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By Klaus M. Zeitler

INTRODUCTION One cannot discuss the subject of "Raising Capital in the 1990s" without having a crystal ball and a reliable fortune teller. This discusses "Raising Capital for the 1990sW, which is what Metal1 Mining Corporation did in 1987. We raised (3166 million in an IPO (initial public offering) that was originally planned for only some (375 million. Why did we raise this money? How did we do it, and why was this IPO so successful? The answer to the first question requires a description of the promoter and principal shareholder of Metal1 Mining Corporation, Metallgesellschaft AG. This West Germany company was founded over 100 years ago in Frankfurt as a trading house for non-ferrous metals. It has developed into one of the world's leading firms in the non-ferrous metals industry. The company's worldwide activities in all areas of that business include mining, smelting and refining, the trading of ore, base and precious metals, the production of semi-fabricated and finished metal products, and the provision of engineering, construction and transportation services. Metallgesellschaft AG has also diversified into many other areas, the most significant of which are manufacturing, the production of chemicals, the development and application of technical and chemical processes, the planning and construction of industrial plants, and activities associated with finance, insurance, shipping and freight forwarding, and the provision of barter and countertrade services. The company maintains a network of more than 100 offices around the world; it employs some 25,000 people in its worldwide activities. [Selected financial data, as of September 30, 1987: (MetaUgesellschafl AG) Working Capital DM 8%.6 million CDNS 672.8 million Long Term Debt DM 568.0 million CDNS 426.2 million Sales DM 14.9 billion CDNS 11.2 billion Net Income DM 87.7 million CDN$ 65.8 million Market Capitalization at April 27, 1987: (Metallgesellschafi AG) Outstanding Shares ~,6oo,o0o DM 1,875 million CDNS 1,407 million] For the fiscal year ended September 30, 1987, Metallgesellschaft AG had, on a consolidated basis, net sales of DM13.3 billion, net income of DM100 million and total assets of about DM7.0 billion. Metallgesellschaft AG established the American Metal Company, a predecessor of AMAX Inc. one of the largest ventures undertaken by Metallgesellschaft AG then was the acquisition, through the American Metal Company, of a majority share in the Mexican Penoles mine, a large lead and silver deposit. METALLGESELLSCHAFT AG Figure 1 depicts an overview of Metallgesellschaft AG before and at the time the initial public offering of Metall Mining Corporation's shares took place. It shows that mining was far from the centre of Metallgesellschaft's activities. Therefore, it could not expect to receive an extraordinary amount of board attention. Thus, mining investments not only had to compare well with other mining opportunities, but were in fierce competition with projects from other divisions. In addition, mining was sub-divided into two separate departments -- domestic and international. These two departments had different management styles and diverging interests which resulted in a minimum co-operation between them. The domestic mining department was primarily interested in the survival of the local mines. These mines were characterized by rising operating costs and declining ore grades. It took a special commitment and continued ingenuity to develop and adjust to local conditions, and modern mining and processing technology, in order to remain competitive, or at least survive within the international mining industry. Local management

Jan 1, 1990

By D. R. Hanson

The acoustic vibrational spectra of impacted rock slabs were examined at the Denver Research Center, US Bureau of Mines, in an attempt to characterize the behavior of partially detached mine roof rocks. The ultimate goal of this study was to develop a technique or instrument that could provide a quick, accurate, quantifiable measure of mine roof stability. The power spectra of unstable rock slabs were found to contain more energy in the range of 200 to 1000 Hz than solid rock. Comparison of the power contained between 500 and 1000 Hz with that between 3000 and 3500 Hz provided a quantitative measure of rock stability. A lightweight prototype field instrument was designed, constructed, and field tested. This battery-powered instrument computes the power contained in the two frequency bands, compares their magnitude, and displays a number related to the stability of the block tested. Field tests showed the instrument provided reliable measurements of block stability even under conditions of noise that would have seriously degraded the accuracy of the standard methods of roof sounding.

