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By Peter A. Allen

INTRODUCTION Lac Minerals Ltd., a significant North American producer of gold and other metals for over three decades, recently completed the financing for its third discovery in an eight year period. From 1975 to 1982, three important gold deposits in Quebec and Ontario: namely Bousquet, Doyon and Hemlo, were located and tested by company geologists. When current development plans are complete, Lac will have injected $400 million into these deposits. A discussion of these projects and their financing reveals some extraordinary challenges faced by top mining management. Responses to these challenges developed by Lac management may interest executives planning to proceed with new North American gold or base metal mines. MINE DE BOUSQUET In 1976, we explored a property containing a large low grade surface gold deposit. The geologial setting was exciting and we tested recent rethinking about the volcanigenic genesis of gold and base metal occurrences. These ideas helped pus to persist in drilling a nearby conductor and 600,000 ton, 0.22 ounce/ton orebody was outlined. With gold at $Cdn.150 per ounce the feasibility was approved and work started February 1978. Availability of a company custom mill 35 miles away reduced our immediate capital needs to $8.5 million. First of all, understanding the geological significance of results at Bousquet was critical. Mine and surface exploration geologists at Lac are continually and closely working together to better understand the nature of gold deposits in the Shield. This management emphasis on both pure and mine geology meant that a much larger ore reserve could confidently be predicted. (A proposal to quickly develop and ship the ore to a nearby company mine was discarded.) Instead of designing just for the initial plan of 500 tons per day we therefore included headframe, shaft and hoisting capacity for 1,700 tons and provided a compartment for future shaft deepening. These prebuilt additions were welcomed within two years. The type of collaboration whereby surface and mine geologists make study and field projects of each other's problems sets the foundation for this predictive ability. At Lac, the traditional responsibility for and supervision of the mine geologist by the mine manager is modified by this collaboration. This adds interest and scope to the geologist's work and lets him think beyond production requirements. Besides such management considerations, dedicated, professional geologists with integrity and lots of practical experience are needed to plan successful developments like Bousquet. Second, projecting future bullion revenue was critical and our experience selling production for future delivery gave us a way to ensure that loan repayment at term would not be jeopardized by falling metal prices. Output from a single mine is often reduced or curtailed for numerous reasons, so "selling forward" is done best and with least risk by companies like Lac with more than one or two producing locations for that metal. At first, a forward marketing program was considered unwise, speculative and unorthodox by analysts and other producers. Declining markets in the early 1980s prolonged gold project capital recoveries however, and critics were better able to appreciate the usefulness of such a tool. The notion that gold miners shouldn't sell forward is rooted in the belief that long-run gold prices will rise as modern social theory implementation in democracies inevitably erodes currency values. Selling against this trend goes against this industry belief or "ethic" and is at odds with the company shareholder who expects the gold price to rise not fall. Nonetheless, an efficient tool is available to the gold producer (not to most other metal producers) to quickly disengage from adverse price trends or to lock in spot prices instantaneously for two years or more of profits. Gold had recently retreated from U.S.$200 to $104 and now had reversed to $150. Lac had been forced to close several of its producers during the late 1960s because central bank-controlled

Jan 1, 1985

By Schneider, W. G.

IT is not my purpose to burden you with many statistics. The charts herewith should be considered merely as indicating the trend. I believe' that is what is really of interest to us. It is difficult, if not impossible to forecast with any assurance future developments, because of possible new mines, competitive materials, curtailment' or increase in the use of the metal in certain markets, and many other factors that have a vital bearing on any industry. Fig. 1 shows United States smeltet output of copper, starting with 1845. It is estimated that in 1928 the smelter output of copper will be about 1,010,000 tons. Between 1895 and 1905 it increased about 200,000 tons, and between 1905 and 1915 about 240,000 tons. Between 1915 and 1925 the increase was about 140,000 tons. This is an average increase over 30 years of about 190,00Q tons per ten-year period. At the present time the indications are that this demand for increased production will continue. As to whether or not we have the supplies or facilities to maintain this increase or a greater one, remains to be seen. Provided it is possible for United States smelters to increase their production, they should be producing at the rate of about 1,210,000 tons or more per year by 1935.

