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By P. Somasundaran, K. P. Ananthapadmanabhan

A knowledge of the role of effects and interactions of chemical species is important in developing an understanding of the behavior of mixed minerals and natural ores in beneficiation processes such as flotation and flocculation. In this study the role of such species was examined for the calcite-apatite system by conducting flotation of each mineral in various supernatants prepared by mixing with water. Supernatants of apatite and even that of calcite depressed the flotation of calcite markedly in the pH range of 5 to 13. Addition of Ca(NO3)2, K2C03, and K3P04 also produced definite effects under various pH conditions. Apatite flotation was also affected by the mineral supernatants and by carbonate and phosphate solutions. The results are analyzed in terms of the surfactant's solubility properties and the mineral's electrochemical and dissolution properties. While depression of calcite flotation by the dissolved species is found to be governed by depletion of oleate by bulk precipitation, the depression of apatite flotation is caused by the carbonate and phosphate species in the system. Turbidity measurements and a thermodynamic analysis of possible interactions in the system support these considerations. The effect of the supernatant of minerals on their own flotation suggests the important role of kinetics of various surface interactions in comparison to that of mineral dissolution.

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 W. W. Simpson, W. L. Staker, R. G. Sandberg

The Bureau of Mines investigated selective extraction of Au and Ag from a low-grade Au ore containing Hg. Gold and silver were extracted from the ore in cyanide slurries, and Hg extraction was suppressed with sodium or calcium sulfide. Maximum Au extraction and minimum Hg extraction were obtained using solutions containing 17 kg NaCN/t of solution (0.34 lb NaCN/st). Increasing the cyanide concentration increased Hg extraction without increasing Au extraction. Mercury extraction from the ore was suppressed with 0.5-2.9 kg CaS/kg Hg (0.5-2.9 lb/lb) in the ore. Gold-to-mercury ratios of 100:1 to 400:1 were obtained in the leach solution, and on the activated carbon in a CIP circuit.

Jan 1, 1985

By Charles H. Jacoby

During the past three decades an ever increasing number of uses for underground storage space has been developed. In some instances, the value of the space created has been so great that the host rock has been wasted. The preferential use of salt to host underground cavities is based on numerous factors, the primary two being low extraction costs and low permeability. Both dry and solution mined cavities have been created for the storage of a variety of materials. As the demand for underground storage and disposal grows, so must our selectivity of the materials to be stored.

Jan 1, 1985

By J. E. Lawver, W. D. Carrier

During the past 20 years, millions of dollars in research effort have been spent to improve methods of phosphate clay dewatering and disposal. Although to date no proven large-scale system has been developed that will result in ultimate below ground storage without the use of at least temporary dams, considerable progress has been made and a variety of techniques are being tested, some on a large scale. This paper summarizes the use of mathematical and centrifuge (physical) models that can analyze and evaluate various systems for the consolidation of phosphatic clays. These provide a powerful tool for engineers responsible for land management and mining waste disposal.

Jan 1, 1985

By R. J. Sweigard, R. V. Ramani

Demands on available lands will continue to increase due to the projected population increase and industrial expansion. Though there is an upper limit on available lands, the multi-use nature of the lands will make it possible to meet these demands. However, this will not happen without adequate planning. Land uses can be broadly categorized as nonrenewable and renewable. Lands with minable resources can be dedicated at some Point to the extraction of resources. Such a dedication, however longterm, is only temporary because of the nonrenewable nature of the minable resources. The land will be available before and after mining for other uses. Planning for such lands must have the objective that, as far as practicable, no nonrenewable uses are preempted and no renewable uses are permanently destroyed. This paper addresses primary aspects of this planning process. These aspects include a discussion of planning responsibility, data needs and availability, the integration of mine planning and post-mining land use planning, and a long-term plan for resource conservation and utilization. Minerals, with agriculture and forest products, are the primary sources of wealth. Therefore, to amid land development that may preempt future mineral resource utilization, local planning groups must be aware of the mineralization and mining potential. Much work needs to be done to identify and characterize the mineral resources. Even more land use planning is needed for lands with mineral deposits.

