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By Daniel T. Brian, O&apos

Exploration targets and results in the mining industry are commonly summarized in terms of tonnage and grade. Business appraisals require, as additional information, the expected profit or loss implied by the physical summay. The early incorporation of knowledge gained through financial analysis computations can provide a means for economically resolving many common exploration and development problems. Examples of such applications from the activities of exploration planning, reconnaissance, land acquisition, and development planning are presented. While prospecting for mineral deposits, geologists are frequently asked what they hope to find or have found. The response is usually descriptive, such as "50 million tons of 1% copper," and the economic implications are deferred until a capital investment decision is required. At that time, a financial analysis integrating the four analysis components is completed. These components are: 1) Tonnage and Average grade above cutoff grade 2) Capital and operating costs 3) Product value 4) Appropriate profit or loss accounting Close examination of these components reveals that there is no intrinsic reason for avoiding financial analyses at earlier stages in exploration, as long as the uncertainty of the estimate is realized. Tonnage and average grades are commonly estimated at early stages in exploration. For this component, the appropriate cutoff is the major uncertainty. Capital and operating costs are difficult to estimate before detailed quantitative information is available, but estimates useful for the types of applications pertinent to earlier exploration stages are possible. Product value estimates may or may not be difficult, depending on the pricing structure of the particular commodity. A simplified accounting procedure usually may be adopted without introducing any significant loss of validity. This paper describe some of the financial analysis applications which are pertinent during mineral exploration and deposit development. These applications lend additional insight during exploration planning, land acquisition, physical exploration, and development. The examples are oriented toward a hypothetical management investment policy which is based on a single criterion, a minimum 15% discounted cash flow rate of return. In reality, managements use multiple criteria. This simplification is convenient for purposes of presentation and does not invalidate the examples. Computers are useful, but not a requirement, for the applications described. The use of computers provides the results on a more timely basis at costs lower than equivalent manual computations. UNDERLYING PRINCIPLES AND ANALYSIS METHODS Data estimates are subject to uncertainty. The analyst may choose to assess this uncertainty by using one of two principles. Each principle has some advantages. The principle most commonly employed is "assumed certainty." Each financial analysis is based on one set of selected data, which may represent the average estimates, minimum expected conditions, etc. The critical data is identified by making successive calculations, varying the values used. Such studies, called sensitivity analyses, isolate the economic effect of various uncertainties, and guide the allocation of future efforts toward improving the overall accuracy of the analysis. A second principle, "assumed risk," examines the interactive effect of the current uncertainties by qualitatively assigning probability distributions to each data element. These probability distributions indicate the currently appraised chance that a given numerical value will prove to be true. The corresponding procedure, risk analysis, consists of processing many individual financial analyses, each analysis being based on randomly selected numerical values from the probabilistic distributions. The result is a numerical presentation of the uncertainty, but care must be exercised in the interpretation of results. The advantage of this procedure is the direct measurement of economic uncertainty caused by the interaction of uncertain estimates. Kennecott Copper Corp. has developed computer systems for accomplishing sensitivity and risk analyses.

Jan 1, 1970

By Meyer Klein

Decision theory is the formal theory of the logic of decisions in view of the decision maker's objectives, preferences, I beliefs, and available information, It usually deals with weighty economic problems involving irrevocable (or costly to reverse) decisions. Capital investment planning problems constitute an instance par excellence for application of the decision theory concepts. Decision theory as it is presently conceived has evolved in recent years. At first it concentrated on decisions in the face of total lack of information and on games with intelligent adversaries. The results of these efforts proved theoretically interesting, but practically of little applicability. In the last few years, stress has shifted to the introduction of subjective probabilities and preferences, and the results have been eminently successful in applications both in government and with- in business firms in the resolution of complex problems.

