimum-discount-percentage-rate applied to forecast cash flows to give a present value of zero to the All-Equity-Funded Investor. The feasibility study for a project is a fundamental tool in the management of risk. An experienced team has an established and well-understood set of ground rules for the preparation and assembly of a feasibility study. The necessary degree of conservation is built in at all levels of study data and, if the project is technically feasible, the hurdle rate becomes a catch-all measure of risk in a base-case project cash flow.

Jan 1, 1985

By Pedro L. Lizaur

INTRODUCTION The degree of success of an association between parties in establishing a new venture ultimately depends on three factors: a. the venture's underlying economic strength, which is based on the complementarity of the comparative advantages brought by each party to the negotiating table; b. the ability to reach an agreement which satisfies each party's objectives and constraints; and, c. the capacity to design and implement a funding structure which is consistent with the project economics. A thorough assessment of the venture's profitability and associated risks under alternative technical and economic scenarios is the basis for a sound "go" or "no go" decision. In-depth evaluation of the risks and rewards to each of the parties involved under alternative legal and financial structure must be the foundation for a long lasting "how to go" decision. The allocation of risks and rewards should be consistent with the objectives and constraints of all parties and the sharing mechanisms, established in the contract, should be flexible to assure the long-term stability of the agreement. Rapidly changing economic conditions during the last decade have had a dramatic impact on the envisaged allocation of risks and rewards between host countries and private investors. The effects of these changes, and the fact that the relative strengths of the parties involved may shift during the life of a project (e.g. before and after major capital investments have been made), have forced the renegotiation of a multitude of contracts. Therefore, the present and future stability of an economic agreement would depend not only on the originally designed provisions, but also on provisions which allow for the automatic adjustment of rewards to project sponsors under a variety of future economic situations. A pre-condition for the allocation and quantification of risks and rewards is the definition of standards of measurement used by each of the parties. This is critical in international negotiations when one of the parties represents the national interests of a country. The understanding and use of different standards for the measurement of rewards for risk taken between a government and private enterprise facilitate the negotiation of a satisfactory agreement. This is possible because certain trade-offs between the negotiating parties may have different relative values. STANDARDS OF MEASUREMENT OF REWARDS FOR RISK TAKEN The negotiating process takes a step forward when the parties are able to focus on their interests, explore different alternative solutions and then base results on a set of objective standards. Unfortunately, the parties frequently put more effort into "staking out" and defending positions, than into understanding their intrinsic interests. Moreover, when one party, such as a governemnt owned corporation, represents a country's national interests, the negotiation process increases in complexity. Private firms focus on commercial profitability, using discounted cash flow techniques such as NPV, IRR, or ROE. In contrast, the government is also concerned with the project's impact on the local socio-economic environment. Without entering into a discussion of alternative economic development theories and approaches, there exist several possible measures that could be pragmatically utilized by each party in evaluating the socio-economic impact of a project. The more complete measure is the National Profitability (NP). The NP is a discounted cash flow procedure similar in structure to IRR or NPV but in which the project's financial cash inflows and outflows and discount rates are adjusted to take into consideration the local conditions. The NP is calculated on an unlevered basis and all taxes and duties are removed from the project

