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By A. J. M. Ross, R. G. Wayland

The Homestake mine is situated in Whitewood mining district, in the northern Black Hills of South Dakota, in the city of Lead, Lawrence County. The entire property, comprising 557 lode claims with a total area of 3343 acres, is held under United States Patent. The older claims were 300 by 1500 ft. under local regulations, the newer ones 600 by 1500 ft. The Homestake was discovered April 9, 1876, by Moses and Fred Manuel, and Jake Harney, who were drawn into the northern hills, from the Custer placer district, by news of the discovery of rich placer deposits in Deadwood Gulch. They located a number of additional lode claims and, in a short time, the whole country was covered with locations. The Manuel brothers built an arrastre the following winter and took out $5000. The next year the Homestake lode was sold to Senator George Hearst and associates, who organized the Homestake Mining Co. Other companies were formed to exploit other groups of claims and at one time fivc companies were operating on this deposit, the Father DeSmet, the Dead-wood-Terra, the Caledonia, the Highland, and the Homestake Mining Co. These companies, however, have been merged into the Homestake Mining Company. The first stamp mill, known as the "Eighty Mill," commenced operation on July 12, 1878, and production has been nearly continuous since that time. Geology The orebodies of the Homestake are found in an intensely folded and altered bed of dolomitic limestone occurring in a series of ancient rocks believed to be of Archean age, belonging to the Keewatin series. The Keewatin series is estimated to be 20,000 ft. thick and is made up essentially of quartz mica schists, garnet schists, quartzites, slates, and some green schists, probably derived from basic igneous rocks. The dolomitic limestone bed has a thickness of 40 to 60 ft. The great width of ore, as much as 400 ft. in some of the stopes, is due to the folding, wherein the bed is repeated. In other cases the bed is stretched and pinched out. Dikes of Tertiary rhyolite cut across the country and, in places, sills overlie the

Jan 1, 1925

By Rudolph Emmel

The mines operated by the South American Development Co. are located in the Zaruma mining district of southwestern Ecuador. They are near the old mining town of Zaruma, which is the only important city in the canton of the same name. The district is situated in the upper end of a valley lying between two spurs of the Cordillera, one of which may be considered the Coast Range and the other an intermediate range. The mining camp proper, known as Portovelo, and the plant are 2.4 km. south of Zaruma, on the north bank of the Amarillo River, a tributary of the Tumbes River, which flows southwestward through Peru to the Pacific. Portovelo is difficult of access; it is reached from Guayaquil by means of river steamers and muleback. 'Embarking at Guayaquil, the route is down the Guayas River, across the Jambeli Canal, and up the Santa Rosa River to Santa Rosa, a distance of 177 km. From Santa Rosa, the road or trail follows the Santa Rosa River, then across the summit of the Coast Range into Portovelo, a distance of 74 km.—a two-day trip on muleback. The mining property of the South American Development Co. comprises 297 lode claims and 142 placer claims. The combined lode claims cover an area, roughly rectangular in shape, 9000 m. long from north to south by 4000 m. wide; the northern edge of the rectangle is about 3000 m. north of the central plaza of Zaruma. Mineral lands in Ecuador are held by virtue of an annual tax per claim paid to the central government, no surface rights being included. HiSTOry The Zaruma mine has been worked by white men since 1549, probably before that it was worked by Indians. The followers of Pizarro, led by traces of gold in the sands of the Tumbes River, followed that stream to its source, worked the gold veins that they found and established the city of Zaruma. Among the mines worked by them were th Sesmo, Leonora, Viscaya, and Mina Grande. Only the soft ores at the outcrop were

