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By Delbert E. Gann, Richard D. Hagni

Ore microscopic study of copper-bearing shale at the Creta mine in southwestern Oklahoma reveals a variety of copper sulfide grains and shows that each has originated by replacement of original constituents In the Permian Flowerpot Shale at Creta. The largest grains, about 120 pm in diameter, are replacements of megaspores with triletes morphology. Their interiors are shown by Auger microprobe analyses to be organic matter. The interior organic matter and the spore exines have been replaced by anilite and djurleite. Digenite and anilite replace collomorphic pyrite averaging 40 pm in diameter. Grains 10 pm or less in d~ameter are mostly euhedral, six-sided, platy crystals that have anllite compositions and are pseudomorphous after pyrrhotzte. Other 10 pm copper sulfide grains are pseudomorphous after octahedra and cubes of pyrite. The results of this study indicate that the copper minerals are epigenetic and were deposited from fluids introduced into the Creta shale when it was relatively uncompacted and permeable. The shale served as a favorable reducing environment that contained a source of sulfur in the form of pyrite and pyrrhotite.

Jan 1, 1985

By John D. Welsh

Jan 1, 1985

By Robert L. Thoms, Richard M. Gehle

Hydraulic fracturing is of considerable interest as a possible release mechanism during operation of storage caverns in salt formations. However, field data are lacking on fluid pressures required to initiate and propagate fractures over a range of depth in U.S. salt domes. A currently active research project is outlined which has the objectives of gathering field data on hydrofracture gradients in inland and coastal domes of the Gulf Coast. A wireline minifracturing system with downhole microprocessor controls is briefly described.

Jan 1, 1985

By Michael K. O’Leary, William D. Coplin

Risks from political instability and government policies restricting equity ownership, local operations and transfers of payments affect the profitability of foreign mining ventures. More than seat-of-the-pants judgments and old-boy networks are required to anticipate these risks and to take actions appropriate to offsetting them. A system for making political forecasts, called the Prince System, and a series of charts relaying risks to a production of key minerals has been developed.

Jan 1, 1985

By William J. Potter, Roger N. Pyle

Introduction The primary ingredient for survival of mining companies during a recessionary period is to be innovative and resourceful in the structuring and financing of operations. Over the past decade, many mining companies have had to retrench and restructure their operations and to redeploy their assets just to survive. During the same period, traditional sources of financing for mining companies -- commercial banks, subsidized export credit loans and long term straight debt financing in the public markets -- became less available and more expensive. Meanwhile, new markets and new financing instruments provided new alternatives for mining companies. Those companies which exploited these alternatives greatly enhanced their capacity for survival and even for profitability. This article considers the strategies adopted by some companies to adapt to changes in this recessionary environment; the inadequacy of traditional sources of financing; certain of the new financing instruments, structures and markets which have become available; and how several mining companies have utilized these new instruments, structures and financial markets to improve their competitive positions. THE IMPACT OF RECESSION ON MINING COMPANIES AND TRADITIONAL FINANCING SOURCES In its 1983 year-end article "The New Economic Order" Mining Journal characterized many of the large private sector mining companies with operations in the industrialized countries as being "gripped between the jaws of high working costs and stagnating metal commodity prices." The article went on to characterize the Canadian mining industry in particular as being "in the difficult position of having to seek to sell the bulk of its output in a world market characterized by over-capacity, where production costs were determined by internal political and economic factors while prices were set by external competitive forces of supply and demand." Miners of a wide range of commodities in the industrialized countries have come to realize that their domestic mineral resources are in many cases no longer competitive with global sources of supply. To compete and survive they would have to rely on their technical and financial expertise in mineral exploration and development and in mining and processing. Strategies For Survival Global competition has compelled management in the extractive industries to improve their worldwide cost position. This is the only means whereby a mining company can differentiate its product and attain a substantial competitive advantage. During the past decade, for example, ASARCO Inc. and Inco Ltd. chopped their payrolls, postponed expansion plans and otherwise retrenched. ASARCO reduced its capital expenditures and cash requirements for operations in 1984 to a level almost equal to its internally generated cash. The company's finances were also strengthened by increasing total lines of credit from outside sources, by selling common stock, and by reducing annual pension funding through a change in actuarial assumptions. Other companies returned to their traditional organizational structure where they had a demonstrated competitive strength. Consolidated Gold Fields, for instance, resumed its operation as a mining finance house. Its capital investment programs are now devoted solely to resource development. In mid-1984, at a time of firming zinc prices, Union Miniere S.A. used the opportunity to integrate its smelting capacity and to direct investment to certain subsidiaries at the expense of less viable operations. Smaller corporations realized that it was not enough just to be the low-cost producer. For example, Drummond Coal Company in Alabama, which dominates its regional market due to its low-costs, has also developed a world-wide trading capability and has placed incremental tonnage from its own mines as well as brokered coal produced by others, thereby minimizing capital risk. In Canada, Campbell Resources has exploited difficult times by acquiring assets cheaply. In the process it improved its capacity to withstand cyclical economic swings by diversifying from solely a copper and gold producer to a company based upon asbestos, coal, copper, gold and natural gas.