Jan 1, 1985

By V. F. Hollister

The Queen Charlotte gold deposit (also known as the Specogna, Babe, or Cinola) was discovered in late 1970 by Efrem Specogna and Johnny Trico. They were prospecting along the trace of the Sandspit fault, and they sampled jarositic material that included veins from the fault zone. Their assays included some good gold values. They located the Babe Claims in 1971 and optioned them to Kennco Explorations Ltd. Kennco conducted stream sediment and soil geochem studies, geological mapping and drilling of 55.2 m (181 ft) in two drill holes. Kennco withdrew from the property, and by 1977, Cominco, Placer Development, Silver Standard, and Quintana Minerals had each successively worked on the deposit. Consolidated Cinola Mines bought the claims in 1977 and completed exploration of the deposit ultimately in a joint venture arrangement with Energy Reserves. Energy Reserves entered in late 1979, and by 1983, a total of 200 surface and 12 underground drill holes had been completed, totaling 28 600 m (93,832 ft). In addition, a 461.9 m (1515 ft) adit was driven in the ore body. Reserves published by Cinola aggregate 34 Mt (37 million st) of 1.7 g (0.060 oz) Au per tonne. All industry geologists working in the area agree that the Queen Charlotte gold is an epithermal gold deposit in porous volcaniclastic and clastic rocks that is genetically related to a Miocene-Pliocene rhyolite plug. The geologic description here follows the oral presentation made by G. G. Richards, J. S. Christie, and M. R. Wolfhard at a 1976 CIM meeting. Additional comments by the late C. S. Ney of Kennco Explorations are included with the Richards, Christie, and Wolfhard data to complete the geologic set- ting. The attached reprint by Champigny and Sinclair (1 980) provides additional data on the deposit. The Queen Charlotte (Babe, Specogna, or Cinola) gold deposit is located on Graham Island in the northern Charlotte Islands, at the fault boundary of the Skidegate plateau and the Charlotte lowlands. The Sandspit fault marks the physiographic boundary, and it is intruded by rhyolite porphyry at the deposit. Because displaced geochem anomalies, drain- age patterns, and topography suggest dextral and east side down movement for the fault, exposed east block rocks are younger than rocks west of the fault. The east block, which included the ore deposit, is a lowland largely masked by unconsolidated Pleistocene and Recent clastic rocks. Rocks west of the rhyolite plug, on the Skidegate plateau, are Cretaceous carbonaceous and calcareous shale unconformably overlain by a thin veneer of rhyolite tuff. The deposit is about 100 m (328 ft) above sea level. GEOLOGIC SETTING At the ore deposit, the Sandspit fault is a complex structure. However, lithologies on either side of the fault-controlled rhyolite porphyry plug are distinct. West of the rhyolite, the upper member of the Cretaceous Haida formation shale is the most common rock type. The member is composed of dark grey to black, poorly consolidated, and thinly bedded carbonaceous and calcareous shale. The sequence is silicified to an argillite or a hornfels near the rhyolite. West of the rhyolite porphyry plug, but not importantly involved in the mineralization, is a thin masking cover of rhyolite tuff. The tuff unconformably succeeds the cretaceous shale, but it is largely eroded in the mine area. East of the fault-controlled rhyolite porphyry plug is a thick section of conglomerate and sandstone of the Miocene- Pliocene Skonun formation. The ore body occurs within the coarse clastics, the rhyolite intrusive as the western boundary. Ore is entirely contained within the clastics. Original permeability of the clastic rocks was a major control for ore deposition and alteration, and for that reason, the Skonun formation is described in greater detail. The Skonun formation clastics unconformably overlie Haida shale. The Skonun is at least 300 m (984 ft) thick in the mine area, where it trends northerly and dips easterly 15º to 25º. The sequence is about 62 percent conglomerate, 3 1 percent coarse arkosic sandstone, and 7 percent interbedded siltstone and sandstone. Contacts between adjacent beds are generally sharp. Stratigraphic correlations between drill

Jan 1, 1985

By Phillip O. Tyree, Joseph W. Mussey

Bio-epigenetic sulphur deposits occur in Pecos, Reeves and Culberson Counties of far West Texas. Sulfate reducing bacteria, utilizing hydrocarbons as energy, transformed gypsum into replacement limestone and hydrogen sulfide. Hydrogen sulfide, retained in the pores of the replacement limestone, was subsequently oxidized by highly oxygenated groundwaters, and native sulphur precipitated. West Texas sulphur was first recognized at surface exposures by William P. Blake, a geologist attached to the Captain Pope Military/ Scientific Expedition of 1854. Attempts were made in the early 1900's to mine these sulphur vent exposures by a retort method, but the ventures met with little success. In 1967, Duval discovered a large sulphur deposit near some of the old sulphur works in Culberson County. Duval also expanded reserves in a small sulphur deposit in Pecos County. The Frasch process, developed for producing sulphur from Gulf Coast salt domes, proved successful in West Texas type sulphur deposits also. However, modifications of the process were necessary to provide economical and efficient sulphur recovery from the varied ore occurrences. West Texas conditions and logistics require the ultimate in productivity to be competitive in the domestic and foreign sulphur markets. Several companies, in addition to Duval, are producing or have produced sulphur in West Texas. As of June 1, 1984, a total of 29.87 million mt (29.4 million long tons) of sulphur had been produced west of the Pecos River. Duval Corporation has produced more than 88 percent of that total.

