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By Douglas A. Karvonen

INTRODUCTION Although the economy in the Province of Saskatchewan has historically been agriculturally oriented, a major source of wealth has been realized through natural resources such as petroleum and natural gas, coal and uranium and since the 1960's - potash. Potash or potassium chloride, in the form in which it is presently produced in Saskatchewan, is used primarily as fertilizer, a source of potassium, one of three essential elements required for healthy plant growth, with about 5% of production sold to the chemical industry for use in such products as soap and liquid detergent, glass and ceramics, textiles and some pharmaceuticals. Saskatchewan is estimated to have approximately 40% of known world potash reserves and its ten active mines account for some 25% of annual world production. POTASH CORPORATION OF SASKATCHEWAN In an effort to guarantee a fair and lasting economic benefit to the Province of Saskatchewan, the Potash Corporation of Saskatchewan (PCS) was created on February 4, 1975 through an Order-in-Council under the Crown Corporation's Act and later on April 1, 1976, the Potash Corporation Act provided for its continuation. PCS was given the mandate to acquire ownership of a significant portion of the potash mining capacity in Saskatchewan and to establish an organization capable of operating the facilities, marketing the product, and conducting all of the other activities necessary for a successful corporation competing in the world potash industry. The corporation is the largest potash producing and selling organization in the Western World - or third largest in the world. (See also Figure 1). PCS through its wholly-owned subsidiary, PCS Mining, has acquired a whole or partial interest in five geographically distinct producing properties or divisions, representing today more than 40% of Saskatchewan's potash producing capacity. The acquisition of each division was followed by a program designed to exploit and maximize the particular opportunities at each minesite for increased production. To that end, PCS Mining has taken an active lead in expanding to meet future demand and has implemented expansion programs at all properties except for its Esterhazy Division where it has a long-term processing agreement with International Minerals & Chemical Corporation (Canada) Limited. Through its wholly-owned subsidiaries, PCS Mining, PCS Sales and PCS Transport, this provincial crown corporation has the ability to operate as a producer and marketer of Saskatchewan's potash. In certain instances PCS, the parent company, assists in the financing of various projects undertaken by the subsidiaries and in other cases the subsidiary involved arranges its own financing. POTASH RESERVES As a background to the specific issue of financing, it is helpful to describe briefly the nature of the deposit which supports the industry - our collateral, if you like. The potash beds underlying Saskatchewan are sedimentary rock deposits formed by the gradual evaporation of an inland sea during the Middle Devonian period roughly 400 million years ago. Now known as the Prairie Evaporite, this formation stretches from North Dakota and Northeast Montana through Southern Saskatchewan into North-Central Alberta. These beds lie at mining depths ranging from 950 - 1000m (3,000 ft) below the surface, where conventional mining methods can be used, and to 1,650m (5,000 ft), where solution mining must be

Jan 1, 1985

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 W. M. Dressel

This Bureau of Mines report describes a shaft closure demonstration project in which 11 inverted pyramid-shaped plugs were used to plug abandoned open mine shafts in Galena, KS, The inverted pyramid-shaped forms, fabricated from steelplate, were designed so that the inverted base would be larger, by 4 ft on a side, than the approximate size of the shaft opening at the surface residuum-solid rock interface. After the surface openings of the shafts were trimmed with a backhoe, the steel forms, complete with reinforcing, were lowered into the openings and filled with concrete; the remaining portions of the openings above the plugs were backfilled to slightly above the surrounding surface level with waste rock and soil. Location and elevation monuments were installed for long-tern evaluation of the success of the project.