Jan 1, 1925

By W. H. Schacht

The operations of the Copper Range Co. are located in the Michigan copper district at the southern end of the Keweenaw Peninsula, 8 miles southwest of Hough ton (the center of the district). All the producing mines are situated in a long narrow zone paralleling the peninsula and occupying the central portion. This zone is about 25 miles long and 3 to 4 miles wide. The important mines, in their order from northeast to southwest, are, Mohawk, Ahmeek, Allouez, North Kearsarge, Wolverine, South Kearsarge, Centennial, Calumet & Hecla, Osceola, Franklin, Quincy, Isle Royale, Baltic, Trimountain, and Champion; the last three are operated by the Copper Range Co. The existence of copper deposits in this district became known soon after the discovery of America. Many references by early explorers show that copper was found in the possession of many of the American Indians that inhabited the Great Lakes region. There is abundant evidence that exploration of these copper deposits extended into prehistoric times; and some indication that the American Indians carried on operations shortly before the advent of white men. An account of the finding of primitive mining appears in the Government publications of 1850-51 by Foster and Whitney. Although earlier expeditions by white men had been made to the Keweenaw peninsula, an attempt to commercialize the district was not made until after 1765, when Alex. Henry, a British subject, searched the shores of Lake Superior for mineral treasure. His first expedition took him to the Ontonagon River, where he found the famous mass of copper now on exhibition at Washington. In 1771, he started operations along this river with a crew financed by English capital; but after much difficulty and only meager success he found only detached masses while in search for a major deposit. There is no record of any cxploration from 1774 to 1820. In 1838, Dr. Douglas Houghton was appointed state geologist. Prior to that time he had made several visits to this region; and was the first white man to find

Jan 1, 1925

By Robert S. Lewis

Park City, Utah, elevation 7200 ft., is on the eastern slope of the Wasatch Mountains about 25 miles southeast of Salt Lake City, elevation 4200 ft. The town and surrounding mining district are served by two railroads: one, 28 miles long, is a branch of the Union Pacific R. R. and joins the main line at Echo; the other, 35 miles long, connects with the main line of the Denver & Rio Grande R. R. at Salt Lake City. The main shaft and important mine buildings, elevation about 8200 ft., of the Silver King Coalition Mines Co. are 11/2 miles by road to the southwest of Park City, and are near the head of Woodside Gulch. The property of this company is a consolidation of several groups of mining claims, and comprises an area that is roughly 4 miles long by 1 mile wide, the long axis of which has a N. 55" E. bearing. Geology A general geologic section through the property shows a basal formation of gray quartzite, called the Weber quartzite, above which seems to lie conformably the Park City formation. Both beds are of Carboniferous age. The Park City strata consist of a number of beds of limestone, with intercalated beds of quartzite, sandstone, and shale. The exact thickness is difficult to determine, but is apparently between 650 and 850 ft. Above the Park City beds and conformable with them lie the Woodside Shales. These thinly bedded fine-grained shales, about 1000 ft. in the thickness, are of no economic importance. They are overlain conformably by the Thaynes formation, which has about the same thickness and is composed of beds of limestone, sandstone, and shale. A thin bed of shale divides the formation into an upper and a lower part; the upper part contains more lime than the lower part. The Woodside shales and the Thaynes formation are of Triassic age. All the beds dip northwest, the dip is usually from 20" to 30°, but may be as great as 40°. In places, intrusions of diorite porphyry have deformed the beds. Marked faulting in zones of a northeast-southwest trend occurred after the intrusion of the porphyry. Later faulting in a

Jan 1, 1925

By C. E. Mills

The Verde mining district is in Yavapai County, in north-central Arizona. Jerome, the principal town, has a population of 6000 and the two important mines of the district—the United Verde and the United Verde Extension—lie almost within its limits. Perched high on the southwest side of the Verde valley, at elevations of 4800 and 5500 ft. (1463 and 1676 m.) respectively, both mines have long tunnels from their lower levels through which the ore is hauled to the smelters. Clarkdale, the smelter town for the United Verde mines, lies in the Verde valley 4.1 miles (6.5 km.) distant in an air line from Jerome and at an elevation of 3560 ft. The two towns are connected by the standard-gage railroad of the Verde Tunnel and Smelter R. R., a subsidiary of the United Verde Copper Co. This road is 11 miles long and has a compensated grade of 4 per cent. At Clarkdale it connects with the Verde valley branch of the Santa Fe railroad. Clemenceau, the smelter town for the United Verde Extension mine, lies 3.5 miles (5.8 km.) in a southeasterly direction from Clarkdale, at an elevation of 3420 ft. It is connected to the Verde Valley branch of the Santa Fe railroad at Clarkdale by the Arizona Extension R. R., a subsidiary of the United Verde Extension Mining Co. The portal of the haulage tunnel, at an elevation of 3757.5 ft., is also connected with the smelter town by 4 miles of standard-gage track belonging to the same company. In the vicinity of Jerome, the great southern escarpment of the Arizona plateau forms the northeast side of the Verde valley. The general level of this escarpment, or "rim" as it is called, is about 4000 ft. above the Verde River. A corresponding elevation is reached only by the highest peaks of the Black Hills, which bound the valley to the southwest. Two lava-capped mesas, known as "Mingus" and "Woodchute mountains," form the culmination of the Black Hills. That part of the Old Black Hills mining district which lies between their crests and the Verde River is now known as the Jerome, or Verde, mining district. If the smelter towns are not included, a strip about 7 miles long by 3 miles (11 by 5 km.) wide, embraces practically all of the properties belonging to the Jerome district. T-bis strip lies parallel to and along the side of the Verde valley from First View, 2 miles northwest from Jerome, to the