Jan 1, 1928

By AIME AIME

THE second session on geophysical prospecting at the February meeting of the Institute was a discussion of the mining law and the bearing of the new method of search on location of claims and assessment work thereon. Allen H. Rogers was chairman of the meeting, which he opened by reviewing the present law and the proposed changes. W. R. Ingalls commented (by letter) on the Arentz bill, as introduced into the House of Representatives in 1921 and the need for revision of the present mining law. L. W. Douglas explained (by letter) the bill that he introduced and which has been passed by the House. SAMUEL S. ARENTZ, Nevada: It is my opinion that if the American Institute of Mining and Metallurgical Engineers is to sell this proposition to the people in the West, they have to sell it to the lawyers, because, after all, they are heard loudly when it comes to speaking in Congress. One man tells the other, "This thing is a vicious piece of legislation"; it might not be, but they will pass it on if it affects them. If the Institute would impress on the people affected that we need a re-codification of the mining law and that such is necessary along certain lines; that things have changed during the past decade or two, so today instead of doing our prospecting alone through the sinking of a shaft, through a discovery that may be seen, we are now moving on to more modern means of discovery through geophysics, through the churn-drill, through geology, through geological inference, I think we could get somewhere.

Jan 1, 1929

By H. J. Polta, R. W. Michelson

Discounted cash flow analysis is commonly used to evaluate the profit making potential of a business venture. The same method can be used to analyze the effects of varying physical and economic conditions upon the real cost of supplying a mineral commodity. If a fixed rate of return on a capital investment is specified, and the flow of cash, discounted at that rate, is just adequate to repay the investment over the life of the venture, the net present value of the venture is zero. At this condition it is possible to evaluate the unit cost of producing the mineral. It will be exactly equal to the selling price required to calculate a zero present value. Increasing a particular cost factor will not always increase the cost of supply by the same amount. For example, in iron production from magnetic taconite, an increased cost per ton associated with beneficiation would be integrated into the discounted cash flow model along with local, State, and Federal taxes, depletion and depreciation allowances, resultant increased unit recoveries, and all of the other related component cost factors. Rather than adding to the cost, the factor may have a positive, instead of a negative, effect on the discounted cash flow and cause a decreased cost of supply. This value can be determined by a computer model which iterates the necessary selling price until the net present value is essentially zero. The discounted cash flow evaluation model lends itself particularly well to an application of the Monte Carlo simulation method for calculating a probability distribution of iron unit cost resulting from the probability distributions of the component cost factors.

Jan 1, 1969

By Nathan C. Rockwood

BASIC mineral commodities may be divided into two general classifications in their market or price characteristics. In one class are commodities sold on a world-wide basis, as gold, silver, nickel, asbestos and petroleum, and in the second are those produced and sold locally. Of course, no precise line of demarcation exists between the two; coal, for instance, belongs more or less in both. If there are enough producers of any commodity to prevent control of production by any one person or group, a free market then exists and the price in a buyer's market is determined by the most favored producer-meaning the producer, with the lowest production cost or the lowest cost of transportation, or both, to the particular market, or place of use. With minerals in the first classification, their high intrinsic value far outweighs the transportation cost and a uniform market price is accepted as an essential element in the economy of distribution. But with common minerals of small. intrinsic value and relatively high transportation costs, economists are reluctant to admit that a uniform price may also be an essential element in distribution.

Jan 1, 1940

By Mark L. Requa

(San Francisco fleeting, October, 1911.) DURING the past two years California has developed a new and important oil-field : I refer to Midway. This field produced the famous Lake View gusher, which is credited with a total production in excess of 8,000,000 barrels. Fortunately for the oil industry of the State, this well is now a thing of the past, and nothing save a great crater-like opening marks its location. The pipe is entirely worn away and gone ; and it is a matter of serious doubt if there can be anything done that will cause the well to produce again. Fortunately, also, there have been no, other wells in that field or elsewhere throughout the State that in any way compared with the Lake View. Midway is noted for large wells, of from 500 to 2,000 barrels production; but the decline is rapid, and a few months serve to bring the output down to a few hundred barrels. In the oil-territory heretofore blocked out as proved and probable, there have been, during the year, many changes. Some areas which were expected to be fairly productive have apparently failed; others, more strictly "wild-cat," have come in; while in some of the older fields there are properties which are beginning to show evident signs of exhaustion. The total area of proved territory will therefore probably suffer but small increase, when balances are struck off. The increase of new area has come from extensions of the Midway field, the development of a field in Lost Hills and Belridge, and extensions of the Fullerton-Whittier field in southern California. In these later developments, down to date, the fresh area absolutely proved is not much in excess of 3,000 acres. Recent developments in Coalinga indicate the possible extension of that field to the south, but at great depth. Coalinga is still the most northerly field of any consequence in the State. The Kettleman Hills have hitherto brought in nothing, although a

Apr 1, 1912

By J. L. SILSBEE

THE existence of large saline deposits in that flat arid basin, known as the Great Salt Lake Desert, has long been recognized, but the extent and great commercial value of these deposits has not been generally appreciated. That a very considerable interest has recently developed is indicated by the fact that about 263 prospecting permits-each covering about 2560 acres of land in this Desert-have been issued under the Potash Leasing Act (Act of 0ct. 2, 1917-40 Stat. 297), and patents granted on approximately 40,000 acres. It is reported that patents and leases have, or will be applied for on an additional 80,000 acres in the basin. , Tests have been made on probably less than 10 per cent. of the total area of the basin, but these have proved a practically unlimited supply of brine available -sufficient, probably, to. furnish the potassium and magnesium chloride requirements of this country for at least a hundred years.