Jan 1, 1986

By B. J. Steblay

Roof bolts are the primary means of supplemental support in coal mines and are widely used in other mines. Presently, post installation loads are measured infrequently on only about 10% of the bolts by using standard torque wrenches that limit accuracy to about ± 30%. Because mine roof bolts are long, slender, non-uniformly sized, roughly forged, placed in a difficult environment, and subject to severe bending on installation, researchers have been unable to use ultrasonic reflection techniques to measure strain. A complete measurement system has now been assembled by the US Bureau of Mines, Denver Research Center. Obstacles such as bolt preparation, transducer mounting, reliable reflection, and calibration have been dealt with. The seemingly simple concept of measuring the time of flight of an ultrasonic pulse to a reflector is actually complex due to the need to measure to 0.0025 mm (0.0001 in.) accuracy, the sensitivity of velocity to temperature, and stress, and the stability required to make measurements over several years.

Jan 1, 1986

By D. L. Blakeman, Trimble. J. W., S. W. Banning

Noranda's Grey Eagle mine and mill, in the Siskiyou Mountains of northern California, began shakedown operations in the late fall and early winter of 1982. This paper describes some of the unique features in mineralogy, milling, and water treatment operation at Grey Eagle. In addition, major start-up problems in the mill and water treatment plant are discussed along with measures taken to correct these problems.

Jan 1, 1986

By Jack M. Jodrey, Neil D. Donnell, O&apos

Bituminous sands of the Lower Cretaceous McMurray Formation in northern Alberta constitute the ore for the surface mining operation at Syncrude Canada Ltd. These sediments represent a complex succession of fluvial, estuarine and marine depositional environments. Grade prediction is realized through a combination of geological interpretation, computer modeling, and reference to past mining experience. Accurate forecasts of feed grade permit reliable predictions of volumes for removal to meet budgeted synthetic crude oil production. This planning facilitates efficient allocation of mining equipment and resources. The feed grade to the Extraction Plant is monitored at various points along the delivery system.

Jan 1, 1985

By Dean S. Rogers

The conventional role of exploration, development and grade control is examined in this paper within the context of the many and varied types of gold occurrences which are found at the Dome Mine. The account endeavours to trace the development of the total ore evaluation process, from diamond drilling through the exploration and drifting stage, to the stope development and planning phase of the operation, with an emphasis on sampling techniques and assaying procedure. The concept of ore reserve calculations is developed and the practice of grade control is described. In summary, the role of the geological, the engineering and the mining department is presented in relation to the contribution each has to make in the evaluation and exploitation of ore from one of the world's classic Archean gold deposits.

Jan 1, 1985

By J. J. Reuther

Reported are singular results of a completed combustion research program designed to reliably determine the ignition, burnout, and pollution characteristics of various ranks of pulverized coal (bituminous and lignite), chars, and water-slurries of the raw bituminous coals. Well controlled simulated boiler environments were diagnosed to do so. The standardized, systematic, and comprehensive investigation established relationships between physicochemical fuel properties (coal rank, volatile matter, and reactivity) and thermochemical combustion behavior (ignition and burnout times, and NOX pollution potential) for 31 different fuels.

Jan 1, 1985

By A. S. C. Owili-eger

Coal mining is one of the major activities that may affect the natural or existing hydrologic equilibrium of a basin. Consequently, the mining industry is committed to the conservation and protection of the hydrologic balance within and around mining environments. This commitment embodies thorough and careful consideration of the quantitative and qualitative variations and, in general terms, the environmental impacts of mining activity on the natural water systems. A research program was undertaken to study the impacts of full extraction coal mining on the ground water systems at one of the coal basins in the Appalachian region. The primary objective was to provide reliable information for determining the local and possibly the regional effects of longwall mining on well yields, and the hydraulic and hydrogeochemical parameters of the immediate surface and subsurface water resources.

Jan 1, 1985

By S. A. Shoop, J. J. K. Daemen

Site-specific blast vibration prediction can be more accurate than using a universal prediction equation. Vibrations from 37 blasts were monitored using three seismographs. Data analysis showed that square root, cube root, and site-specific scaling predicted ground motion with equal reliability. Imprecise prediction is caused by geologic and blast variability, particularly, inaccurate delay times. Vibrations at some mines were consistently lower or higher than vibrations predicted from US Bureau of Mines (USBM) equations. Vibration restrictions based on USBM studies could then be too conservative or too lenient. Predominant vibration frequencies were generally less than 50 Hz, but several blasts had significant energy up to 125 Hz. In some cases, energy was concentrated at frequencies corresponding to delay intervals.

