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By Stuart McGill

This case-study of the financing of the Ok Tedi project illustrates the nature of project financing and outlines the arrangements made in the case of this project; it also demonstrates that the limitation of financial exposure is an important goal for Governments involved in developing the resources sector. The account includes a chronological description of the process by which the sponsors prepared for the financing of the project and the lenders became involved in it. The type of security arid loan documentation required for such financing is described, together with a broad analysis of their content and the manner in which the various risks involved in development are apportioned among the sponsors and lenders. The ability to apportion and limit financial liability is an important development for the owners of capital and resources.

Jan 1, 1985

By William A. Vogely, Robert T. Deacon, Walter J. Mead

Oil and gas together are the most important energy sources consumed in the United States. In 1983, 67% of total energy consumption was represented by these two resources (43% was oil and 25% natural gas), while coal accounted for only 23% of U.S. energy use. All other sources (hydroelectric, nuclear, geothermal, wood and other waste products) accounted for only 10% (U.S. Department of Energy, 1983, p. 1). In this chapter we address the issue of regulation in the oil and natural gas sectors of the U.S. energy industry. In addition, we analyze the cartel characteristics of the Organization of Petroleum Exporting Countries (OPEC). If OPEC is an effective cartel, then U.S. oil as well as substitute energy prices, production, and consumption will be affected by cartel action. Further, as the nation learned in the 1970s, major changes in oil prices produced major disturbances in other sectors of the U.S. and world economies. Consequently, it is important to determine whether the roughly ten-fold increase in nominal prices that occurred in the 1970s was the result of cartel action, the result of normal economic forces adjusting to the fact that the world was running out of cheap oil, or some combination of the two. Furthermore, the presence of OPEC- associated oil price increases is related to regulations that were imposed on the energy sector during the decade of the 70s. THE RATIONALE FOR GOVERNMENT INTERVENTION Economists have traditionally judged the state of an economy to be efficient if it is impossible to improve the welfare of any one member of society without harming someone else. Any economy that satisfies this condition is said to be Pareto efficient, after the Italian economist Vilfredo Pareto who first gave rigorous attention to such questions (see Chapter 4.10). It is easy to see why an economy that fails to satisfy this condition could not be efficient; by definition, it would be possible to alter the allocation of resources in a way that improves everyone's welfare.' Much of the appeal of this weak efficiency criterion is that it avoids comparisons of levels of well being among different individuals. The cost of such generality, however, is that in any given economic system a wide array of different Pareto efficient states will typically be attainable. In the simple Robinson Cursoe economy of the undergraduate textbook, for example, efficiency could just as easily be attained in the case where most of the island's resources are owned by Friday as in the case where they are under Crusoe's control. However, the distribution of welfare among the two inhabitants would obviously be quite different in the two situations. Such equity issues cannot be settled on objective or scientific grounds. To decide which distribution of welfare is socially "best" an explicit value judgment is needed. It is useful to keep in mind the preceding distinction between efficiency and equity issues when analyzing the role of government in a market economy. Decentralized market processes will not necessarily result in a distribution of welfare that society considers just. For this reason a potential role for government lies in the redistribution of income among individuals. In some circumstances, however, market pro-

Jan 1, 1985

By Salustio s. Guzman

The standard .free energies of formation of tin chlorides were estimated with reviewed and estimated basic thermodynamic data, and measured reversible potentials for the disproportionation of tin dichloride into metallic tin and tin tetrachloride. Values for cºp, Sº, Hº?-Hº 298, -(Gº - Hº298) /T,.Hºf, Gºf, and log Kp are given in tabular form, these estimations are compared with estimations reported in the literature.

