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By William Hilliard

IN any manufacturing business, it is of vital importance that the management should know the exact cost of the units of production. Without such knowledge, a company can sell blindly in the open market, obtaining the best prices it can in competition with other firms, and manage perhaps to continue in business for a time; but at any moment, and especially in a period of falling prices, such a firm is at a loss to know exactly at what point it can sell at a profit and exactly how much it is losing per unit if it sells below that point. Furthermore, it is necessary not simply to know the exact total cost per unit, but to know definitely all the different-factors which enter into that cost. A firm manufacturing pocket knives had been doing a profitable business for many years when it began to earn smaller and smaller profits, until there was scarcely any profit at all being realized. Being unable to determine exactly what its future policy should be, it called in experts who studied the past records carefully and followed out for a period a better cost, system. Investigation then showed that on several different kinds of knives in common use, a small profit per unit was being made. On a number of special kinds of knives, of which the firm was very proud, it had been forced to cut prices under the pressure of outside competition and had believed that a small profit per unit was still being made on that product, while a detailed cost analysis showed that a loss was being incurred on each knife of that kind produced. It then became clear that the company must either give up the special line and concentrate wholly on the cheaper knives and extend their sales to territory not yet developed; or expand its plant and produce more of the higher grade knives and thus lower the cost per unit enough to make money on the higher grade knives also, if conditions warranted such expansion. Investigation revealed that the market for large quantities of the high-grade -knives was decidedly uncertain and that the most promising move would be to manufacture only the less expensive knives on a larger scale. That plan was carried out and the concern began again to make a better profit.

Jan 1, 1932

By Sidney V. Gold

Should Gold Producers Hedge Their Positions Through : Sales on Forward Markets? Purchases of Put Options? Sales on Spot Market? Forward Markets Assumptions 1. Producer has a known amount of Gold to sell in year ahead. 2. Effect on price is the same whether sold Forward or Spot Market. 3. None of us have knowledge of Future Price Trend. 4. Contange Market prevails in which Forward price premium is approximately equal to rate of interest.

Jan 1, 1983

By White A. H, Gillies A. D S

In recent years the Australian gold industry has gone through a major expansion phase. The need for finance has led to adoption of different approaches such as the well known gold loan, forward selling, equity participation by suppliers and equipment leasing. During early periods of the expansion, significant new equity was raised chiefly for high risk exploration ventures. The major form of new equity finance was ordinary shares, often in 'No Liability' companies. The increasing capital requirement of the huge new development projects of the 1980s also spurred the use of debt finance. This trend was accelerated as high inflation and the taxation advantages of debt finance made borrowing attractive. This paper reviews major financing techniques used by the Australian gold industry with particular emphasis on the innovative financing techniques initiated recently. An analysis has been undertaken of the effects on the industry of issues such gold loans, forward selling, equity participation by suppliers, fly-in fly-out operations, contractor mining and equipment leasing. In order to achieve a better understanding of the innovative financing techniques, a survey of already published financial data from well known Australian gold mines was carried out. Data was collected from various published financial reports of gold mining companies. In addition, a questionnaire survey was sent to gold mining companies to assist the collection of further information. The results of this study show that there are a significant number of gold mines variously using gold loans, forward sales, contractor mining and fly-in and fly-out arrangements to finance their projects. Only four operations have vendor suppliers investing capital funds in their projects. Based on the findings of this study, conclusions and recommendations are drawn that these approaches are likely to be with Australian gold industry for some time in the future and will continue to be intensively applied to finance gold projects.

Jan 1, 1994

By Gillies A. D S

Rail, port and shipping charges represent 30 to 50 per cent of landed costs for Australian coal mines selling to Asia. This proportion is higher for sales to Europe, yet it is in Europe where Australian producers are aiming for increased market share. The landed cost of coal to the international customer is the key parameter which determines market competitiveness. The objective of this study is to examine Australian export coal competitiveness in terms of transport distance. The approach used examines world coking coal and steaming coal production and the transport distances between major exporting regions and importing countries. Reference is made to the importance of land transport costs and a comparative approach for emphasising the relative magnitude of this factor is developed. Models developed are examined in terms of Australia's exports and a conclusion is reached that a reduction in rail freight costs would be an effective measure for improving the competitiveness of Australia's coal industry.

