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By Kenneth L. Clifford, Thomas G. White

Many changes have occurred in lead-zinc milling in the U.S. since the 1970 Lead and Zinc Symposium. New mills have been built, novel flowsheets devised, and the use of process control techniques is increasing. The Missouri concentrators produced in 1976 more lead and zinc concentrate than those in any other state. The Tennessee mills produced nearly as much zinc concentrate in 1976 as Missouri and with some very highly developed flowsheets. Progress in the Western U.S. is centered around new operations in Colorado and Utah. New mills in New York and Missouri incorporate many of the newer control concepts. Most of the older concentrators have undergone flowsheet changes to accomodate different ore types or because of the availability of new and better equipment.

Jan 1, 1977

By John J. Croston

THE year 1935 witnessed one of the world's oldest industries-gold mining-attain the stature of a billion dollar business. Preliminary estimates indicate that somewhat over 30,000,000 oz. of gold was pro-duced, the largest output ever recorded and exceeding the previous year by more than 11 per cent. Of this huge total the Witwatersrand field produced about 10,800,000 oz., compared with 10,480,000 oz. in 1934. Russia was apparently the stellar performer, and from incomplete data it appears that between five and five and a half million ounces were produced by the Soviets compared with 4,200,000 last year and 2,814,000 in 1933. The United States nosed Canada out of third place with a production of 3,546,000 oz. against 2,916,000 in 1934, while Canada increased her total from 2,965,000 to 3,291,000 oz. Similarly, gains of lesser magnitude were made in Australia, the Gold Coast and other countries. As a result of great activity in developing outlying areas on the Rand, and the great number of new companies building mills in Canada, Australia, the Gold Coast and the United States, the years 1936 and 1937 should see new high records, as these new producers will more than offset any decline in the older properties. The whole world has become "gold conscious" during the past three years. It has been the subject of innumerable articles by economists and others, but, unfortunately, because of their lack of actual mining knowl-edge, they have treated the production of gold as a static affair, ignoring geological and technical factors. It is hardly necessary to draw attention to the fact that the world's gold-mining industry was slowly but steadily shrinking in importance, owing to the gradual depletion of known deposits that were profitable to work at costs existing prior to 1929. The International Geological Congress at Pretoria and the League of Nations Committee drew atten-tion to the estimates of the mining experts of the various governments predicting a steady falling off in world production. On the Rand there

Jan 1, 1936

By A. M. Gaudin, J. G. Morrow

FLOTATION requires the existence of a definite contact angle. This contact angle, the surface tension of the solution, and adsorption at the solid- fluid interface are quantitatively related. Adsorption of dodecylammonium acetate on hematite was measured for a wide range of concentrations of reagent in solution. Similar measurements for quartz have already been made.1 Contact angle measurements were then made on polished surfaces of hematite and of quartz immersed in aqueous dodecylammonium acetate solutions, and a functional relationship was sought between adsorption density at the mineral-solution interface and the contact angle. Finally, the surface tension of the aqueous amine acetate solutions was measured. These data were combined to give an evaluation of the work of adhesion for the three-phase system.

Jan 12, 1954

By L. F. Wright

Operations of these two mining companies have some superficial similarities-geographical location, production rates, comparatively large ore reserves; but any critical comparison of mining and milling procedures or of economics must take into account the striking differences in geological environment and mineralogy of the respective ore deposits. The properties are only about 20 miles apart on an upland surface of moderate relief (part of the Interior Plateau of central B. C.) which occupies an area east of Thompson River between the towns of Ashcroft and Merritt. Being in the "dry belt" of British Columbia, water conservation is necessary at both operations.