Jan 1, 1985

By C. Hertzler

The difference of means of milling characteristics by rock and ore type is tested in a statistical manner in the paper. The null hypothesis being tested is that the sample means of two different populations are equal. It is assumed that the null hypothesis is true when performing the test. Because of this, acceptance of this hypothesis leads to the conclusion that the sample means of the two different populations are equal (or there is no significant difference between the sample means), not that the samples come from the same population, as the author asserts. Rejection of the null hypothesis leads to the conclusion that the sample means of the two different populations are not equal. A P value for this test is reported in Table 2 and is incorrectly identified as the probability that the two samples came from different populations. Actually, what was recorded was 100(1 - p) where p is the usual p-value. The usual p-value measures, on a scale of zero to one, the extent to which the data agree with the null hypothesis. It is the probability of observi" a value of the test statistic (Z score) that is at least as contradictory to the null hypothesis as the one computed from the sample data (McClave and Dietrich 11, 1982). The author makes no mention of the fact that were these tests to be conducted together, the chances of determining that the null hypothesis is not true when it is really true are increased considerably (Snedecor and Cochran, 1980). This is a multiple comparisons problem and should be dealt with accordingly. The usual methods involve adjusting the level of the individual tests. Table 2 reports an incorrect 100(1 - p) value in the comparison of concentrate grades for other rock types with .30 to .69% Cu vs other rock types with .70 + % Cu; 86% should be 98.6%. Although the article can be criticized for poor data presentation and discussion of that data, the point the author makes regarding the use of these statistics in the ore reserve estimation process is well taken. It does not appear that inaccuracies in the statistical interpretations have hindered that usefulness.

Jan 1, 1985

By G. P. White, J. M. Jones

Introduction Computer simulation is a technique that has been around for many years. Its applications include designing steel mills, planning space shots, or even developing ways to beat the casinos in Las Vegas. However, the use of computer simulation in surface coal mining is fairly recent. To promote its use, several government agencies, including the US Bureau of Mines, Forest Service, and Department of Energy, contracted with universities and private companies to develop computer simulation programs for surface coal mining. Some of these developers include McDonnell-Douglas Electronics Co., Pennsylvania State University, Montana State University, Fluor Mining and

Jan 1, 1985

By G. T. Lineberry, L. Adler

Reduced clearance a one of the most important characteristics of encumbered space in underground coal mining. Another key variable is the maximum velocity at which a piece of mobile mining equipment can operate in this limited space. Typical velocity-clearance curves for different mine transportation systems are developed and characterized. Applications of the relationships are examined, emphasizing their significance in designing and controlling mine materials handling system.

Jan 1, 1985

By Herbert D. Drechsler

Mining Finance is the interrelated aspects of "determining the total amount of funds to employ in a mining firm; allocating these funds efficiently to various assets; and, obtaining the best mix of financing in relation to the overall valuation of the firm." The first section is an overview of the financing problem through examination and discussion of the Balance Sheet and Income Statement. The next section is a discussion of the nature of the criteria developed in feasibility study. The third section describes type of capital funds, and the final section describes case studies of mining finance

