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By G. H. Roybal

Humic-acid-rich deposits exist in Arkansas, Florida, Louisiana, New York, North Dakota, Michigan, Minnesota, Texas, and Wyoming (Burdick, 1965) and in New Mexico (Shomaker and Hiss, 1974). New Mexico humic deposits are associated with coal in the northwestern part of the state where humate and weathered coal are presently mined. Discussion of the humic -acid industry in New Mexico requires an understanding of complex terminology and coal geology. TERMINOLOGY Humic material is not a pure substance so an ambiguous and complex terminology is in use by geologists, chemists, soil scientists, agronomists, and producers. Material mined for its humic-acid content is an extremely variable mixture of base-soluble humic, fulvic, and ulvic acids and their salts, formed during partial or complete decay of organic matter. This decay releases a high-molecular-weight organic material which is darkly colored, partly colloidal, and weakly acidic.

Jan 1, 1985

By D. A. Gulley, L. J. MacDonnell, William A. Vogely

INTRODUCTION Environmental impacts are most commonly associated with air and water pollution. Not- withstanding this fact, to many people the primary disruption caused by mineral extraction is the change in the character of the locale. That is, the environmental impact of mining includes, but is not limited to, the generation of residuals. The dramatic transformation of wilderness or rural land often creates strong reactions to mineral development. Thus, the basic issues of land use management are a useful addition to environmental discussion. In this section, we take up a discussion of federal, state, and local land use management regimes, along with a brief introduction to the potential role of economic analysis. Elsewhere in this volume, land management issues are discussed from other orientations, and the interested reader may wish to look there as well. Locatable Minerals on Federal Lands Legislation and Administration: Access to hard-rock minerals on the public lands is governed by the General Mining Law of 1872. This law declares that "valuable mineral deposits in land belonging to the United States . . . are hereby declared to be free and open to exploration and purchase . . . ." In order to initiate rights, prospectors are required to physically stake claims of specified sizes and shapes following basic procedures set by federal law which may be supplemented by the individual states. Rights to these claims are protected at the exploration stage so long as actual possession is maintained and diligent exploration activity is underway. If a valuable mineral deposit is discovered on the claim, the claimholder earns the exclusive right of possession as against private parties so long as the claim is properly maintained. To maintain this exclusive right the claimholder must per- form $100 worth of labor or improvements, known as assessment work, on each claim every year and make related annual filings with the U. S. Department of the Interior. If the existence of a valuable mineral deposit can be demonstrated, and other legal requirements are met, the claimholder may receive a patent giving full title to the claimed land, including the surface in most cases. The purchase price is either $2.50 or $5 .OO per acre. The Mining Law has remained largely un- changed by legislative amendment during its now more than 100-vear existence. However, while the law itself has not changed, its interpretation and administration have changed considerably. Written at a time of rapid western expansion of the U.S. following the Civil War, the intent of the law was to promote mineral development by inviting unrestricted prospecting and by selling the lands containing mineral deposits at a minimal charge. As federal land policy shifted from one of rapid disposal into private ownership to one of retention and management for a number of uses, mineral patenting requirements have been administered more strictly. The most critical issue concerns what must be demonstrated to establish the existence of a valuable mineral deposit. The so-called "prudent man" standard was established in the case of Castle v. Womble (19 L.D. 455 (1894)):

Jan 1, 1985

By Robert J. Collins

Computer-aided design drafting systems have been employed in plant design for nearly ten years. Current and future systems will include computer-aided engineering as well. This paper will explore the history and development of such systems including computer and workstation hardware, graphics software, and plant design applications software. The paper will also address future systems and will present both the system vendor and the mine mill designer's view. Specific examples of particularly successful applications will be included.

Jan 1, 1985

By D. T. Couillard

Video technology is becoming an important tool for many designers of industrial training programs. This report describes how trainers at the Minntac Mine, Mt. Iron, MN, have developed videocassettes of safe job procedures (SJP's) for training miners assigned to perform unfamiliar work tasks. All steps necessary for videocassette production, from idea to finished product, as well as the required equipment and prices, are listed and/or briefly explained. Minntac officials believe that the SJP videocassettes have contributed significantly to a reduction in mine accidents.

