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By Thomas E. Bruner

With drilling costs playing a pivotal role in the economics of most mineral exploration programs, there has been a significant effort over the past decade to trim expenditures in this area. One result of these cost-cutting measures has been the substantial shift to use of rotary drills. By the mid-1970's, rotary drilling accounted for six times as much footage as core drilling in exploration work. Among the various rotary drilling techniques, the use of dual-tube drilling for continuous sampling is attracting growing interest. Factors such as drilling speed and cost advantages, coupled with favorable comparisons between chip samples and solid core samples, have helped to spark this interest.

Jan 4, 1979

By W. M. Duncan, F. S. Kendorski, C. V. Jude

After shotcrete had been in use for a short time al the Climax Mine of the Climax Molybdenum Co., Climax, Colo., it was noted that regular longhole undercutting blasts would severely damage or detach slusher drift shotcrete linings. If this were to be a usual occurrence, the widespread application of shotcrete would have to be reexamined or abandoned. Concrete drift linings are affected less by blasting because of occasional significant gaps between the placed concrete and rock and the greater thickness of poured-in-place linings. Research Project Organized A research project was organized to determine: 1) the seriousness of the problem, 2) more complete in-use shotcrete strength data, and 3) possible solutions.

Jan 12, 1973

By Dennis V. D’Andrea, Larry R. Fletcher, Peter G. Chamberlain

The evaluation of potential in situ copper leaching deposits requires a thorough examination of the geologic, mineralogic, hydrologic and physiological characteristics of the ore body. The decision to develop the deposit is made with these data along with leaching properties, estimated copper recovery, and economic analysis. A test blast followed by pilot leaching can a so be used for further evaluation and to reduce uncertainty regarding the deposit's potential. This report describes a number of ground characterization techniques that can be used to evaluate potential deposits. Field methods include geologic mapping, groundwater hydrology, core drilling, geophysical logs, permeability testing, and in-situ stress measurements while laboratory tests include assaying, mineralogy, leaching, rock physical properties, size analysis, and computer simulation.

Jan 1, 1980

By D. W. Fuerstenau

A detailed study of the residence time distribution in an industrial balling circuit is presented. Using fired recycle pellets as a tracer impulse in each experiment, material was found to pass through the drum under plug flow conditions with a mean residence time of about 20 seconds. The time for a single pass through the entire circuit is about 60 seconds. Approximately three passes are required for fresh feed to report as product. Segregation of the tracer pellets in the system, according to their diameter, was observed and reasons for this are suggested. These results should be of potential use in the modeling and control of ball balling circuits in the iron ore industry.

Jan 1, 1985

By O?Harra B. M.

THE work here described had for its purpose the procuring of data from which some quantitative estimate might be made of the results obtainable by using oxygen-enriched air in roasting zinc ores on a commercial scale. The principal metallurgical advantages of using enriched air in roasting zinc ores would be: 1. The rate of roasting would be increased, with consequent gain in the capacity of the roasting furnace. 2. As less air would be required for roasting, the volume of hot gases leaving the furnace and the heat carried out of the furnace as sensible heat in these gases would be less per ton of ore roasted; partly for this reason and partly because of the increased quantity of heat generated in the furnace by the larger amount of ore that could be roasted, the consumption of fuel by the furnace would be lessened; and by the use of air sufficiently enriched with oxygen the necessity of using fuel might be entirely obviated. 3. Roaster gas having a higher SO2 content could be produced; this would make possible greater capacity and more economical operation of the sulfuric-acid plant. Certain phases of the application of enriched air to roasting can be worked out only by experimenting with a furnace of commercial, or at least semicommercial, size. Thus the precautions necessary to secure proper. distribution of heat in the furnace;1 the volume of enriched air; and the proportion of oxygen in this air, necessary to give the desired increase in roasting capacity of the furnace and in SO2 content of the roaster gases;; and the most desirable frequency of raking, thickness of

