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By Grover R. Castle

INTRODUCTION "Project Financing" or "Project Loans" have become increasingly popular in recent years, and commercial banks are being asked to consider more and more of such financing. However, the analysis of this type of loan is quite different from the analysis of a loan to a financially sound corporation based on the company's balance sheet. For this reason Chemical Bank did a study of project loans in an attempt to be more sophisticated in our approach to them. As part of this study, we examined 29 project financings for which information was available. In this article I shall describe project loans and set forth the guidelines we developed, as an aid to credit officers who might have occasion to analyse this type of financing. DEFINITION OF "PROJECT FINANCING" OR "PROJECT LOAN" The terms "project financing" and "project loan" commonly describe the various methods that banks and institutional lenders use to finance the construction of new projects on a basis whereby payout is anticipated from the revenue stream generated by the project. A project financing often involves a loan to a new entity formed specifically to own the project. The analysis of a project loan proposal is quite different from the analysis of other term-loan proposals since it involves a credit decision based on the review of a projection or forecast rather than of historical earnings and/or it involves the reliance on contractual obligations of third parties. Lenders are asked to assume the added risks associated with project loans because: 1. Project financing may permit a company to obtain additional leverage. It is possible for companies to arrange financing on a project basis that could not be arranged as a direct borrowing. For example, a company may not be permitted to borrow more money directly, due to a limitation in a bond indenture. However, a project financing can sometimes be negotiated on a basis not prohibited by the indenture. 2. Often the sponsors of, or the stockholders in, the project are seeking an off-balance-sheet financing. For example, 11 of the 29 projects in our study were arranged on an off-balance-sheet basis and one showed on the balance sheet as a deferred income item. An off-balance-sheet financing, for the purpose of this article, is a financing which does not show as a direct liability on the balance sheet of the sponsors of or stockholders in a project. 3. Projects are often located in a foreign country. The financing is arranged so that the lenders assume the political risk on the loan because many companies rightly believe that this arrangement affords a degree of insulation from political risk not otherwise obtainable. 4. Many projects are jointly owned by several sponsors. This form of financing lends itself well to a situation where a new entity is formed to own a project and do the borrowing. Project loans can be used to finance a variety of activities including development of iron-ore deposits and associated pelletizing plants; development of coal reserves; construction of pipelines, alumina plants, fertilizer plants and refineries; etc. The specific areas of analysis can be quite different, depending upon the type of project being financed. It is important, therefore, to classify the proposal according to the type of project, and also by the nature of the financing - nonrecourse financing, financing covered by a guarantee of completion and financing supported by an undertaking lasting for the life of the financing. I will discuss each of these types in more detail later, but first, I should like to make some

Jan 1, 1985

Many of the large refrigeration plants used in, the cooling systems on deep South African gold mines are situated on surface where they are exposed to seasonally and diurnally varying climatic conditions, and to a diurnally varying demand for cooling made by the mine. It has been traditional to accommodate the seasonal variation in climate by manual control applied to the plants at appropriate times of the year, and the plants have normally been specified to conform passively to the diurnal variations. This paper introduces new strategies for the active automatic control of the plants on a diurnal cycle, and shows that attractive benefits in energy and chilled water resource management can be accrued through the use of these strategies. The results have been derived through the modelling and simulation of a representative refrigeration plant.

Jan 1, 1985

By G. L. Dollinger, J. P. Kindsvater, J. A. Gibson

DESIGN AND DEVELOPMENT OF A MOBILE MINING MACHINE INTRODUCTION Until recently, developing tunnels in hard rock has been accomplished either by the drill and blast method or by using large tunnel boring machines. Combining the flexibility of drill and blast with the safety, efficiency and productivity of a TBM has been the objective of mining machinery producers for many years. In 1979 The Robbins Company began developing a new type of tunnel boring machine called the Mobile Miner to meet these objectives. The development and testing of the Mobile Miner is the subject of this paper. CURRENT MINE DEVELOPMENT METHODS Both the drill and blast method and the use of a TBM have notable advantages and disadvantages. The drill and blast method, for example, allows much more flexibility, requires less setup time and has a lower initial cost than a TBM; however it requires the use of high explosives and blasting has a disrupting effect on the rock surrounding the development. A TBM, on the other hand, is safer to operate, more efficient, more productive and produces smooth tunnel walls without disturbing the surrounding rock. In longer straight drifts it will easily out distance the drill and blast method. The TBM, however, is limited to boring a circular cross section tunnel which must then be modified if a flat floor is required. It also has a higher initial cost and an extended setup period.