Jan 1, 1985

By Keith L. Harris

Economic activity in the United States picked up in the third quarter, according to the latest estimate released by the Department of Commerce. Real gross national product (GNP)--the Nation's output of goods and services--grew at a seasonally adjusted annual rate of 4.3%, or $17.6 billion, compared with a rate of 1.9% for the second quarter of 1985 and 1.6% for the third quarter of 1984 (table 1). The 4.3% rate is one percentage point above the preliminary estimate reported in the August/September issue of Minerals and Materials. Most of the upward revision was due to the change in business inventories and Government purchases, while the figure for net exports was revised downward substantially. The 4.3% growth bettered by 1.5% the average rate of growth in GNP from 1974 through 1984 and was 1.1 % above that of the period from 1975 through 1984 and 0.7% above that of 1980 through 1984. Of importance to the minerals industry was the $14.4-billion growth in personal consumption expenditures, $10.2 billion of which was for durable goods (especially domestically produced automobiles) and the growing residential investment. The net export deficit continued to grow, however, and investment in nonresidential structures, producers' durable equipment, and business inventories declined. Prices, as measured by the GNP fixed-weighted price index, increased at an annual rate of 3.1% in the third quarter, compared with 3.9% in the second quarter. The slower rate of inflation resulted mainly from a decline in energy prices, following second-quarter increases. Fourth-Quarter Prognosis Many of the economic data available for October and November indicate that the economy is growing modestly and will continue to grow over the next 3 to 6 months. The composite index of leading indicators, designed to predict economic activity within 3 to 6 months, rose 0.3% in October, the sixth consecutive monthly advance, according to the Department of Commerce. Six of the 11 available leading indicators were positive: Stock market prices rose, as did sensitive material prices, credit outstanding, and manufacturers' new orders for consumer goods and materials; initial claims for unemployment insurance decreased, and firms were getting slower delivery of goods. Four of the indicators were negative: Business formations, homebuilding permits, contracts and orders for plant and equipment, and money supply all declined. The average hours worked per week, already at a high level, remained unchanged.

Jan 1, 1985

By James L. Poole

INTRODUCTION Companies in the mining industry are subjected at times to currency exchange rate risks and interest rate risks. The former occurs any time a firm deals in more than one currency. The latter occurs anytime a firm is financing itself with borrowings that have a floating interest rate (although a fixed rate can be a problem at times). FOREIGN EXCHANGE RISKS There are two general reasons why exchange rate risks (FX risk) can occur: First, a firm may be building a mine or plant in another country where financing for the plan is denominated in funds other than the country hosting the plant. For example, if a Canadian firm is building a smelter in another country which is being financed with Canadian dollars, the C$100 million for labor, which must be paid in the local currency, has subjected the firm to a C$100 million FX exposure risk. If after the cost estimates were made the local currency appreciates 30% against the Canadian dollar, the cost of labor has increased to C$130 million. (Of course, the local currency could also devalue during this period making the labor cost component less than estimated.) The other reason exchange rate risk arises is due to the fact that the costs of production in one country producing minerals may be incurred in one currency while the production is sold in another currency, such as coal being exported from Canada to Japan under contracts denominated in Yen. In this example, the Canadian firm is exporting coal to Japan and being paid in yen in 30 days at a contract price of 100 Y per ton. Furthermore, assume that the mining firm anticipates a depreciation of the yen against the Canadian dollar of 5% in the next 30 days. Therefore, the mining firm stands to lose 5% of the value of its shipment in a month's time not including carrying costs. In both cases, the mining company risks an adverse change in the exchange rate, that is, the currency the company holds may decrease in value relative to the other currency. There are a number of ways to mitigate the exposure to foreign exchange which can be utilized by the mining company. Optimally, a company should try to match all their inflows and all their outflows in the same currency. For example, if a Canadian firm has mining costs and debt service costs both denominated in Canadian dollars then 100% of their receipts would need to be in Canadian dollars. If a Canadian firm has 70% of its cash outflows in Canadian dollars and 30% of its cash outflow in American dollars in the form of a loan amortization then their receipts would need to be 70% in Canadian dollars and 30% in U.S. dollars. This general principle of matching cash receipts and cash costs in the same currency works fine in a perfect world but what of the real world when these cannot be matched? In actual practice, however, the financial markets have developed a number of ways in which foreign exchange risks can he managed or reduced. FORWARD MARKETS One method is to use the forward markets which are made on a world-wide basis by the commerical banks for foreign exchange. If a firm wanted to lock in the current exchange rate for the receipt of a foreign currency at some point in the future, they could do so by contracting on the forward market with a bank selling that foreign currency at the current rate at the future date. For example, assume that a Canadian firm is exporting coal to Japan which would pay yen in 90 days. If a firm wanted to lock in today's exchange rate they could contract with a bank to sell on the forward market yen in 90 days. When the yen was received the contract would be executed by selling the yen to the bank and receiving the previously agreed upon number of Canadian dollars. Generally speaking, the forward market can be used to sell forward about 12 months. The costs of selling (or buying) forward