Jan 1, 1985

By John S. Brock

INTRODUCTION The Oxford Dictionary says that the word "promoter" has usually been used in an opprobrious sense since at least 1876. This popular image of mining promoters is of cigar-chomping shysters and Brooklyn-Bridge vendors, improving their standard of living with the aid of funds raised through the sale of stock to little old ladies. It is unfortunate that mining promoters are considered crooks until they can prove their integrity and honesty by finding a mine. A common rule of thumb states that for every 1,000 prospects, 100 come to be drilled, and one becomes a mine. However, it is also a statistic that there have been mining promotions, where money raised has gone elsewhere than into the ground; Junior exploration companies can be handy vehicles for unscrupulous financial activity. One must remember though that every stock exchange has had its share of sound mining promotions that, because of the one in 1,000 odds, have failed for legitimate reasons. The promoter must be able to rationalize the worth of a mineral discovery which, on an industry- average basis, probably cost more to find than the discounted value of its net return, which return is not an assured percentage of invested capital, and furthermore, is ultimately from a wasting asset. So, it is easy to understand why the promoter must constantly justify the credibility of his operation to his grubstakers during the course of the "five phases of exploration," those being (1) euphoria, (2) disillusionment, (3) search for the guilty, (4) punishment for the innocent, and (5) distinction for the uninvolved. The promoter with the exploration organization that does not have the benefit of positive cash flow, by definition for the sake of this article, works for a promotional outfit, a Junior Company, that must raise its exploration budget from a variety of sources. Promotion, as discussed here, will not entirely refer to the formation and operation of a joint- stock company but rather to the overall methods of raising risk capital for mineral exploration ventures from outside sources. THE NECESSITY OF PROMOTION In Canada, the publicly financed Junior Company has had an enviable record of mine-finding success. In the Province of British Columbia alone, the discovery of fifteen out of twenty-four mines has been as a result of the activity of the Junior Company (B. C. & Yukon Chamber of Mines, 1977). In the Province of Ontario, one research study indicated that between 1951 and 1974 the 'Juniors' spent only 28 percent of the total exploration funds but were responsible for 62 percent of all economic discoveries (Freyman, 1978). The reasons for the success of the Juniors are tied to a variety of factors, the main one being personal initiative based on incentive. In other words, the principals, or their employees have 'a piece of the action.' The smaller companies can operate faster and more efficiently than their larger counterparts. The Junior Company is also destined to take some bigger risks, the 'long shots,' many of which efforts by virtue of the Junior's perseverance coupled with a touch of 'ore is where you find it' philosophy, result in major discoveries. The individuals, syndicates, private and publicly financed Junior Companies, because of high costs of exploration and development, cannot hope to finance most mineral prospects all the way to production. Exceptions do exist, those being the lower capital cost, small, high-grade deposits. Private investors and publicly financed Junior companies, therefore, can usually afford to finance most exploration through the initial drill-testing stage. The major resource company will enter a mining deal with a Junior Company usually by way of option or joint venture agreement, and will finance to production to earn an equity in the prospect or the Junior Company or both. The conventional lending institutions, banks and government agencies, will usually only participate through loaning a portion of capital

Jan 1, 1985

By P. R. Goad

"Kidd Creek is a large volcanogenic base metal sulphide deposit, located near the west end of the Abitibi greenstone belt, 27 km north of Timmins, Ontario. The rhyolite geology is characterized by a NNE-striking and steeply east-dipping package of rhyolite volcaniclastics upon which has been imposed a strong ESE-striking and north-dipping structural fabric . Massive rhyolite units with grey-black. chloritic cores and yellow, sericitic margins intrude as dykes into the stratigraphic footwall and as sills higher in the stratigraphy. Massive rhyolite units positioned near the top of the felsic pile exhibit an extensive marginal development of hydraulic fracturing and are termed crackle-brecciated rhyolite.The stringer sulphide zone is positioned in a lobate blanket of crackle-brecciated rhyolite at the top of the felsic pile. The stringer sulphide zone is characterized by a mature chemical alteration, being specifically depleted in alkalis and enriched in iron-rich chlorite. with accompanying silica, sericite and carbonate alteration. A suite of trace elements characterizes this mature alteration. The massive rhyolite units, which intrude lower in the rhyolite volcaniclastics, exhibit a core of weak chlorite alteration and strong marginal sericite alteration. Tight or unfractured massive rhyolite units are essentially devoid of sulphide mineralization and exhibit a suite of trace elements characteristic of this immature alteration. It is interpreted that the massive rhyolite units intruded into an already evolving system and ""choked-off"" active conduits carrying hydrothermal fluids and subsequently acquired an immature alteration signature. Rhyolite units positioned higher in the pile developed intense hydraulic fracturing and a mature alteration coincident with the formation of the stringer sulphide zone. In summary, a model, based strictly upon the rhyolite geology, is reviewed to assist in the exploration for volcanogenic base metal sulphide deposits."