Jan 1, 1985

By Edward M. Jacobs

In some ore grinding circuits it is desirable to make separations purely on size. The normal choice for this is vibrating screen equipment. Developments in screening process technology have led to improvements in the capacity and efficiency of vibrating screens, through the adoption "Thin Layer Wet Screening". This process can reduce recirculating loads and equipment requirements in the ore grinding circuit.

Jan 1, 1985

By W. E. Horst

Raw materials and mineral products are crushed, ground, or pulverized for a variety of reasons. Some of the most important reasons for size reduction are: to liberate marketable mineral species from a matrix of commercial minerals and gangue, to promote rapid chemical reaction through exposure of large surface area, and to produce a material with desirable size characteristics for handling, utilization, and storage. Comminution processes are currently used on vast tonnages of raw material annually. In the mineral industries where mineral products and other solids are processed, the various size-reduction unit operations represent a major portion of the manufacturing costs. The comminution process is an expensive unit operation from the stand- point of both capital and operating costs. Power consumption is large, and the energy conversion to useful work is very small regardless of the size-reduction system. In energy terms, about 1% of the all electricity generated throughout the world is expended in crushing and grinding operations by the cement industry alone. Comminution is a general term for size reduction that may be applied without regard to the actual breakage mechanism involved. General type of size-reduction equipment include crushers, tumbling mills of various type, impact mills, fixed-path mills such as a roller mill, and fluid-energy mills. Some comminution machines accomplish

Jan 1, 1985

Provide respiratory protection and a clean work environment for stationary or semimobile workers at minerals processing plants. Approach An Overhead Air Supply Island (OASIS) was developed which filters, conditions, and evenly disperses an envelope of clean air over a worker's head, thereby insuring reduced dust levels and a clean work environment. How It Works The concept for the OASIS derives from an earlier Bureau development of a canopy air curtain for continuous mining machines (see Technology News #21). In this application, the benefits of a reliable, self-contained, self-cleaning industrial-duty air filtration and distribution system are extended to the minerals processing field. The OASIS draws dust-laden room air into a filtration system, removing the dust and delivering clean air to a specific 16-square-foot area. It consists of: ? a self-cleaning primary filter ? a heater (cooling coil optional) ? an airflow distributor and secondary filter (combined)

Jan 1, 1985

By K. Adam

Grinding in steel mills adversely affects the flotation of pyrrhotite. The electrochemical nature of inter action between pyrrhotite and active metals was investigated by contacting pyrrhotite with platinum at different applied potentials. Flotation tests, scanning electron microscopy, Auger electron spectroscopy, and X-ray photoelectron spectroscopy were wed to examine the surface properties of pyrrhotite. The formation of hydroxide or oxide and sulfate species of iron through the oxygen reduction reaction at the cathodically polarized surface of pyrrhotite was shown to be the mechanism responsible for the reduced floatability of pyrrhotite.

Jan 1, 1985

By John D. Campbell

"IS YOUR MANAGEMENT CONTROLLOOP FUNCTIONINGMineral processors make use of hundreds of control circuits in their mills, process plants, smelters and refineries, to optimize throughput and recovery and minimize cost. This afternoon, I would like to discuss what is probably the weakest circuit in any mineral processing operation - the management control loop.In their recent book ""The Winning Streak"", Goldsmith and Clutter describe extensive research on unsuccessful companies. They conclude that ineffective control, which does not immediately identify the problems, is one of the main failings of unsuccessful companies.We will look at the three key components of control which, from the manager's point of view, ensure that the loop is complete. These three are:• measuring what's happening,• assessing its significance, Rnd• altering performance.If we compare management control to process control as shown in this first figure, ""We see that parameter sensing by the analyzer in a process circuit is analogous to performance monitoring by management in a responsibility centre. The analyzer senses temperature, pressure, flow, weight or some surrogate indicator such as colour to indicate ion concentration. For manage1nent, the performance to rnonitor is dependent upon the objectives of the responsibility centre, and the key factors which affect these objectives."

Jan 1, 1985

By McCall. F. E., J. Cervik, A. A. Campoli, P. Thakur

The cross-measure borehole system is a common method of controlling gob gas throughout Europe. Drainage holes are drilled into the strata adjacent to the coalbed being mined. Removal of the coal on a longwall panel relaxes and fractures the adjacent strata, enabling these holes to draw out the methane. A test in the Upper Kittanning Coalbed demonstrated the capture of 50% of the total methane generated by the mining operation. A test in the Pittsburgh Coal bed was not as effective.

