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By Peter J. Szabo

The mining executive works in a cyclical industry. His employment is subject to the vagaries of the marketplace. Boom and bust has always been the industry's story. "Big oil" failed in its mining effort. This left emotional and financial scars on many mining families. One must remember that mining executives always play a high-stakes game. Given the cyclical nature of the mining industry, mining executives need to take care of their own financial security. The mining executive that does not plan for his financial security in this cyclical business is playing Russian Roulette with his future. Take a look at those people who have reached their later years with the mining industry. One usually finds three categories of people. Those few in the first group have been fortunate enough to have worked for one company. They have survived the winnowing process of cyclicality, political problems, and takeovers. They have reached normal retirement age. For them, the retirement years are usually comfortable. People in the second group have worked for those same mining companies. But these people have been forced out by early retirement. Or they have been laid off for cyclical, takeover, or political reasons. The third group includes those who have held many positions in the mining industry. Probably not until their later years are they fully vested, if at all, in a pension program. The first small group, then, is the exception. The others, unless they have taken care of their financial security, are doomed to later years of financial problems, stress, and unhappiness. Too late in life, many realize the harsh realities of failure to plan and implement a personal financial program. Mining executives go to some of the world's leading mining schools, to learn how to make money. The curriculum is technically strong. Most mining graduates are familiar with the intricacies of discounted cash flow, present value, and the Hoskold formula. But few of these same mining schools require courses on personal financial planning. Such courses could give mining students a realistic foundation and the mechanisms with which to cope with their cyclical profession. An executive has only three sources of money. He can make money at work. He can put his money to work. Or he can get money from charities, such as government programs. Of these three sources of money, money at work has the best chance of providing financial security in later years. The mining executive must think of the day when he will be too old to work and contribute to the market place. At this point, the quantity and quality of his investments will determine whether his later years will be secure. Along with the Mining Engineering Handbook, two key books should be included in the mining executive's library. These are Venita Van Caspel's The Power of Money Dynamics and Benjamin J. Stein's Financial Passages. These books contain the basic concepts of personal financial planning so critical to an individual's financial survival. Venita points out the simple formula that is the key to financial independence: Time + Money + American Free Enterprise (Rate of Return) = Opportunity to Become Financially Independent Chart 1 shows that this is not a trite formula. The chart shows the dramatic effects of compounding over time. The chart also shows at various yields what a $2000 a year Individual Retirement Account (IRA) contribution will accumulate. Chart 1 (from Money magazine) is based on the future value of an ordinary annuity. It shows that the key to amassing a small fortune by the time a person reaches his 50s is starting to save methodically in his 20s. This, coupled with the highest yields consistent with safety of principal will ensure financial security. There are significant effects from compounding money over time. Every year the decision is put off to save for later years will cost a person dearly by the time he reaches his 50s. For example, consider the decision to put off for one year a $2000 IRA investment at a 12% return. Starting it at age 31 instead of 30 will cost the executive almost $100,000 by age 65. What if the executive waits until age 35 to get started with his $2000 a year investment? He will then lose nearly $400,000 by age 65. Stated another way, the executive costs himself this $400,000 simply because he did not invest $167 a month for five years. $167 a month - that's less than an inexpensive second car payment. This $400,000 pool of money could provide the executive a $40,000 a year income at age 65, assuming a 10% return on invest-

Jan 11, 1985

By Bryan Morris

Quebrada Blanca (QB) is a copper project located in the semi-arid Andean highlands of northern Chile. The operation is situated 170 km ( 105 miles) southeast of the port of Iquique and 30 km (18 miles) west of the border with Bolivia, at an altitude of about 4300 m (14,000 ft) (Fig. 1). The QB ore body is a secondarily enriched porphyry copper deposit containing reserves of 85 Mt (93 million st) grading 1.3% copper. Underlying the enriched zone is a significant primary ore zone containing several hundred million tons grading about 0.5% copper. In the late 1970s and early 1980s Falconbridge and its affiliates spent $20- $30 million exploring the deposit and conducting feasibility studies. Falconbridge, however, decided not to develop the property. It was returned to its owners, Empresa National de Mineria (ENAMI), a Chilean state mining corporation. In 1988, ENAMI announced its intention to privatize the property through public bidding. Cominco Resources, then 61% owned by Cominco Ltd., examined the property and the extensive data base developed by Falconbridge. In conjunction with its parent company, Cominco Resources submitted a proposal to ENAMI to construct an open- pit mine, with heap leaching and solvent extraction/electrowinning (SX-EW) processing facilities. The plan would use patented heap leaching technology developed by Sociedad MineraPudahuel (SMP), a privately owned Chilean mining company. At that time, a $150-million project that would produce about 45 kt/a (50,000 stpy) of cathode copper was envisaged.