Jan 1, 1925

By HAROLD VINTON COES

THE motive for merging or consolidation today is conspicuously different from that actuating business men in the late eighties and early nine- ties. Then they combined to secure added productive capacity and to monopolize their respective industries with a view to exploiting the consumer. So flagrant were some of these cases that they brought about their own correctives via retaliation on the part of the public and the subsequent restrictive legislation and legal curbs. The objective of the present-day merger, writes W. R. Hill in Printers' Ink, December, 1927, is summarized as follows : "In the golden days when an industry was being cut to pieces, the prevailing cure was to combine. The reason for such trusts was to strangle competition and by creating a monopoly, dominate the market, raise prices, regardless of economic business methods, and simply force larger profits.

Jan 1, 1930

By John B. Miles

THE present period of depression in the iron industry, with the resultant close approximation of the cost of production to the selling-price of pig-iron, should make the discussion of this subject at this time not only interesting but, profitable. It is possible that it may result, in the collection of data, which when added to those set forth in this paper will clearly indicate the influence of the rate. of driving a blast-furnace upon its fuel-economy. The question is not whether an excessive rate of driving (meaning a rate definitely in excess of the average rate in the United States) results in, an increase in the fuel-consumption, but rather whether a rate considerably less than the average does not result in a marked decrease in the fuel-consumption. The commercial and metallurgical sides of. this problem must be kept separate. With a large margin between the cost of production and the selling-price of pig-iron, and a plant already in operation, it is frequently profitable to sacrifice a couple of hundred pounds of fuel per ton of pig-iron in order to secure the greater gross profits resulting from a larger tonnage. When this margin decreases with a plant in operation, or when the determination of the size of a new furnace intended for a certain production . confronts the management, a clear understanding of the effect of the rate of driving upon fuel-economy becomes necessary. If it be granted that slow driving leads to low fuel-consumption, it should he borne in mind in the design of a new plant for the production of a certain tonnage that the adoption of an economical rate of driving increases only the size of the furnace proper, whereas, due to the decrease in quantity of blast required on account of the decrease in fuel burned, the stoves, the blowing-engines, the boilers and the piping may be de-

Sep 1, 1908

By Gerald C. Dohm

INTRODUCTION After a mining company has discovered a mineral deposit, the problem is then how to mine and process that deposit the best way. The principal problem facing managers or engineers who must decide on mine plant size, equipment selection, and long-range scheduling is how one can optimize a property not only in terms of efficiency but also as to project duration. Mine opti¬mization is dependent upon the interaction of con¬tributing parameters which leads to maximizing the net present value (NPV) Realistic mine planning is the key, to the analysis. The process is to be used when evaluating undeveloped properties or when a complete revamping of existing facilities is scheduled The proc¬ess is not intended for detailed mine design but rather for property evaluation and feasibility studies. The derivation of the various input parameters will only be discussed to the point where a meaningful correlation can be made with the overall analysis. The interrelationship of the parameters will be the central point because most company guidelines and financial analysts have their own standards when deriving the various inputs. Assume that the data is totally acceptable and pro¬vides at least the following categories of information and guidelines- (1) mineral and waste inventory; (2) geologic, hydrologic, and geotechnical criteria; (3) topographic layout including property boundaries; (4) metallurgical flowsheet, recovery and design criteria; (5) access, water, power, and environmental base-line study; and (6) financial constraints (minimum rate of return, payback period, etc).