Jan 1, 1985

By F. Grant

"General *The mining experiences of the coal mining industry in Western Canada have been extremely varied, with the mining companies having to adjust their operations or fail due to the harsh economy of the country in the first part of the century. The bituminous or mountain mines had the railways as main consumers with, at times, optimism that potential steel producers would require metallurgical coal. The prairie and foothills mines mainly provided household fuels, with the fine coal sold to local thermal power plants at discounted prices. In practically all cases fuel competition was very keen, and the less successful mines ceased operations in short-time spans. Knowledge of the parameters that governed the success or failures of the past coal operations should be of value to the present and future mining companies. The initial coal mines were small and were started to supply local demand. These mines had little in the way of capital machinery, engineering, or transportation equipment; therefore the mining methods and mine plans were very simple. The first industrial-sized mines imported most of their management and mining methods from other mining areas, mainly Great Britain. It took time to change the bias of management and mining methods to the requirements of strata characteristics, with rapid closure to those mines that were slow to adapt working methods. The main markets for coal were for household fuel, thermal power plants and railways, with very few other industrial markets developed. The economy of the period was harsh and cyclic and the coal mines were affected more than most industries by these boom and bust periods. It led to the survival of the fittest or the most efficient. Due to the economy, mechanization was introduced to the mines very slowly, with the inability to sell coal fines at a profit being another reason for the delay. Manual labour with hand tools was the main means of production. The work was heavy and arduous, and the pay was based on contract coal tonnage; therefore both men and management paid close attention to details so that nonessential work could be eliminated. Mine openings were dimensioned so that coal could be loaded easily by hand and support requirements were kept to the minimum. Transporting and handling the timber supports required heavy labour; thus the most efficient dimensions were chosen to suit the strata. On the other hand, during the main production seasons the mines tried to make the strata stress work for them so that the pressure was kept on the coal face to keep the coal loose while the strata, a short distance back, was induced to cave to minimize the abutment stresses. This caused mining to be an art, using skills developed by experience with the strata. This led to the development of efficient mine layouts with the openings dimensioned to the strength of the strata and the type of support available. The lack of capital and mechanization, and the manual labour, induced the mines to correlate their service and haulage systems with their mining methods. This caused many innovations that proved very practical."

Jan 1, 1985

By Clayton M. Rumsey

The U.S. Bureau of Mines conducted a mineral resource survey of the Cinder Cones Wilderness Study Area (WSA) (CDCA-239), 10 miles east of Baker, CA, in 1983. The 44,299-acre WSA is underlain by Precambrian granite gneiss, Upper Cretaceous or lower Tertiary Teutonia quartz monzonite, and Quaternary basalt flows and alluvium. This mineral survey included an examination of two volcanic cinder mines, five lode prospects, two volcanic cinder prospects, and reconnaissance sampling in and near the WSA. The seven prospects are in the WSA; the two volcanic cinder mines are adjacent. No mines are in the WSA. In 1981, there were 61 placer and 3 lode mining claims in the WSA. Sample results from two prospects within the WSA contained significant gold and silver values; however, the mineralized rock is of limited extent and no resources were apparent. Alluvial samples taken throughout the WSA contained only traces of gold. Two volcanic cinder cones within the WSA contain an estimated 30 million tons of cinders. There are sufficient cinders outside the WSA to satisfy demand in the foreseeable future. Stone, sand, and gravel deposits are not resources because similar material is closer to markets. No evidence of energy minerals or geothermal resources was found.