Jan 1, 1994

The words ""Uncertainty"" and ""Risk"" pervade every discussion about mining exploration and investment. Perhaps these terms are subjectively understood by industry professionals, but objective portrayal of these concepts outside the industry is a woefully undeveloped science. This paper addresses current industry understanding and practice regarding quantitative risk assessment techniques, and provides examples of the application of three of these techniques. Probabilistic techniques for financial risk assessment are valuable adjuncts to conventional financial analysis, and address a range of issues not assessable by any other means. The value of whole-of-project probabilistic risk assessment is currently debatable for decision-making purposes, but is seen as important as a mechanism to focus attention to the critical issues that ultimately impact on project success. The dissection of project capital into risk and non-risk components provides valuable insights into risk characteristics not readily quantifiable in any other way. This technique also provides a framework for more objective ""what if?"" scenario evaluation and for the capital structure of resource projects. Finally, mechanisms for the valuation of undeveloped reserves are examined, and guidelines suggested. The importance of reliability in production cost estimates is highlighted and the impact of early development on reserve valuations is discussed. The importance of economics throughout all stages of the evaluation process is fundamental.

Jan 1, 1994

This summary of State laws or explosives was compiled primarily to ascertain what subjects relating to their control have been acted upon by each State legislature and, in general, how they have been treated. It does not include any legislation passed after 1942, or any proclamations, regulations, or administrative orders. It does not purport or attempt to be authoritative. If any problem arises involving interpretation of the statutes of any particular State, the original source must be consulted for the exact words used by the legislature. This summary, however, will be useful In determining whether relevant statutes exist, and In locating them quickly,-with a minimum of effort. It will be of value also in comparing statutes in one State with similar statutes in other States to determine what construction has been placed upon them by the courts of those jurisdictions or to contrast the varying provisions of many States upon a similar subject. To make these comparisons easier, the statutory provisions for each State have been grouped under several major topics in outline form. Although this sometimes has resulted in disruption of the continuity of individual acts, the increased general clarity and availability of comparable sections have more than justified the procedure followed.

Jan 1, 1943

By Côme Carbonneau

The ten -year case history of La Société Québécoise d'Exploration Minière (SOQUEM) is reviewed under the headings of the company's raison d'être, objectives, policies, structure and final goal. A brief analysis of its past operations is presented: aborted efforts, findings and developments. A projection is made of the future earnings, in terms of estimated present value, of its three main discoveries - Louvem , Niobec and Selim.

Jan 1, 1978

By J. W. Thompson

A mining company for a period of 12 years bad been selling its ore to a certain smelting company for the purpose of obtaining a continuous and steady market for its ore and for the purpose on the part of the smelting company of obtaining a continuous and steady supply of ore for smelting; an agreement was entered into by which the mining company agreed to eell and the smelting company agreed to purcshase at ruling prices all the ore produced by the mining company of certain' stated grades, and to this end the mining company agreed to actively operate its mines. It is no longer the rule that a suit will not lie for the specific performance of a contract relating to personal property ; but the question for determination in such a case is whether the complainant has a plain, speedy and adequate and complete remedy at law, and if he has no such remedy, specific performance will be granted. In an action by a smelting company for the specific performance of a contract of sale it appeared that the ore produced by the mining company bad a peculiar value for smelt. i.ng purposes and was not readily obtainable elsewhere, and it would be practically impossible to measure the value for determining the loss the complainant would sustain· if the smelting company were not ,able ,to obtain the ore under the contract. It is comparatively simple for a court of equity to enforce the agreement as it pertains to the normal product of the mine and there is no plausible reason why a court may not require a performance on the part of the mining company where the mining company obligated it:Belf to operate all its mines. There is no delicate or complex condition involved in the production or delivery of the ore 'or in obtaining_ the stipulated prices agreed upon, and there is nothing apparent that will necessitate supervisory· control in requiring performance on the part of the mining company. A decree for specific perfoi:m,ance would require no supervision by the court either for the operation of the mines or for ascertaining and fixing the prices the mining company is to receive for its ore.

Jan 1, 1919

By R. M. Quinlan

The coal industry in the United States has undergone significant economic changes during the past six years. The price of coal remained relatively constant from 1950 to 1969 (See Figures 1 and 2). Steam coal prices tripled and metallurgical coal prices doubled from 1969 to 1974. This price structure has created a new economic environment for coal preparation. Contributing factors to these price trends include: ? Coal Mine Health and Safety Act of 1969 ? Mid-East oil embargo of 1973 ? United Mine Workers of America contract agreements ? Productivity decrease (tons per man-day basis) ? Environmental Protection Agency regulations The increased value of coal justifies additional capital investment in cleaning facilities to optimize yield. Current trends include recovery of existing slurry ponds and recleaning of refuse. Coal preparation plant product yield and quality must be evaluated in terms of the amount of capital expended and cost of operation. Therefore, it is advantageous to optimize the plant product based on clean coal selling price and rate of return on investment.