Jan 1, 1993

By D. A. Karvonen

Although the economy in the Province of Saskatchewan has historically been agriculturally oriented, a major new 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 percent 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 percent of known world potash reserves and its ten active mines account for some 25% of annual world production. The development of this resource was recognized to be important to the development of Saskathcewan. 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.

Jan 1, 1983

By James H. Boettcher

In the second quarter of 1979, ASL Inc. inquired whether Crocker National Bank ("CNB") would provide $4 million in term loan financing to help ASL acquire the outstanding shares of the S&S Coal Company in West Virginia. ASL had, prior to approaching CNB, sought financing with the assistance of a financial advisor from a number of commercial banks without success. A summary of the initial terms requested by ASL is shown in Table I compared with the actual terms the transaction closed with. It is not difficult to note that the two sets of terms differ significantly. This is often the case when financing requests based on the expectations and vision of a mine developer are juxtaposed with more pragmatic requirements of a commercial bank. The "art" and fun of structuring financing plans for mining ventures (highly leveraged acquisitions or grass roots) comes in working with mine developers to arrive at a final financial structure that meets their objectives and constraints as well as those of the bank or other financial institution providing much of the financing. This article briefly describes the process we went through with ASL beginning with the terms they requested initially and ending with the ones on which the transaction was finally closed.

Jan 1, 1981

By Wallace W. Wilson

It scarcely 1s possible to read a new issue of any of the principal mining trade journals without noting some mention of a major new overseas mining venture with which one or more domestic companies are involved. These projects seem to follow a fairly consistant pattern; most are large open pit mines, with relatively low grade ore bodies but huge reserves; the total price tag will be in nine significant figures and around half or more of the total cost will be for infrastructure. West1 noted that nearly $7 billion is being invested annually for new mining projects and the expansion of existing mining ventures, in the free world. He anticipates that by the year 1975 such investments would reach the $10-11 billion annual figure, and that in the five year period 1972-76 total capital requirements can be expected to aggregate around $45 billion. The proportion of this total investment which will be financed in some manner is difficult to estimate because of the variety of available financing arrangements. West estimated that around 75% of the total capital would come from internally generated funds, with the balance from external sources. Conceivably a substantially higher percentage could be attributable to external financing, especially it the trend of recent mineral development in Canada and Australia is any criterion, and of course, including local sales of equity as a part of the package.

Jan 1, 1973

By P. Klaus

"KfW IPEX-Bank is the commercial arm of KfW Bankengruppe, responsible for international project and export finance.KfW was one of the first banks in Germany to promulgate environmental guidelines for its commercial business activities. These guidelines were first made public in 2000 and updated for the second time in 2004. They now include specific reference not only to environmental but also to social concerns. The guidelines specify the procedures to be followed in assessing credit risks related to environmental or social hazards.The bank considers sustainability as an interdependent framework of economic, ecological and social factors. In its efforts to contribute to sustainable development worldwide the bank uses its influence as far as possible to improve a project’s performance if such improvement is deemed necessary."

Jan 1, 2005

By M. Götze, P. Eysel

Over the last years, the importance of the assessment of environmental and social aspects as well as of issues of good governance has increased significantly in mining finance. For this, international standards as well as internal guidelines of the banks and other involved institutions have been established and continuously improved. Considering these standards and regulations, the banks can influence the sustainability of mining projects - and they have done so in the past -, mainly by implementing certain provisions and covenants in the loan documentation, binding the financing to the mining company’s adherence to the agreed sustainability standards. However, there are limits to the banks’ influence due to the competitive environment with other available means of financing. Nevertheless, the experience of the last years has shown that the standards and regulations bound to the financing by the banks help to lead the mining industry towards more sustainable projects.