Jan 12, 1963

By W. J. Reagan

A SURVEY of the literature on bottom-cast practice gives but scant information as to some of the real facts concerning this most interesting method of steel manufacture, and some of the information available is very misleading.1 An exceptionally good description of this method of pouring or teeming is to be found in an English publication2 on the heterogeneity of steel ingots. Quoting from this paper: (a) With bottom teeming, the metal rises steadily and progressively in the mold with the minimum possible agitation, the main force of the stream coming from the ladle being broken down or retarded by the down gate or runner. Further, the stream of metal from the ladle, under these conditions of casting, is invariably main-tained at a much more continuous rate and is steadier than with top teeming. (b) In view of the facts referred to in (a) it follows that with bottom teeming the metal is not exposed to atmospheric oxidation to anything like the same degree as with top teeming. In this paper it is intended to detail briefly some of the advantages of bottom-cast practice and to discuss the possibilities of iron-oxide control in the basic open-hearth furnace. A description of the type of charge, ingot mold set-up, etc., is found in detail in an earlier paper.3

Jan 1, 1934

By N. E. Norman

During the past few years the underground mining industry and the big hole drilling industry have been involved in a flirtatious courtship, but until recently this courtship did not appear to be taken too seriously by either party. However, many of the promises made by the big hole industry are beginning to come true. Improvements have been made steadily in techniques of mechanical boring of large diameter shafts, raises and tunnels, thus making the big hole industry a more stable partner in the eyes of the mining industry. The mining industry too has made many changes in planning that make mining more attractive to the big hole industry. If there is to be a marriage between big hole drilling and mining, we should certainly take a look at the background of the big hole drilling industry, and examine the three main features of big hole drilling to determine how each applies to mining. Shaft Drilling Since 1950, numerous large diameter shafts have been drilled using rotary drilling techniques. Most of the larger diameter shafts have been drilled for the AEC for underground nuclear testing purposes. However, since 1960 several shafts have also been drilled for various mining companies, particularly in the United States. In 1967, rotary drilling shafts were either completed or in progress at the mining companies listed in Table I.

Jan 6, 1968

By Thomas W. Dawson

The H. C. Frick Coke Co. has used belt conveyers for handling coal for the last eighteen years but, until recently, only for small tonnages and over short distances. The first installations were outside the mines for distributing coal to various parts of plants. A belt conveyer was put in service at Colonial No. 4 Mine in November, 1906, to carry coal from the main hoisting shaft to a storage bin serving two blocks of beehive ovens on the other side of the valley; it was in constant service until the Colonial No. 4 ovens were abandoned less than a year ago. This conveyor was in an overhead gallery that spanned our sidings and yard tracks and the main line of the Pennsylvania Railroad. It was a crude installation, from the viewpoint of present conveyor engineering practice. It had no mechanical feeding device, the coal simply ran through a gate in the side of a bin on to the belt; but one belt on this conveyor lasted eleven years. This conveyor is about 300 ft. long center to center of pulleys. It operated at a speed of 250 ft. 'per min-and carried about 400 tons per day. On this basis, the belt life of eleven years means that not over a million and a quarter tons was carried by the belt. whi1e: this is not a large tonnage, the cost per ton was much less than by any previous method in use for supplying coal to ovens located at a distance from the main shaft. The next belt conveyor was installed at Bridgeport Mine in 1907. It carried about the same daily tonnage as the first, delivering from the hoisting shaft to a coke-oven bin. Very few data were kept on this conveyor. It also operated until the coke ovens at the plant were put out of blast and the coal taken to the Clairton byproduct plant by river. In 1916, work was started to equip the Bridgeport, Palmer, Gates, and Ronco mines to load their entire output on the river for transportation to the Clairton byproduct plant, which was then being built. These mines were all operating at that time and had a large area of coal available for river shipment. The Monongahela Railroad was located between the hoisting shaft and the river at each of these plants and, therefore, had to be crossed at each location to deliver coal to the river. After careful study, it was decided to transport this coal from the hoisting shaft to the river at each of these plants by belt conveyors.