Jan 1, 1985

By H. Boyd

Fluid energy grinding, or jet pulverization, refers to the process of entraining solid particles in high velocity gaseous or vaporous streams and reducing their size by impact and attrition against other particles or some sort of target. Since all desired size reduction is not achieved in one pass through the zone where energy is applied, some form of classification is necessary to return oversize particles to the grinding zone for further size reduction. Applications Fluid energy mills have normally been used to produce products where the particle size is basically finer than 325 mesh. Products having particle size distributions with a maximum size of 4 or 5 µm, and with a high percentage finer than I µm, can be produced using fluid energy mills. More recently, some fluid energy grinding units have been applied economically to produce ground products with 1 or 2% coarser than 200 mesh. It is also possible to consider usage of a jet-pulverizing zone, without the usual integrated air classi¬fier, operated either in open circuit or in conjunction with a screen. Feed sizes to be delivered to the fluid energy mill depend on the material involved, the type of jet pulverizer used, the finished product size requirement, and the upstream process. In some units feed sizes up to l in. or larger can be accepted, but practical economics usually require the starting material to be -4 mesh or smaller and some pulverizers are typically fed at 20 mesh top size. It is not unusual to find feed materials at essentially -325 mesh when extremely fine products are needed, since capacities are improved with finer feeds. Conventionally the fluid energy grinding process has been used for relatively soft and nonabrasive materials. This includes very low¬melting-point and temperature-sensitive materials or coatings, since there is no measurable temperature rise during fluid energy milling. More recently, however, jet pulverizers are being used on highly abra¬sive materials such as silica, feldspar, glass, zircon, calcined alumina, coke, boron carbide, and similar materials. Since the primary energy application is by impact of particles against themselves, there is a low rate of wear resulting in a small amount of product contamination and in low maintenance costs. Usually the fluid energy pulverizer produces a more narrow particle size distribution than other mills provide, and this is useful where such a requirement exists. It is possible, within limits, to adjust classifi¬cation and other functions of the overall fluid energy system to vary the particle size distribution curve and thereby approach the broader distribution obtained from other grinding methods. By controlling the temperature, composition, and humidity of the fluid used, it is possible to incorporate other functions with the size-reduction process. These include drying or adding moisture, coating, mixing and blend¬ing, and even oxidation or reduction and other chemical reactions or their inhibition. The finished product is discharged in the fluid stream and is conveyed pneumatically to the desired point, where a suitable dust collector must be provided. Operation and Mechanical Features One of the earliest fluid energy mills is the Micronizer now manu¬factured by the Sturtevant Mill Co. Similar units are also manufac¬tured by Jet Pulverizer Co. and others. As shown in Fig. 81, the micronizer consists of a shallow circular grinding chamber with noz¬zles arranged at the outer periphery to discharge tangentially inward. Fluid (usually compressed air or superheated steam) is provided to the nozzles from a manifold at pressures normally in the range of 100-150 psig and at temperatures up to 800°F or higher, depending on the raw material, required results, and economic factors. The com¬pressible fluid expands to high velocity through the nozzles and gener¬ates a spiral flow pattern in the grinding chamber, and discharges

Jan 1, 1985

By Andrew Cecala

The Bureau of Mines performed tests to compare the effectiveness of steam and of water sprays to reduce respirable dust levels at mineral processing plants. By applying 0.22 wt pct water vapor as steam to product material, a 64-pct respirable dust reduction was recorded. By applying the same amount of moisture with water sprays, only a 25-pct dust reduction was recorded. By increasing the moisture content up to0.5 pct using water sprays, the dust reduction was increased to 55 pet, which was still less than the dust reduction achieved by adding less than half that amount of water in the form of steam.

Jan 1, 1985

By J. A. Herbst, H. R. Cooper, R. J. Brison, R. W. Harper, K. P. Ananthapadmanabhan, W. C. Hellyer, B. H. Bergstorm, D. M. Hopstock, H. Rush Spedden, W. C. Hellyner