Jan 1, 1970

Most types of nuclear power reactors use uranium dioxide fuel. Power reactors using natural uranium dioxide fuel are of special interest to countries such as Australia that have their own uranium supplies. A wide range of uranium dioxide powders can be fabricated and the ideal one flows readily, presses without the need for binders or lubricants, sinters to the required density and gives low reject rates at all fabrication stages. Sinterable uranium dioxide is usually produced via the ammonium diuranate route.The Australian Atomic Energy Commission is aiming to demonstrate production of nuclear grade uranium dioxide from Australian concentrates, improving technology where possible. Details are given of the dissolution, solvent extraction, precipitation, filtration, drying, and· calcination-reduction steps. Solvent extraction from sulphate media is also under study with a view to developing a process to produce a nuclear grade product at the mine treatment plant site.

Jan 1, 1970

By John R. Zelonka

Models made by encasing strain-gage networks in epoxy are described and evaluated. With this technique relatively complex models can be constructed in which any number of gages can be located and alined precisely. Although the gages are an integral part of the model matrix, they create no important mechanical or thermal stresses. Model construction techniques and experimental data proved reproducible and reliable. In addition, the sGlution obtained with these models to the problem of the state of stress around a circular hole in a plate subject to a plane stress condition was in agreement with theoretical, photoelastic, and finite-element solutions.

Jan 1, 1970

By Douglas D. Donald

The financial analyst's job is to make an objective appraisal of the investment opportunities which exist within the various industries under his supervision within the context of the economic model provided by his firm and the a climate of investor sentiments. Industry analysis is critical. When a major investment trend develops, usually the stock of all companies within the specific industry react in the same direction. I should emphasize here, however, that an investment trend is influenced by the economic outlook, but economics is not the only determinant - investor psychology and arbitrary political factors may be of equal or greater importance. Part of our job is to recognize trends early and determine whether they are valid. Following industry analysis, the analyst must examine the specific companies within that industry since some companies usually react more violently than others to industry trends, whether they be favorable or adverse. To simplify the process of evaluating an investment opportunity, it is convenient to isolate three types of factors which have a bearing on every sort of business although the degree of influence of each factor may vary from industry to industry. These categories are, 1) independent or external factors insofar as they are beyond the control of corporate management, 2) interdependent factors insofar as influence may be exerted by industry-wide action, and 3) dependent factors covering the area of internal decisions which are basically under the control of the individual corporate managers. Although the title of this paper, "The Corporate Use of Cash Flow," is only one segment of the third category, it may be useful to continent on the first two categories as well. The independent factors may be either economic or governmental. The economic factors include cyclicality which may be very high in the case of the basic commodity industries or relatively low as in the case of utilities. Underlying growth rates, another independent factor, may range from the business equipment industry with an annual growth rate of 14% through the electric utility industry with a growth rate of about 7% per year to the

Jan 1, 1970

By John E. Husted

Universities have education as their primary purpose. This appears to be an innocuous statement with simple meaning. In an age of conflicting semantics, however, cords and meanings are often lost or changed. The term education is often broadly expanded to encompass any form of learning process, or the accumulation of knowledge, and even to the beneficial application of knowledge to man's problems, hence one find that education in universities is not solely the formal process of texts, lectures, recitations, and testing by a batch process known as class room teaching. Despite critics of education batch is spelled with an "a", instead of an "o" - at least we hope so If one defines teaching as causing to learn, then the learning objectives may necessitate a variety of approaches within the teaching concept and research is among those favored at the graduate and some undergraduate levels. Research has been among the glamour words and certain fields such as oceanography and space science have had more than their share of glamour. Unfortunately, industrial mineral research has not had the competitive drawing power of enamoring students of the "note" generation in terms of glamorous accomplishment. Research today usually requires sophisticated equipment and such equipment is expensive, both for initial purchase and operation. Again, administrations, be they industrial, government, or academic, usually require

Jan 1, 1970

By Joseph L. Condon

Fifteen shots of three explosives with charge weights of 0.52, 1.1, 3.1, and 5.1 kilograms were fired in a pond to study the seismic effects of detonating explosives in water. Shock pressures and bubble periods were measured with pressure transducers in the water. Vibrations were measured on land in three orthogonal directions with particle velocity gages. Statistical tests indicated that a charge weight exponent of 0.43 best scaled the data. While shock pressures and bubble periods showed considerable differences in explosive performances, the amplitudes of ground vibrations showed less difference, and one prediction equation was therefore derived to estimate vibration amplitudes from all the explosives.