Jan 1, 1925

By G. R. Rubly, H. J. Steele

The San Manuel property is in town&ips 8S and 9S, range 16E, Gila and salt River Base and Meridan, State of Arizona. This area is in the Old Hat mining district, southern pinal county, and is about 31/25 miles southwest of the town of Mammoth on the San Pedro River And one mile south of the Mammoth mine at Tiger, Arizona, The property consists of over 150 contiguous lode claims. The old Hat district was prospected prior to the civil war, but there was little or no production until 1881.1 The chief producers have been the Mammoth and Mohawk mines, now consolidated and operating as the st. Anthony Mining and Development Co., Ltd. Production to 1936 was $5,200,000, of which 83 pet was gold.2 Since 1940 the production has been chiefly lead and zinc, and some molybdenum and vanadium. There are a few small properties in the vicinity that have produced very minor tonnages of copper ore. In the San Manuel group there are claims which have been held continuously from 1906 to the present time, and at least two churn-drill holes were put down on or near the outcrop in 1917. No logs for these holes are available, but it is assumed that the grade of copper encountered was not sufficient to encourage further exploration. A small amount of ore has been shipped from open cuts on the San Manuel outcrop area, but there is no record of the tonnage Or grade. It is estimated that not more than 50 tons were mined. These cuts, plus a few shallow shafts and some short adits indicate limited and unenthusiastic prospecting at San Manuel. In 1942, through the efforts of James M. Douglas, R. B. Giffin, Victor Erickson, and Henry W. Nichols, owners of the Sari Manuel group, the Reconstruction Finance Corporation and War Production Board authorized the United States Geological Survey to investigate the property, and by their recommendation, the United States Bureau of Mines was authorized to put down a limited number of churn-drill holes. The Bureau of Mines carried On drilling from November 1943 to February 1945 Seventeen holes were drilled, varying from 305 to 1990 ft in depth. The property was brought to the attention of Magma Copper Co. in June 1944, and an option agreement was made with the Owners. Subsequently, a group of claims lying north of the original group and held by the Apex Lead Vanadium Mining Corp, and a group to the east held by the Quarelli family, were optioned. A drilling program was laid out to conform to the Bureau of Mines pattern, and drilling started in December 1944 Sari Manue1 Copper Corp. was incorporated September 1945, and has carried on the exploration program to the present time. Geology General The mineralized outcrop, chief copper mineral of which is chrysocolla, is a tri-

Jan 1, 1949

By A. F. Bertuzzi, M. R. Tek, F. H. Poettmann

A method is presented for predicting pressure drop for two-phase fluid flow in horizontal pipes. A set of 267 experimental measurements randomly sampled from approximately 1,000 measurements from various literature sources was used. Pressure gradients calculated by the procedure developed and compared with the experimental values showed a bias of +0.82 per cent and a standard deviation of 20.8 per cent. The advantatges of this method over other available methods of predicting two-phase flow pressure drop are (a) its comparative simplicity of application, (b) its relative independence of flow patterns, (c) its accuracy, which on the basis of a statistical evaluation predicts pressure drop closer than other available methods, and, (d) its ability to satisfactorily correlate laboratory data from various sources while the correlations from these sources do not appear to agree with one another. The method has been reduced to a simplified graphical procedure, suitable for field use. A two-phase f factor is defined and correlated with parameters involving the flowing gas-liquid mass ratio, a Reynolds number for the gas phase, and a Reynolds number for the liquid phase. The choice of parameters allows the correlation to reduce to the usual f factor plot for the limiting conditions of (111 gas or all liquid. INTRODUCTION The mechanics and characteristics of two-phase flow systems have been of interest throughout the industry for some time. In numerous engineering installations such as pipe lines, chemical reactors, and heat exchangers, two-phase flow conditions are of every day occurrence. In oil production operations it has been desirable, in some cases, to consider transporting gas and oil together in a common pipe from oil field to process plant. The trend toward centrally located stock tank batteries in oil fields has resulted in longer gathering pipelines in which more than one fluid phase is flowing. The increase in the producing capacity of oil wells due to new production tech- niques has created the need for review and re-design of many surface gathering lines for properly handling the increased production. Optimum pipe size for the situations described above has become an important factor. The problem which is of interest here involves the ability to predict the relationship between pressure drop, fluid properties, fluid rates, pipe diameter, and pipe length. Although the literature1,5,10,13,18,19 contains various articles dealing with specific cases of the problem, Lock-hart and Martinelli17 proposed the most general solution. Their method has been later modified by Baker:1 Alves2 demonstrated that different flow patterns are possible for a flow mechanism defined by Martinelli such as gas turbulent, liquid turbulent. Baker explained deviations experienced with Martinelli's correlations on the basis that different flow patterns could exist for the same flow mechanism. Using Martinelli's method of correlatioil, Baker correlated data for each flow pattern for the turbulent-turbulent flow mechanism. Bergelin and Gazley6,7 presented a correlation for predicting gas phase