Jan 1, 1985

By Rose L. Ballard

This chapter summarizes data on crude nonfuel mineral production for the United States, its island possessions, and the Commonwealth of Puerto Rico. Included also are the tables that show the principal nonfuel mineral commodities exported from and imported into the United States and that compare world and U.S. mineral production. The detailed data from which these tables were derived are contained in the individual commodity chapters of Volume I and in the State chapters of Volume II of this edition of the Minerals Yearbook. Although crude mineral production may be measured at any of several stages of extraction and processing, the stage of measurement used in this chapter is what is normally termed "mine output.? It usually refers to minerals or ores in the form in which they are first extracted from the ground, but customarily includes the output from auxiliary processing at or near the mines.

Jan 1, 1985

By Tomek Ulatowski

INTRODUCTION In 1974, Industrial Miners Mexico, S.A. (IMMSA), agent for the borrowers, was the largest privately-held mining, smelting, and refining company in Mexico (accounting for 32% of Mexico's nonferrous metal and coal production in 1974), the fourth largest company in terms of sales, and the second most profitable company in Mexico, excluding government wholly-owned and operated industries. The company was engaged in the mining, smelting and refining of coal, copper, fluorite, gold, lead, silver, zinc and related by-products for domestic consumption and export. A combination of favorable factors led IMMSA to propose an investment plan amounting to US$286 million for 1974 through 1978, of which US$150 million was to be financed. These factors included: Substantial profits in 1973 and 1974 Positive near-term outlook for metal prices Success of the reinvestment program in increasing productivity Substantial additions to proved reserves during 1973-1974 and Fiscal incentives provided by the Mexican government to stimulate investment in the mining industry. The primary purpose of the investment program was to construct a new electrolytic zinc refinery and to expand and modernize many of the company's existing mining and refining facilities. THE BORROWER Company History Compania Miners Mexico, S.A. was incorporated in the city of Monterrey in 1918 as a wholly-owned subsidery of ASARCO Inc. (formerly American Smelting and Refining Company, New York) for the purpose of mining and processing non-ferrous metals and related products. In compliance with the Government's Mexicanization program, ASARCO Inc. divested itself of 51% of its equity in Compania Miners Asarco, S.A. on June 30, 1965. Subsequently, ownership in the divested share was apportioned as follows: 15% ownership in Compania Miners Asarco, S.A. to a group of private investors, and 36% in trust for subsequent public sale. The company's name was changed to Asarco Mexicana, S.A. in 1965. Mexican ownership in Asarco Mexicans, S.A. was increased to 51% in 1967, following the purchase of the 36% share ownership held in trust, and then to 66% in 1974 when ASARCO Inc. divested itself of an additional 15% of its holdings in Asarco Mexicans, S.A. Following its 1974 divestiture of 15% of Asarco Mexicans, S.A., ASARCO Inc's ownership in Asarco Mexicana, S.A. was reduced to 34%. In 1974, the company changed its name for the second time to Industrial Miners Mexico, S.A. (IMMSA). Fiscal Agreement IMMSA entered into a fiscal agreement with the Mexican government in 1969. The agreement, which was renewed in 1974, provided for 100% of the production and export tax corresponding to the federal government with a minimum of 50% of the amount refunded to be reinvested in fixed assets. Further, the agreement permitted the company to

Jan 1, 1985

By J. B. Hiskey

The hydrometallurgical application of thiourea in processing precious metal ores and concentrates has reached the development stage. This paper reviews recent technical literature covering the process development of thiourea leaching. In addition, recent fundamental contributions are discussed. Most of the interest in thiourea leaching has involved treating high grade concentrates that have sufficient value to just the use of thiourea as a reagent. An important development in thiourea technology is the addition of SO2 to the leaching solution. This procedure effectively reduces the decomposition of thiourea and eliminates the problems of passive surface layers that limit the leaching efficiency. Results for the thiourea leaching of a bulk sulfide concentrate and a residue from the autoclave leaching of a smelter flue dust are also reported. As determined by a standard bottle roll cyanidation test, the bulk concentrate was extremely resistive to cyanide leaching yielding only 16% gold and 2% silver extraction in 24 hours. Leaching with a relatively concentrated thiourea solution (1MCS (NH2)2) resulted in 83% gold and 75% silver extraction in four hours. With the treated flue dust residue, gold extraction was about 60%. Gold and silver extraction with cyanide was sensitive to both cyanide concentration and oxidizing conditions. Cyanidation resulted in 59% gold extraction and 77% silver extraction in 24 hours.