Jan 1, 1970

By John W. Sweeney

The southeastern phosphate industry is investigated to determine its role in supplying the United States and world phosphate demand. The report shows that the southeastern (Florida, Tennessee, and North Carolina) phosphate industry is the leading domestic and world producer of phosphate rock, The report emphasizes size and organization, production capacity, transportation, and marketing of the southeastern phosphate product, Factors affecting the supply- demand relationship of the southeastern phosphate industry and world phosphate production-consumption relationships are analyzed and related to the southeastern phosphate industry. Past trends are projected and the future role of the southeastern phosphate industry is analyzed to determine its ability to supply the United States and rest-of-the-world phosphate requirements in 1985 and 2000. The projections show that southeastern resources are ample to supply domestic and export requirements at the projected rates of consumption well beyond the year 2000.

Jan 1, 1970

By D. A. Keefe, O&apos

The electrowinning of beryllium from beryllium oxide (BeO) using a molten-salt electrolyte composed of 56 LiF-37 BeF2-7 BeO (mole-percent) was investigated. Anodes made of porous carbon were found to be superior in current-carrying capacity and gave a lower cell voltage than other types of anode material tested. When porous carbon anodes were used) the resultant increase in anode area prevented anode passivation. The cell voltage was 3.3 volts) and electrode current efficiencies of 50 to 70 percent were obtained. The electrodeposited beryllium was recovered as beryllium powder or was coalesced to metal beads by heating to 1,300° C.

Jan 1, 1970

By Basil Dimitriades

The roles of hydrocarbons and nitrogen oxides in smog formation were investigated by the Bureau of Mines. Samples of automobile exhaust with varying HC and NOx levels were irradiated in a smog chamber under conditions that resulted in smog levels similar to those observed in the atmosphere. Results were used to define the patterns that describe the dependence of a number of smog manifestations on HC and on NOx. Using these dependence data and some simplifying assumptions, estimates were made of the ranges within which HC and NOx must lie in order to obtain specified levels of air quality.

Jan 1, 1970

By Leslie G. McMillion

A field project to develop and demonstrate a method for alleviating problems of highly-mineralized ground water where they occur as isolated zones or pockets in fresh-water aquifers is being conducted in the Ogallala Aquifer of eastern New Mexico by the Robert S. Kerr Water Research Center. Removal of contaminated water is by a large-capacity well and the pumped poor-quality water is used locally for secondary recovery of oil, Benefits of the operation are threefold in that the aquifer is being reclaimed for future fresh water production, contaminated water is being used beneficially, and fresh water which otherwise would have been used for waterflooding is available for other purposes. Ground-water quality in the site has improved markedly after 21 months of operation. Water quality in 15 specially-drilled monitoring wells has returned to the original quality level of the aquifer, and chloride concen¬trations in the pumping well have dropped to half the maximum level recorded thus far. Project results are very favorable and provide guidelines for initiation of similar undertakings in localities where needed.

Jan 1, 1970

By D. H. Hileman

Economic investigations indicate that bituminous coal can be mined underground in the Uinta region and marketed at a cost competitive with that of other energy sources in the West. A selling price of $3.90 per ton of coal was calculated from a cost analysis of a projected coal mine in the Emery coal- field of Utah. Although mines in some of the coalfields have extremely difficult mining conditions and cannot compete in the energy market at this price level, at least two other coalfields in the Uinta region contain coal reserves that could be mined and sold at a price of approximately $3.90 per ton. Projections by power companies and other coal-consuming industries indicate a strong future market for the large coal reserves in the Uinta region.