Jan 1, 1925

By Nelson Severinghaus

Mineral fillers have been defined as inert materials that are included in a composition for some useful purpose. Because this definition and the scope of this review are not specific- indeed, exceptions abound-accurate total statistics are unavailable. One source estimates the total production in the United States in 1971 at 5 million tons valued at $200 million, averaging $40.00 per ton. Included are a broad group of minerals-asbestos, barite, bentonite, calcium carbonate, clays, diatomite, feldspar, micas, silica, talc. Additional references will be made to synthetic mineral-derived fillers such as aluminum hydrate, precipitated calcium carbonate, and pyrogenic and precipitated silicas and silicates. A section on related uses at the end of this chapter covers absorbents and filters. Mineral fillers can be included in compounds to accomplish a variety of final results. Hardness, brittleness, impact strength, compressive strength, softening point, fire resistance, surface smoothness, electrical conductivity, and a host of other physical characteristics may be modified by the inclusion of fillers. These effects are the result of properties of the fillers, including chemical activity, hardness, particle size, shape and distribution, surface structure, color, density, and refractive index. To facilitate an overview of the mineral filler industry, this chapter will review the general usage of fillers, the inherent characteristics that intensify their utilization, and similarly their manufactured characteristics. Major using industries will then be examined in detail. Specific information on deposits and processing for industrial minerals will be found in the appropriate commodity chapter. The chart in Table 1, updated from the 3rd edition of Industrial Rocks and Minerals, illustrates the major mineral fillers (both natural and manufactured) and their more important end uses.

Jan 1, 1975

By Nelson Severinghaus

Mineral fillers have been defined as inert materials that are included in a composition for some useful purpose. Because this definition and the scope of this review are not specific-indeed, exceptions abound-accurate total statistics are unavailable. One source estimates the total production in the United States in 1979 at 11.3 Mt (12.5 million st) valued at $534 million, averaging $49.19 per ton. Included are a broad group of minerals-asbestos, barite, bentonite, ground limestone and dolomite, clays, diatomite, feldspar, micas, silica, talc. Additional references will be made to synthetic mineral-derived fillers such as aluminum hydrate, precipitated calcium carbonate, and pyrogenic and precipitated silicas and silicates. A section on related uses at the end of this chapter covers absorbents and filters. Mineral fillers can be included in compounds to accomplish a variety of final results. Hardness, brittleness, impact strength, compressive strength, softening point, fire resistance, surface texture, electrical conductivity, and a host of other physical characteristics may be modified by the inclusion of fillers. These effects are the result of properties of the fillers, including chemical activity, hardness, particle size, shape and distribution, surface structure, color, density, and refractive index. To facilitate an overview of the mineral filler industry, this chapter will review the general usage of fillers, the inherent characteristics that intensify their utilization, and similarly their manufactured characteristics. Major using industries will then be examined in detail. Specific information on deposits and processing for industrial minerals will be found in the appropriate commodity chapter. All of these same minerals have additional significant uses based on their chemical composition or other characteristics. References will be found in other use chapters and summarized in commodity chapters. The chart in Table 1, updated from the 4th edition of Industrial Minerals and Rocks, illustrates the major mineral fillers (both natural and manufactured) and their more important end uses. Use of Mineral Fillers Archaeologists have found that more than 5000 years ago, bitumen used for mortar and waterproofing contained mineral contaminants that acted as fillers. Since that time man has added mineral products to compounds to improve certain characteristics. Perhaps the most common objective of filler usage is reduction of cost of the end product. Certainly the inclusion of a filler that costs 2¢ per 0.45 kg (lb) will reduce the cost of a plastic product whose resin costs 50¢ per 0.45 kg (lb). But the decision to use a specific filler is not that simple. It may "soak up" binder, making a compound more viscous and perhaps preventing its flow into a mold as an injection molding compound, but similarly will give good anti-sag characteristics to putty, caulking compound, or undercoating. Fillers may be incorporated to modify: 1) Cost 2) Physical characteristics 3) Flow characteristics 4) Fire resistance 5) Density 6) Heat conductivity 7) Color or brightness and opacity 8) Hardness, brittleness, impact strength 9) Deformity, viscosity, softening point 10) Processing problems 11) Electrical conductivity 12) Surface texture 13) Thermal expansion characteristics 14) Abrasion resistance