Jan 1, 1985

By John J. McCabe

INTRODUCTION Over the years, Congress has written into the Internal Revenue Code various provisions aimed at lessening at least one financial burden faced by taxpayers in the mining industry - the federal income tax burden. These provisions include the election to deduct exploration expenses, the election to defer deduction of development expenses, and the percentage depletion deduction. Careful tax planning from the very beginning of a mining venture is essential in taking maximum advantage of these tax benefits. A major decision to be made is the choice of organizational structure. (For a more detailed discussion of this subject, see McCabe, John J., "Developing Structures for Investments in Mineral Property," New York University Institute on Federal Taxation, 42 NYU 24, 1984). One such structure is the use of multiple corporations, with mining activities conducted by one corporation and nonmining activities, such as manufacturing, financing and administration, conducted by the other corporation. This technique, which will be discussed in detail below, can be particularly advantageous in delaying recapture of previously deducted exploration expenses and in maximizing depletion deductions. TAX BENEFITS IN MINING Exploration Subject to certain restrictions discussed below, exploration expenditures (i.e., expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development state of the mine are deductible at the election of the taxpayer (Section 617(a)).* Were it not for this option, exploration expenditures would be required to be capitalized and recovered through depletion, after production begins. Exploration of a mineral deposit can be very costly and may not result in commercial production for some time. If the taxpayer has income to he offset by the deductions, a mining venture can usually be structured in such a way as to allow the offset of mining losses against the other income. With today's high interest rates, this election can be quite valuable in present value terms. Corporate and noncorporate taxpayers are subject to different restrictions on this tax benefit. Corporations may elect to deduct only 85 percent of eligible exploration expenditures (Section 291(b)). (The Tax Reform Act of 1984 reduced this to 80 percent effective for expenditures after December 31, 1984, in taxable years ending after such date). The remaining 15 percent (20 percent after December 31, 1984) is capitalized and recovered at the same rate as five-year ACRS property (Section 291(b)). Individual taxpayers are not subject to this 85 percent rule; however, any amount deducted in excess of ten-year straightline amortization is a tax preference item for individuals (Section 57(a)(5)). Individuals may avoid the tax preference by electing to capitalize exploration expenditures and amortize them over ten years (Section 58(i)). In order to prevent the taxpayer from, in effect, converting ordinary income into capital gain by selling property that has given rise to exploration expense deductions, the Code requires recapture of such deductions upon the occurrence of certain events (Section 617): 1. Upon disposition of the property, adjusted exploration expenditures are recaptured to the extent of gain realized on the disposition (Section 617(d)). 2. If the property is leased, the lessor is disallowed any depletion deduction until his adjusted exploration expenditures have been recaptured in the form of foregone depletion deductions (Section 617(c)).

Jan 1, 1985

By M. B. Truehaft

Expectations for coal in the early to mid-1970s prompted the government and industry to pursue research and development programs to increase underground and surface mining coal Productivity and net coal recovery. Several programs concerned advanced surface mining methods for thin seam coal recovery. Three such programs, along with related areas of interest, presented in this paper are: extended depth augering for trench-strip applications; high recovery auger heads for enhanced recovery; and variable wall mining in low cover longwalls. Conceptual development is examined, prototype testing is discussed, and potential operations are considered.

Jan 1, 1985

By W. J. Kennedy, J. D. Gardner

A systematic method is presented for analyzing and improving energy costs in surface mines. Each mine is divided into drilling and blasting, overburden haulage, ore haulage, crushing and grinding, and lighting system. Specific methods of improving the energy costs of each system are discussed. Contributions of simulation and queueing to energy cost reduction are also discussed.

Jan 1, 1985

By Stanley J. LeFond

Jan 1, 1985

By E. Tulcanaza

The practical significance of the in situ grade variability is usually neglected. Although recognized, often times it is either ignored or just considered as a vague guideline in many of the decisions dealing with exploration, reserve estimation, and mine planning. This paper stresses the significance of grade variability for exploration and mining, and illustrates its liaison to the structural features of the ore deposits, as well as to the mining parameters used for mine extraction. Some geostatistical results obtained from a silver mine, tungsten mine, and copper mine in South America are discussed.