Jan 1, 1976

By Milford L. Skow

MICA is a group name for a number of complex hydrous aluminum silicate minerals that have a sheet or platy structure and extremely variable and complex compositions containing various metallic ions, particularly those from the alkali group. Muscovite and phlogopite, the two varieties of significant commercial value, are the principal consideration of this report; muscovite has major importance industrially. The mica crystal, because of its laminated structure, can be split easily and accurately into thin films that are transparent, flexible, elastic, tough, and waterproof and have outstanding dielectric and insulating characteristics. This combination of properties is not duplicated in any other known substance. The world production of mica can be divided into two main classifications: (1) Sheet mica and (2) scrap mica (including flake mica). In general, separate divisions of the industry produce these two classes of mica, which differ widely in their uses and in the forms in which they are marketed. A glossary of mica terminology is given in appendix A.

Jan 1, 1962

By J. W. Thompson

MEANING OF TERM, The term "minerals" when used in grants or in reservations or instruments of conveyance is not limited to metals or metalliferous deposits, whether contained in veins that have well-defined walls or in beds or deposits that are irregular and are found at or near the surface or otherwise. Byron v. Utah Copper Co., Utah, 178 Pacific 53, p. 58. The term "mineral" in its commercial sense has been defined as any organic substance found in nature having sufficient value sepa- rate from its situs as part of the earth to be mined, quarried, or dug for its own sake or its own specific use. Rockhouse Fork Land Co. v. Raleigh Brick & Tile Co., - W. Va., 97 South- eastern 684, p. 685. CONSTRUCTION AND MEANING. It can not be said that the term "minerals" includes only such substances as are procured by tunnelling and shafting, as much gold is procured by placer mining and rich deposits of manganese and other like ores are found upon the surface of the earth and are some- times obtained without either quarrying or mining. Rockhouse Fork Land Co. v. Raleigh Brick & Tile Co., W. Va. ——, 97 South- eastern 684, p. 685. GRANITE AS MINERAL. It has been determined that granite was included in a grant of minerals. Rockhouse Fork Land Co. v. Raleigh Brick & Tile Co., -W. Va., 97 South eastern 684, p. 685. See Armstrong v. Lake Champlain Granite Co., 147 N. Y. 495, 42 Northeastern 186.

Jan 1, 1919

By P. R. Jones

The Bureau of Mines has written a computer program for the design and cost of a shell and tube type heat exchanger, in which a change in phase occurs on the shell side. The total cost, which was minimized, includes the annual fixed charges and annual operating costs. The program was written to meet the following requirements: (1) Triangular pitch, (2) single or multiple pass, and (3) heating or cooling. Price optimum design was obtained for four standard tube diameters and pitch. Standard heat exchangers whose area equaled or exceeded the required area are also listed. The program was made adaptable to various fluids and to various tube dimensions by including many of the required data such as physical properties of the fluids, tube data, and standard shell data as input data.

Jan 1, 1969

By G. J. Perrott, H. W. Clark

During the course of the cooperative smoke abatement investigation carried on by the Bureau of Mines , the city of Salt Lake and the University of Utah during 1919-1920 , a study was made as to the suitability of Utah coals for by-product coking with particular reference to low temperature coking . was done because it was realized that a smokeless fuel for domestic consumers was the best remedy for this class of smoke producer . A report of the technical side of the work was included in the final report of the cooperative investiga- Since this report was written (June 1 , 1920) further work has been done by other investigators .

Apr 1, 1922

By H. W. Earnest

This report covers the results of a two-phase study to determine the feasibility of underground disposal of retorted oil shale. Two mining methods, chamber and pillar mining and sublevel stoping, were specified for backfilling. Phase I of the study covered the evaluation of hydraulic, mechanical, and pneumatic transport and stowing systems, individually and in various combinations, and the selection of the most feasible methods. Conveyor transport and stowing and a combination conveyor transport and stowing with pneumatic topfilling were selected for detailed study of phase II. Phase II activities included detailed engineering analysis and design of the selected systems, an engineering economic analysis, and a cost comparison with total surface disposal of retorted oil shale. An extensive literature search was conducted and the bibliography is included in the report. Research done under Contract No. J0265052 by the Cleveland-Cliffs Iron Co. Available for reference at Bureau of Mines facilities in Denver, Colo., Twin Cities, Minn., Bruceton and Pittsburgh, Pa., and Spokane, Wash.; U.S. Department of Energy facilities in Carbondale, Ill., and Morgantown, W. Va.; National Mine Health and Safety Academy, Beckley, W. Va.; and National Library of Natural Resources, U.S. Department of the Interior, Washington, D.C. Order ONLY from NTIS:

Jan 1, 1978

By Gerry Norton

The overall economics of a coal production unit are governed by a number of interdependent parameters which individually and collectively affect the final result. A business judgement is measured through return on investment considerations and in this respect, a sensitivity analysis proves useful. Figures 1 and 2 show how the various parameters affect return on investment through unfavourable change from planned or expected values. In the case of metallurgical coals, the selling price negotiated is the primary and most sensitive variable, followed by transportation, clean coal yield and capital funds invested in mining. It is clear that coal preparation plant capital and operating costs are the least sensitive to R.O.I. For energy coals, the selling price is determined by heat energy content (x cents per million BTU's) and is therefore not con¬sidered as an interdependent variable. In this case, transportation cost is the major primary factor affecting the level of income. Again the amount of saleable clean coal or total yield has a major effect on return on investment. Most of the factors considered in Figures 1 and 2 are fixed and unfavorable change from planned values becomes critical but clean coal yield is to a great extent controllable during actual operations. Once the theoretical yield for a particular coal has been determined, the optimum return is achieved by approaching this theoretical yield as nearly as possible in practical commercial operation.

Jan 1, 1975

By Alan C. Noble

Ore reserve estimation is a multi- disciplinary process involving not only tonnage and grade estimation (resource estimation), but also consideration of technical and legal aspects such as mining the deposit, beneficiating the ores, and selling the product. This paper provides a background to under- standing resource estimation including geologic modelling, manual estimation methods, conventional computer methods. and geostatistical methods. Mine planning, metallurgical studies, legal/environmental, and marketing considerations are also discussed as they relate to estimating ore reserves.

Jan 1, 1991

This paper examines the cost and economic consequences of varying a number of key factors in the course of developing and operating new underground longwall coal mines with both shallow and deep cover in New South Wales. The economics of the project are assessed for the first 20 years of mine life using the discounted cash flow method with produc- tion and selling price being determined to provide break even costs for a range of minimum rates of return.

Jan 1, 1988

By Moshe Sheinkin, Burke O. Trafton

This paper describes the use of a computer in analyzing the expected return on a mining venture. The computer program is designed to incorporate all aspects of a mining project, including the mine, mill, smelter, and refinery. Data input may consist of the operating variables in each phase such as the mining rate, grades, reserves at the mine, and the technical operating characteristics of the mine, mill, smelter, and refinery. Detailed tax computations are shown for a domestic operating company, for a foreign company and for a foreign subsidiary. In addition, the use of the various options that are available such as expense write-offs or deferments to create tax credits during preproduction years are considered, and its effect on the DCF. The program is also constructed to accommodate changes in metal prices, and escalation of capital requirements and operating costs. Output consists of profit and loss statements for entire projects using different methods of depreciation, cash flows, discounted cash flows, net present value and returns on investment. Returns on investment are computed for equity investment, total investment, and total investment less tax credits. Allowances are made for bank and guaranteed loans. Additional financial statements can be made for the following: a) A mine-mill segment with a concentrate selling schedule b) A mine-mill-smelter complex with a smelter product selling schedule c) Profitability of the smelter separately d) Profitability of the refinery separately

Jan 1, 1969

By W. N. Hoskins

This report covers the final results of a two-phase contract study conducted between July 1974 and October 1976. A comprehensive summary of the initial phase of the study is included. Phase I of the study involved the investigation and evaluation of all potential candidate underground systems for mining the deeper deposits of oil shale and associated minerals in the Piceance Creek basin of northwestern Colorado. Phase II called for the refinement and the detailed technical and economic analysis of the most promising system or systems, thus disclosed. Of the several systems initially investigated and evaluated, four Showed considerable merit for exploiting the deeper deposits: (1) chamber and pillar mining with spent shale backfill, (2) sublevel stoping with spent shale backfill, (3) sublevel stoping with full subsidence, and (4) block caving mining using LHD's. Final refinement and analysis of these four systems indicated their technical feasibility over at least part of the range of conditions expected in the deeper deposits. Their economic feasibility also was indicated under certain operating and market conditions. A variety of engineering, production, and cost information is provided on each of these systems.

Jan 1, 1976

By R. D. Brown

"""A matter of serious concern to the mining industry in British Columbia""; this comment reflects the attitude of the Mining Association of British Columbia toward the proposed new B.C. Mineral Royalties Act. The proposed legislation, introduced by the provincial government in February and now being debated by the legislature, combines a basic 5% royalty on the selling price, less approved p1ocessing and transpo1•tation costs, of minerals produced in B.C. with an ""excess"" royalty of 50% of any price increases over a predetetmined base. Government estimates project annual revenues of $20 million from the new royalty structure. The accuracy of these figures has been contested by the mining industry. Based on current world prices for copper the industry estimates that the provincial revenues from this mineral alone may run as high as $140 million in 1974 and $150 million in 1975. The Mining Association has warned that the new royalties “threaten to become confiscatory""."

Jan 1, 1974