Jan 1, 1985

A microcomputer based expert system is presented for fast and cheap mineral identification. Because of the increasing pipularityof and interest for minerals and precious stones (selling, hobby polishing, collecting, teaching etc.) we pointedly deal with gemstone identification. In most cases only some fundamental data are needed to identify a mineral sample (or precious stone) if we know how to use these data. The important, characterizing data of the well-known minerals are stored in the data-base of our program-system. The visible and measured optical and physical properties of the sample are compared adequately with the stored data to get the result, the name of the examined mineral. The system works in a simple, friendly way - asking questions, understanding answers - so that no special computer knowledge is necessary to use it, only the answers should be typed in. The main advantage of the system is that only relatively simple and fast measure-ments are required. Based on these measurements a fast, reliable identification is processed on a cheap com-puter running a sophisticated program-system. The MINTEST system handles even those cases when the tested mineral cannot be determined based on the given input data.

Jan 1, 1985

By James M. Barker

No commodity agreements now exist for sulfur and a lack of reference to sulfur commodity agreements exists in the literature. Law (1975) made a passing reference to sulfur as one of a group of commodities where "there have been additional control efforts of various types." Clearly, sulfur was a candidate, at least conceptually in the past, for some form of commodity agreement and the following discussion centers on the world sulfur market of the early 1980's in this context. GENERAL THEORY OF COMMODITY AGREEMENTS The upsurge in demands for commodity agreements seen in the last decade or so stems largely from agitation by the less developed countries (LDC) for better economic treatment by more developed countries (MDC). Several economic factors, real or imagined, adversely affect the LDC's as follows (MacAvoy, 1977): 1) variable demand in MDC's causes wide fluctuations in commodity prices which hurt the economies of commodity producers, who are often LDC's although consumer economies may also benefit from more predictable prices; 2) a general decline of commodity prices relative to the price of manufactured goods which hurts commodity producers in their balance of trade while their stocks and overcapacity rise; 3) instability of LDC economies enhanced by the above factors lowers internal stability, inhibits foreign investment, and retards economic growth; and 4) a lack of self respect when dealing with developed countries o, following the OPEC lead, LDC producers want the stature related to cartel market power.

Jan 1, 1985

By T. F. Anstett

The Bureau of Mines evaluated the potential availability of chrysotile, amosite, and crocidolite asbestos from 42 properties in market economy countries. This resulted in the development of tonnage-cost relationships indicating the quantity of grades 3 through 7 asbestos at various average total costs of production at 0% and 15% rates of return on invested capital. The availability of grades 2 and 8 was also evaluated, but since each is produced at only one property, no analytical results were given. Total demonstrated recoverable chrysotile fiber potentially available of grades 3 through 7 from the 42 properties evaluated follow: 1.59 million t, 21.00 million t, 16.74 million t, 15.54 million t, and 19.27 million t, respectively. The total amount of crocidolite is 1.69 million t. Owing to the good potential for discovery and development of new deposits, long- term availability of fiber of all three types is not in jeopardy. However, many of the crocidolite properties evaluated in the northern Cape crocidolite field of South Africa have relatively small demonstrated resources, and new deposits will have to be exploited by the late 1990's to sustain projected levels of production.

Jan 1, 1985

By J. B. Czirr

MESA Corporation has completed a four-year program for the Bureau of Mines to develop a technique for measuring roof competence in underground coal mines. The preferred technique employs a tracer gas that is injected into a roof borehole drilled near the working face. The tracer gas performs the dual purpose of determining the pressure loss rate from the borehole and of marking the diffusion pattern of the the escaping gas. The primary detection technique relies upon observation of the rate of pressure drop in a hole drilled in the roof strata under test. If this measurement indicates a significant probability of roof collapse, the gas diffusion pattern is outlined with the Leak-gun tracer-gas detector. These two techniques provide a comprehensive method for predicting the relative probability of roof collapse in operating coal mines.