Scope of Section The physical characterization of an ore or mineral mixture in such detail that mineral processing may be effectively applied to create more useful products is one part of the technology of sampling and testing. In addition, the evaluation of the multitude of separation processes, both physical and chemical, combined with ancillary opera¬tions and performed on samples at a laboratory scale, is another part of the testing procedure. Although analytical techniques provid¬ing quantitative determinations of elemental compositions are an im¬portant and necessary supplement to any testing program, that field of endeavor is a well-developed, separate entity beyond the scope of this Section. Sampling procedures cover the practice of selecting representative quantities of test materials in the field to evaluate mineral deposits, and extend to techniques of obtaining process samples in slurry and bulk ore as part of process evaluation. The same techniques are appli¬cable, of course, to standardized methods of metallurgical accounting. Sampling is also an important facet of successful on-line measurement of slurry properties such as assays and particle size in the practice of automation. However, the sampling methods in this case can be different from those needed for precise testing and accounting pur¬poses. Sampling was well defined in Taggart's Handbook as "the opera¬tion of removing a part convenient in size for testing, from a whole which is of much greater bulk, in such a way that the proportion and distribution of the quality to be tested (e.g., specific gravity, metal content, recoverability) are the same in both the whole and the part removed (SAMPLE). The conditions of the more stringent definition, that the sample shall be completely representative of the whole as regards all aspects save bulk, are practically never fulfilled when heterogenous mineral mixtures are sampled." Taggart's Handbook of Mineral Dressing, Section 19, "Sampling and Testing," continues to be a very useful compendium of principles and techniques, particularly as applied to manual methods for han¬dling samples. In the intervening years since its last revision, substan¬tial progress has been made in both the theory and the techniques; thus, this current contribution is designed to be an extension of the earlier work, yet complete enough to provide procedural guidelines to methods of continuing validity. Although basic principles of testing remain unchanged, the meth¬ods of applying those principles have undergone great change. New testing equipment has become available, yielding a greater precision of results. Testing methods have been refined which, in many cases, allows for a valid scale up of flowsheet designs without the necessity of costly pilot or prototype plant development. Justification for a Sampling and Testing Program* The proper evaluation of a mineral property is a complicated process. It often is done on a team basis with the exploration geologist, mining engineer, mineral process engineer (extractive metallurgist), economist, and product utilizer (ceramist, chemical engineer, chemist, metallurgist, etc.) all represented. The mineral processing engineer is a key member because he can provide a go no-go answer to the question, "Can this ore be processed economically?" In addition, his judgment on the response of even the initial sample to processing can be an invaluable guide to the proposed process and its mutations. Since the capital investment and operating costs are so sensitive to the type of process used, the judgment of the mineral processing engineer forms an important part of the early evaluation of the profitability of a new mining venture. This early estimation of the processing approach is all the more important since, for some metalliferous ores, the capital investment for mill, smelter, water supply, and tailings disposal exceeds the cost of the mine. At present, for commodities such as coal, the reverse is true. There is a smaller capital investment for the coal preparation plant than for the mine. In general, both the capital and operating costs escalate very rapidly in the following order: gravity concentration of alluvial deposits (e.g., dredging), gravity concentration of lode ores, flotation, simple hydrometallurgical processes, and complicated hydrometallurgical and pyrometallurgical processes. The latter two processes may cost 100 to 1,000 times more per ton treated than processing of a simple alluvial deposit. This dictates that the valuable mineral be concentrated as much as possible to minimize the total tonnage treated in the more expensive operations. Within each of these ore-processing categories there is a wide range of process sophistication and hence of capital and operating costs. Perhaps the greatest variations are in the chemical processing of ores. These range from the simple leaching of a copper waste dump to very sophisticated hydrometallurgical processing of ores in increasing order of cost. Because the overall cost of a mining venture is so sensitive to the process selected, it is essential that the mineral¬ processing engineer evaluate the ore in the initial stages of the development of an ore body. As better samples become available, he must continually revise his estimate of the process to be employed. The sampling and testing process must be a necessary and continuing activity throughout the life of a project. One fundamental aspect of nearly all mineral deposits is the inherent variability of the mineral assemblage and composition. A utopian goal of any processing plant is to have the process so flexible and so well-defined that an automatic process control system can optimize the economic recovery at all times. Since this is rarely possible, a continuing or at least a periodic testing program is desirable. Variables to be considered are: 1) Ore body inconsistencies. 2) Zonal variations. 3) Feed variations from mining plan or methods. 4) Variable performance of processing units due to wear. 5) Seasonal or other changes affecting processing conditions such as water quality, temperature, etc. 6) Changing market conditions for product quality or byproducts. 7) Technological advances in processing methods or equipment. 8) Increasing demands for environmental control. 9) Changing economics of competitive processes, of supplies, of capital investment vs. labor costs, etc. Sampling Procedures Preliminary Guidelines for Sampling Ore Deposit Studies. t At a very early stage, it is essential that the mineral processing engineer receive a sample of the ore. This may be a portion of the diamond drill core or a split from the trench, pit, churn drill, channel, or sheet sample. Even a grab sample may have some value, but it should be selected by the mining engineer or exploration geologist to be as representative of the ore body as possible within his best judgment. The sample delivered to the process engineer should have been subjected to as little prior crushing as is practical since fine sizes are difficult to concentrate. In addition, finely ground ores are readily oxidized and thus may give misleading test results. Furthermore, ground samples may make it impossible to eval¬uate either the comminution or the coarse-gravity concentration pro¬cesses. For an initial evaluation, a good deal may often be learned from a sample of only a few pounds if that is all that is available. To obtain the maximum information from a sample, its selection should be carefully discussed with the mineral processing engineer. In addi¬tion to being as representative as possible, the mineralogically distinct samples should be carefully segregated rather than composited. Since drastically different processes are often needed to process samples of differing mineralogy, considerable care and time must be exercised during this sample collection step. The segregation of samples showing gross mineralogical differences, such as the oxide caping on a sulfide deposit or a laterized zone, is easy. It is the more subtle changes in mineralogy that can often elude the field man. Yet these differences are often sufficient to dictate that an entirely different type of process be used. Obviously, the selection of these initial samples for ore testing and mineralogical studies requires that it be done by a man of consider¬able experience and judgment. While the mining engineer or field geologist is collecting these samples, he should also note and convey to the processing engineer such details as water quality and availabil¬ity, terrain, potential mill location, tailings-disposal areas, case of transportation, etc. As the property is developed with additional drill holes, adits, etc., larger and more representative samples will be required to develop the ore-processing flowsheet more adequately. If pilot-plant studies are required, a very large sample may be necessary. Though the type and amount of sample collected for flowsheet development investigations vary widely, gathering a representative sample of the ore body is a prime requisite for any process development effort. The process developed for any given ore body is only as reliable as the sample on which the flowsheet was based¬

Jan 1, 1985

By D. G. Collins

As part of its effort to develop ways to maximize resource recovery, the Bureau of Mines investigated the extraction of vanadium from Western phosphate beneficiation tailings with H2S04 and/or H3P04. Dissolution of the vanadium was accomplished by digesting a mixture of acid and a 50-pet-solids, tailings-water slurry. In the most effective method investigated, vanadium and phosphorus were leached by digesting the slurry at a constant boiling temperature (1000-1100 C) in a stirred reactor. In batch tests, maximum vanadium dissolution was 95 pet. In continuous-circuit tests designed to further evaluate vanadium dissolution at con-stant boiling temperature in a continuously stirred reactor, vanadium dissolution ranged from 70 to 85 pet. An economic evaluation of the process demonstrated that H2S04 consumption is the major cost factor. Based on the value of the vanadium product with no allowance for a phos-phate product, the cost of producing the V205 is more than twice its value. The potential for profit would depend upon the value of the phosphate fertilizer produced from the impure H3P04 remaining after vanadium extraction.