Jan 1, 1979

By Charles Janin

ONE of the most interesting features of the world's platinum situation has been the steady increase of Russian production, which had dropped to 11,000 oz. in 1920, but increased to 92,000 oz. in 1926, and to probably over 100,000 oz. for 1927. It is ex-pected that Russian production of platinum will, be-fore long, closely equal its pre-war production, or approximately 200,000 oz. annually. The world production before the war was around 250,000 oz.; that for 1925 has been estimated at 160,000 oz., and for 1926 probably 170,000 oz. The consump-tion of platinum has, however, decreased. The esti-mate of the International Selling Agency was a de-mand of 130,000 oz. new platinum against a normal pre-war demand of over 200,000 oz. The high price of platinum during the war gave an added impetus to the search for substitutes for the metal, and sev-eral were developed that are now used extensively in place of platinum. The demand for platinum for high-class jewelry, however, was not greatly affected by the high prices, but "white" gold did replace platinum in the cheaper jewelry. Colombia is the most important producer of plati-num, next to Russia, and the production has increased from around 10,000 oz. pre-war production to 55,000 oz. or more in 1927. In 1924 important discoveries of platinum were made in South Africa. Prior to these discoveries practically all platinum was recovered from alluvial deposits, and the South African opera-tions are first to work an ore profitably for the pri-mary recovery of platinum. A number of companies were formed to develop these deposits, but only a few made any real progress. Total production for 1926 was about 5000 oz. The United States production is unimportant; that in Canada has increased to around 9000 oz., principally as a by-product in nickel-copper ores.

Jan 5, 1928

By CHARLES DORRANGE

INTRODUCTION. CULM is a general term used in the anthracite regions for many years to denote a mixture of coal, bony coal and impurities which is sent to the refuse-banks. Thus, 35 years ago culm contained the pea and buckwheat sizes of anthracite; but to-day, and as mentioned in this paper, culm is used specifically to denote the material which passes through the smallest screen in the anthracite-breaker. The smallest size of commercial anthracite is known as No. 3 buckwheat, barley, or bird's-eye coal, and is ordinarily made through a round-punched plate having openings 3/16 in. in diameter, and over a round-punched plate with opening 3/32 in. or 1/16 in. in diameter. Thus culm will consist of coal, bony coal, slate, gravel, iron pyrite, etc., ranging in size from ? 3/32 in. down to dust. Other local terms for culm are " slush," " silt," and " dirt." The first experiments towards the utilization of anthracite culm by briquetting, and the first briquetting-work done in this country, were in 1872 at Port Richmond Piers, Philadelphia, Pa., by E. F., Loiseau.1 Clay was used as a binder and the finished briquette was water-proofed with shellac, etc. Excessive cost was given as the reason for discontinuing work at this plant. The Delaware k Hudson Co., in 1876, built a plant at Rondout, N. Y., which operated until 1880. Gas-tar was used as a binder, and anthracite screenings were briquetted for engine fuel. Excessive cost, poor results in firing, and the tendency of the fuel to cut the boiler-flues were given as the reasons for discontinuing the manufacture. The next plant was built by E. F. Loiseau about 1878, at Nesquehoning, Pa., near the No. 1 or Nesquehoning colliery

Sep 1, 1911

By HILAND BATCHELLER

COMMENT on the economic significance of the special alloy steels seems inevitably to reduce itself to an attempt to peer into the future of the industry in which we are interested. We are all familiar with the historical development of iron and with the almost complete replacement of iron by steel. Those who have been connected with the industry since its .early days have had the satisfaction of witnessing the greatest industrial development the world has seen. As the cartoonists of the muck-raking decade liked to picture steel as an ogre armed with a spiked club, his hands reeking with blood and with golden coins dripping from his pocket, fiercely seeking for more widows and orphans to devour, I choose to call on my imagination to create a gigantic but beneficent robot of such marvellous mechanical skill. that it quickly transforms millions of tons of otherwise worthless material into the infinite variety of useful products which are so largely responsible for our present civilization.

Jan 1, 1931

By Robert F. Calman

OUTLINE FIVE EXAMPLES OF GOLD-LINKED FINANCINGS 1. Financing the Lupin Mine • Sale of Cdn $40.0 million of 12% preferred shares and Cdn $40.0 million of Gold Purchase Warrants @ $595 per ounce. 2. Financing the Copper Range acquisition • Borrowing 100,000 ounces from a Canadian chartered bank @ US$307 for five years. 3. Financing the Round Mountain expansion • Borrowing up to US $80.0 million in dollars, convertible into gold, repayable over five years from a group of North American banks. 4. Financing the Tenneco Precious Metals Division acquisition •Sale of SFr 110.0 million of ten year 3-718% bonds with warrants to buy 132,000 ounces of gold at US $560. 5. On Forward Sales, Puts and Calls • Gold, Silver, Canadian Dollars, Swiss Francs THE FINANCIAL RULES AT ECHO BAY 1. Never bet the company 2. Equity is the primary form of capital for a gold mining company 3. On debt 4. The Yardsticks for Corporate Decisions 5. Financial Community Relationships 6. Dividend Policy No Text Available Tables Follow