Jan 1, 1970

By F. J. Cservenyak

The Bureau of Mines Solid Waste Program is directed toward three main areas of research: (1) Extraction of mineral, metal, and energy values from urban refuse; (2) recovery of mineral and metal values from wastes generated in the industrial extraction, processing, and utilization of raw materials and mineral-base products; and (3) upgrading and utilization of automotive scrap. The Bureau also has a contract and grant program which supplements the in-house research and aids in the training of personnel in the proper management of mineral- and metal-based solid wastes.

Jan 1, 1970

By Frank G. Horino

This report presents a method of utilizing the Coulomb strength criteria for estimating the strength and stability of pillars and pit slopes containing planes of weakness. It is assumed that the Coulomb theory, as a special case of the Mohr envelope, is a satisfactory first approximation of failure in uniaxial compression or triaxial loading with low lateral loads. Accepting this assumption for brittle materials, an expression for the strength decrease of rock pillars containing a plane of weakness or fracture at any angle of orientation is derived. As few as six samples (three solid cores and three fractured cores at a failure-oriented angle) are required for testing uniaxially and triaxially to statistically determine the coefficients of friction and the shear strengths of both the solid rock and the fracture plane and the range of failure angles of the fracture plane. Interpretation of the data shows that the mean normal stress and maximum shear stress technique of analyzing the data is superior for solid core and that shear and normal stress values using angles of failure should be used for fractured specimens with failure-oriented angles. Plots of either the strength or strength ratios against fracture angles obtained from oriented drill core samples give a useful first approximation of strength decrease due to fracture. Using the same test conditions for both fractured and unfractured material increases the validity of the tests.

Jan 1, 1970

The commonly used Stopes-Heerlen coal petrographic classification and nomenclature has over the years been subject to variable interpretations. This paper discusses the problem with specific reference to the inertinite maceral group. The effect of various interpretations of the Stopes-Heerlen system on maceral analysis is discussed and illustrated by means of comparative analyses conducted by a number of laboratories in Australia.An attempt is made to define the reflectance thresholds used by the authors to subdivide the inertinite group; the genetic and technological significance of these thresholds are compared.The difficulties of distinguishing structured and nonstructured macerals of the inertinite group are discussed in terms of possible improvements to the present StopesHeerlen system by extending the classification to include transitional maceral types.

Jan 1, 1970

Lead isotope measurements indicate that lead from the A.B.H. Consols mine and two transgressive veins in Browne's shaft is "Thackaringa" type and not "Broken Hill" type.

Jan 1, 1970

Standard petrographic profiles for many Permian seams from New South Wales and Queensland have been drawn up. The standard profiles of seams of the same age and from one or more coalfields were used to compile an idealized or type seam sequence for those coals in which more than half the seam profiles were similar to one another. A marked similarity existed between at least 7 of the 10 type seam sequences formed.The configurations of the vitrite-plus-clarite contents of the plies of 95 per cent of the seams could be formed from different arrangements of 3 basic sequences. These were...

Jan 1, 1970

By H. R. Babitzke

As part of a continuing project to develop refractory metal alloys for high-temperature structural applications, the Bureau of Mines applied solid solution and precipitation strengthening techniques to improve the properties of columbium alloys. The purpose was to investigate the effects of hafnium, tungsten, and boron on the formability, strength, and oxidation resistance of columbium. The experiment was of factorial design with two replications which called for 72 ingots of 36 basic compositions, weighing 150 grams each. Hafnium, tungsten, and boron were evaluated at 3, 3, and 4 levels, respectively. Values of alloy content are all in atomic percent. The highest strength observed was 29,000 psi at 1,200° C for alloys Cb-15Hf (No. 3), Cb-7.5Hf-5W-2B (No. 14), and Cb-15Hf-5W-2B (No. 15). At 1,200° C, the ternary alloy Cb-15Hf-5W (No. 6) which has shown good properties in previous Bureau of Mines investigations was the most resistant to oxidation For boron additions, the alloys oxidized more readily with increasing amounts of this element. The fabricability of the alloys high in boron became increasingly difficult, resulting in an inadequate number of alloys required for a complete statistical analysis for all the tests. As a result of the decrease in ductility, an insufficient quantity of tensile samples were available for a proper analysis for the high-temperature strength data.