Jan 1, 1983

By Orville R. Lyons

THE continuous vacuum filter, whether it be a vertical or horizontal disk, inside or outside drum, when properly applied is a very effective device for dewatering fine solids. Because of the number of variables that affect its performance, however, it is not possible to obtain consistently maximum moisture reduction in an operating plant. This paper presents a method for determining the average cake moisture and the variations in cake moisture to be anticipated when dewatering fine solids by continuous vacuum filters under normal operating conditions.

Jan 10, 1951

By C. F. Cornell, Henderson, A. F. Dunyon, D. A. Dahlstrom

IN processing magnetic taconites several steps of crushing, grinding, classification, and magnetic separation are required to produce a 60+ pct Fe concentrate. Usually the final concentrate is in a slurry form of 55 to 70 pct solids by weight and is further characterized by a particle size of 60+ pct -325 mesh. In taconite plants already completed or under construction the conventional method used to obtain pellets suitable for blast furnaces is to filter the concentrate slurry, ball the filter cake, and then harden the green pellets in a traveling grate or in a vertical shaft furnace. Large tonnages must be handled in minimum floor space, with reduced maintenance and lowest possible operating cost. Filtration must therefore achieve two objectives: 1) high filtration rate-in terms of pounds of dry solids per hour per square foot of filtration area-at a low filtrate solids concentration, and 2) a filter cake moisture that will always permit efficient balling within the normal fluctuations of plant operating conditions. If moisture contents are too high, balling may be impossible or result in a mushy ball without enough green strength for the firing operation.

Jan 3, 1957

By Colin MacDonald

The choices of an uranium mill flowsheet are pri- marily determined by economic feasibility with plant location and regulatory bodies playing a lesser but still important role in this determination. The host ore bodies will determine the leach pro- cess to be used for basic uranium extraction. Im- mediately following this decision, the method of leaching has to be determined. These can be: - Atmospheric leaching - Pressure leaching - In-situ leaching - Heap leaching The three previously stated criteria lay important parts in this decision. In the case of atmospheric or pressure leach and once the soluabilized uranium has been liberated from the host gang material, liquid solids separation becomes the major criteria. Three process flowsheets are available; they being: -Countercurrent decantation - Countercurrent or co-current filtration - Resin in pulp Following liquid solids separation, concentration and precipitation become the next variable choice. They being: -Solvent extraction - Fixed bed ion exchange - Fluid bed ion exchange Lastly, washing and drying of the precipitated product to remove impurities can be carried out by either filtration or centrifugation. With the exclusion of milling circuits, grinding circuits, flotation circuits, and calcining processes, we have 240 variations of the flowsheet between leaching and a dry washed precipitate. Of this total, filtration in one form or another and in single or multiple applied forms has application in 144 streams. This paper intends to discuss four (4) facets of the total flowsheet in which filtration is applied, following grinding and prior to calcining. They are: - Leached pulp liquid solid separation - Tailings dewatering - Pregnant solution clarification - Yellow cake washing and dewatering

Jan 1, 1980

By B. Das, V. Hucka

Two different types of filtration methods for in-situ gasification of coal are described. The different factors, i.e., geological, technological, and others, which affect in-situ gasification are given. The layout and operation of filtration methods of in-situ gasification are described in detail. The results of a case history are described.

Jan 1, 1977

By J. E. Schiller, S. E. Khalafalla

Due to its unique surface properties, magnesium oxide (MgO) is an excellent medium to filter asbestos and other suspended solids from water. MgO operates up to twice as long as a sand filter before backwashing is required while flow rate and filtrate clarity are as good or better with MgO.