Jan 1, 1990

THE John Fritz Medal Board of Award, at its regu¬lar annual meeting Oct. 19, awarded its gold medal to Herbert Clark Hoover. Thus ended a process of selection begun a few years ago. The award was tentatively made a year ago by the Board, which is composed of sixteen recent past-presidents of the four national societies of Civil, Mining and Metallurgical, Mechanical, and Electrical Engineers, having together a membership of nearly 60,000. The sixteen members of the Board are: American Society of Civil Engineers : C. E. Grunsky, Robert Ridgway, George S. Davison and John F. Stevens ; American Institute of Mining and Metallurgical Engineers: William Kelly, J. V. W. Reynders, Samuel A. Taylor and E. DeGolyer; American Society of Mechanical Engineers: Fred R. Low, D. S. Jacobus, Dexter S. Kimball and Charles M. Schwab; American Institute of Electrical Engineers: Farley Osgood, M. I. Pupin, C. C. Chesney and Bancroft Gherardi.

Jan 1, 1928

By W. J. O'CONNOR

THE production of lead in the United States for the period from 1720 to 1912 was 10,432,668 tons valued at $924,600,000. The average price during this period was 4.4c. a pound, although lead sold at times below 3 cents. We know that in the early days of lead smelting in Montana lead was deliberately lost in the slag and only enough reduced as bullion to collect the silver. This bullion was freighted by ox team to Corinne, Utah, the terminus of the railroad at that time, and shipped to Swansea or Omaha, Neb., for refining. The slag from some of the above mentioned operations contained as much as 15 per cent lead and has since been resmelted. Since 1921 the production of lead has increased each year and the price and tonnage have been as follows :

Jan 1, 1926

By George A. Roche

Investment in growth stocks is the most assured way of achieving superior, long term investment accomplishment. There are many criteria used to select growth companies but the most important is a combination of superior management operating in an industry with above average growth potential. This growth stock approach is the cornerstone of investment strategy for two of the three mutual funds sponsored by the Price organization and for its private clients. However, during the past five years inflation has accelerated due to a variety of factors including the inability of government to meet seemingly unlimited needs with limited revenue sources.

Jan 4, 1972

By HAROLD A. KNIGHT

The Miami Copper Co., Arizona, is asking Congress to reimpose the import duty of two cents per pound on copper which, by law, has been suspended until June 30, 1950. C. Donald Dallas, chairman of Revere Copper and Brass, champion of a duty-free regime as regards the red metal, has been answering E. H. Westlake, Miami president, now that Mr. Westlake's statement to stock- holders has been salted away for posterity on wire recorders. Even prior to this action and at the instigation of two prominent consumers of pig lead, the House of Representatives has, in the confines of committee, not yet reported out, as of June 16, a bill to suspend the duty on lead for another year from expiration of the present law June 30, 1949. But apparently the bill was started too late. Thus the tariff issue becomes a Rip Van Winkle again after having slept for several years in the mountains of metals scarcity. During the wartime scarcity and the boom days that followed, most metal producers welcomed a considerable influx of foreign metal since it gave them a little surcease from constant teleibhone calls asking why that delivery of 300 tons of lead, 250 tons of zinc, and 1000 tons of copper had been delayed. These were the days when it was such an undisputed sellers' market that the sellers had even thrown away their certificates of ownership. Another development that brings home the tariff situation, small in it- self but perhaps indicating a trend, has been the announced closing of

Jan 1, 1949

By D. R. Knowlton

IF I were a minister, and this were a sermon, and such a passage appeared in the Bible, I would choose for my text: "From whence cometh the oil for our war?" And no preacher was ever more serious than I am. You petroleum engineers recognize that the producing branch of the industry is passing through an era of plenty and inflated potentials into an era of scarcity and unmet allowables. Not too long ago the oil operators of Kansas, California, and Texas were appearing before operators' meetings and regulatory authorities asserting that these States were capable of producing at rates far in excess of what the demand at that time would absorb. Today every oil-producing area in the United States except the Texas Gulf Coast and West Texas is producing close to or in excess of its maximum efficient rate.

Jan 1, 1943

By George H. Jones

NO STRANGER phenomenon exists in the American mining industry today than the so-called bootleg anthracite industry in Pennsylvania which now produces probably close to 15 per cent of the total hard coal out- put of the State. Instead of being what - was first thought to be a temporary condition, countenanced because of the desperate condition of some of the miners at the depth of the depression. it is thriving now as never before. Re- ports of it have penetrated all over the world, as exemplified by inquiries concerning it in Durban, South Africa mentioned by John C. Cosgrove in his article in the July MINING AND META LURGY.

Jan 1, 1939