Jan 1, 1985

By Anthony Tuke

Members of the Society of Mining Engineers may well regard it as rather unusual that a paper on this subject is being presented by someone whose first taste of mining came at the age of 60 or so - someone who last heard of cathodes and anodes in 1938. On the other hand, the title does refer to the financing of a mine and at least I can claim to have spent all my business life since the war until 1981 in the world of banking, though this inevitably means that I have been used to looking at these and other problems through what you might regard as the wrong end of the telescope. The lending of money, and more particularly the provision of finance for commerce and industry, is the central job of a banker and I have been involved in this in various ways over many years, but regrettably only very marginally in the world of mining. As you will see from what follows, the rather specialised form of finance which RTZ required was, to my regret, not provided by the British banking community since the great majority of the finance came from American banks and, to a lesser extent, from German banks. I am most indebted to Mr. Roy Wright for a great deal of the nuts and bolts in this paper. He was one of the three central figures in the growth and expansion of RTZ during the 1950's and 1960's and was right at the centre of the negotiations with bankers, with governments and with many others. The going, as you will see, was far from easy. The essential basis for the financing of each of the RTZ group's mining projects was a firm long-term sales contract for sufficient of the output of the particular mine to produce the cash flow necessary to service the loans. Wherever possible, loans were raised in the same currency as the sales contracts were made. Each sales contract was designed to give the customer the product he wanted with a long-term assurance of supply and at the same time to give the bankers the protection they required. Thus the marketing concept and the financing concept for a particular mine formed one overall plan, and talks with the customers and the bankers were conducted in parallel until a satisfactory marketing/financial package was agreed in principle. Preliminary talks were begun soon after the discovery of a potentially viable orebody. As confidence about a discovery increased, customers were persuaded to enter into contingent sales contracts before the very detailed and costly business of the economic and technical feasibility study of the mine was launched; such a study might cost 10% or more of the estimated total capital cost. At the same time provisional understandings were reached with the bankers. The contingent sales contracts usually gave a period of grace of eighteen months to two years, during which time the decision whether or not to continue with the mine had to be made. This decision rested mainly on the result of the feasibility study and also on coming to a firm agreement with the bankers. If all went well and the mine went ahead, then the contingent sales contracts became firm, but they fell away if the decision was negative. The Company was fortunate that during the whole period when its major mines were being developed, world trade was increasing rapidly and Japan was becoming a dominant industrial power. The Japanese supported many of the mines, including Hamersley Iron Ore, Lornex Copper, Bougainville Copper to name a few, with the basic long-term sales contracts that enabled their development. The Germans supported Palabora and to a lesser extent Bougainville. The mines were financed as individual projects generally with a loan/equity ratio of about 65/35, without legal recourse to RTZ for the loans. RTZ was, however, responsible for providing any capital overruns required to bring the mines into commercial operations. Nevertheless, the RTZ management regarded itself as morally responsible to the lenders because, Palabora aside, the sales contracts had either a fixed selling price (like Hamersley), an indexed price (like the Elliot Lake Uranium Mines and Mary Kathleen), or a floor price (as in Lornex, Bougainville and Rossing). Thus the Company believed that any financial failure would have been due to poor management or technical

Jan 1, 1985

By Robert B. Parsons

"1984 was an eventful year in the courthouse f or observers 0/ the mining tax scene in Canada. For the first time in a number of years, the Federal Court heard several important tax cases which pertain directly to the resource industries. Tax Notes discusses/our cases that could affect the taxation 0/ operations and investment in the mining sector.Capital Gain or Income?Ever since tax reform, risk-takers in the exploration business have maintained that the taxation of capital gain s is a significant impediment to raising risk capital. It must be akin to rubbing salt in the wound, then, when an entrepreneur sells shares and the Court upholds Revenue Ca nada taxing the gain as ordinary income instead of capital gain. But, this is precisely what happened in the case of The Estate of Murray Watts, et al. v. The Queen.The issue that had to be decided by the Federal Court, Tri al Division, in this case was whether or not the profit from the sale of shares in Hearne Coppermine Exploration s Limited in 1968 was a capital gain, or income subject to tax.Hearne was incorporated in July, 1967. At that time, the three plaintiff s, together with seven other individuals, subscribed for 400,000 shares at 10 a share. The plaintiff subsequently subscribed for an additional 500,000 shares at $1.A pooling agreement was entered into by all ten shareholders regulating the disposition of any o f their shares; any sale required approval of seven of the ten initial sub scribers. It also provided for the sale of their shares 30 days after any public offering."

Jan 1, 1985

By Keith Harris

The U.S. economy grew moderately in the second quarter of 1985 with real gross national product (GNP) recording a seasonally adjusted annual growth rate of 2.0%, up from the 0.3% growth of the previous quarter but significantly below the 7.1% growth of the second quarter of 1984 (table I). Personal consumption expenditures grew 5.3%, with purchases of durable and nondurable goods rising 7.4% and 5.1 %, respectively; nonresidential and residential fixed investment--the two components of fixed investment--grew 11.8% and 5.6%, respectively; and Government spending rose 3.6%. However, these gains were tempered by a major decline in the growth of business inventories (from $19.1 billion to $8.3 billion) and the continuing growth of the net export deficit (from -$28.4 billion to -$33.3 billion). While the high value of the dollar compared with other currencies has been a major cause of the expanding trade deficit, its value, as measured by the monthly Federal Reserve Board (FRB) multilateral trade-weighted dollar index, has declined over 17 index points from its February peak to 140.94 in July. The July dollar value was still high historically. The rate of inflation, as measured by the fixed-weighted price index for GNP, remained low at 4.1%, down from 4.3% in the first quarter, and employment continued to grow at a rate sufficient to keep up with new additions to the labor force. Civilian unemployment has remained steady at 7.3% over the past 6 months. Industry Statistics The FRB recently revised its index of industrial production and changed the base year from 1967 to 1977,1/ The revised total index shows a 0.1 % higher annual growth rate between 1967 and 1984 than the previous index. In the slower growing or declining industries, such as metal mining, primary metals, and fabricated metals, however, downward revisions in the indices and rates of growth have occurred. The previous and revised annual rates of growth between 1977 and 1984 for several of the sectors of interest to the mining industry are shown in table 2.