Jan 1, 1985

By Gary P. Thomason

INTRODUCTION One may have heard about how various projects were financed or certain companies were successful in obtaining a bank loan, but there are many more projects and companies who fail to get the money they need. At least a portion of these failures, and a large percentage of the frustrations connected with even the successful financings, are a result of not understanding the process of obtaining money. Recent years have seen a proliferation of debt financing sources available to finance minerals operations (see the next Chapter 11), but these represent only a minor portion of the minerals financing market. The fundamental source of borrowed money to many minerals related companies remains the banks. Therefore, understanding the "Loan Approval Process" can easily mean the difference between getting the money or not. LOAN APPROVAL PROCESS The initial stages of the loan approval process should begin long before the bankers, and the organizations they represent, enter upon the scene. The loan approval can be broken down into six stages: 1) Generation 2) Preparation 3) Presentation 4) Evaluation 5) Approval 6) Documentation As you can see in Figure 1, the bank is only directly involved in the second half of the process. The perils in obtaining financing for the smaller minerals venture are primarily in the first three stages, not the last three. The minerals venture making application for a loan can, in almost every case, improve its chances of success by carefully planning and preparing itself and the information that will be required of it in the loan approval process. Generation This first step in the process is deciding on the need for a loan. (Earlier papers in this Book and in Chapter 11 provide some guidance.) It is surprising how many ventures confuse the need for money with the need for a loan. Suffice to say that the equity investor risks both the timing of the yield on his capital and, ultimately, his capital. The lender, on the other hand, advances temporary funds which he expects to be repaid on a specific schedule with a fixed

Jan 1, 1985

By John S. Brock

INTRODUCTION The Oxford Dictionary says that the word "promoter" has usually been used in an opprobrious sense since at least 1876. This popular image of mining promoters is of cigar-chomping shysters and Brooklyn-Bridge vendors, improving their standard of living with the aid of funds raised through the sale of stock to little old ladies. It is unfortunate that mining promoters are considered crooks until they can prove their integrity and honesty by finding a mine. A common rule of thumb states that for every 1,000 prospects, 100 come to be drilled, and one becomes a mine. However, it is also a statistic that there have been mining promotions, where money raised has gone elsewhere than into the ground; Junior exploration companies can be handy vehicles for unscrupulous financial activity. One must remember though that every stock exchange has had its share of sound mining promotions that, because of the one in 1,000 odds, have failed for legitimate reasons. The promoter must be able to rationalize the worth of a mineral discovery which, on an industry- average basis, probably cost more to find than the discounted value of its net return, which return is not an assured percentage of invested capital, and furthermore, is ultimately from a wasting asset. So, it is easy to understand why the promoter must constantly justify the credibility of his operation to his grubstakers during the course of the "five phases of exploration," those being (1) euphoria, (2) disillusionment, (3) search for the guilty, (4) punishment for the innocent, and (5) distinction for the uninvolved. The promoter with the exploration organization that does not have the benefit of positive cash flow, by definition for the sake of this article, works for a promotional outfit, a Junior Company, that must raise its exploration budget from a variety of sources. Promotion, as discussed here, will not entirely refer to the formation and operation of a joint- stock company but rather to the overall methods of raising risk capital for mineral exploration ventures from outside sources. THE NECESSITY OF PROMOTION In Canada, the publicly financed Junior Company has had an enviable record of mine-finding success. In the Province of British Columbia alone, the discovery of fifteen out of twenty-four mines has been as a result of the activity of the Junior Company (B. C. & Yukon Chamber of Mines, 1977). In the Province of Ontario, one research study indicated that between 1951 and 1974 the 'Juniors' spent only 28 percent of the total exploration funds but were responsible for 62 percent of all economic discoveries (Freyman, 1978). The reasons for the success of the Juniors are tied to a variety of factors, the main one being personal initiative based on incentive. In other words, the principals, or their employees have 'a piece of the action.' The smaller companies can operate faster and more efficiently than their larger counterparts. The Junior Company is also destined to take some bigger risks, the 'long shots,' many of which efforts by virtue of the Junior's perseverance coupled with a touch of 'ore is where you find it' philosophy, result in major discoveries. The individuals, syndicates, private and publicly financed Junior Companies, because of high costs of exploration and development, cannot hope to finance most mineral prospects all the way to production. Exceptions do exist, those being the lower capital cost, small, high-grade deposits. Private investors and publicly financed Junior companies, therefore, can usually afford to finance most exploration through the initial drill-testing stage. The major resource company will enter a mining deal with a Junior Company usually by way of option or joint venture agreement, and will finance to production to earn an equity in the prospect or the Junior Company or both. The conventional lending institutions, banks and government agencies, will usually only participate through loaning a portion of capital