Jan 11, 1924

By B. E. Eakin, A. L. Lee, M. H. Gonzalez

Expeximental viscosity and density data of lour natural gases are presented for temperatures from WO to 340F and pressures from 100 to 8.000 psia. A correlation is also discussed and results reported. INTRODUCTION This investigation is one of several efforts by the authors to provide viscosity data for pure hydrocarbons and mixtures. Results of some pure hydrocarbons and their mix tures have been presented." Several predictive methods and correlations have also been reported.'," This paper presents the experimental viscosity and density data of four natural gases and confirms a correlation in a previous study. APPARATUS The viscometer was described previously. 2,6 A bank of stainless steel pycnometers was included to determine density in conjunction with the viscosity measurements (Fig. I). DATA AND MATERIALS The natural gases were furnished by the Atlantic Richfield Co. (Samples 1 and 21, the Continental Oil Co. (Sample 3) and the Pan American Petroleum Corp. (Sample 4). Table 1 shows the composition of these gases obtained by mass spectrometer analysis. The pure component viscosity data used in the correlation have been published."".'"', '" Experimental and calculated viscosity data for the natural gases are presented in Tables 2 through 5. CORRELATION Starling and Ellington"' have reported several semi-empirical expressions based to a certain extent on the theory of viscosity advanced by Born and Green.' The final expression presented by Starling and Ellingto'n is: i'. (micropoise) -- /t,, exp rX(7') p ..... (I) Eq. 1 was modified by Lee et 01." to represent mixture and pure component data simultaneously. This equation has the form: F = K exp [XpY] :.........(2) where K=- (7.77 i 0.0063M)Ti 122.4 + 12.9M +T .................(3) ' ' ' X= 2.57 + ---1914.5+ 0.0095M .... (4) Y = 1.11 -r 0.04 X ........(5) Over the pressure and temperature range studied in this investigation, this equation represents the data on methane, ethane, propane, n-butane and four methane-n-butane mixtures with a standard deviation* of ? 1.89 per cent. Density data by Sage and Lacey" were used to fit the equations. Eq. 2 gives reliable values of the viscosity of light hydrocarbons without prior knowledge of experimental viscosity values, but accurate density data must be available. Eq. 2 was used to predict viscosity values for the natural gases studied in this paper. The particular set of parameters contained in Eqs. 3 through 5 gave values that reproduced experimental data within 25 per cent. Needless to say, in using Eq. 2 better density values will give better viscosity results. However, those engineers who do not have accurate density values at hand or the time, or such facilities as a library, computer, etc. readily available, may feel uneasy in using Eq. 2. Therefore, the authors sought the easiest but by no means best density prediction method, which was reported by Kaf 30 years ago. A set of density values, which were calculated based on Kay's method, and a generalized compressibility factor chart were used to fit Eq. 2. The results are:

Jan 1, 1967

By Arthur Knapp

The petroleum industry is confronted with the problem of conservalion. This is not a simple problem in view of a wide difference of opinion among authorities as to whether conservation is necessary and the specific direction that it should take. Many writers accuse the petroleum industry of wasting the natural resources of the country. Others link the consuming public with the industry in this waste. Let us define our terms; agree, if possible, on where and when waste occurs in connection with either the recovery or use of petroleum and select such plans for conservation as appear most practical. A plan for conserv3tion which appears to be logical today may not meet the problem tomorrow. The conservation of petroleum is closely linked with the advancement of marly arts and sciences and as these advance, the plan of conservation has to change. The need for conservation does not necessarily rest upon the elimination of waste. There is not necessarily a fixed connection between waste and conservation. Conservation may be necessary or desirable although there is no waste. Definitions Waste: Useless or unnecessary expenditure. Conservation: The preservation of the natural resources for economical use. Both definitions contain adjectives the interpretation of which is extremely difficult. It is the determination of what expenditures are "unnecessary" or what uses are "economical" that will require study and agreement. If one lets his automobile engine run in cold weather in order to keep it hot, it is difficult to measure that necessity. If an automobile is driven two blocks, when the driver is physically capable of walking, what is the measure of necessity. This question is in the realm of one of the oldest of sociological problems, "What is a luxury?"—a problem which has not been solved. The history of society indicates that the measure of a man's wealth has been the measure of necessity. What he can afford to buy without stinting himself in some other direction, is not a luxury to him and, if it fulfills his desires, may be considered his necessity.