Jan 1, 1985

By C. P. Mishra

The Bureau of Mines performed a study of the availability of cobalt from market economy countries. The study entailed the detailed analysis of 97 deposits which contain 3.9 billion lb of cobalt at the demonstrated level; in 94 of the deposits cobalt is recovered as a byproduct, and in 3 it is considered the primary product. Since 97 pet of all recoverable cobalt is derived as a byproduct from copper and nickel deposits, the report focused on these two sources. At an assumed market price of $0.89flb for copper, $3.45/lb for nickel, $475/tr 021 for platinum, and $7/lb for cobalt, 1,330 million lb of cobalt at the demonstrated level are potentially available. This total includes 1,105 million lb of cobalt from copper properties, 190 million lb from nickel, 29 million lb from platinum, and 6 million lb from primary cobalt. This analysis indicates that the production cost for 589 million lb of cobalt can be totally covered by the revenues obtained from the other metals produced. The impacts of increases in capital investment and energy costs are also discussed.

Jan 1, 1985

By J. O. Pitts

"Background The preponderance of Canada's coal resources is located in areas remote from high demand domestic users and at some significant distances from deepsea ports. This places great demands on the transportation system and has forced the coal and the transportation industries to adopt highly efficient methods of handling the product and hauling it to market position. Most of the coal not consumed in minemouth thermal power stations is carried by rail over lines operated by the two transcontinental railway systems, Canadian National and Canadian Pacific. These rail networks are extensive and have the advantage (as compared to most other North American railways) of being able to handle coal movements from origin through to destination without interchange to other rail carriers. Coal SourcesWith exception of the coal produced in Cape Breton, Nova iScotia, all the significant shipping volumes in Canada emanate ifrom mines located in the three most westerly provinces. Figure I ishows the geographic distribution of the major mining operaitions shipping coal to domestic and export markets. The prinicipal routes and the tonnages carried (1980 calendar year) are ialso indicated. iThe 1980 shipping data are summarized in Table I. Saskatchewan lignite began moving from Bienfait to Thunder Bay by CP Rail unit trains in mid-1981 at the rate of one million tonnes per year. The product is handled through Thunder Bay Terminals and delivered directly to a nearby Ontario Hydro electrical generating station."

Jan 1, 1985

By John J. McCabe

INTRODUCTION Over the years, Congress has written into the Internal Revenue Code various provisions aimed at lessening at least one financial burden faced by taxpayers in the mining industry - the federal income tax burden. These provisions include the election to deduct exploration expenses, the election to defer deduction of development expenses, and the percentage depletion deduction. Careful tax planning from the very beginning of a mining venture is essential in taking maximum advantage of these tax benefits. A major decision to be made is the choice of organizational structure. (For a more detailed discussion of this subject, see McCabe, John J., "Developing Structures for Investments in Mineral Property," New York University Institute on Federal Taxation, 42 NYU 24, 1984). One such structure is the use of multiple corporations, with mining activities conducted by one corporation and nonmining activities, such as manufacturing, financing and administration, conducted by the other corporation. This technique, which will be discussed in detail below, can be particularly advantageous in delaying recapture of previously deducted exploration expenses and in maximizing depletion deductions. TAX BENEFITS IN MINING Exploration Subject to certain restrictions discussed below, exploration expenditures (i.e., expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development state of the mine are deductible at the election of the taxpayer (Section 617(a)).* Were it not for this option, exploration expenditures would be required to be capitalized and recovered through depletion, after production begins. Exploration of a mineral deposit can be very costly and may not result in commercial production for some time. If the taxpayer has income to he offset by the deductions, a mining venture can usually be structured in such a way as to allow the offset of mining losses against the other income. With today's high interest rates, this election can be quite valuable in present value terms. Corporate and noncorporate taxpayers are subject to different restrictions on this tax benefit. Corporations may elect to deduct only 85 percent of eligible exploration expenditures (Section 291(b)). (The Tax Reform Act of 1984 reduced this to 80 percent effective for expenditures after December 31, 1984, in taxable years ending after such date). The remaining 15 percent (20 percent after December 31, 1984) is capitalized and recovered at the same rate as five-year ACRS property (Section 291(b)). Individual taxpayers are not subject to this 85 percent rule; however, any amount deducted in excess of ten-year straightline amortization is a tax preference item for individuals (Section 57(a)(5)). Individuals may avoid the tax preference by electing to capitalize exploration expenditures and amortize them over ten years (Section 58(i)). In order to prevent the taxpayer from, in effect, converting ordinary income into capital gain by selling property that has given rise to exploration expense deductions, the Code requires recapture of such deductions upon the occurrence of certain events (Section 617): 1. Upon disposition of the property, adjusted exploration expenditures are recaptured to the extent of gain realized on the disposition (Section 617(d)). 2. If the property is leased, the lessor is disallowed any depletion deduction until his adjusted exploration expenditures have been recaptured in the form of foregone depletion deductions (Section 617(c)).