Jan 1, 1985

By Brooks J. Klimley, Daniel M. Higgins, Grover R. Castle

Measuring The Economic Viability Of Resource Projects (A Western Surface Coal Project) The bankers approach to the analysis of a new "green fields" mining project is similar but different from the approach that the pining company might take. The purpose of this paper shall be to discuss the techniques that are used by mining companies and bankers as they try to measure the economic viability of mining projects. The analysis of these new projects (by both the mining companies and the banker) is based on a projected revenue stream and not on historical earnings or past perfomance because these projects are start up situations with no history to look to. The starting point in the analysis of these projections is the choice of the assumptions to be used in preparing these projections. After the assumptions have been determined and the projections are prepared then the projections are submitted to various tests in order to determine whether the project measures up to previously agreed upon minimum standards. In order to illustrate the analytical procedures used in evaluating a mineral project the writer has constructed a hypothetical case involving the development of a western surface coal mine (Property). The basic data in connection with this hypothetical new project is described in the next section of this paper. After the Description of the Project is a section which shows the type of analysis that a mining company might prepare in order to approach a bank for a loan and the final section illustrates the type of analysis that a bank might prepare in evaluating this loan request. Description Of The Project or Basic Data In Connection With Undeveloped Western Surface Coal Property An independent mining/geological Consultant's report has been completed on the Property which confirms that the Property contains 175 million tons of economically recoverable coal subdivided into the following reserve categories in accordance with U.S. Bureau of Mines and U.S. Geological Survey definitions: Measured or Proven 90,000,000 Indicated or Probable 50,000,000 Inferred or Possible 35,000,000 The owners of the reserves have chosen to drill up those reserves that are nearest to the subcrop and have not spent as much time on those portions of the Property which are on the fringes of the deposit where the overburden is thicker because the stripping ratio and hence the operating costs and capital requirements are higher down dip. The proven reserves are based on an average thickness of 80 feet, of which a mining recovery of 90% is projected. The overburden thickness varies from 0' to 280' with an average thickness of 127'. The overburden consists mainly of scoria, sandstone, gravel, shale and silty clay. 134 holes were cored (and analysis done on five foot increments) in the measured reserve on the following spacing: 100 foot centers to define the burn line; 1,320 foot centers to define the early mining areas; 2,640 foot centers to identify the later mining areas.

Jan 1, 1985

By A. S. C. Owili-eger

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

Jan 1, 1985

By J. A. Corbyn

An analysts of mining investment from the point of view of financial optimization is presented. The method uses differential equations to describe financial performance rather than the more usual method of modeling mine accounts from year to year. The analysis shows there is a optimum mine life that can be easily determined if certain simplifications are made. Tables are given to facilitate computation of the optimum life.

Jan 1, 1985

By Marcie A. Greenberg, John C. Patton, R. Tim Thompson

The Fence Lake Project is located in the Salt Lake coal field, an extension of the San Juan Basin. Geologic formations exposed in the Project area range in age from late Cretaceous to Quaternary. Coal is encountered in the Moreno Hill Formation (upper Cretaceous). Salt River Project (SRP) followed the basic textbook approach for the exploration, regional appraisal, detailed reconnaissance, detailed surface detailed and three dimensional sampling (physical exploration). SRP is exploring this property as a potential fuel source for the Coronado Generating Station. Therefore, for the physical exploration stage, the quality sampling program was designed from a utility company viewpoint to determine possible impacts to the Station. Exploration drilling was completed in spring, 1982; September, 1982, and summer, 1984. Engineering, environmental, and land acquisition studies - in the Summer, 1984 Program to more closely evaluate the potential Fence Lake Project coal supply option for the Coronado Generating Station. Studies, including drilling, are ongoing at this time.