Jan 1, 1985

The cleaning of copper containing fayalite slag using a CuFe alloy was studied under an oxygen pressure ranging from 10-7 to 5 X 10-11 atm at 1200º c. The reduction of copper from fayalite slags by Cu-Fe alloys was found to be very effective. For example, at a P 02 of 10-7 atm, the copper content in the slag was reduced from 4.1 to 0.402 wt. percent after 90 min. of reaction time using a Cu- 5.27 wt. percent Fe alloy. The copper reduction rates were found to be independent of P02 in the gas phase when using Cu-Fe alloys which exhibit an iron activity of greater than 0.4. A mechanism for slag c1eaning is proposed based on the concept that the Cu-Fe alloy lowers the oxygen potential of the slag according to Eq.1 1, fol1owed by the reduction of cuprous oxide by wustite as shown in Eq.2. Here X represents element X in the alloy phase while (X) represents the element in the slag phase. The copper and iron transfer behaviour obtained in this study are explained by a ?Stepwise equilibrium model.

Jan 1, 1985

By N. J. Duncan

"Coal mining, whether surface or underground, has hazards that make it unique in the field of industrial safety and health. The often soft, faulted and folded sedimentary strata make wall or roof movement a risk to the safe and economic removal of the coal, while the extraction and handling of coal may create an explosion hazard even in surface operations, In Canada, these problems are compounded by the situation of the coal fields which range from deep undersea deposits in Nova Scotia to steeply pitching thick coal seams high in the Rocky Mountains. Climate too can create its own problems, particularly the effect of metals of minus 40°C temperatures, as crumpled dragline booms at prairie strip mines witness. Because of the difficult and sometimes hazardous conditions, Canada's underground colliery managers, in common with those of other Commonwealth coal-producing countries, must have a government ""certificate of competency"" before being appointed as mine managers. Certification of assistant managers (""under-managers"") and foremen (""fire-bosses"") is also a legal requirement for all of Canada's underground collieries, while the province of Alberta requires certification of surface management personnel. Electricians and mechanics who install and maintain the specially designed equipment underground and in hazardous areas of surface mines and processing plants, and mine surveyors who ensure accuracy of the location of underground workings, must also hold government certificates of competency. The requisites for all certification include a minimum work experience and knowledge of coal mining technology and mine safety and health legislation. Despite recognition of the hazards and increasing knowledge of methods of preventing explosions of flammable gas and coal dust in Canada's underground mines, there have been several disastrous explosions such as those at Springhill Colliery in Nova Scotia in 1891 with the loss of 125 lives, at Hillcrest Colliery in Alberta in 1914 with 189 dead, and more recently · explosions and fires in No. 20 and No. 26 Collieries in Cape Breton. Preventing explosions has required developing optimal ventilation techniques, reducing ignition potential, suppressing ignition at source, draining flammable gas before it can enter the air courses, and preventing, or sealing off, autogenous heatings with their associated carbon monoxide or explosion dangers."

Jan 1, 1985

By I. J. A. Brackley

An investigation of the slope stability of a pit and failures of spoil dumps, carried out at Silicon Smelters quartz mine, Pietersburg, South Africa, is described. The major geological feature of the mine is the intensely foliated schist in the footwall, with exceptionally Iow strengths upon extensive discontinuities, and the similarly unusual strength properties of the dumped schist spoil. The selection of slope angles for the pit is described, and a proposal for the stabilization of the failing spoil dump by segregated dumping is explained.

Jan 1, 1985

By D. L. Sawyer

The Bureau of Mines studied alumina extraction from uncalcined, kao-linitic clay at temperatures from 1000 to 2500 C using 20-or 27-wt-pct-HCI concentrations and with an acid-to-clay ratio of from 0.8 to 1.4 times stoichiometric. Autogenous digestion pressures ranged from atmospheric pressure to about 900 psia. Extraction of 96 pct of the alumina was obtained by HCI leaching at temperatures and leaching times that varied from 1000 C for 120 h to 2000 C for 15 min. Hydrochloric acid stoichiometry of the reaction A1203'2Si02'2H20 + 6HCI + 2AICl3 + 2Si02 + 5H20 was studied at different temperatures and leaching times in a 750-mL tetrafluoroethylene-polymer-lined autoclave. A combination of high temperature and 20 wt pct excess HCI promoted rapid and almost quantitative extraction of alumina (99 pct in some tests). Additional Bureau data obtained with 35-mL tantalum bombs and leach-ing tests with added fluoride are also provided. At high temperatures, the addition of fluoride did not result in a significant improvement over HCI alone and was deleterious to the filtering properties of the digest residue.