Jan 1, 1985

By R. H. Lien

The Bureau of Mines investigated a roast-leach process for recovering a marketable lithium product from a montmorillonite-type clay deposit located on the Nevada-Oregon border. The clay sample treated in the investigation contained 0.6 wt pct Li. The lithium recovery process consisted of several unit operations. The lithium silicate compounds in the clay were converted to Li2SO4 by roasting a pelletized mixture of clay, limestone, and gypsum at 900° C in a direct-gas-fired rotary roaster. Water--leaching the calcine at 40 pct solids extracted the Li2SO4. Lithium recovery from the leach solution involved concentrating the solution by evaporation, adding Na2CO3 to the concentrated solution to precipitate Li2CO3 , and filtering the slurry to obtain the product. The product filtrate was recycled to the evaporator following a crystallization step. About 80 pct of the lithium in the clay was recovered as 99-pct-pure Li2CO3. Process operating costs were estimated at $2.12/lb Li2CO3 produced; the current Li2CO3 selling price is $1.48/lb. Raw materials. accounted for 30 pct of the total operating cost.

Jan 1, 1985

By William W. Aljoe

This report summarizes the Bureau of Mines noise-control research program from 1972 to 1982. Each segment of the mining industry--under- ground coal, underground hardrock, surface mining, and processing plants--has different noise-control problems because of vast differences in working procedures, equipment, and workplace design. The Bureau has identified the most serious noise problems in each segment and has developed strategies for attacking these problems. This publication points out the need for noise control in the mining industry, discusses Federal regulations governing worker exposure to noise, and describes the Bureau's overall approach to mining noise- control research. It traces the history of noise overexposure in each segment of the mining industry and discusses the major noise sources. It provides detailed information on noise-control research efforts in the Bureau's major areas of emphasis, including the results of these efforts. Finally, the report discusses the Bureau's future role in research on mining noise control, emphasizing the need to expend more effort on long term in-house investigations into the noise problems that have been identified in past programs as the most serious ones.

Jan 1, 1985

The contract objective was to evaluate sources of airborne quartz and research control methods that would assist underground mine operators in complying with respirable dust standards which have been reduced because of quartz in the dust exceeding five percent. The work involved: Phase I -evaluate sources of quartz dust at the roof bolter work location; Phase II -evaluate the relationship between the quartz content of the coal and adjoining rock strata and quartz exposure at the roof bolter and continuous miner locations Phase III -conduct laboratory tests to determine performance parameters for roof bolter dust collector systems. The underground surveys for Phases I and II determined: (1) the continuous miner typically is the greatest source of quartz exposure for the miner and roof bolter operators when single-split ventilation is utilized, (2) a statistically significant relationship be­tween quartz content in face material and operator exposure was not determined and data suggested mining equipment and procedures may be more critical. The Phase III lab tests indicated the use of dust hog-type bits, filter cartridges, maximized collector airflow, and reduced bit rpm should be utilized to minimize dust liberation at the roof bolter.

Jan 1, 1985

By N. T. Lowe

This Bureau of Mines publication presents salient deposit information in abstract form on 119 principal mineral deposits in the State of Nevada. Commodity coverage addresses 17 critical and strategic commodities that appear to have commercial production potential in the State. The core of the deposits described is taken from those properties evaluated d under the Bureau of Mines Minerals Availability Program (MAP); additional deposits are included to provide a more complete coverage. Institutional and infrastructural factors affecting mineral development are also discussed.