Jan 1, 1985

By C. A. Wert, K. C. Hsieh

Measurement has been made of the organic sulfur concentration in coal macerals using microanalytical techniques in the transmission electron microscope. This technique utilizes measurements of x-rays emitted by the sulfur atoms embedded in the hydrocarbon constituents and the bremsstrahlung x-rays generated in the matrix. It is a simple technique for thin specimens and yields reliable results. Although it can be used to measure the average organic sulfur content of coal, it is most useful in determining organic sulfur in extremely small volumes of material. Variations in organic sulfur content can be measured at a scale unimagined earlier. This TEM technique also has application for determination of organic chlorine, phosphorous, potassium and other elements often found distributed through the hydrocarbon constituent of fuels.

Jan 1, 1985

By R. A. Irvine

The use of large vibrating screens presents unique challenges to the screen manufacturer, the plant designer, and the plant operator. The design of vibrating structures that span greater unsupported distances is critical to the reliability of a screen subjected to billions of fatigue cycles. Larger percentages of total plant production become dependent upon fewer, larger vibrating screens. Plant designers and operators must plan for equipment maintenance in a manner which optimizes the production availability of large vibrating screens.

Jan 1, 1985

By L. S. Kolbert, C. H. Baab

Introduction In June 1981, the Electric Power Research Institute (EPRI) issued a report titled "Control Systems in Coal Preparation Plants" to determine the status of instrumentation and automation systems in the coal preparation industry. EPRI concluded that the control systems presently being employed in the US coal preparation plants "are relatively primitive compared with those in other mineral processing industries; and analytical instrumentation is virtually non-existent." With tighter specifications on the quality of steam coal, interest is increasing in more sophisticated control systems. One type of device that is currently assisting the preparation plant operator optimize and control the coal cleaning process is nuclear based instrumentation. Nuclear instrumentation includes methods for measuring weight, level, and density as well as for performing elemental analysis on coal. Major Features and Benefits of Nuclear Measurement and Analysis Systems There are many features and benefits of nuclear instrumentation. The major benefit is that nuclear instrumentation is non-contacting. The measuring heads do not contact the process materials. This enables measurements of corrosive, abrasive, or high temperature materials with no loss of performance, reliability, or useful life. Also, there are no moving parts to wear or be fouled by dust or corrosion. Installation is simple and inexpensive. For instance, density gauges are simply clamped onto existing pipe runs. Weigh scales and level switches usually require nothing more than welding brackets to customers' equipment. Once installed, routine maintenance can be performed without interrupting the process. Thus, nuclear instrumentation is highly reliable and easily installed and maintained. The operating life of the instrumentation is virtually unlimited. Principle of Operation Nuclear belt weigh scales, point level switches and density gauges all operate on the gamma-ray transmission principle. A beam of gamma radiation from a radioisotopic source is projected through the process material either on a belt, in a vessel, or in a pipe. Opposite the source is a radiation detector whose electrical output is proportional to the intensity of the radiation it absorbs. Gamma radiation is part of the same electromagnetic spectrum that encompasses light, infrared, and x-rays. In many respects, gamma radiation behaves much like light. However, it is far more penetrating and can be transmitted through considerable thickness of materials that are opaque to visible light, e.g., several inches of steel. Types of Nuclear Instrumentation in Coal Preparation Plants There are four types of nuclear instrumentation presently being employed in coal preparation plants. They are: •Belt Weigh Scales •Point Level Switches •Density Gauges •Coal Analysis Equipment. Each type of instrumentation has a number of potential applications within the plant. What follows is a discussion of three different types of devices and their applications. Weigh Scales In coal preparation plants, weighing instruments are used for measuring material throughput, totalized weight, and batch weight on conveyor belts and other transport equipment. They are also used on drag chain conveyors, vibrating conveyors, and screw conveyors. Weighing is important for receiving the run-of-mine coal, controlling mass flow, scheduling production, and loading and shipping the washed coal to market. There are two basic types of weighing instruments: gravimetric and nongravimetric devices. Gravimetric devices are units which measure the pull of gravity on the material being weighed. Nongravimetric devices are not dependent on the force of gravity on the sample. Nuclear weigh scales are the most prevalent nongravimetric devices used. The nuclear weigh scale works on the same basic principle as other nuclear gauges. The greater the quantity of material placed in the path of a radiation beam, the more radiation will be absorbed by the material. In weigh scales, Cesium 137 source is generally placed above the moving stream of material so that the radiation is directed through the material. An ion chamber radiation detector is on the opposite side of the material. The radiation passing to the detector generates a signal which is inversely proportional to the weight of the material present. This signal is amplified and integrated with the speed of the process flow yielding the weight. The weight is indicated and can be totalized for throughput, batch control, etc. In conclusion, radiation weighing methods have become well established in the coal preparation industry throughout the world. As mentioned before, this device finds its most