Jan 1, 2011

By Tomek Ulatowski

This article discusses four principal areas relevant to financing direct reduction facilities: (1) Lenders' differing requirements with respect to projected cash flows; (2) The impact of leveraging on project viability; (3) The importance of appropriate debt structure; (4) The significance of accurate and complete capital cost estimates. The overall findings emphasize the inseparable connection between the project economics and its financeability, and particularly how direcly intertwined they both are in the project planning.

Jan 1, 1978

By G. V. Campbell, O. T. Holdsworth, M. G. Nelson

A senior design project is required by all accredited mining engineering degree programs. Often referred to as the capstone of a student’s education, this project is expected to include all the important components of the preliminary economic assessment of a mineral prospect, including orebody modeling, grade and reserve estimation, selection of mining and processing methods, preliminary mine design, access and utilities, environmental compliance and reclamation, and financial analysis. Two of the authors (Campbell and Holdsworth) completed a senior project in 2021. They analyzed the Akie zinc deposit located in Canada. This paper summarizes the economic analysis portion of that project. The two primary objectives of this economic analysis were risk reduction and integration of economics and engineering. Addressing risk is important as risk is one of the primary concerns in mining investments. Risk reduction was the primary concern through the entirety of this economic analysis. Integration of financial analysis and engineering design was the first component of a risk reduction design. This allowed for financial and engineering design to be optimized in conjunction with one another. This produced benefits from both a financial and an engineering prospective. From a market, economic, and financial risk perspective, risk was reduced by forecasting multiple metal price scenarios, and then addressing the Akie project’s economic viability at each price point. Lastly, risk was address through consideration of nontraditional financing options. The project also sought to minimize financial and human capital risk, by proposing mutually beneficial cooperative social relationships and favorable work, schedules. Description of that work is not included in this paper.

Mar 2, 2022

By Christian F. Baiz

Industrial minerals can have similar financing requirements to those needs of metaliferrous and coal mining projects. Although, one may see many similarities in the fundamentals of the various risks that must be evaluated in lending to any specific project, one of the outstanding differences is the understanding of the many different markets that these industrial minerals represent. There are in excess of 30 principal industrial minerals ranging in terms of annual production from the largest quantity such as sand and gravel, to possibly the smallest quantity of production of a legitimate industrial mineral which may be defined as industrial and rough gem diamond. If we assume that it is necessary to finance independent projects of ore bodies of industrial minerals for development, the financing techniques are similar to the fundamentals that we would use for financing coal projects or metaliferrous deposits. Therefore, let's begin by redefining project financing in the traditional banking or private sector area, and then in the later development of this paper, we will apply these techniques to industrial minerals in general and cite it with several specific examples.

Jan 1, 1982

By William L. Young

I think I should let you in on one of Canada's best-kept secrets, if you will promise not to tell it all over the place. Believe it or not, good, honest, enterprising capitalism is still alive and flourishing north of our common border, and I am living proof that capitalism is still working for the little guy. My personal story of mining development in Canada isn't all that rare -- you've probably heard something like it from other areas and other days several times -- but my case brings it up-to-date. I would like to Tell you briefly the history of Northumberland Mines Limited, a contemporary case of individual enterprise getting a mining operation underway. And if I can do it you probably can too.

Jan 1, 1981

By Barrie A. Wigmore

There are two aspects of financing western coal development -- whether there is going to be enough money to finance the prospective large development of the industry, and the specific techniques of raising money for that development. To take the first question of whether there is going to be enough money around to finance your industry, I think it is quite clear that the restrictions on the development of western coal are going to be non- financial. Environmental impact problems are creating the greatest delay in coal mine development, at the moment; but getting enough personnel, mining equipment, railroad equipment, and failure of the Department of Interior to act on leasing federal coal lands all appear likely to create significant bottle- necks in the development of western coal -- larger bottlenecks than financing. Financing appears straightforward for the industry. There are many projections of the financing required to meet Project Independence goals. The National Academy of Engineers estimated that development of 500 million tons per annum of western coal would be necessary by 1985 to meet the Project Independence goals which might require $20 billion of capital spending. It is generally agreed that 500 million tons a year is not a realistic possibility. Carl Bagge?s estimate of production of 250 million tons a year by 1983 appears a more reasonable projection. Development