Jan 1, 1985

By Joseph E. Worthington

The present-day Northumberland gold mine is one of the deposits generally characterized as a Carlin-type occurrence. It lies at the crest of the Toquima Range in Nye County near the center of Nevada. Gold mineralization occurs in two modes, in argillaceous and in silicified limestones, and is generally very fine-grained or micron gold. The Northumberland district has had a history that is typical of many western gold districts: minor production prior to World War II and intermittent exploration thereafter until a combination of geological insight, improved economics, and the advent of heap leach technology created the Northumberland gold mine. Nye County, Nevada, was sparsely populated and little explored in the early years of the settlement of the west; the Northumberland district was not established until 1866. Initial interest was in silver and the district operated as a very small producer for the next seventy years. The disseminated gold occurrences in silicified limestones were recognized and Northumberland Mining Co. was organized to develop the property in the late 1930s. Northumberland Mining Co. actually conducted drilling operations (over 200 drill holes) and mined from small open pits in the silicified limestones. They ultimately produced almost 936 kg (33,000 oz) gold before being shut down by War Production Board Order L-208 in 1942. After World War II gold mining activities were essentially nil for over a decade due to the poor economics of gold production. The property was, however, a known gold producer and attracted recurrent exploration attention. About 45 holes were drilled under the direction of Peter Joralemon for private interests between 1959 and 1963. Next Kerr McGee drilled about 25 holes during 1963 and 1964. Some- what later, in 1968, Homestake drilled 20 holes. The property was then acquired by Idaho Mining Co. which drilled about 30 more holes between 1972 and 1974. By this time the Northumberland mine was becoming somewhat shopworn with over 300 holes drilled. Interest in gold prospects was increasing substantially in Nevada, how- ever, due to rising gold prices in late 1974, and several companies were interested in continuing exploration at Northumberland. In 1975 Cyprus Mines Corp. was successful in obtaining a joint venture arrangement with Idaho Mining Co. for further exploration and development of the property. The overall Cyprus exploration program was under the direction of James G. Hansen, Vice President Exploration. The geologist recommending acquisition of Northumberland was Peter E. Chapman who reported to Joseph E. Worthington, Manager of U.S. Exploration for Cyprus. The basis for selection of the Northumberland mine as an exploration target for Cyprus by Chapman was essentially prior knowledge of regional and 16cal geology and of the mine. Exploration for the next few years was directed by Chapman under the supervision of Worthington. During 1975 and 1976 rotary and check core drilling were conducted that indicated that a substantial Carlin-type or disseminated, low-grade gold deposit occurred in two separate bodies. Drilling was based on geologic mapping and rock chip geochemical sampling. Both ore zones were reflected at the surface as gold and arsenic anomalies in rock chips. Heap leach tests attempted in 1977 were aborted by a flash flood, but were completed in 1978. Engineering studies occupied the next couple of years until the property achieved production in the fall of 1981. It is now producing by open-pit mining with gold recovery by heap leaching and cyanide extraction at a rated capacity of approximately 2722 t/d (3000 stpd) ore. Metal recovery has been projected (probably conservatively) at 5 10 kg/a (18,000 oz per year) gold and 1.6 Mg/a (59,000 oz per year) silver. Reserves are reported to be adequate for ten to fifteen years of production. REFERENCES Anon., 1981, "Gold in Nevada," Span Magazine, Vol. 21, No. 3, Standard Oil Co., pp. 6-9. Koschman, A.H. and Bergendahl, M.H., 1968, "Principal Gold- producing Districts of the United States, Professional Paper 610, US Geological Survey, p. 193. Kral, V.E., 195 1, "Minerals Resources of Nye County, Nevada, Bulletin, Vol. 45, No. 3, Geology and Mining Series 50, Nevada University.

Jan 1, 1985