Jan 1, 1927

By C. A. Heiland

The new geophone described herein was developed by Charles H. Hull, instrumentmaker of the Colorado School of Mines, and the writer. The first geophone was invented during the war for the purpose of detecting enemy sapping or underground mining operations and for locating enemy artillery. It is based on the principle of the seismograph—a heavy lead mass suspended by one or two diaphragms, which are clamped to an air-tight case. When the ground vibrates during the transmission of sound waves, the case moves with it while the so-called steady mass remains practically motionless. Attached to the top of the casing is a hose leading to an earpiece shaped like a stethoscope. When the mass and the diaphragm move up and down in the case, the air is compressed and rarified in the inside; thus the vibration is communicated as sound wave to the human ear. The geophone combines a surprising simplicity of construction with an extreme sensitivity. Other listening instruments were developed during the war, adaptations of the telephone and the microphone—that is, instruments operating through the medium of electricity—of which the so-called seismicrophone, an adaptation of the carbon-granule microphone receiver, probably has found the greatest application, but such instruments apparently have not proved as useful as the simple geophone despite obvious advantages arising from the use of electricity. The carbon receivers were more subject to extraneous noises and to what is called "frying," and they did not offer the advantage possessed by the geophone; namely, the simultaneous use of two receivers, which makes it possible to determine the location of the source of sound. During the war, the U. S. Bureau of Mines made a study of the geophone and of the propagation of sound waves through rock. These studies have been continued, as the earlier results proved the possibility of using the geophone in various non-military ways, principally in mining, and the results of these studies have been published.'

Jan 1, 1932

By F. B. Plummer

THE practice of introducing acid into oil wells to increase production of oil and gas has been in use since 1894, when it was first used in the Pennsylvania. oil fields30.? It is only since 1928 that it has been used to any extent in the Mid-Continent18. The process has proved successful in increasing production, at least temporarily, in depleted oil fields where the producing formation is highly calcareous and where water drive is not too pronounced. In the Zwolle field in Louisiana, where the producing horizon is a chalk, increases of 100 per cent have been recorded25. In north-central Texas, where the oil is produced from the Marble Falls limestone, equally pronounced increases have resulted3. The production also in some fields yielding oil from quartz sand cemented with calcite has been benefited. The evidence of actual increase in total recovery of oil, however, has been questioned by some engineers18. It has been pointed out that the results of the treatment of a well in a new district, where the process has never been tried out, can never be predicted with certainty, since other factors besides percentage of calcareous content: of the oil sand play a large part in determining the success of the method. Numerous articles have been published on acid treatment and on the effects of acid on limestone1-35, yet very little has been written con-cerning experimental work on the actual effect, of acid on capillary pores and larger oil-coated voids of oil sands. This is due partly to difficulties in duplicating field conditions in a laboratory and partly to the fact that the process has been carried out largely by contracting companies that have been unwilling to publish details of their results for fear of loss of business to competitors. The authors, using equipment developed to measure the radial permeability of oil-sand cores29, have developed a method of investigating the results of acid treatment which has enabled

Jan 1, 1935

By I. Iwasaki, K. Adam

The oxidation behaviors of simple and complex chloride systems of copper, iron, nickel, cobalt, and manganese in a stream of oxygen were investigated using a thermogravimetric analysis technique. Their reaction mechanisms are discussed from stoichiometry, thermodynamic feasibility, and X-ray diffraction analysis of reaction products. The results are used to determine an optimum operating temperature of the selective oxidation step in a chlorination process for producing nonferrous metal chlorides, elemental sulfur, and ferric oxide from copper-nickel sulfide flotation concentrates.