Jan 1, 1985

By P. G. Dunn

Geologic studies during development at Copper Flat were directed at acquiring the necessary information in evaluating a low-grade porphyry copper deposit. In addition to the geologic mapping and core-logging of a typical exploration project, these studies included: - careful checks on the sampling and assaying, - selection of representative samples used to establish the recoverable amounts of precious metals in the ore, - examination of underground workings driven to provide samples both for metallurgical testing and for assay comparison, - evaluation of plant site and waste dump areas as non-material, including a placer examination of the tailings disposal area, and location of an adequate water supply. All these investigation were carefully documented to provide the necessary data both for the engineering design and, more importantly, for the feasibility studies required for successfully financing the project.

Jan 1, 1985

By Jon C. Volkwein

The Bureau of Mines and many member companies of the Industrial Sand Association have been working in several areas to reduce personal exposure to respirable dust. Areas investigated include ventilation, modification of hardware, moisture addition to the product, and improved housekeeping practices. Ventilation systems have been devised and shown to contain 100 pct of a tracer gas released within the hood. An industrial clean air island has been developed and shown to reduce dust levels 90 pct at the opera- tor's position, Modification of hardware on a bag filling machine has been demonstrated to reduce dust 83 pct at the machine operator's lapel. This particular development has been termed a significant advancement in the state-of-the-art of bag filling by industry representatives. Addition of moisture to dried product materials has been tested with results showing dust reductions of 90 pct are possible!, Control of the moisture addition method still needs refinement and costs may be prohibitive. Dust sampling results clearly show the benefits of housekeeping practices such as building cleaning and vacuum sweeping. Rotation of work schedules is also effective for reducing personal exposure.

Jan 1, 1985

By Terry J. Close

From 1981-84, Bureau of Mines personnel examined and evaluated mines and prospects in the highly mineralized 62,400 acre Inyo Mountains U. S. Bureau of Land Management (BLM) Wilderness Study Area (WSA), located east of Lone Pine, CA. The 62,400 acres studied is the part of the 87,145 acre WSA designated as suitable prior to February 28, 1983. The WSA is underlain principally by quartz monzonite and quartz diorite that have intruded sedimentary and volcanic rocks. Three types of mineral deposits are present: 1) gold in fissure veins, 2) silver in fissure and replacement veins, and 3) talc in metasomatic lenses. Of the 84 nines, mills, and prospects examined, 54 are significant: 1) 5 in the intrusive rocks total about 4.4 million tons of inferred marginal gold reserves averaging 0.24 oz gold and 0.74 oz silver/ton; 2) three associated with intrusive-sedimentary rock contact zones total about 280,000 tons of inferred subeconomic silver resources averaging 7 oz silver/ton; 3) 27 gold and silver occurrences in the intrusive and sedimentary rocks total about 1.2 million tons of material in poorly defined bodies too small or low grade to be resources; 4) 15 gold and silver occurrences in the intrusive and sedimentary rocks are too poorly exposed to estimate tonnage and grade; and 5) four talc deposits along intrusive-sedimentary contact zones have inferred marginal reserves totaling about 640,000 tons. The marginal gold reserves at $450/oz might be profitably mined (reserve) at a gold price of about $600/oz and the subeconomic silver resources at a silver price in excess of about $27/oz. The marginal talc reserves might become minable at prices of about $50/ton and $80/ton for unprocessed and processed talc, respectively, after present supply sources are depleted. At most of the 54 significant mines and prospects, additional reserves or resources would likely be disclosed by trenching or drilling. Present in the WSA are 13 gold mills, numerous small pits and cuts, 270 underground workings totaling about 36,000 ft, and 80 mining benches totaling about 11,000 ft. Gold, silver, or talc were produced from most of the workings. A total of 1,561 lode and 18 placer samples were taken.

Jan 1, 1985

By S. M. Hsiung

This paper presents the results of an extensive study concerning a series of roof falls in a room-and-pillar coal mine located in West Virginia. Three dimensional finite element modeling was employed to identify the possible causes for the roof falls. The effectiveness of possible roof control measures for alleviating or eliminating the adverse roof conditions is analyzed, discussed, and compared. The best mining alternatives are recommended. It has been found that large overburden depth and typical roof geology are the major reasons for the roof falls. Angle bolting may not solve the problem encountered in the mine studied. Changing the mine layout currently used in the mine appears to be the best alternative. The recommended pillar size and entry width which will eliminate the problem completely are 90 ft. x 90 ft. and 14 it., respectively.

Jan 1, 1985