Jan 1, 1984

By Daniel T. Hegyan, Thomas B. Zugates

Continuous vacuum disk filters are increasingly being used to filter refuse from the fine-coal washing circuits as it becomes important to close the water circuits and eliminate sludge holding ponds. This paper discusses our past experience filtering refuse, effects of solids concentration in the filter feed, use of polymer flocculation aids, effect of flocculation devices, and effects of particle size and ash content on the filtration rate. Detailed tests were performed on existing installations utilizing coal refuse filters to determine optimum flocculant dosage, solids concentration, and disk rotation speed to form a dischargeable cake. Information was also obtained showing effect of flocculant addition on the moisture of the filter cake.

Jan 1, 1977

By K. D. Hester, A. C. Anderson

The Elliot Lake uranium deposits are contained in a pebble conglomerate which is similar throughout the basin. This paper compares the solid-liquid separation circuits of two nominal 3000 T/d acid leach uranium concentrates treating Elliot Lake ore. One concentrator employed rotary vacuum drum filtration for solids removal and washing, the .other used counter current decantation in torque arm thickeners. Capital and operating costs, operation and maintenance, and metallurgical performance of the two solution recovery methods are compared and contrasted. A recent development, removal of the sand fraction ahead of C.C.D. and separate sand washing in hydraulic cyclones, is also discussed.

Jan 1, 1973

By AIME AIME

The following abstract of the minutes of the final Adjourned Annual Business Meeting, held Nov. 12, 1912, in the office of the Institute, 29 West 39th Street, New York City, is here presented for the information of the membership at large. On the announcement by the Secretary that there was a quorum present, President James F. Kemp called the meeting to order. The minutes of the Adjourned Annual Business Meeting of Oct. 7, 1912, were read and approved. (Sec p. xi,Bulletin No. 71, November). Prof. Jos. W. Richards, in behalf of the Special Committee of the Board of Directors and the Council (Messrs. Richards, Kirchhoff, and Rand), withdrew the two proposed amendments to the Constitution offered by the said Committee at the Adjourned Annual Business Meeting of Oct. 7, 1912. (See Bulletin. No. 70, October, 1912, p. vi., and Circular Announcement No. 8, Oct. 15, 1912, p. 15.) Professor Richards presented a syllabus of the proposed amendments to the Constitution and By-Laws prepared by the Special Committee. Several members present discussed various sections of the proposed Constitution, and the Committee advised that the suggestions would he duly considered before submitting the final document, which would be duly presented and sent to the membership at large at least 30 days before the next Annual Business Meeting, Feb. 18, 1913. Professor Richards presented a resolution, seconded by Mr. Kirchhoff, making a change in the present Certificate of Incorporation, so that it would conform to the proposed changes in the Constitution and By-Laws; said resolution was unanimously adopted. Professor Richards presented another amendment to the Constitution, which had been purposely omitted from the printed list, but had been requested by many members, namely, the creation of a " Class of Fellows." This question was freely discussed at the Cleveland meeting (see Bulletin No. 71, November, 1912, p. 1348), and in view of the diversity of opinion it was-decided to present it in separate form for separate action of the membership at large at the Annual Business Meeting, Feb. 18, 1913. In answer to question, the President announced that the proposed amendments to the Constitution and By-Laws presented by Messrs. Corning and Stone at the Adjourned Annual Business Meeting, Oct. 7, 1912, and published in Circular Announcement No. 8, Oct. 15, 1912, were still on record. Professor Richards presented a syllabus of the proposed amendments to the By-Laws, and several sections were discused by members present, but no action of record was taken. Mr. Charles F. Rand read a letter from Mr. L. K. Armstrong, Sec-retary of the Spokane Local Section of the Institute, referring to the proposed amendments to the Constitution, and he announced that many of Mr. Armstrong's suggestions were, in one form or another, already incorporated in the proposed amendments submitted by the Special Committee. A special vote of thanks was passed to Dr. Albert R. Ledoux for the valuable assistance rendered by him to the Special Committee in the preparation of the proposed amendments to the Constitution and By-Laws.

Dec 1, 1912

By Daniel T. O’Brian

Exploration targets and results in the mining industry are commonly summarized in terms of tonnage and grade. Business appraisals require, as additional information, the expected profit or loss implied by the physical summary. The early incorporation of knowledge gained through financial analysis computations can provide a means for economically resolving many common exploration and development problems. Examples of such applications from the activities of exploration planning, reconnaissance, land acquisition, and development planning are presented in this paper.