Jan 1, 1985

By Julian Kennedy

When it was decided to erect these furnaces the company also decided to use the Cowper type of stoves. It was, however, desirable to improve upon the plan of the stoves then in operation, to avoid, if possible, some defects which had shown themselves in them. The stoves now in use at Furnaces " A," " B," and " C " are of the well-known type of Cowper stove, having a circular combustionchamber placed at one side of the stove, and a regencrator with crescent-shaped section, resting at the bottom oil cast-iron glatings, which are supported in turn by cast-iron girders, the products of combustion passing up the chamber, down through the flues of the regenerator, and thence to the chimney. The objection to this shape of stove, that the gases would not pass down the parts of regenerator lying beside and behind the combustion-chamber—the horns of the crescent, as it were,—did not apply to the newer form of stoves, with combustion-chamber having a straight wall next to the regenerator; but. there were other defects, the principal ones bring the small size of the openings through the regenerator and the material used for supporting it. The small passages (4" X 4") soon choked up, and when a part of them became entirely closed, not only was the effective heating surface greatly diminished, but as the remaining opening were not sufficient to absorb the heat

Jan 1, 1882

By Jill Dill Pasteris

Several mineralogical prospecting techniques are used in diamond exploration. Most are concerned with identifying indicator minerals such as pyrope garnet and magnesian ilmenite, which are derived from mantle xenoliths hosted by kimberlites. The first goal of such prospecting is to locate kimberlite intrusions; the second goal is to identify the diamond-bearing kimberlites. Explorationists have worked much less on the indigenous kimberlite phases. The kimberlitic opaque oxides, ilmenite and particularly spinels, promise to be useful in discriminating between intrusion episodes in identified kimberlites, and perhaps in the evaluation and prediction of diamond grades. Several petrologists have showed that spinel compositions and zoning patterns are specific to certain intrusive facies in South African and Canadian kimberlites. Careful evaluation may indicate a correlation between spinel parameters and diamond content.

Jan 1, 1984

By C. A. Sobotowski, J. Eagan

Computer programs applicable to coal mining have been available for some time, especially in the academic sector. However, the computer has not routinely been applied to actual mining operations. This paper discusses how a computer system was set up as an important tool in mining design and decision making. The project was completed within the allotted timeframe of two months by taking advantage of existing technology. Key points include the selection of programs to meet the specified needs of the project, conversion of the programs to be compatible with a computer of a different manufacture, simplification of the data entry process, development of procedures for using these programs, and an explanation of how the reports generated from the programs were used for mine planning and decision making.

Jan 1, 1983

By E. H. Cho

INTRODUCTION Activated charcoal has been used for several centuries in many capacities including the recovery, isolation and purification of various materials (1). The first use of charcoal in a gold metallurgical system was in the extraction of gold after chlorination (2, 3,4). The gold was dissolved in a chlorine system and subsequently filtered through charcoal. The application of charcoal with cyanide extraction was patented by Johnston (5) in 1894 and adopted commercially in Australia in 1897. The process consisted of dissolving the gold and silver in a potassium cyanide solution and passing it through a series of charcoal filters. The charcoal was subsequently smelted to recover the gold and silver. The interest in the use of charcoal diminished in the first part of the twentieth century as the practice of the use of zinc as a precipitating agent increased. However, in 1916, the Yuanmi Mine in Australia replaced their zinc precipitation plant with a charcoal adsorption plant. In 1926, Scott and Gross (7) of the U. S. Bureau of Mines con- ducted extensive research on the adsorption of gold and silver from cyanide leach solutions. Among their findings was the result that the most important factor in improving the adsorptive power of charcoal was heat treatment with oxidation by air or steam. The work of Zadra (8) in 1952 stimulated renewed interest in the use of activated charcoal in gold and silver recovery with the development of a method of recovery of the gold and silver from the charcoal other than its destruction by burning. The process involved simultaneous desorption