Jan 1, 1985

By C. Richard Tinsley

INTRODUCTION The economic analysis (Chapter 3), the engineering studies (Chapter 10), the credit structure (and the consequential funding sources) - Chapter 11, and the overall feasibility structure for any venture are all directed to determining one major decision element: How much and how certain is the reward for taking these risks? Risk assessment is a surprisingly weak area of analysis and is usually addressed in a checklist fashion. It is much preferable to deal within a risk system so that the inevitable tradeoffs among risks are correctly made. DEFINITION The first step toward risk definition must be to ascertain all of the risks to which a project or a company is exposed; otherwise one will remain ignorant of the possibility of a financially crippling loss until it occurs. (Carter and Crockford, 1974). However, simply stating what "risk" is can lead to debate. For example, risk could be (adapted from Vaughan, 1982): -the chance of a loss - uncertainty of loss -possibility of loss - uncertainty -dispersion of actual from expected results - probability of an outcome different from the one expected - possibility of an occurrence of an undesirable contingency -a condition in which a possibility of a loss exists. For the minerals industry financier, the last definition is probably the most appropriate. However, from a mineral company's point of view the definition might well include the possibility of not achieving the expected financial return. RISK CLASSIFICATION Risk identification will be readily agreed as the all-important first step. There are five major "branches" of risk classification. These are: -Statistical -Modellers -Checklist -Project Financing -Insurance The Statistical set discovered probability theory and any risk discussion soon deteriorates into a mathematical jungle (Megill, 1977; Hartman, 1976; Reutlinger, 1970; and Pouliquen, 1970).Their use of terminology tells its own story: coin toss (binomial distribution), gamblers' ruin, delphi (oracle) techniques, monte-carlo simulations, random walks, etcetera. These techniques inadequately represent the judgements necessary in an increasingly complicated and interrelated world. The risk Modellers have turned to the computer to handle these inter-relationships but soon find barriers because of "simultaneity". Certainly the computer has its uses to conduct various analyses (marketed as "sensitivity" analyses) but very often one finds that this involves changing one or two variables at a time, all other things being equal. Unfortunately, in a modern and complex world all other things do not remain equal. The statisticians will, no doubt, jump to their own defence by citing this

Jan 1, 1985

By B. Strohmeier

The role of large, ultra-high-powered arc furnaces in a fully integrated steelworks for the production of flat products is outlined, and an account is given of the technological improvements that have been implemented over the past few years to enable the arc furnace to remain competitive against the conventional route using blast furnaces and top-blown-oxygen steelmaking (LD). Modern secondary refining facilities have been installed, enabling the arc furnace to operate at high production rates in the manufacture of high-quality flat products.

Jan 1, 1985

By J. A. Meech, R. J. Tucker

"A dynamic computer model has been developed to simulate the operation of ore crushing plants. The model was created in a general form to allow imitation of a wide variety of secondary crushing circuits with only minor program modifications. The system can be run on either a microcomputer or a large time-sharing main frame computer as required.The size reduction and separation characteristics of crushers and screens are based on standard manufacturers' design and performance data. These calculations are isolated within various subroutines to facilitate tailoring of the model to emulate any particular plant of interest. Input and output data are presented in a variety of formats. Crusher, screen and conveyor amperages and surge bin levels can be presented in a tabular form along with appropriate alarms arising from improper circuit operation or process interruptions. Graphical representation of the circuit together with strip chart data output are features of the system when operated in a microcomputer environment.The program is currently being used at Queen's University as a teaching aid to demonstrate plant operating characteristics, control strategies and design concepts. The acceptance of, and reaction to the program at this level indicates a good potential for it to provide a valuable tool for operator training."

Jan 1, 1985

By F. J. Palumbo

Effective recycling or disposal of flue dusts is a continuing problem for copper, brass, and bronze smelters. Over 300,000 short tons (st) of dust is generated annually by U.S. secondary copper, brass, and bronze smelters. The Bureau of Mines has developed an alkaline leach method for recovering metal values from copper converter flue dust containing zinc, tin, lead, and copper. The dust was leached with a hot solution of ammonium chloride and ammonium hydroxide to solubilize ZnO. All of the tin (as Sn02) and the metallic copper, lead, and zinc, as well as possible insoluble compounds of each, report to the residue. Dissolved copper and lead salts are removed from the leachate by cementation with granular zinc. Zinc oxide is precipitated by diluting the leachate with water. The tin-rich (9.8 pct) residue has a ready market. The cement product is recyclable to the smelting operation. The ZnO is at least 97 pct pure and has potential marketability.