Jan 1, 1985

By James E. McNulty

Coal reserve estimates are prepared using a simple equation: the product of area, bed thickness, density and recovery factors. Each of these elements involves a degree of risk based on certain assumptions. Reserve area, thickness and density rely on certain physical data whose accuracy, reliability and sufficiency may be problematical. Estimates of recovery factors for mining and coal preparation are often subjective. Most reserve estimates assume, sometimes incorrectly, that the subject reserves will be completely extracted. The principle that certain coal resources are reserves, if they can be considered economically recoverable at the time of determination, needs to be reexamined in the light of recent market cycles. Reserve estimating requires the exercise of judgments, the validity of which reflect the qualifications, experience and objectivity of the estimator.

Jan 1, 1985

By Grover R. Castle

INTRODUCTION Banks are being asked to assume more and more of the project risk in connection with project financings and, as a result, they are seeking to become more sophisticated in the way that they approach these kinds of financings. For example, a large number of banks that are active with the mining companies have established mining groups which typically will include mining engineers, economists, and bankers, in order to specialize their service to the mining industry. These banks have geared up these special service staffs so that they will be better equipped in their lending activities to analyze, measure and evaluate the project risk. The hope is that a team of these specialists will be able to predict the potential success or failure of these new "green fields" mining ventures that the banks are asked to finance. This paper shall focus on this subject and try to determine just how successful these specialists can hope to become as they analyze these various projects that are brought to them for financing. The approach that shall be taken in this paper shall be to examine how successful the mining companies themselves have been in the past with this same problem. These mining companies should be the most sophisticated in their approach to the analysis of the potential for success of a new mine because they have had the most experience in evaluating these projects. After all, who knows more about developing a mine than the companies that have developed similar mines in the past? For the purposes of this paper, the writer has selected a sample of 18 mines that have been developed over the years and measured the actual performance of each of these sample ventures against the original projections. All of these cases have involved the development of large projects where the sponsors or partners in the venture are substantial and sophisticated companies and where the feasibility studies have been prepared by engineering firms that are considered very professional in the industry or alternatively where the feasibility has been done by a comparable in-house staff. The sample cases have been chosen from a period which starts in 1965 and continues through 1981 with the cases distributed over that period as indicated below: [ ] Fourteen of the projects are open pit mines, three are underground mines and one mine starts on the surface and gradually goes underground. Seven of the mines are in the the far east with the remaining three in either South or Central America. The following four specific questions were examined for each project:

Jan 1, 1985

By Hans W. Schreiber

INTRODUCTION At the end of the day, the decision by the sponsor to proceed with a project and to seek financing, or the decision by the financier to grant financing are made on a judgmental basis. Cash flow projections, sensitivity and risk analysis, the innumerable ratios applied by the financier, the so-called feasibility study, etc. are all only tools, and the degree to which they affect decisions is as highly varied as are the personality differences and business conduct and outlooks of the persons who render the decision of "go or no-go". The independent consultant, then, is expected to provide an additional increment of credulity and/or reliability to the "tools" which others will use in reaching a decision; the consultant is really not in a position to directly recommend a "go or no-go". PROJECT FINANCE INGREDIENTS The project finance situation has basically three ingredients: - The project; - The inherent risks attendant with project failure; - The parties. The project, to be viable for financing, will have certain essential characteristics, namely: 1. Clear title or rights to the mineral; 2. Proven definition/establishment of mineral quantity; 3. Financial viability; 4. Physical access consistent with financial viability; 5. A market for the product at a price and for the quantity consistent with financial viability; 6. Transportation/shipping from the project facility to the market at a cost consistent with financial viability; 7. Availability and demonstrated expertise of the developer of the facility; 8. Demonstrated expertise of the operator of the facility; 9. Production processes do not involve unproven new technology; 10. Availability of management personnel; 11. The property and the facilities have value (and thus can be used as collateral); 12. Government approvals/support, as required, will have been obtained; 13. The political environment is essentially friendly and stable; 14. The owner(s) of the project have the financial, strength to make equity contributions consistent with total required investment capital and project risk; 15. Backing by credit support other than that of the financier (i.e. guarantees); The inherent risks of failure are (Nevitt, 2nd Edition); 1. Completion delays with consequent delays in the generation of revenue 2. Cost overruns 3. Technical failure 4. Financial failure of contractors 5. Government interference 6. Uninsured losses 7. Increased price or shortages of raw materials, supplies 8. Technical obsolescence 9. Loss of competitive position in the market place 10. Expropriation 11. Inadequate/poor management The parties directly or indirectly integral to the project financing are: - The mineral rights owner - The developer - The operator - The equity investor

Jan 1, 1985

By Robert T. DeGavre

INTRODUCTION The $645 million financing for Inco Ltd's Soroako nickel project in Indonesia not only represents a significant human achievement but also there are certain important lessons that can be derived from Inco's experience in financing the project. The paper will not present a technical assessment of the project since Inco Ltd. submitted a series of papers on this subject at the international Laterite Symposium as part of the 108th Annual Meeting of the AIME in February 1979. BRIEF HISTORY OF THE SOROAKO PROJECT Table 1 summarizes the milestones achieved in the Soroako project and its financing. Exploration Phase A contract of Work was signed on July 27, 1968 by the Republic of Indonesia and F.T. International Nickel Indonesia (P.T. Inco) covering an extensive area of over 25,000 square miles on the two southeastern arms of the island of Sulawesi. The Contract provides that P.T. Inco has the sole responsibility for financing the project and determining the terms on which the financing should be obtained, that P.T. Inco has the right to receive and hold outside of Indonesia foreign exchange revenues and to freely dispose of such revenues, and that Indonesians have the right to purchase up to 20% of the equity of P.T. Inco over a period following start of production. P.T. Inco began field investigations in the Contract Area in August 1968. Preliminary reconnaissance sampling with portable drills broadly outlined areas of favorable laterite terrain which were then systematically sampled on surveyed grids. By early 1971 sufficient exploration work had been completed to indicate that the laterite deposits near Soroako could sustain a major nickel-producing plant (figure 1). Pilot plant studies in 1970 and 1971 at Inco's research station in Port Colborne, Ontario, using two bulk samples of Soroako ore material, also confirmed that the ore could be upgraded and treated for the recovery of its metal values. Feasibility Phase Encouraged by the results of its exploration program and pilot-plant work, Inco Ltd. commissioned Toyo Engineering Company of Japan in August 1971 to prepare a capital cost estimate for a relatively small nickel project called "Stage I". Stage I was to be a single-line pyrometallurqical process plant with an annual capacity of approximately 15,000 metric tons of nickel contained in 75% nickel sulphide matte (see Figure 2). Electric power was to be supplied by a thermal power station. It is important to recognize that Inco's strategy was to develop the Soroako ore deposits in several stages: first, construct a small project to gain experience and to reduce the initial capital outlay and then later expand in one or more steps to a much larger project to achieve maximum economies. The strategy reflected both Inco's financial position in 1971 as its sales and earning dropped sharply and the difficulties previously experienced by Inco in trying to launch in the late 1960's very large "greenfield" nickel projects in New Caledonia and Guatemala. Toyo's Project Development Study was completed. in January 1972. Based upon Toyo's cost estimate for physical facilities, Inco estimated the total capital cost of Stage I to be $115 million. For the next several months, Inco ran numerous in-house financial feasibility studies, using as inputs Toyo's cost estimate and the results of its exploration and pilot plant programs. In September 1972, Inco completed a project feasibility study which was based upon a capital cost estimate of $135 million. The feasibility study was immediately made available to potential partners and lenders. Partner Negotiations The Japanese nickel market had from the outset been central to Inco's planning for the Soroako project. That market had been growing dramatically at rates in excess of 20% per annum during the 1950's and 1960's. Japan had established, for rational security and other reasons, a domestic