Jan 1, 1983

By John Tabor, R. B. Spivey

INTRODUCTION Shafts have been sunk in a number of ways. By and large, however, most have been sunk by drill, blast, muck, and slip form methods. Most methods have provided satisfactory means of completion. The major drawbacks to the conventional methods have been: (1) un- reliable cost estimates for completion; (2) unreliable rates of progress; and (3) unreliable integrity of the shaft lining. Recently , engineering design studies have been done that strongly indicate, that, by the use of existing proven technology, shafts can be completed faster, more cheaply, safer, and with a better lining that has been possible using conventional methods. THE METHOD The alternate method utilizes the techniques of big hole drilling, shield excavator tunnelling, and pre-cast concrete lining. Big Hole Drilling - Drilled shafts have been completed for several years and I don't intend to address the technology, only to point out the use of drilled shafts is an alternate method of shaft sinking. Ideally, in a multi-shaft mine, the first shaft would be blind bored and cased to a size, whereby it can handle the muck from the excavation of subsequent shafts. It should be an 8' to 10' completed diameter. The cost of such a shaft in sedimentary formations compares favorably with a conventional shaft. However, it is much faster. For additional shafts, the role of the drill is to complete small holes (3' to 4') to the desired horizon. This is merely a hole to allow slashing to a larger size with easier muck removal from an underground drift connected to the previously drilled shaft. The smaller holes, just as the larger one, should be cased and grouted into place so as to assure a smooth open hole. SHIELD EXCAVATOR Theory and History - Tunnelling Shields have been in common use for several decades, and steam powered shields were used in England over 100 years ago. The purpose of the shield is to provide temporary ground support, protect personnel during operation, and to house the excavating equipment. The excavating equipment approach has varied from attempts at a continuous or semi-continuous boring machine, the tunnel mole, to a mechanical or hydraulic digging arm. The shield may or may not be an active digging element. If not active, the boring tool or cutter is advanced ahead of the shield to full diameter and then the shield is moved up to the cutter, or the shield advances along with the cutter. If active, the cutter opens a conical free face, and the shield is either jacked forward so that the leading edge spalls rock to the free face or poling plates are thrust forward to spall to the free face. In either approach, various methods of muck removal are incorporated into the shield. These may be gathering arms, conveyors, or with moles, hydraulic transport, where the cuttings are sufficiently fine. The efficiency of the muck removal system is critical as excavation is rapid and the system could easily become muck-bound. Application to Shaft Sinking- Technically, the use of a shield to sink vertical shafts is no different than a tunnelling operation. It is, in fact, less complex in most respects. Muck and water removal are difficult in a blind-driven shaft. However, where an underground opening is available for handling muck and water, rapid shield sinking is possible, using a pilot hole for muck and water to fall through and be removed from below. The Tabor Mining Shield is basically a caisson approach, whereby, the ground is only seen at the face or bottom. It does have hydraulic jacks to force it downward and has segmented cutting edges which allows forepoling ahead of the shield. The hydraulic excavator allows mining in the center of the face around the previously drilled hole with the forepoling segments slabbing to this free face. First, the drilled hole is cased and grouted. The machine is a tube with an excavator. The work cycle is as follows: (1) The casing and grout are cut at predetermined intervals by shaped charges. (2) The casing is crushed by the excavator, removed from the hole and hoisted to the surface. (3) The excavator then rips out a face around the hole by digging the formation in tension and breaking the pieces