Jan 1, 1985

By Richard L. Gordon, William A. Vogely

ENERGY POI.ICY-PRINCIPLES AND THEIR PRACTICE Persistently, at least since the end of World War 11, governments have intervened broadly, deeply, and incoherently in major energy markets. If we take a broad definition of energy that encompasses gas distribution and electric power, we can observe regulations of even older vintage. This trend, of course, is not unique to energy. Expansion of government controls has occurred in many areas. The relevant basic question about energy regulation, therefore, is not why is energy special, but whether any general principles exist to explain the wisdom of existing regulations. This review takes place at a time, the middle 1980s, in which a massive onslaught is being undertaken against government regulation. However, the present chapter is influenced primarily by my observations of the failures of energy regulations and not by any inspiration from those ideologically opposed to government intervention. Several subquestions arise in policy appraisal. A primary need is to establish clear objectives and determine the consistency between these goals and the policies imposed. Thus, the first step is to set objectives. The next is to outline ways to attain these goals. However, it should be recognized that many apparently distinct options are economically equivalent. When the goal is to charge producers or consumers for something, it is possible to attain the same result through either government ownership or taxing private transactions. The tax can raise the price to the level the government would have charged if it were the owner. Creation of a Department of Energy is not necessarily any different from having separate energy agencies well coordinated by some small supervisory body. Thus, a distinction should be made between substance and form in policymaking. The critical substance concerns such matters as whether the government imposes financial penalties, incentives, or rules to attain a goal. Then, there can be many equivalent ways to implement the basic policy form. The second prior illustration suggests that one favorite question is how to attain proper integration of policy. At various times, voices on either (or even both) sides of the Atlantic have called for a coordinated energy policy. The U.S. Paley Commission made this a primary goal for future policy. The western European governments that were the founding members of the Coal and Steel, Economic, and Atomic Energy Communities spent much time in the middle fifties and much of the sixties trying futilely to agree on an energy policy. (See Gordon, 1970 for an annotated review). The energy price rises of the 1970s rekindled United States interest in coordination. However, astute observers of the problem such as O. C. Herfindahl of the United States and Maurice Allais (1 962) in France warned the discussions confused form with substance. The crucial issues were what were the goals and what were the best types of policies to attain such goals. Policy suffered, not from poor organization, but from discord about the goals and how to attain them. All this suggests that we need principles to guide policy appraisal. The branch of economic theory known as welfare economics concentrates on providing guidance about the problems of policymaking. The theory examines both what

Jan 1, 1985

By Richard L. Gordon, William A. Vogely

In this chapter, the principles that determine the procedures selected to transform minerals in the ground into usable commodities are re¬viewed.a I argue here that straightforward mod¬ification of the modern general economic theory of production suffices to meet the practical needs of a mineral economist. Therefore, the chapter is largely a review of the general economic theory of production to which is added discussion of the special prob¬lems of the exhaustibility of mineral resources and the economics of finding and developing economically recoverable minerals. In many cases, propositions applicable to all industries are reviewed because they are not treated ade¬quately in prior texts. In the discussion, use is frequently made of basic concepts of differential calculus widely used in economics. However, this is supple¬mented by simpler verbal and graphical treat¬ments, so that those either untrained in the calculus or, as is often the case, whose skills have grown rusty, can still follow the discus¬sion. Where the argument depends critically on the mathematics, this is noted and the justifi¬cation for including the material is provided. In addition, an appendix outlines the critical mathematics and reviews some of the numerous books published that provide the most readable available introduction to the subject. Further¬more, mineral industries examples are used to suggest the relevance of the theory. THE RELEVANCE OF THE ECONOMICS OF PRODUCTION Three basic steps are involved in establishing the relevance of economic analysis to mineral ¬industries decision making. First, the general theory of production must be defined, and its relationship to the simpler models of production stressed in economics textbooks must be noted. Second, the critical modification-considera¬tion of the problems of discovering and devel¬oping mineral deposits-must be developed. It turns out this too involves a special case of the general theory of production. Third, the concept of an economics of exhaustible resources must be explored sufficiently to suggest why its practical relevance is doubtful (or at least far smaller than the numerous writers on the subject seem to believe). The present approach is heavily influenced by post-1945 developments in economic anal¬ysis. Particularly since World War II, economic theory has drastically changed its scope. First, stress has increased greatly upon viewing the economy as a network of intertwined markets known technically as the general equilibrium system.b In this view, not only is the economy viewed as an integrated system, but critical con¬cepts are viewed somewhat differently than was previously fashionable. Specifically, in general equilibrium models, the concepts of supply and demand are rejected as central concepts in favor of a distinction be-