Jan 1, 1985

By Robert L. Davidoff

INTRODUCTION The impact of taxation differs substantially from state to state in a complex fashion that depends on both the physical characteristics of a mineral deposit and on the price of the mineral commodity relative to its costs of production. A comparative analysis of the tax structures of eight states (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wisconsin) showed wide variations in rates of return for any given type of mineral property, with no state having either the most burdensome or least burdensome tax structure under all circumstances. Three hypothetical mineral operations were analyzed: a producing open-pit copper property, a non-producing underground platinum operation, and a non-producing underground gold operation. None of them corresponds exactly to an existing property. Each of these property types is further defined to have ore feed grades at three different levels, leading to three potential profitability levels, referred to in this paper as "economic", "marginal" and "subeconomic". Thus the differential impact of state tax structures is measured for mineral properties of different types, as well as for different profitability levels. Montana is used as the base case. This study does not address the topic of corporate structures or tax consolidation. There are no costs assumed external to the operation of the deposit (e.g. exploration to locate additional deposits). Two types of analyses were performed for this study. The first calculates the total cumulative tax payments in each state using all applicable taxes (including U.S. federal income taxes and examines the resultant differences in discounted cash-flows rate of returns DCFROR's amoung the eight states. The second is a sensitivity analysis that examines each type of state tax separately (i.e. state income, property, and severance taxes) in order to isolate and examine the differences in tax payments that are due to the difference in rates and methods of computing specific types of taxes in each state. The results of this study serve to illustrate the complex nature of interactions among various taxes. For example, property tax is a deduction in calculating severance tax in some state. Changes in property-tax and severance-tax payments both enter into the calculation of state and federal income-tax liability. This, in turn, could change the timing and usage of tax-loss carry forward amounts and investment tax credits. Additionally, the physical characteristics of a property, the method and costs at which the mineral will be extracted, and the profitability level at which each property operates will affect tax treatment. Each mineral operation was evaluated at three different predetermined profitability levels, referred to using the terms economic, marginal and sub-economic. These three profitability levels are defined by the ore feed grades of the primary commodity that yield in constant terms, approximately an "economic" 18% DCFROR, "a marginal." 10% DCFROR, and a "sub-economic" 5% DCFROR, respectively, under the Montana tax structure. In the analyses, the mining and processing parameters for each of the three types of properties were assumed to be identical for each of the eight states. It was assumed that each operation produces at full operating capacity throughout its life. This implies the level of mineral commodity demand will support the inferred commodity price, such that each operation will be able to sell all its output. The analyses performed for this study were done using a comprehensive economic evaluation simulator that is used in the Bureau of Mines, Division of Minerals Availability MAS program to perform DCFROR analyses. All economic evaluations performed upon these data (see appendix 2) were in constant January 1981 dollars. By-product prices used for the analyses were: [Gold $425.00/troy ounce Palladium$200.00/troy ounce Silver $ 10.00/troy ounce] Typical cash-flow calculation layout is given in Appendix 3. The initial step for each evaluation is to define an "economic" profitability level scenario. An 18% DCFROR rate in Montana was considered the

Jan 1, 1985

By William G. Pariseau

The research reported here concerns a four year study of the rock mechanics aspects of two underground hardrock mine study stopes. The first study was conducted at Anaconda Minerals Company's Carr Fork Mine near Tooele, Utah. The second study was conducted at the Homestake Mining Company's Homestake Mine In Lead, South Dakota. Both case studies were cooperative efforts of mining company personnel, the Spokane Research Center of the Bureau of Mines and the Department of Mining Engineering, University of Utah. Large diameter (6 1/2 In.) blastholes were an integral part of the stoplng method at each mine. A true vertical crater retreat (VCR) method was used at the Homestake Mine, while a vertical bench mining method (VBM) was used at the Carr Fork Mine. VCR and VBM methods were developed In the 1970's; they offer significant productivity gain and are now used throughout the world. The new technology, however, brings with It a requirement for more sophisticated engineering design and control. Since there are no personnel in a VCR or VBM stope, all ground control Including dimensioning of stopes and pillars and the layout of cable bolt assays or other artificial support must be done in advance of production blasting. Accordingly, the objective of the research study was the establishment of a procedure for optimizing stops and pillar sizes. The approach taken was In each case a combination of mine measurements of the study stope response to mining, laboratory testing for rock properties and In situ stress measurements of the premining stress field, and theoretical calculations of the study stope response to mining. All calculations were done with the UTAH-II finite element computer program. Simulation of the blasting sequence gave a correlation of 0.88 between measured and calculated extensometer readings (Incremental relative displacements) at the Carr Fork Mine where other 30 Instrumentation boreholes were used to monitor the test stope response. A correlation of 0.84 was obtained at the Homestake Mine where 19 instrumented boreholes were used for monitoring purposes. These high correlations validated the computer mode and calibrated It for rock mass properties. The calibrated model was then used In parametric studies of alternative design layouts.