Jan 1, 1985

By Leons Kovisars

Introduction Competitive analysis is the collection and evaluation of data on a product, a product line or on an entire industry. Much of the focus of competitive analysis centers on production volume and the price targets of the competitors. In actual practice capacity may be used in place of production volume. Similarly, unit production costs and individual producing units - mines, mills, smelters, refineries - may be the targets of the analysis. The purpose of competitive analysis is to provide information for strategic planning. The analysis will locate the position of the company in the industry and define the competitive margin -- or lack of a margin - between the company and other producers. The analysis can show the current situation and may be expanded to examine the outlook for the future. The forecast option is particularly valuable because it will show the opportunities for new project development or the expansion of current production. Similarly, the forecast will show the potential threat from new entrants, and may provide early warning to reconsider operations that may become uncompetitive in the future. Production cost analysis is a clearly understood means to evaluate producers and estimate the outlook for their profitability. The cumulative cost for the industry outlines the supply structure and defines the marginal cost of production used in developing price forecast as explained in the sub- sequent section of this paper. Competitive analysis is particularly important to the mining industry, notably to metal producers. The final product is typically a purified metal conforming to standards, and interchangable with the output of other producers, i.e. a fungible commodity. Brand loyalty is questionable in the mineral industry. Consumers will show a preference for specific brands, but this preference will be limited to a premium of several percent over the general market price. Price and assurance of supply are the keys to marketing success. Assurance of supply depends on geopolitical considerations and production capabilities. Price will be closely related to cost of production and a thorough competitive analysis should describe the cost structure of the industry. This snapshot will locate one's own position and provide an immediate and readily understandable evaluation of the hazards and opportunities inherent in this position. In the following section we shall discuss elements, methods and sources for competitive evaluation. ELEMENTS OF COMPETITIVE ANALYSIS The practice of systematic collection and analysis of data on competition is hardly a new concept; see, for example, Wall (1) or Porter (2). However, most discussions have been in the context of conventional industrial or manufacturing industries, with a focus on product lines and brand marketing. These considerations are not irrelevant to mining but they do have only a limited application. The key to success in the mining industry is minimizing the cost of production. However, this simple concept becomes complex when we consider relevant costs and the planning horizon. Production costs include the factors consumed in production, namely labor, fuel, energy, materials and supplies. The cost also includes purchased and contracted services such as freight, smelting and refining, sampling and sales required to convert ore to the finished metal. Royalties and ad valorem taxes paid on gross production are direct expenses, as is the cost of administration required by the production units. The sum of these outflows is the total cash cost, the expense that has to be paid in cash in order to continue production. Indirect costs incurred by a producer will commonly include allocated headquarters expenses, as well as the capital charges associated with equity investment and debt. Profit is not generally considered an indirect cost even though it represents the cost of using the owner's capital; similarly, income taxes represent the government's participation in the profits of the enterprise. Interest payments are considered as a direct expense in some cost studies, but many competitive evaluations would consider

Jan 1, 1985

By R. E. Hucko

Introduction The principal thrust of the US Department of Energy (DOE) coal preparation R&D program is to develop technology to reduce ash and sulfur content of US coals to levels where the resultant product can be formulated into a high quality solid or slurry fuel that could replace oil or natural gas in both new and retrofit applications. The coal preparation program is implemented by the Pittsburgh Energy Technology Center (PETC) and is conducted both in house and by a cross section of industrial organizations, universities, and national laboratories. Research is subdivided into three areas - coal characterization, beneficiation, and ancillary unit operations.

Jan 1, 1985

By W. J. Croft, R. J. Arnott

A series of commercial titanium diboride powders have been characterized in terms of X-ray crystallography, composition, particle size distribution, and particle shape. These materials were used in sintering experiments from which the effect of impurities on the sintering temperature was observed. Transmission electron microscopic observations have been made on Ion milled and chemically milled hot pressed material. Dislocations have been observed as well as grain boundary phases. Limited bonding between grains seems to account for poor mechanical properties. Observations have been made of preferred crystallographic orientation in hot pressed material.

Jan 1, 1985

By Henry J. Sandri

ACQUISITION JUSTIFICATION There are many reasons why companies consider acquisitions as a means to expand their operations. Some wish to reduce the impact of business cycles on their businesses. Others seek firms within the same industry for expansion and increased market share. Still others diversify in order to avoid takeovers. Whatever the reasons or justification, an evaluation of an acquisition candidate should be systematic and thorough. To many financial managers the concept of a systematic acquisition evaluation indicates the need for a regular set of evaluation criteria. While these are available from numerous sources, one basic parameter frequently overlooked is the application of these criteria to an industry which is different from the acquirer. This becomes particularly important when evaluating firms within the mineral industry. The mineral industry is significantly different from other industries to require different valuing techniques. • This paper will present a number of reasons why an acquisition candidate in the mineral industry should be evaluated differently from other acquisitions, including by other mineral firms. Additionally, this paper will review the most appropriate means of valuing a mineral firm. • Firms considering the acquisition of a mineral firm should understand the nature of the industry before ever making a tender offer. Some of the general considerations include the following: • Level of Capital Intensity: In the mid-1980's the start up cost for a gold mine has been between 20-200 million dollars and 500-1,500 million dollars for a bauxite operation. • Global Nature of Competition: Except for certain industrial minerals, most minerals and metals are traded worldwide and many on national exchanges, such as COMEX. • Start-Up Time: Many mining operations in developed and developing countries have long lead times, 7 to 10 years in some cases, prior to the start-up of production. • Long Term Nature of Investment: For most mineral operations payback usually occurs at least 7 years after production has started. Additionally, many mining operations will continue producing for 80-100 years. • High Level of Risk: The number of factors that a mining firm cannot control such as grade, volume, world supply and demand, plus the long payback periods tend to classify mineral firms at a higher than average risk compared to other investments. • Cyclical Nature: The mineral industry is cyclical in nature, experiencing long troughs and explosive peaks, thus making timing a critical issue. • Labor Intensive: Even with the large capital requirements needed to operate a mine, most mines are labor intensive in proportion to their capital equipment. • Location: Obviously, the nature of this industry requires operators to work in difficult locations, frequently far from civilized localities, in poor weather conditions and without proper supply and distribution infrastructure. One of the most important considerations is an understanding of asset replacement and asset value. Unlike manufacturing concerns, firms in the mineral industry are working toward the elimination, through depletion, of their asset base. Product flexibility is not available to a mining operation. A mineral firm basically has two options as its resource base is depleted: 1) replace the asset with new production, or 2) deplete the asset and close down operation, as in the South African gold mining model referred to later in this paper. An understanding of the