Jan 1, 1976

By L. Clark

Despite near-record commodity prices, the mining industry continues to search for ways to maintain profits in these times of steadily increasing energy prices and steadily decreasing grades. The pressure is still on today’s miners to continuously improve their operations because they know that one day prices too will drop. Some, however, have seized the opportunity to employ systematic methods to reduce costs and increase the efficiency of their workforce and equipment. As a result, closer attention is being paid to scheduling and the value that could be added by defining the extraction sequence that maximizes the net present value [NPV] of a project. This paper will discuss the challenges faced by Newmont Mining Corporation [Newmont] at its operations and the application of sophisticated software tools and methods in its search of solutions to this problem.

Jan 1, 2007

By F. Seymour

A dynamic programming algorithm is presented that takes a series of nested phases, a fixed mining rate schedule, a fixed plant production capacity schedule, and finds the mining and cutoff grade sequence that maximizes the Net Present Value. This tool allows the Mining Engineer to quickly look at project sensitivity to various production capacities, commodity prices, and costs. A description of the algorithm is given along with examples of how it has been used at Newmont.

Jan 1, 1995

By F. Seymour

A dynamic programming algorithm is presented that takes a series of nested phases, a fixed mining-rate schedule and a fixed plant-production-capacity schedule, and, from these, finds the mining and cutoff grade sequence that maximizes the net present value. This tool allows the mining engineer to quickly look at project sensitivity to various production capacities, commodity prices and costs. A description of the algorithm is given along with examples of how it has been used at Newmont Gold.

Jan 1, 1996

By Joe W. Cotton, Thomas A. Wheeler

This paper briefly covers theories behind caking of crystalline salt particles, and methods of its prevention. The main factors that influence the extent of caking are humidity, storage pressure, temperature variations, and length of storage time. Careful adherence to control- ling these variables are more critical than the addition of even the most efficient anticaking reagent. The principle characteristics that a successful anticaking reagent must possess are: high retention at the temperature of application, good coating of reagent on the particle surface, capability of in- creasing the hydrophobicity of the particle, reducing the surface tension of liquids, and/or creating of a barrier between particles that prevent contact between particles, and modifying the crystal structure of the salt between the particles. Methods to evaluate the reduction of caking tenacity with the application of various anticaking reagents, reagent volatility and reagent degradation in plant and laboratory scales are discussed. Various types of anticake reagents used today in industry are organic active and inactive reagents, inorganic inert and inorganic salt crystal modifying re- agents.

Jan 1, 1986

By Douglas B. Silver

The key to unlocking value is to find opportunity where others have missed it. How does a company find value in a thoroughly explored asset? This article explores the approach taken by one company and the results it achieved from working this problem. The town of Shafter is located on a small bend in the road in west Texas' Big Bend Country. Its past emulates the glory days of so many other mining camps. A discovery was made, fortunes were built and World War II shut down the operation. The Shafter deposit continues to be one of the larg¬est undeveloped primary silver deposits in North America. Gold Fields Mining Co. recognized the area's potential in 1977 and embarked on studies to reopen and develop the district. Gold Fields spent $16 million on the Shafter project. It drilled more than 86,240 m (282,940 ft) in 475 holes, sunk two shafts and developed 1,550 m (5,100 ft) of underground workings. Today, the mothballed 447-kW (600-hp), single-drum Nordberg hoist and permanent production-type, single-compartment headframe continue to crown the shaft. Other buildings onsite house compressors, mine pumps, spare parts, drill core and other supplies. All these items look as though they arrived yesterday. By 1982, Gold Fields had completed an extensive feasibility study with ambitions to. construct a 1.36-kt/d (1,500-stpd) agitated cyanidation mill and base metal gravity circuit. Reserves at Shafter stand at 4.23 Mt (4.67 million st) grading 193.5 g/t (5.65 oz/st) silver. Gold Fields planned to produce 71.5 t/a (2.3 million oz/year) of silver at a head grade of 196.2 g/t (5.73 oz/st) silver with a 77% recovery rate. Cash costs were projected to be $5.54/oz with an anticipated initial and total capital cost of $46.2 million and $51.3 million (1984 dollars), respectively. The study assumed a silver price of $8.60/oz that has not been seen since the Hunt brothers quit buying silver. When silver prices declined, Gold Fields put the property up for sale.