Jan 1, 1985

By M. K. McCarter

Jan 1, 1985

By C. A. Rowland

Introduction Rod mills are horizontal, cylindrical, rotating, tumbling mills in which steel rods, that are usually about 6 in. shorter than the length of the grinding chamber, are used for grinding media. Fig. 33 shows a cutaway view of a rod mill. Rod mills were first used around 1910 because of their ability to grind in open circuit, consistently produce a uniformly sized prod¬uct, give greater continuous availability, and give lower maintenance costs. They have basically replaced roll crushers and coarse grinding ball mills in comminution flowsheets. The present 20-ft limit on rod length, based on rod manufacturing methods, and the pulp flow char¬acteristics, that influence mill capacity, have established the maximum rod mill sizes' of 15 x 21 Vs ft using 20-ft rods and drawing from 2,200 to 2,300 hp. Rod Mill Uses. The principal uses for rod mills are: preparing feed for ball or pebble mills, grinding gravel or aggregates to the size analysis required for making concrete sand, preparing coarse agitator feed for leaching operations, and for primary grinding circuits, particularly in industrial mineral applications. Wet grinding is the most frequently used grinding process for rod milling. There are a few special cases where dry rod milling is used. Preparing feed for ball or pebble mills is the most common use for rod mills. In ferrous and nonferrous ore concentrators, wet open-circuit grinding is used to prepare ball-mill feed. Figs. 34 thru 37 show the four basic grinding circuits used in these concentrators. In rod mill-ball mill grinding circuits, where the rod-mill discharge contains 25% or more of the grinding circuit product-size material, the rod-mill discharge can be fed to the ball- or pebble-mill classifier as shown in Fig. 34. This is the most frequently used rod mill-ball mill circuit in the nonferrous ore concentrators. In a few concentrators such as Anaconda's Weed concentrator,55 the rod mill discharges to one classification stage which makes the same or a slightly coarser particle-size cut as the classifiers used to close the ball- or pebble¬mill circuits, as shown in Fig. 35. In concentrators where rod mill-ball mill circuits are used to grind low grade magnetic iron ores such as Reserve Mining Co., Silver Bay, Minn.; Erie Mining Co., Hoyt Lakes, Minn.; Eveleth Taconite Co., Forbes, Minn.; US Steel, Mt. Iron, Minn. and Atlantic City, Wyo.; Inland Steel-Jackson County Iron Co., Black River Falls, Wis.; and The Cleveland-Cliffs Iron Co., Adams mine, Kirkland Lake, Ont., the rod mills discharge to rougher magnetic separators (cobbers), the concentrates from which are fed to a ball milling stage as shown in Fig. 36. The same basic circuit is also used with gravity concentra¬tion methods such as spirals (Hanna Mining Co., Groveland, Mich.), tables (St. Joe Minerals, Bonne Terre, Mo.), and jigs. When the rod-mill discharge contains less than 25% of the grind¬ing circuit product size, this indicates an ore that does not readily produce the fines needed to help carry the coarse feed into the ball charge. When this occurs, the fines in the rod-mill discharge are needed in the ball mill or pebble mill so the rod-mill discharge flows direct to the second-stage mills as shown in Fig. 37. Rod mills are used to make feed for open-circuit ball mills such as those used in wet grinding cement raw material (American Cement, Brennan Ave¬nue plant, Detroit, Mich., and Port Huron, Mich., plant, and at the South Dakota State Cement plant, Rapid City, S. Dak.). Grinding gravel or aggregates to the size analysis required for making concrete sand is used in areas where natural sand of the proper particle size gradation required to make concrete is not availa¬ble. Three-quarter inch crushed aggregate is ground to 4 mesh using center peripheral-discharge rod mills (Fig. 38) operating in open circuit. US Corps of Engineers specifications state that the sand product be 93-100% passing 4 mesh and contain no more than 3-7% passing 200 mesh. It may be necessary to classify the rod-mill discharge to remove any excess -200 mesh sand produced in the rod mill. Particu¬larly when processing aggregate with high abrasion indices, center peripheral-discharge rod mills are used instead of hammer mills, fine bowl crushers, and crushing rolls for the production of specification sand. If the -4 mesh size fraction of the rod-mill feed is removed