Jan 1, 1969

By Daniel T. O’Brian

Exploration targets and results in the mining industry are commonly summarized in terms of tonnage and grade. Business appraisals require, as additional information, the expected profit or loss implied by the physical summary. The early incorporation of knowledge gained through financial analysis computations can provide a means for economically resolving many common exploration and development problems. Examples of such applications from the activities of exploration planning, reconnaissance, land acquisition and develoment planning follow. While prospecting for mineral deposits, geologists are frequently asked what they have found or hope to find. The response is usually descriptive, such as: "50 million tons of 1% copper," and the economic implications are deferred until a capital investment decision is required. At that time a financial analysis integrating the four analysis components-tonnage and average grade above cutoff grade, capital and operating costs, product value, appropriate profit or loss accounting-are completed.

Jan 10, 1969

By David C. N. Cockburn

INTRODUCTION This paper analyses certain of the financial considerations which will commonly apply in relation to the following questions: - what equity structure or project vehicle should be adopted for the exploration and/or exploitation of a project by more than one unrelated participant? - what vehicle should be adopted by a participant for its participation in a multiparty project? Due to local, politically motivated laws in certain jurisdictions, or due to the overriding requirements of a dominant participant, there may be little choice of the underlying multiparty structure which may be adopted for the exploration, appraisal and/or development phases of a project. Nevertheless, even in such circumstances, attention should be given, at least in the preparation of the related documentation, or in considering methods of participating or funding the project, to certain of the points discussed below. This discussion of financial considerations in the context of the more commonly adopted multiparty structures concentrates primarily on fiscal, financial accounting, financing and funding aspects. TYPES OF PROJECT VEHICLE FOR MULTIPARTY INTERESTS The well known types of vehicle adopted for the participation in a project by more than one participant (assuming that the participants are effectively unrelated) are as follows. Joint Venture (unincorporated joint venture) By far the most commonly adopted structure for mining ventures, a joint venture is usually defined and documented in terms to distinguish it from a partnership for important tax and legal reasons. In essence, this is a contractual association of more than one participant to carry out a specific commercial project or purpose. The relationship between the separate participants and their respective rights, interests, obligations and liabilities are agreed between the participants in one or more contracts (viz Joint Venture Agreements or Joint Operating Agreements together with ancillary documentation). Unlike other project vehicles of participation, in most jurisdictions there is no specific body of law governing joint ventures. The participants thus enjoy contractual freedom to negotiate whatever deal they may wish between themselves. Jointly-Owned Project Company (corporate joint venture) A very familiar vehicle, this is a separate and distinct legal and tax entity incorporated under the company laws of the place of incorporation to undertake specific objects, and granted specific powers, in relation to the Project. Although certain rights, interests and obligations may be circumscribed in the governing corporate instruments by the promoter participants, the corporation laws of the relevant place of incorporation, and the selection of such governing laws (assuming freedom of choice) and future political changes in such corporate laws, should be carefully considered. The use of a company in a multiparty structure may be peripheral to the project itself as a specific purpose vehicle (for example, a joint sales agent or marketing company or a joint borrowing vehicle) or it may form a central function such as in the case of a tolling company which will own the project for legal and taxation purposes and raise financing with the backing of the shareholder participants commonly by the adoption of take-off, throughput and/or user agreements. Partnership This is a legal relationship, subject to the often wide-sweeping restrictions of the relevant local partnership laws, under which the participants have agreed to carry on a business venture together with a view to profit. The effect of the relevant partnership laws, as well as the various types of partnerships and the