Jan 1, 1957

By G. R. Rubly, H. J. Steele

The San Manuel property is in town&ips 8S and 9S, range 16E, Gila and salt River Base and Meridan, State of Arizona. This area is in the Old Hat mining district, southern pinal county, and is about 31/25 miles southwest of the town of Mammoth on the San Pedro River And one mile south of the Mammoth mine at Tiger, Arizona, The property consists of over 150 contiguous lode claims. The old Hat district was prospected prior to the civil war, but there was little or no production until 1881.1 The chief producers have been the Mammoth and Mohawk mines, now consolidated and operating as the st. Anthony Mining and Development Co., Ltd. Production to 1936 was $5,200,000, of which 83 pet was gold.2 Since 1940 the production has been chiefly lead and zinc, and some molybdenum and vanadium. There are a few small properties in the vicinity that have produced very minor tonnages of copper ore. In the San Manuel group there are claims which have been held continuously from 1906 to the present time, and at least two churn-drill holes were put down on or near the outcrop in 1917. No logs for these holes are available, but it is assumed that the grade of copper encountered was not sufficient to encourage further exploration. A small amount of ore has been shipped from open cuts on the San Manuel outcrop area, but there is no record of the tonnage Or grade. It is estimated that not more than 50 tons were mined. These cuts, plus a few shallow shafts and some short adits indicate limited and unenthusiastic prospecting at San Manuel. In 1942, through the efforts of James M. Douglas, R. B. Giffin, Victor Erickson, and Henry W. Nichols, owners of the Sari Manuel group, the Reconstruction Finance Corporation and War Production Board authorized the United States Geological Survey to investigate the property, and by their recommendation, the United States Bureau of Mines was authorized to put down a limited number of churn-drill holes. The Bureau of Mines carried On drilling from November 1943 to February 1945 Seventeen holes were drilled, varying from 305 to 1990 ft in depth. The property was brought to the attention of Magma Copper Co. in June 1944, and an option agreement was made with the Owners. Subsequently, a group of claims lying north of the original group and held by the Apex Lead Vanadium Mining Corp, and a group to the east held by the Quarelli family, were optioned. A drilling program was laid out to conform to the Bureau of Mines pattern, and drilling started in December 1944 Sari Manue1 Copper Corp. was incorporated September 1945, and has carried on the exploration program to the present time. Geology General The mineralized outcrop, chief copper mineral of which is chrysocolla, is a tri-

Jan 1, 1949

By A. J. Sinclair

Sampling methods for feasibility studies are dependent on geological characteristics of the deposit being evaluated. A preliminary geostatistical study is required, taking into account autocorrelation aspects of variables under study in order that sample plan design can be optimized to produce grade and tonnage estimates within stipulated error limits. In general, regular sample distribution is to be aimed for, and regular sample lengths (from drill core or cuttings, for example) are preferred in order to facilitate statistical analysis. Sample plans are modified and improved (either technically or economically), as a sampling program proceeds and additional information is obtained. Bulk samples for metallurgical testing can be evaluated in terms of the variance shown by all such samples in a deposit and the internal variability of grade. Attention to these sources of variability will ensure proper evaluation of pilot test results from bulk samples. In addition, a general mineralogical study of a deposit is an important, often ignored, requirement in a more general but semi-quantitative evaluation of the representativeness of a bulk sample; and, moreover, provides information useful in optimizing plant design.