Jan 1, 1985

By William L. Langdon

PRELIMINARY COMMENTS Recent years have been difficult for the mining industry, as reported in the most recently published Minerals Yearbook (Volume III), the estimated value of world crude mineral production has been generally declining since an historical peak in 1979 (16).* The costs of mineral extraction have, however, been rising rapidly. Individual project costs are, in general, exceeding the growth rate of mining companies, while operating and technical risks continue to increase (16). Risks resulting from currency flotation and political actions in the host country are also on the increase. Labor difficulties (such as those experienced by Phelps Dodge) and the Reagan Administration's recent rejection of a proposal by the International Trade Commission for higher tariffs and/or quotas on copper imports have also contributed to the mining industry's difficulties. The net result of these factors has been financial difficulties for mining companies with respect to paying for their current financial obligations as well as trouble finding new financing. It may be that one of the main factors in determining the future of the mining industry will be centered upon capital structure, i.e. how its assets are financed. Historical Perspective on Capital Structure In The Mining Industry As discussed by Isreal Borenstein in (4) and Thomas Navin in (7), mining firms typically have used a financial model based upon high financial leverage, i.e. large amounts of debt relative to equity. This has been especially true for American firms developing orebodies discovered overseas. Problems sometimes occurred for those who were forced to commit themselves to completion guarantees in order to obtain bank loans. Mines under these circumstances must be brought into operation regardless of market conditions. Politicians in overseas countries also may use the high profits required by these high risk ventures to argue for nationalization of mines. Coupled with the frequent use of high leverage, mining companies traditionally have paid out a higher percentage of earnings in the form of dividends than manufacturing firms. This is significant, in that such funds paid out in dividends are not available for other uses. Hence, a greater reliance upon debt and/or additional stock issues than would ordinarily be the case for manufacturing firms. Thomas Navin has stated in (7), that the theory behind the high dividend payout was that, "most mining investors thought of themselves as investing in a wasting asset, one that would gradually deplete over time until it ultimately became valueless." Investors, therefore, required a receipt, in the form of dividends, of a percentage of current earnings and a return on original capital. This view of reality, apparently, has not changed in some quarters, even though modern mine management ordinarily replaces depleted mines with new ones. It may be that this practice of high dividend payout coupled with relatively high financial leverage should be reexamined. Current capital structure theory could prove interesting and useful for those concerned with current conditions. Capital structure patterns and related practices in this industry are not, in many cases, congruent with those thought by some to be theoretically optimal. Prelude to Capital Structure Discussion With a few notable exceptions (such as the Guggenheims and Anaconda's chief operating,. officer in 1971) mining companies' chief executives and boards of directors have not been persons with financial backgrounds. This, one could conjecture, might have accounted for the relatively nonsophisticated nature of capital structures of mining companies. In order to appreciate the possibilities with respect to alternative influence on a firm's performance, one must be acquainted with the basics of financial theory. This paper is an attempt to familiarize the reader with (1) capital structure in general, (2) the usual components of this structure, (3) the general theory behind the use of financial leverage, and

Jan 1, 1985