Jan 1, 1999

By Ellis Brien, O&apos

The fine coal fraction of a coal stream is that fraction which contains particles essentially in the -28 mesh size range. This fraction will normally first appear, in a coal preparation process, as a result of classification to segregate raw coal into various size components for beneficiation. More specifically, it could appear in desliming screen underfiow, classifying cyclone overflow, and in other process circuit components. It's recognized that the top size of this fraction has been determined more by secondary reasons, such as desliming screen area for the heavy medium cyclone circuit, the dewatering equipment for the fine clean coal, or even the stability of the refuse thickener circuit. Benefits, both economic and environmental, gained by beneficiating the fine coal fraction of a raw coal stream are increasing in number, until today, fine coal beneficiation is a necessity in most coal operations requiring any degree of preparation. This is due to some of the following reasons: • In the past it was frequently more economical to discard -28 mesh raw coal sizes than to recover the coal values from them. Today, mining costs have escalated to the point where all coal values leaving the mine should report to the finished product if possible. • Today's mining methods are producing run-of-mine coals containing higher percentages of -28 mesh sizes. This heavily weighs the economic balance in favor of beneficiating this fraction. As much as 25% of the run-of-mine coal from some mines is in the fine coal fraction. Beneficiation is recommended so that clean coal contained in the fraction can be recovered to reduce the loss of coal values. • Existing and pending environmental regulations mandate that solid fuels now consumed in power station boilers contain almost no pyritic sulfur. This form of sulfur appears in raw coal in the fine coal fraction, but can be removed by coal beneficiation. Environmental considerations dictate that every year, more of the fine coal produced for steam generating purposes in the US be beneficiated. To deliberately discard any portion of the fine coal can only add to this cost, not only in the sense that fewer tons will be recovered but, more importantly, additional tonnage will be diverted to the most capital- and labor-intensive section of the entire preparation plant-the fine refuse dewatering section. It is apparent to preparation engineers that dewatering and ultimate disposal of the fine refuse derived from this beneficiation step is certainly the most difficult technical problem presented in the entire plant design. Therefore, any beneficiation procedure which increases the fine coal recovery, or in any manner decreases the tonnage of fine refuse to be dewatered, is going to be cost effective. Since the -28 mesh fraction contains both coal and refuse particles in their finest particle sizes and thus presents the greatest degree of liberation, one would immediately infer that the highest degree of beneficiation would be achieved. This is not the case-the opposite is more likely true. Conventional coal cleaning devices based on specific gravity (such as

Jan 8, 1980

By Mutombo Nombe, Avimanyu Das, Rick Honaker

Enhanced gravity separators (EGS) provide a more efficient separation than froth flotation when cleaning coal in the 150 x 25 µm particle size range. To improve the performance of an EGS unit, air bubbles were injected into the feed stream in an attempt to decrease the apparent density of the coal particles due to the formation of bubble-coal particle agglomerates. Air injection had a significant impact on operating characteristics and separation performance. Coal recovery was increased by 10 to 20 absolute percentage points while a 2 percentage point drop in the minimum product ash content was also achieved.

Jan 1, 2005

By R. Q. Honaker

Until recently, the application of the Jameson Cell technology in North America has been restricted to minerals processing. Recently, laboratory, pilot-plant and full-scale testing has been conducted to assess the Jameson Cell's ability to effectively treat fine coal. Based on the data, carrying-capacity relationships have been developed. In addition to its operational simplicity, the Jameson Cell has the ability to provide a separation efficiency near the theoretical separation performance on the basis of ash rejection while achieving a relatively high throughput capacity Tie results obtained from the various fine coal cleaning applications in North America is presented in this publication.

Jan 1, 1999