Jan 1, 1978

By S. LeFevre

THE solution of the housing and sanitation problem in mining communities, keeping in view both economic and humanitarian aspects, demands the best thought of the management of such enterprises. Upon the solution depend the health and comfort of the employee and his family, and as a consequence his contentment and efficiency. The following description covers briefly the methods installed for Witherbee, Sherman & Co. The operation of the system has been for about two years under the direct supervision of T. A. Hammond, Land Agent, and I am indebted to him for a compilation of the results.

Jan 2, 1915

ALABAMA Aldrich.-Lloyd, T. W. Ashland.-Downs, F. G. Geary, E. S. Auburn.-Brown, R. L. Bessemer.-Abbott, C. E. Ball, T. L. Ferguson, V. Salmon, H. S. Stuart. Q. W. Birmingham.-Adams, J. H. Aldrich, T. H. Aldrich, T. H., Jr. Allen, A. W. Armstrong, W. D. Ball, E. M. Bonnyman, J. Bush, M. W. Crawford, G. G. Davis, C. B. Ellis. E. E.

Jan 1, 1923

By E. H. Bronson

PROPERTY of Malartic Gold Fields Ltd. is situa-ated in the great clay belt in the northern part of the Province of Quebec. This belt represents the floor of the glacial lake Barlow-Ojibway. The clay blanket has a gently rolling, almost flat surface, with here and there projecting knobs and ridges that outline the large irregularities of the surface on which the clay was deposited. At irregular intervals glacial eskers dominate the landscape. The ore-bearing country rock is covered by strata of clay, sand, and silt to a depth varying to 40 ft. There are serious structural problems when it is necessary to place loads of unequal intensities on this surface to support buildings and machinery for a modern mining plant. Earlier mining companies and their engineers paid little attention to the science of soil mechanics, partly because they believed it unnecessary and partly because they knew little of the subject. The results are evident in some of the tottering structures in older camps. Careful analysis of soil problems is well worth-while, since cost of foundations may vary from 20 to 50 pct of the final cost of a structure. Low operating and maintenance costs can be achieved only in this way. If it is definitely established that a plant will be in operation for only a few months, this limited time factor will probably influence the design of the foundation, and rightly so. If sensitive and complickted equipment is to be mounted on these foundations and the plant is to operate for several years, there should be a thorough study of foundations and a very careful design. A familiar problem is presented by the difficulty of operating a permanent plant originally designed for a few months' work. The engineer must beware of these hazards and disassociate himself from them if he cannot prevail on the promoter to spend the proper amount for a thorough foundation study. Laws of certain provinces and states hold the engineer equally responsible with the contractor for any 'damage that may be caused to building through inadequate study-ignordnce of the facts is no excuse in the eyes of the law. Types of Soil: The engineer should be familiar with such terms as silt, clay, peat, and varved clay, as well as perpafrost, especially if he is to work in the far northern reaches of the country. He should also be familiar with soil attributes such as porosity, texture, consistency, permeability, compressibility, consolidation, and shearing resistance. The design of any foundation requires an accurate knowledge of the physical properties and location of the soils involved. Older textbooks on the subject outline various empirical methods to determine the carrying power of soil. Tables are given in reference books. The modern ehgineer should be wary of these modes of thinking. He should analyze his problem carefully, calculate to what depth of soil the loads may be transmitted, and then check the bearing value of all soils to that or greater depths. If the strata are water-carrying, he must determine the possibility of this water being accidentally re-