Jan 1, 1982

By J. Blodget Britton

IN the Journal of the Franklin Institute for May, 1870, there is published a description of a Colorimeter, together with a modification of the method proposed by Professor Eggertz, for determining combined carbon in iron and steel. An instrument of the kind there described, but of a little higher range, though in other respects not differing materially from the one originally made and used in the Iron-Masters' Laboratory, I now submit to your inspection ; and I propose, also, to make some determinations with it for the purpose of showing how quickly they may be made, and enabling you to form some judgment of what reliance can be placed in the results. Professor Eggertz proposed only a single standard, and the solution to be tested should be diluted to exactly correspond in color with that of the standard, and the per cent. of carbon calculated after carefully noting and making allowance for the measures of water used in diluting. In practice, difficulty was found in bringing the color of the normal solution down to the exact shade of the standard ; also other difficulties were met with in conducting the process, causing delay and interfering with the accuracy of the results. To materially overcome these, and after numerous attempts, an instrument such as is now before you suggested itself to me; and also I concluded to use a larger quantity of metal than directed by Eggertz, and, in addition, to filter the solution from its insoluble matter before making the comparison ; and, more recently, to use an acid of just such strength as would completely dissolve the metal without the application of heat. Experimenting with these changes from the original method I obtained reasonably good results. The instrument, you will observe, consists of a series of tubes, sixteen in number, two and a half inches long, and about half an inch in diameter, standing upright, and securely fastened in a light, portable, walnut-wood frame, but separated one from the other so as to allow just sufficient space between to place for comparison the tube containing the solution to be tested. The tubes are filled with

Jan 1, 1873

By J. Blodget Britton

IN the Journal of the Franklin Institute for May, 1870, there is published a description of a Colorimeter, together with a modification of the method proposed by Professor Eggertz, for determining combined carbon in iron and steel. An instrument of the kind there described, but of a little higher range, though in other respects not differing materially from the one originally made and used in the Iron-Masters7 Laboratory, I now submit to your inspection ; and I propose, also, to make some determinations minations with it for the purpose of showing how quickly they may be made, and enabling you to form some judgment of what reliance can be placed in the results. Professor Eggertz proposed only a single standard, and the solution to be tested should be diluted to exactly correspond in color with that of the standard, and the per cent. of carbon calculated after carefully noting and making allowance for the measures of water used in diluting. In practice, difficulty was found in bringing the color of the normal solution down to the exact shade of the standard; also other difficulties were met with in conducting the process, causing delay and interfering with the accuracy of the results. To materially overcome these, and after numerous attempts, an instrument such as is now before you suggested itself to me; and also I concluded to use a larger quantity of metal than directed by Eggertz, and, in addition, to filter the solution from its insoluble matter before making the comparison; and, more recently, to use an acid of just such strength as would completely dissolve the metal without the application of heat. Experimenting with these changes from the original method I obtained reasonably good results. The instrument, you will observe, consists of a series of tubes, sixteen in number, two and a half inches long, and about half an inch in diameter, standing upright, and securely fastened in a light, portable, walnut-wood frame, but separated one from the other so as to allow just sufficient space between to place for comparison the . tube containing the solution to be tested. The tubes are filled with

By E. G. Leonardon, D. C. McCann

The search for oil has required, and without a doubt supplies, a tremendous amount of information on the structure, composition, physical properties, and history of sedimentary rocks. The earliest and most complete source of knowledge is the sample or core of the rock itself, the uses of which are well known. The purpose of this paper is primarily to discuss a new method for obtaining these cores, and to illustrate its use in connection with electrical logs. Most cores have been obtained through a special adaptation of rotary drilling, and the results have been remarkably good, considering the mechanical problems involved. Unfortunately, because of the time and expense, this method cannot be used for the entire length of the drill hole. Even though ingenious contrivances have been evolved in order to reduce the time spent in round trips, such as wire-line coring equipment, mechanical coring still remains too expensive to be carried out continuously. In practice, therefore, one is finally compelled to estimate the probable depths of the more interesting horizons and, allowing a wide margin of safety, to core through those sections only. It is true also that interesting results have been obtained by examining the cuttings brought to the surface by the mud circulated in the well during the process of drilling. Be that as it may, the inescapable fact remains that key horizons may be passed inadvertently, for one reason or another, while the drilling operations are being performed. The only continuous record of the formations encountered is that furnished by electrical surveys. Obviously, it would be desirable to make the electrical survey first and to take the samples from the wall of the hole according to the indications on the electrical log. In this way, it would be possible to core only the exact sections desired, eliminating the otherwise inevitable estimates as to the point at which to start coring, and thereby reducing to a minimum this expensive operation. At the same time this method would provide a maximum of useful samples. A device for taking samples of the formation from the walls of a hole therefore offers the possibility of recovering cores from zones otherwise lost as a source of this type of information. Furthermore, by coring