Jan 1, 1985

By D. N. Hedges

This paper discusses the actual recovery and installation of a longwall in a bituminous coal mine in western Pennsylvania. The coal bed mined is in the Lower Freeport seam, which averaged 1.07 m (42 in.) in height locally. Drainage from the mine is about 13.25 ML/day (3.5 million gal per day) of water. This water deteriorates the mine's predominately fire clay bottom making it extremely difficult to move equipment. Support removal is accomplilshed by pulling the 5.44 t (6 st) shields out under their own hydraulic power and transporting them by track 8.05 km (5 miles) to the next longwall panel. This paper also discusses the changes that will be made to aid in the succeeding longwall recoveries and installations.

Jan 1, 1985

By J. W. Mills

This paper's aim is to demonstrate, by reviewing findings and conclusions of earlier authors and through recording and interpreting the outcome of recent laboratory study of the ores, that the ores around the Gem stocks are metamorphosed equivalents of common siderite-sulfide ores far from the stocks, as was first proposed by Hershey (1912, 1913). That is, all the ores probably have the Precambrian age of 1250 million years reported by Long et al. (1960). Those near the Gem stocks, however, were extensively metamorphosed in Cretaceous time during the emplacement of stocks so their resemblance and relation to other veins in the district are camouflaged.

Jan 1, 1985

By W. R. Marks

Computer-aided torsional analysis of grinding mill drives is defined and related to the mill design process. Equations of torsional dynamics are developed for general mechanical drives. Consideration is given three solution types - specifically the determination of undamped natural frequencies, the calculation of steady vibration amplitudes, and the prediction of transient torques during starting. Following a summary of the methods of calculating drive motor performance, the problem in making practical application of this theory are discussed. Experiences in both calculating and measuring the torsional loads on a large ball mill with dual synchronous motors are reviewed. Conclusions are drawn on the effectiveness of computer-aided torsional analysis for improving mill drive reliability.

Jan 1, 1984

By D. D. Bolstad, S. M. Dar, T. W. Smelser, H. C. Pettibone

The use of roof bolt supports has reduced the number of fatal and nonfatal roof fall accidents in coal mines. Roof fall accidents, however, still occur far too frequently. Roof bolting plans are based almost entirely on trial and error, which inevitably leads to underdesign or overdesign with regard to bolt length, spacing, tension, and bolt type for the specific conditions. Underdesign poses safety problems, and overdesign leads to unnecessary costs. Guidelines are needed to select and design optimum roof-bolt plans that will maximize safety and minimize cost. Despite the use of 100 million roof bolts per year, the theory of roof bolting remains underdeveloped. Underground tests designed to provide this knowledge have been only partially successful owing to the many uncontrollable geologic variables present in underground mining situations. The Bureau of Mines believes that the best approach is to conduct a laboratory model study in correlation with finite-element analysis (FEA) and field verification, where these variables can be tightly controlled and measured. A physical model allows precise performance measurement of different bolt types as a function of a wide range of precisely measured parameters. Although the model being used is idealized and limited in size, it serves as a reliable basis for confirming the mechanism of rock reinforcement by bolting and the accuracy of the computer FEA approach to modeling mining problems.

Jan 1, 1984