Jan 1, 1985

This publication contains 10 papers presented at a symposium on ATRS systems in Charleston, WV, on June 23, 1983. Included are papers by MSHA Technical Support (Roof Control), West Virginia Institute of Technology, the Bureau of Mines, and seven roof bolter manufacturers and/or designers of ATRS systems. These papers summarize the most recent developments in ATRS technology and can serve as a guide to potential designers, developers, and users of ATRS systems.

Jan 1, 1985

By William J. Potter, Roger N. Pyle

Introduction The primary ingredient for survival of mining companies during a recessionary period is to be innovative and resourceful in the structuring and financing of operations. Over the past decade, many mining companies have had to retrench and restructure their operations and to redeploy their assets just to survive. During the same period, traditional sources of financing for mining companies -- commercial banks, subsidized export credit loans and long term straight debt financing in the public markets -- became less available and more expensive. Meanwhile, new markets and new financing instruments provided new alternatives for mining companies. Those companies which exploited these alternatives greatly enhanced their capacity for survival and even for profitability. This article considers the strategies adopted by some companies to adapt to changes in this recessionary environment; the inadequacy of traditional sources of financing; certain of the new financing instruments, structures and markets which have become available; and how several mining companies have utilized these new instruments, structures and financial markets to improve their competitive positions. THE IMPACT OF RECESSION ON MINING COMPANIES AND TRADITIONAL FINANCING SOURCES In its 1983 year-end article "The New Economic Order" Mining Journal characterized many of the large private sector mining companies with operations in the industrialized countries as being "gripped between the jaws of high working costs and stagnating metal commodity prices." The article went on to characterize the Canadian mining industry in particular as being "in the difficult position of having to seek to sell the bulk of its output in a world market characterized by over-capacity, where production costs were determined by internal political and economic factors while prices were set by external competitive forces of supply and demand." Miners of a wide range of commodities in the industrialized countries have come to realize that their domestic mineral resources are in many cases no longer competitive with global sources of supply. To compete and survive they would have to rely on their technical and financial expertise in mineral exploration and development and in mining and processing. Strategies For Survival Global competition has compelled management in the extractive industries to improve their worldwide cost position. This is the only means whereby a mining company can differentiate its product and attain a substantial competitive advantage. During the past decade, for example, ASARCO Inc. and Inco Ltd. chopped their payrolls, postponed expansion plans and otherwise retrenched. ASARCO reduced its capital expenditures and cash requirements for operations in 1984 to a level almost equal to its internally generated cash. The company's finances were also strengthened by increasing total lines of credit from outside sources, by selling common stock, and by reducing annual pension funding through a change in actuarial assumptions. Other companies returned to their traditional organizational structure where they had a demonstrated competitive strength. Consolidated Gold Fields, for instance, resumed its operation as a mining finance house. Its capital investment programs are now devoted solely to resource development. In mid-1984, at a time of firming zinc prices, Union Miniere S.A. used the opportunity to integrate its smelting capacity and to direct investment to certain subsidiaries at the expense of less viable operations. Smaller corporations realized that it was not enough just to be the low-cost producer. For example, Drummond Coal Company in Alabama, which dominates its regional market due to its low-costs, has also developed a world-wide trading capability and has placed incremental tonnage from its own mines as well as brokered coal produced by others, thereby minimizing capital risk. In Canada, Campbell Resources has exploited difficult times by acquiring assets cheaply. In the process it improved its capacity to withstand cyclical economic swings by diversifying from solely a copper and gold producer to a company based upon asbestos, coal, copper, gold and natural gas.