Jan 1, 1970

The C.S.A. copper-lead-zinc mine, located 7 miles north of Cobar in central-western New South Wales, is the largest known mineral ocurrence in the Cobar mining field. The generally discordant orebodies occur within a strike width of 600 ft and an overall strike length of 1200 ft. They are enclosed by the steeply westdipping, west-facing sediments of the Cobar Group, and comprise lenticular steeply north-pitching and eastdipping zones of sulphide mineralization which range in composition from massive pyrite-sphalerite-pyrrhotitegalena to less massive pyrite-pyrrhotite-chalcopyrite varieties.The thinly bedded siltstones, shales, and greywackes enclosing the mineralization appear to have derived some of their constituents from volcanic sources. They have been metamorphosed to the greenschist facies of regional metamorphism. At least two stages of deformation and folding have occurred. The first stage folded the rocks on a south pitching fold axis into their present configuration, and superimposed a strong axial plane cleavage which subsequently guided the emplacement of the mineralization. The second stage of deformation is considered to have controlled the zonal distribution of the orebodies.

Jan 1, 1970

By G. E. Perry, R. D. Seba

The steam soak process is the most widely applied and most successful thermal supplemental recovery process in use today. This process, which consists of injection of steam in various quantities into a well that is subsequently used as a producer, can be repeatedly applied to the same well. The treatment, if successful, will increase the production rate of the well for a given period. For this reason, the steam soak process should be considered primarily as an acceleration method rather than as a method for producing oil that could not be recovered by primary means. However, application of this process to reservoirs containing viscous crude may produce oil that otherwise would have zero present value or would be produced at such low rates by primary methods that it would not be profitable. A major necessity for the successful application of the steam soak process is a source of natural energy. This source of energy may exist in one or more of the following forms: expansion of fluids, compaction, gravity drainage. This study was undertaken to determine the effect of gravity drainage on steam soak production and recovery and to develop a method for predicting production rates, ultimate recovery, and heat requirements when applying this process to a reservoir in which the primary driving mechanism is gravity drainage. (For additional discussion of some of the factors that affect recovery of viscous oils by the steam soak process, see Ref. 5.) Model The model developed for analyzing the performance of the steam soak process in gravity drainage reservoirs is a modified form of that developed by Matthews and Lefkovits.1,2 The model used in this study consists of two concentric cylindrical volumes of productive formation with cap and base rock of impermeable material. The inner cylinder, extending from the radius of the wellbore to some predetermined radius, is referred to as the hot zone; and the outer cylinder extending from the exterior boundary of the hot zone to the outer drainage boundary will be referred to as the partially heated zone. Fig. 1 is a schematic cross-section of the model, indicating its thermal properties. Horizontally the reservoir is divided into two regions, the upper region having a high gas saturation and residual liquid saturation, and the lower region containing a high liquid saturation. The boundary between these two regions is referred to as the free surface, which drops and changes shape as fluid is produced from the reservoir. The model was used to analyze the steam soak process by applying the following assumptions: 1. The horizontal formation is composed of one or more homogeneous noninterconnected layers containing incompressible fluids. Each layer is treated separately. 2. The hot zone is heated by the initial soak and is maintained at the steam temperature corresponding to atmospheric pressure by resoaking. 3. The height of the free surface at the producing well is at all times zero (producing well is pumped off). 4. The position of the free surface at the start of

Jan 1, 1970