Jan 1, 1958

By John Carter Anderson

The theory of a zonal deposition of ores from ascending solutions which were differentiation products of a cooling magma, first propounded by Spurr,l in a measure explained by Lindgren,2 and recently re-emphasized by kemp,3 while perhaps accepted in principle by many mining geologists, so far has not been accepted as capable of practical application in the study and development of ore deposits. From his observations, the writer is convinced that there are laws governing the primary deposition of ores which, when properly worked out, will be of greatest economic value; and that the application of this knowledge to the development of new mines will mark an advance in the mining industry similar to that following the working out and application of the theory of secondary enriehiment. That there has been a tendency to a zonal distribution in the formation of ore deposits, by which the ores of one metal have been precipitated from tile mincralizing solutiolis at a greater distance from the source than those of another, cannot be disputed; and the nature of this zoning in a given deposit or district has been frequently described.4 But that a selection precipitation of the ores of two or more metals, other than lead and zinc, in successive zones may have taken place in a single deposit within limits economically possible of exploration is not generally recognized or admitted.

Jan 1, 1923

By John Carter Anderson

The theory of a zonal deposition of ores from ascending solutions which were differentiation products of a cooling magma, first propounded by Spurr,l in a measure explained by Lindgren,2 and recently re-emphasized by kemp,3 while perhaps accepted in principle by many mining geologists, so far has not been accepted as capable of practical application in the study and development of ore deposits. From his observations, the writer is convinced that there are laws governing the primary deposition of ores which, when properly worked out, will be of greatest economic value; and that the application of this knowledge to the development of new mines will mark an advance in the mining industry similar to that following the working out and application of the theory of secondary enriehiment. That there has been a tendency to a zonal distribution in the formation of ore deposits, by which the ores of one metal have been precipitated from tile mincralizing solutiolis at a greater distance from the source than those of another, cannot be disputed; and the nature of this zoning in a given deposit or district has been frequently described.4 But that a selection precipitation of the ores of two or more metals, other than lead and zinc, in successive zones may have taken place in a single deposit within limits economically possible of exploration is not generally recognized or admitted.

Jan 1, 1923

By Thomas P. Oxford, Leslie G. Bromwell

The waste clay slurry produced during beneficiation of Florida phosphate ore presents a major environmental problem. The large volume of waste requires impoundment in above-ground disposal areas surrounded by earthen dams. As the result of a comprehensive research effort, three approaches to improving clay dewatering involving admixing of sand tailings have been developed. These provide satisfactory performance and appear to be compatible with the technological and economic constraints of the industry. Means of determining waste clay characteristics and analyzing mining waste disposal situations by computer simulation have been devised in support of the planning and field testing effort. Detailed examples demonstrating the applicability of the computer programs are presented.

Jan 1, 1980

By Max Mason

IN 1923 a Western mining company was experimenting with the device of an inventor designed to locate buried ores by radio. Because the progress was slow and the results were confusing, the company began to doubt the usefulness of the method and invited me to review the whole question of the application of physics to ore detection. I was fortunate in securing the cooperation of several physicists who had worked with me during the war on the problem of submarine detection. This group has been increased and has been studying the problem of physical exploration for ores since that time. It was evident that the problem is a big one, with many angles of approach. Its general features may be set down, in rough outline, as follows: The soils, rocks and ores hidden beneath the surface differ one from another in many respects. These differences may be made to furnish a clew for the physicists working from the surface. To bring these differences into action the physicist creates some kind of an effect which penetrates into the ground and is distorted and reflected when it meets boundaries between different sorts of underground structure. In other words, he sends a message down, and the rocks and ore send back signals in reply. In picturing this process, we should not regard the ground as dense and impenetrable. The kind of messages used pass through the earth about as readily as a sound wave travels the air. If, then, the fundamental procedure is to shout down questions in the hope that an orebody will hear and answer back to us, it is clear that a large part of the expert's study must relate to the kind of questions best suited to the temperament and intelligence of orebodies. It will be easier for the ore to reply to some of our questions than to others, and it is for us to find the right questions. In certain cases, we are spared the necessity of using a messenger; because nature has already provided one. For example, we already have a terrestrial magnetic field which auto-matically and continually conveys messages from underneath. We also have available the earth's gravitational field. which furnishes us