Jan 1, 1985

By J. Douglas Causey

In 1984, at the request of Bureau of Land Management, the U.S. Bureau of Mines studied the 13,730-acre Burnt Lodge (MT-065-278) Wilderness Study Area (WSA) in order to evaluate the mineral resources. The WSA is located in Phillips and Valley Counties, MT, about 55 miles south of Malta adjoining the Charles M. Russell National Wildlife Refuge. It is underlain by near horizontal sedimentary beds of the Hell Creek Formation, Fox Hills Sandstone, and Bearpaw Shale. No mines or prospects were found in the WSA. Bentonitic beds were examined, but are generally less than 1 ft thick and, except where exposed, are deeply buried. Kaolin-bearing sandstone in the Colgate Member of the Foxhills Sandstone was sampled and may have potential for use in structural clay products. However, remoteness and inaccessibility of the area make it unlikely that the material could be economically extracted even though some of the material is marginally useful.

Jan 1, 1985

By George White

On June 25, 1876 Lt. Colonel George Armstrong Custer led the Seventh U.S. Cavalry Regiment., comprising 31 officers and 637 enlisted men, into the valley of the Little Big Horn River in southern Montana. His assigned mission was a reconnaissance-in- force to locate the Indians reported to be assemblying in that area. Custer was extremely successful in locating the Indians. Unfortunately he located more than 3000 Cheyenne and Sioux under the leadership of the great war chiefs Crazy Horse and Gall. Custer's entire battalion of more than 200 men was annihilated; there were no survivors. While I don't seriously suggest that things will be all that bad in the uranium industry, I do suggest that some very fundamental changes have occurred in the uranium market. Conventional thinking based on past truths will no longer suffice. Geology, economics, politics, nuclear growth pat terns, technology, and utility attitudes have all changed. New thinking is in order. It is at this point that I would offer my usual disclaimer. My views regarding the future are simply that--my personal views. My belief that certain events will come to pass does not mean I view those events as appropriate, wise, good, equitable, or economic.

Jan 1, 1985

By C. P. Mishra

The Bureau of Mines investigated the availability of mercury from 22 deposits in market economy countries. The 15 significant deposits evaluated have demonstrated resources of approximately 25 million metric tons of ore containing 5.3 million flasks of mercury and account for more than 85 pct of the demonstrated resources for market economy countries. Using data gathered as part of its Minerals Availability Program, the Bureau determined the mercury production potential of each deposit. At a January 1984 mercury market price of $300 per flask, the deposits evaluated could economically produce an estimated 2.5 million flasks of mercury from six mines operating at the time of this study; no mercury is available at this price from nonproducing operations. At $600 per flask, approximately 4.5 million flasks of mercury are available. For production costs up to $300 per flask, operating mines could supply mercury at the current production rate of 114,000 flasks per year until 1988, when the amount of mercury available from these deposits would decrease. This decline could be offset by the development of resources currently reported at the identified level (17 million flasks) at much higher production costs.

Jan 1, 1985

By E. J. Wade

My subject is gold price forecasting and monitoring as an important aspect of gold marketing. While I 'm specifically addressing gold, it is understandable that many other commodities could be readily substituted. Gold marketing must be studied as three distinct processes, and it is my intention to cover each of these processes in turn. First I?ll cover the process of gold price monitoring and forecasting in some detail. In order to select a method, or combination of methods, to be used to sell gold a determination of the future price profile is essential. The profitability of the sales effort will be determined, to a large extent, by how accurately the future price behavior of the gold market has been forecast.

Jan 1, 1985

By C. Thomas Hillman

This Bureau of Mines report describes an investigation of factors influencing economic viability of a proposed system to mine and process manganese nodules. The system consists of hydraulic dredging and ammonia leach processing designed to recover three metals: nickel, copper, and cobalt. A ferromanganese recovery plant is a considered option. Annual capacity is 3 million dry metric tons (t) nodules. Aftertax rates of return (ROR's) of only 7.38 and 6.63 pct are predicted for three-and four-metal base scenarios, respectively. Sensitivity analyses indicate that variations in commodity prices, metal recoveries, and deposit grades produce similar incremental changes in ROR. Estimated cumulative effects of price variations are greatest. While three-metal operations generally yield higher predicted returns, potential increases in manganese price and process recovery could make four-metal operations most profitable. Maximum variations in both capital costs and three-metal operating costs result in ROR changes of about 25 pct. In contrast, four-metal ROR's exhibit variations to 70 pct. Even so only a best case analysis, utilizing favorable variations in all categories tested, generated ROR's approaching a level thought necessary to trigger company interest. Consequently, it is concluded that nodule mining will not take place in the foreseeable future without significant financial incentives.