Jan 1, 1985

By James H. Boettcher, W. Durand Eppler

INTRODUCTION In the second quarter of 1979, Rapid Mining Co., Inc. ("Rapid") inquired whether Crocker National Bank ("CNB") would provide $4 million in term loan financing to help ("Dry Creek") acquire the outstanding shares of the Dry Creek Coal Company ("Dry Creek") in West Virginia. Prior to approaching CNB, Rapid had sought financing with the assistance of a financial advisor from a number of commercial banks without success. A summary of the initial terms requested by Rapid is shown in Table 1 compared with the actual terms on which the transaction closed. It is not difficult to note that the two sets of terms differ significantly. This is often the case when financing requests based on the expectations and vision of a mine developer are juxtaposed with more pragmatic requirements of a commercial bank. The "art" and fund of structuring financing plans for mining ventures (highly leveraged acquisitions or grass roots) comes in working with mine developers to arrive at a final financial structure that meets their objectives and constraints as well as those of the bank or other financial institutions providing much of the financing. Beginning with the terms requested by Rapid and ending with the terms that closed the transaction, this article briefly describes the process we went through with Rapid Mining. The Seller and Buyer The Dry Creek Coal Company was established in 1961, after its owner acquired the coal leases from Republic Steel. Republic has mined the primary coal seam from 1948-1961. Dry Creek was owned as a subchapter S corporation (i.e., for federal income tax purposes, income is taxed at the shareholder level) and had been run on a low key basis. Since the company had virtually no debt and limited cash needs, the owner produced primarily when rail cars were available and income was required. Output was therefore erratic as is shown in the top of Table II, but the result was a profitable little company with an attractive free cash position. Because the owner wished to retire and enjoy his wealth in a more readily spendable form, he had put the mine, with stated recoverable reserves of approximately 13 million tons, up for sale. In contrast, Rapid Coal's investors consisted of a number of investors of disparate financial situations. They had agreed upon a primary objective of income maximization and planned an annual production rate of 120,000 TPA which they and the current owner believed realizable. The Formulation of a Financing Structure Figure 1 presents a simplified overview of the sequence of steps taken in the financing process which lasted approximately three months from start to finish. Since banks see many requests for funding and considerble time is required to follow up on each, an important step was determining, after a brief review of the materials provided to us, whether the basic "eonomic entity" was viable. In this case, the size and quality of the reserves, the inherent operating cost characteristics, the sales arrangements, the management/labor situation and Rapid's principles all appeared to be sound enough to warrant investing the time necessary to do a thorough analysis of the project. Once this decision was made, the evaluation and analytic process shown in Figure 2 was initiated. The first and most fundamental concern of any banker is whether the loan will be paid back as scheduled from the cash flow generated by the project. The amount of debt relative to the owner's equity is of course crucial in such a determination. Before the debt/equity issue was addressed, however, a number of more qualitative factors had to be studied and if

Jan 1, 1985

By Peter J. Maxworthy

INTRODUCTION There is no hard and fast rule on whether functions within a company, diversified or otherwise, should be strongly centralized or decentralized. In all diverse organizations, there are certain basic functions which remain common (or central) to each element of the business, viz: Personnel Management Cash Management Taxation Management Legal Planning Accounting Standards It would follow that each of these common factors requires some supervision at a central level to ensure that overall group objectives are met. It is true that other functions including: Industrial Relations Marketing and Distribution Production Research and Development Purchasing Management Accounting may also be common to each element of the organization. However, there is far less commonality in the degree to which these functions are central to the efficient performance and financial well-being of the business. Role of Operating Units The resources of operating centers may be viewed as a bank of funds, the nature of which can be changed from time to time, but the employment of which must provide for ongoing increases in the net worth of the total enterprise expressed in terms of market values. Operating units are required to continually review products, methods, and opportunities and to monitor avenues for incremental investment--all with a view to attaining the necessary additive net present value of future cash flows of the enterprise. Operating units should be permitted sufficient autonomy to enable the best use to be made of the skills and experience of the people it employs in order to produce a return appropriate to the value of assets employed. Role of Head Office The head office will typically comprise a specialist group--the leaner the better if one strongly adopts the decentralist approach--often acting as Service Centers but also performing a control function in the corporate sense. The head office function is a cost center. It may be instrumental in developing strategies for increasing revenues or reducing costs on a group scale, but it does not generate revenue. Every dollar spent on this function is an extra dollar to be generated by the operating centers in order to achieve an increase in corporate wealth. TREASURY MANAGEMENT Treasury management is concerned with the provision of finance, cash-flow management, and risk analysis. Each decision taken within the enterprise has a cash implication. It follows that a well-integrated central Treasury function can, in all likelihood, produce economic benefits. The degree to which the function should be centralized depends largely upon the unique nature of the operating units it is servicing. Levels of ownership, the calibre of unit operating managers, and the nature and geographic distribution of the business are all factors determining the degree to which the Treasury function is centralized. In the case of Peko-Wallsend, the Treasury Department is small, comprising four people. While divisional cash-flow management is largely decentralized, Treasury is responsible for the daily management of funds surplus to the immediate needs of operating units. Treasury also operates as central banker and provides funds to

Jan 1, 1985