Jan 1, 1939

By E. G. Leonardon, D. C. McCann

The search for oil has required, and without a doubt supplies, a tremendous amount of information on the structure, composition, physical properties, and history of sedimentary rocks. The earliest and most complete source of knowledge is the sample or core of the rock itself, the uses of which are well known. The purpose of this paper is primarily to discuss a new method for obtaining these cores, and to illustrate its use in connection with electrical logs. Most cores have been obtained through a special adaptation of rotary drilling, and the results have been remarkably good, considering the mechanical problems involved. Unfortunately, because of the time and expense, this method cannot be used for the entire length of the drill hole. Even though ingenious contrivances have been evolved in order to reduce the time spent in round trips, such as wire-line coring equipment, mechanical coring still remains too expensive to be carried out continuously. In practice, therefore, one is finally compelled to estimate the probable depths of the more interesting horizons and, allowing a wide margin of safety, to core through those sections only. It is true also that interesting results have been obtained by examining the cuttings brought to the surface by the mud circulated in the well during the process of drilling. Be that as it may, the inescapable fact remains that key horizons may be passed inadvertently, for one reason or another, while the drilling operations are being performed. The only continuous record of the formations encountered is that furnished by electrical surveys. Obviously, it would be desirable to make the electrical survey first and to take the samples from the wall of the hole according to the indications on the electrical log. In this way, it would be possible to core only the exact sections desired, eliminating the otherwise inevitable estimates as to the point at which to start coring, and thereby reducing to a minimum this expensive operation. At the same time this method would provide a maximum of useful samples. A device for taking samples of the formation from the walls of a hole therefore offers the possibility of recovering cores from zones otherwise lost as a source of this type of information. Furthermore, by coring

Jan 1, 1939

By Richard D. Mills

Throughout the mining industry, many companies perform sophisticated business and financial analyses of proposed capital investments. However, once the project is approved, it is never reevaluated. At best, there is an attempt to control capital costs and minimize overruns. The post-installation appraisal, a formalized review of investment performance, may prove helpful. Typical Project Review A typical capital investment is approved after business and financial benefits have been reviewed with management.* The financial data shown to management often include a net income statement, cash flow analysis and summary economic data similar to those shown in Table 1 overleaf. These financials report the expected impact of the project on the corporation financial statements. This project is a rudimentary example of a capital investment decision. An actual project would undergo a more sophisticated analysis incorporating depletion benefits, deferred taxes and a detailed cost breakdown. The example project has several financial benefits that could result in management approval. For example, it provides an immediate net income benefit to the company, generates positive cash flows every year of the project life and has a discounted cash flow rate of return of 25 percent. However, it also has the disadvantage of a long payback period. A sensitivity analysis would show which areas of the analysis have the greatest impacts on profitability. Post-Installation Program Objectives The post-installation appraisal goes beyond the analysis shown in Table 1 by comparing actual results to those projected in the original economic analysis. The post-installation program has three primary objectives: 1. To provide a periodic performance review of major spending programs. 2. To review decision-making and evaluation procedures. 3. To provide a means of controlling individual project investments. The first major function of the post-installation program is the periodic review of actual performance of projects and investment programs, identifying those factors which proved critical to the health of investments. This review will serve to keep management abreast of progress, provide a comparison of actual performance against expectations, and provide valuable information that can be used for improving future economics. The second major function of the program is to perform a continuous review of the decision-making process. This includes testing of evaluation procedures, forecasting techniques, and logic used in making decisions. An information system should be set up whereby original evaluations and historical performance data gathered under the appraisal program are documented for use by evaluators and management when assessing past and future investment proposals. Such data should be particularly useful in evaluating new and developing types of operations and in activities where companies repeatedly reinvest. The primary purpose of this feedback system is to sharpen estimates to assure that they are realistic and attainable. The appraisal program also provides assurance that consistent evaluation procedures are being used throughout a company, leading to improved procedures

Jan 1, 1985