Jan 1, 1927

By J. L. Jones

1. Brinell tests at progressively increasing temperatures are given for a representative lead-base and a representative tin-base babbitt, showing that the former has superior resistance to deformation at the working temperatures of bearings. 2. Small squares of bearing bronze, tinned and then babbitted with a representative lead-base babbitt and a representative tin-base babbitt were subjected to compressive loading. The lead-base babbitt showed less average compression than the tin-base babbitt. Compression did not materially increase the Brinell hardness of the babbitts. 3. A process and a tool are described for giving smoother and more accurate surfaces to bearings than has heretofore been possible. The following experiments have recently been carried out in the chemical laboratory of the Westinghouse Electric and Manufacturing Co., Pittsburgh, Pa. While the work is incomplete, it is described at the present time because data on the comparative merits of lead-base and tin-base babbitts are of interest in connection with the present shortage of tin. BRinell Habdness of Babbitt at Increasing Temperatures Bearings fail because of wiping, or deformation. Hence tenacity is desirable in a bearing metal, especially tenacity at high temperatures. The Brinell test is commonly regarded as a measure of tenacity. In fact, it has recently been proposed to substitute for Brinell hardness number the expression " tenacity number."l It seemed, therefore, that the Brinell test was especially adapted for the tests described. Disks, 4 in. (101 mm.) in diameter and 1.5 in. (38 mm.) thick, were made of the babbitts to be studied, designated A, B, C. They were poured into metal molds, pyrometer leads being soldered in the center of each disk. The composition of the babbitts was as follows:

Jan 1, 1919

By John R. Caldon

INTRODUCTION Leasing has become a major industry in many countries because of the advantages it affords. Whilst the accounting, legal and tax treatment of leasing varies from country to country, there is far more similarity than difference. The general approach to the subject is largely the same. This paper looks to the basic financial considerations in the decision to lease or buy. TYPES OF LEASES Before embarking upon the subject, it would seem appropriate to define a "lease". A lease may be defined as: "an agreement granting one party the right to use, for a specified period of time, property owned by another party in return for a series of payments of rental by the user to the owner''. Ownership, of course, generally entitles the owner to unrestricted use of the asset over its useful life in contrast to a lease which gives the lessee use over a limited period. The distinction between the status of owner and a lessee often is fairly small. In this case we are dealing with what is generally termed a "finance lease". A finance lease is one which substantially transfers the risks and benefits of ownership from the legal owner to the lessee. For example, a finance lease would exist where the lessee enters into a lease of an asset for most of its useful life and has an option to buy the asset at the end of the lease for a price which takes cognisance of the rentals already paid. Where a lease does not substantially transfer the benefits and risks of ownership to the lessee, i.e. those benefits and risks remain with the owner and lessor, the lease is termed an "operating lease" and is an agreement for the renting and usage by the lessee of an asset owned by the lessor for a limited period. An example of an operating lease might be where a tenant leases a building for a defined period say 6 years with the rent and occupancy subject to renegotiation at the end of the lease term. The economic consequences of the distinction between a finance and an operating lease is very important. With a finance lease, the lessee has a de facto economic interest in the asset and the alternative to a finance lease is some form of purchase; with an operating lease, the lessee does not have a basic economic interest in the asset and consequently a comparison with a purchase option involves far more than simply a funding comparison. Some of the principal differences between finance and operating leases can be summarised as follows: (a) finance leases: -the risks and benefits of ownership are substantially transferred to the lessee; -the lessor normally recovers his investment during the term of the lease; -the lessor in entering into the transaction is relying more on the creditworthiness of the lessee than the underlying value of the asset; - the lease is either non-cancellable or a large penalty will apply for unilateral cancellation by the lessee; (b) operating leases -the risks and benefits of ownership remain essentially with the lessor; -the lease rental income would not normally cover the recovery of the lessor's investment; -the lessor evaluates his risk in terms of the underlying value of the assets;

Jan 1, 1985