Jan 1, 1985

By Thomas P. Bispham

INTRODUCTION From the lender's point of view, the greatest period of risk in a project financing occurs during the construction phase. Therefore, most projects are supported during this phase by completion guarantees supplied by some credit-worthy entity; for example, the project sponsors in the case of a joint venture, such as that of W.R. Grace, Hanna Mining, and Liberty Capital; or by a strong contract with a utility or foreign importer/investor, such as the way North American Coal Corporation has structured many of its transactions. THE PROJECT LOAN REQUEST A project financing is a more complex form of term loan than one using an ongoing corporation's balance sheet as a credit base and, therefore, a potential lender will subject the loan request to a more rigorous analysis. To support this effort, the financial institution will require a more detailed information memorandum to evaluate the credit and technical risks of a project - especially since much of the necessary information is not otherwise available. (See also Gibbs and Sroka paper above in this Chapter) A well-prepared information memorandum will impress prospective lenders with the planning ability and general competence of management. Also, the process of preparing the memorandum will help management understand the true extent of the opportunities and limitations of its venture. Appendix A outlines the topics which comprise a complete information memorandum for a loan request. Of some interest to those seeking to sell a currently-operating mining venture, a similar information memorandum should be prepared i.e., covering the same topics discussed here, for the investment banker to use with potential purchasers. For that purpose, though, one might not want to prepare quite as much detail as for a lender. Appendix B outlines the elements of a reserve evaluation and feasibility study, often called the "Bankable Document." Usually, these studies are prepared by independent engineering consultants for use by potential borrowers and sellers. (Potential purchasers will often contract for a similar study for their use in evaluating an acquisition.) ELEMENTS OF A LOAN INFORMATION MEMORANDUM 1. Outline: The information memorandum should begin with a one-page outline covering such topics as: a. The borrower's name, address, and phone number. b. Principal contact at the borrower. c. Amount of the proposed financing. d. Desired pricing and structure of the proposed financing. This should include a description of the amount and source of equity in the proposed financing. e. Use of the proceeds and timing. 2. Summary: The most important information contained in the memorandum should be summarized in two pages. Note - If the borrower is a recently-formed single-purpose company, then elements 3, 4, and 5 will apply to the guarantors of completion and to the project sponsors. 3. The Borrower: This section is a brief biography of the borrower including such topics as date and state of incorporation, founder(s), lines of business, etc. 4. Capitalization: The borrower's current debt and equity position, including leases and trade debt, with amounts, terms, names, and addresses enumerated. Equity owners, and percentage ownership, should be identified. 5. Historical Financial Statements: If available, a minimum of five year's worth of complete historical financial statements

Jan 1, 1985

Many of the difficulties faced by the U.S. mineral industry in 1982 and 1983 emanated from the worldwide recession, from the high value of the U.S. exchange rate, and, in part, from actions taken by foreign governments to protect selected industries. While some problems will be minimized with continued worldwide economic recovery, others remain and may require special attention by U.S. policymakers. These problems include declining U.S. production capacity in selected mining and mineral processing industries, the impact of the high value of the U.S. exchange rate, and protectionist trade practices by competitor nations. Illustrative of the last is the International Trade Commission (ITC) determination in June 1984 that both the domestic steel and copper industries have been substantially injured by foreign imports. In its July 1984 recommendations to the President, the ITC suggested higher tariffs and quotas for 5 years on 70 percent of steel imports but conditioned the aid on cost-cutting and modernization steps by the domestic industry. In the copper decision, two commissioners recommended increased duties, two recommended that quotas be imposed, and one recommended that no relief be provided. The President decided in September to seek voluntary restraint agreements with nations that export steel to the United States and rejected both quotas and higher tariffs on copper imports. General Economic Setting This decade opened with the U.S. mineral industries struggling to deal with double-digit inflation, record high peacetime interest rates, and almost 7 years of oil-cartel-induced energy price increases that seriously affected the profitability of energy-intensive industries such as mineral production and processing.

Jan 1, 1985