Jan 1, 1985

1. Domestic Production and Use: In 1984, 12 companies operated 27 primary aluminum reduction plants, with 3 firms accounting for 57% of production. Washington, Oregon, and Montana accounted for 35% of the production; Indiana, Kentucky, Missouri, and Tennessee 25%; Alabama, Arkansas, Texas, South Carolina, and North Carolina 20%; other States 20%. Based on published producer prices, output of primary metal in 1984 was valued at $7.2 billion. Aluminum consumption by 25,000 firms was centered in the east-central United States. Packaging accounted for an estimated 35% of domestic consumption in 1984, transportation, 20%; building, 18%; electrical, 9%; consumer durables, 8%; and other uses, 10%.

Jan 1, 1985

By Robert S. Schechter

A minitest of the new potassium chloride-potassium carbonate two-stage in-situ uranium leach process has been carried out at the Intercontinental Energy Corporation (IEC) Zamzow project site in South Texas. Substantial quantities of high concentration uranium were produced indicating the viability of the leach solution. The test results yield information regarding the reservoir dispersivity, the average cation-exchange capacity of the formation, and the distribution coefficients describing cation-exchange reactions. The test also indicates permeability anisotropy and the existence of disturbed flow fields.

Jan 1, 1985

By F. A. Penning

Improved skips, with lightweight cylindrical bodies, have made a significant contribution to advancing mine hoisting technology. New concept skips of aluminum bodies with rubber lining; fiberglas bodies with polyurethane liners have been designed and fabricated for field testing at an operating mine. New design, adjustable guide rollers have shown improved ride characteristics with noticeably less wear. Major reductions have been made in stress levels and stress concentrations. Field experience has shown the practicality of the approach. Guide alignment has been measured using the Guide Alignment Measuring System (GAMS). Analysis has been applied to interpret the data. Field measurements in an operating shaft and a test tower have shown the agreement in data from GAMS and plumb wires. Reproducibility has been demonstrated. The data are useful to realign shafts, to use as s maintenance tool, and to evaluate the maximum safe hoisting speeds. The surveys are made at several hundred feet per minute and the system is self-contained. Dynamics of skip-guide interaction has been analyzed using the computer program SKIP II. The effects of speed, weight, type of guides, kind of misalignment have been studied. Resonance has been demonstrated and factors that eliminate resonance have been identified. Data from the GAMS surveys are applicable to the SKIP II program. Interaction between the hoist rope and the mine conveyance has also been studied. Computer programs and closed-form solutions are presented. Economic impact of lightweight skips is presented for an existing mine and for a new mine. Reduction in rope size has a profound effect when using a lightweight skip for the same capacity. Increased productivity can be realized by keeping maximum rope pull the same while increasing skip capacity. Examples and charts project the significant savings in capital expenditure for new installations.

Jan 1, 1985

By Catherine C. Kilgore

The Bureau of Mines investigated the availability of fluorspar (CaF2) from 36 U.S. and 50 foreign mires and deposits in 13 countries. Only 6 U.S. properties are considered to be economic, as 29 domestic deposits were found to have an average total cost of production that was uneconomical at a breakeven (0-pct) discounted-cash-flow rate of return (DCFROR). The 50 foreign properties evaluated represent at least 55 pot of demonstrated fluorspar resources located in market economy countries and China. Al I evaluated foreign operations were found to be economic to marginally economic in January 1984 dollars when compared against published prices for each country. Reserves for 56 properties totaled 97 million metric tons (mt) (recoverable Ca F,) from demonstrated ore resources of 344 million mt that contained 123 million mt CaF2. The average total cost needed to cover all costs over the life of each operation was determined for all recoverable fluorspar products. Comparisons of ruining, beneficiation, and transportation costs per metric ton of fluorspar concentrate illustrate advantages between countries. Of the three countries with the greatest fluorspar production, China, with its high-grade, low-cost operations had the lowest weighted-average total cost of production ($38/mt concentrate), Mexico was next, at $54/mt concentrate, and benefited in U. S. dollar terms from the devaluation of the peso. The Republic of South Africa needed an average of $90/mt of concentrate to cover all costs of production at its large low-grade deposits.

Jan 1, 1985