Jan 1, 1985

By E. Kendall Cork

The traditional financial objective for a single mine company has been to operate as frugally as possible and to pay out most of the earnings as dividends. If the business is cyclical (as it is for most metals) the dividends might fluctuate quite widely. When the mine is exhausted the company disappears. This is still quite a viable strategy for a single mine company. It is not however a viable strategy for the world as a whole. The mining industry is built by mine development companies who can mobilize the people and capital to bring new mines into production. Their skills must include marketing, engineering, finance and other politics. It is very rare for a property to be brought in without the support of a major company that can provide all these services. The exceptions will usually have some other form of big brother support, for example the U.S. government uranium contracts at guaranteed generous prices. The mine development company will seek as a minimum to perpetuate itself by developing new mines in order to replace those which are running out. The more common and more ambitious objective is to grow -- that is to add to its ore reserves and current production by developing more new mines. The financial objectives for that company are very different. Obviously if all the earnings were paid out in dividends there would be nothing left to work with. The first financial policy then is to spend an appropriate amount on exploration for new properties. The next is to retain enough of the earnings to provide the capital for new projects at least sufficient for the equity. There is no magic formula as to what proportion of earnings should properly be distributed as dividends by a growth-oriented mine development company. As a rough rule of thumb distributing half or more will probably leave too little to work on and 30% or so is probably a good balance. However the circumstances differ widely from company to company. It may be useful to set an objective for the rate of growth of a company's earnings. Some have picked rates such as 15% per annum compounded. Others have set a target in real terms which might appear as 10 or 11% plus inflation. Obviously the arithmetic of compound interest is very attractive; however in practice there is much variation. Indeed current returns from existing operations swing widely with the business cycle and there is no assurance that economic new properties will be found according to someone's arbitrary time schedule. For example, Western Mining Corporation Limited in Australia explored for 30 years with little to show for it, but then found the great Australian nickel deposits and more recently the huge Roxby Downs copper. That long dry spell could not have fitted anyone's arbitrary calendar of growth and yet they would not have found such orebodies without that long period of effort. Should they have abandoned the search? Once a new property has been found or acquired there has to be a threshold rate of return on the new capital to be invested against which to evaluate the property's economics. Conventionally this seems to be 15% after tax, a number common in other heavy industries as well. In some cases it is expressed as a lower number plus allowance for inflation. Discounted cash flow analysis is a very useful tool but it does not make the decision. In the end a "go" decision depends on judgment of many factors some of which are numbers used in the DCF calculation whose credibility must be examined. It is curious how frequently investment proposals come in with the rates of return very close to 15%. The project advocates know that a number much less than 15% will not fly and that a number much more is not necessary. With much higher nominal and real interest rates of recent years, even though before tax, logic suggests that the hurdle rate should also rise. The power of compound interest is so great that 20% is very hard to achieve in any cash flow projection but 18% may be a sensible yard - stick. Once again it is remarkable how many project proposals come in with an 18% return. On the record the mining industry as a whole has not been overly restrictive in choosing its hurdle rates of return. This is shown by the abundance of metals in recent years and the failure of metal prices to keep up with inflation. All of the foregoing is standard text book stuff.

Jan 1, 1985

By Brian J. Gorval, Robert L. Kemeny

INTRODUCTION Financing, or providing adequate capital at low cost for developing and bringing a natural resource property into production, is a fundamental requirement for profitable operation. Under the present economic environment the cost of financing any project is gaining more importance than ever. The fundamental keys for success in mining are "the Four M's": Mineral, Market, Management and Money. In recent years, with capital and operating costs skyrocketing, increased emphasis on obtaining adequate and low cost capital funds for bringing in a prospect is essential. For a small mining company there are limited sources for raising funds. In most cases these companies have neither a substantial asset base, nor any cash flow, and they are deemed as risky investments. The issue of shares of capital stock of such a company is probably the most common method of raising funds via the public purse. Alternatively, debt could be used and a source of such capital might be private investors or financial institutions. The company which intends to raise funds from the investing public by way of the sale of equity, subsequently lists those shares for trading on a stock exchange. Going and staying public commits a company to a multitude of complex laws, rules and reporting requirements. The governing bodies are the watch dogs for the public. The largest of such an organization of this kind in the world is the Securities and Exchange Commission (SEC) in the United States. In Canada, the Securities Laws come from within provincial jurisdiction. Most provinces have their own Securities Act, and Securities Commission. It is the Commission which administers the Act, and hence controls the distribution and trading of securities within the province. Extra provincial registration is required for trading and distribution in more than one province. In British Columbia, prior to a public offering, the approval of the Superintendent of Brokers (SOB) and of the VSE must be obtained. THE VANCOUVER AND TORONTO STOCK EXCHANGES There are five stock exchanges in Canada which supply a trading forum in which mining companies may operate. The stock exchanges are located in Montreal, Toronto, Winnipeg, Calgary, and Vancouver. Of the five stock exchanges, the Vancouver Stock Exchange (VSE) and the Toronto Stock Exchange (TSE) are the most heavily used for resource-based issues and are the focus of this paper. The objective of this section is to provide a brief background on the VSE and TSE. The Vancouver Stock Exchange The VSE is Canada's predominant stock exchange for financing resource-based, junior issues. Since 1907, the VSE has acted as a source of funds for mining, exploration and energy companies throughout Canada and the world. Currently, there are over 1400 companies listed on the VSE. During 1983, over 3.1 billion shares traded at a value exceeding CDN$3.96 million. The VSE has developed a reputation as one of the few exchanges where a speculative resource venture may obtain a listing and subsequent financing in a relatively short time, generally five to ten months. The SOB, the Investment Dealer's Association of Canada (IDA), and the VSE all regulate trading at the Exchange. Any irregularities in a company's stock dealings are investigated and trading may be halted by the VSE until a satisfactory explanation has been received from the suspended company. Companies can be suspended from trading or delisted for various reasons. One reason is misrepresentation of facts in documentation submitted to the SOB, VSE, or to the public, through news releases.

Jan 1, 1985

By Peter Sonnenfeld

Bedded potash deposits are known only from Phanerozoic evaporite sequences. They are composed of either sylvite or carnallite, of which only the former produces commercial potash ores. Both Permian and Neogene potash deposits have experienced sulfatization by percolating oxygenated surface brines, causing enrichment in the potash content. Permian potash deposits are mined in various parts of Europe and North America, Miocene ones only along the outer rim of the Carpathian Mountains and in Sicily. New discoveries of large Miocene rock salt bodies make it possible to predict the occurrence of potash deposits along their flanks.

Jan 1, 1985