Jan 1, 1985

By W. S. Cavender

The Round Mountain mining district, Nye County, Ne- vada, was discovered in 1906 on claims owned by Lewis D. Gordon. Initial mining operations uncovered gold veins of spectacular richness, and within a few days of discovery, Gordon sold his controlling interest for some $87,000. From this sale emerged the Round Mountain Mining Co., predecessor of Nevada Porphyry Gold Mines, Inc., the latter destined to become the major property owner in the area. Vein mining in the district continued sporadically into the early 1930s, yielding 9.3 Mg (330,000 oz) of gold plus substantial silver credits from approximately 626 kt (690,000 st) of ore. In addition to the lode deposits, the early miners recognized the placer potential in the alluvial fan material accumulated around the west and north sides of Round Mountain itself. Intermittent placer operations were carried out for a number of years, and in the 1940s and 1950s, Round Mountain Gold Dredging Co. worked the placers under a lease from Nevada Porphyry Gold Mines. The last placer operation terminated in 1959 when it, like some of its predecessors, proved uneconomic. Total placer production for the district is estimated at 3657 km (4 million yd) of gravel containing 59 Mg (210,000 oz) of gold and possibly 2.0 to 2.3 Mg (70,000 to 80,000 oz) of silver. Round Mountain is a small hill situated on the east flank of the Toquima Range in central Nevada. The hill is com- posed of relatively flat-lying Tertiary rhyolitic ash flow tuffs, which overlie Paleozoic metasediments and Cretaceous granites. Throughout the surrounding Round Mountain mining district, most of the known gold ores occur in the tuffs, although the metasediments and granites are also mineralized. Mineralization is structurally controlled, principally by a series of northwest-trending shears and shattered zones. Vein, stockwork, and disseminated ores occur, usually containing simple quartz-pyrite-gold mineral assemblages. The gold itself is electrum, having a silver content of 30% to 40%. In September, 1967, Elwood Dietrich, a prospector and mine promoter, obtained a purchase option on the 4452 ha (1 1,000 acres) of mineral rights held at Round Mountain by Nevada Porphyry Gold Mines. The original option had a buy-out price of $1 million and was established through Dietrich's friendship with officers of Nevada Porphyry. In April, 1968, Dietrich conveyed his option to Ordrich Gold Reserves Co., a partnership created by a group of west coast investors, mostly employees of the airline industry. There- after, Ordrich invested considerable funds in trying to test and develop the property, but soon recognized the need to seek financial and technical support from the mining industry. In December, 1968, Dietrich contacted Wayne Cavender, then Regional Geologist, Southwest, for Copper Range Exploration Company (CRX) in Tucson, Arizona, and made a data presentation. Shortly thereafter, Cavender was appointed Manager of Exploration and Chief Geologist for Copper Range Co. (parent company of CRX), New York City, and he asked C. Phillips Purdy, CRX Regional Geologist, Northwest, to make an initial property examination. Purdy's one-week field study took place in March, 1969, and resulted in a recommendation that CRX pursue its investigation of the property. The presence of low-grade gold mineralization in both the alluvial gravels and in the bedrock was verifiable, but the placer was deemed to have the greater immediate economic mining potential. At that time, gold was in the $1.41/g ($40 per oz) price range. Working from Purdy's information, Cavender decided to attempt acquisition of the property, and the first in a long series of negotiations was initiated with Ordrich. Basically, CRX felt that the placer had a promising potential for several reasons, including (I) past operators had recovered free gold but not the gold contained in the pebble fraction of the gravels; (2) past operations appeared to have been ineffectively designed or managed and not costefficient; and (3) the price of gold appeared to be poised for an upward move. Negotiations with Ordrich were prolonged and difficult, with CRX competing against several ma* mining companies, but finally an agreement was reached, effective June I, 1970. Gold was then back to $35. It is believed that, in

Jan 1, 1985

By G. F. Ziesing, E. F. Loros, T. J. Smolik

The Golden Sunlight mine began full-scale operations in February 1983 with a conventional open-pit mine supplying 4536 t/d (5000 stpd) of milling ore. After crushing and grinding, the ore is leached with cyanide solution in large agitation tanks. Soluble gold values are removed from the sand portion of the leached ore with five stages of countercurrent washing cyclones. After thickening of the cyclone-wash overflow slurry, the gold is recovered in activated carbon with a six-stage carbon-in-pulp circuit and a five-stage upflow carbon column circuit. Pressure stripping, carbon reactivation, electrowinning, and refining complete the gold recovery process.

Jan 1, 1985

By M. S. Azun

The article unfortunately has some serious flaws negating the usefulness of the paper. The authors claim that kriging (linear kriging) is superior to other methods such as polygon. This is not the case. The deterministic methods (referring to polygon, ID, IDS, etc.) should not be compared with the statistical methods (linear kriging, disjunctive kriging, etc.) because they differ not only in their assumptions, but also their tools used in estimation. Thus, they give different results. By comparing the results of deterministic methods and linear kriging, the authors conclude that polygon, IDS, and linear kriging give an average thickness close to the value obtained from realizations. Besides, they argue that linear kriging gives less variance than the others [(fig. 2)]. The first conclusion is expected, due to the well-known central limit theorem. The second is the result of the statistical properties of different estimators. Thus, the comparison presented in the paper is rather meaningless because the authors have failed to follow basic statistical procedures. The numerical results of different approaches to an estimation problem cannot be generalized. In conclusion, the paper is not a meaningful contribution, and sadly, quite erroneous.

Jan 1, 1985

By Ted H. Eyde, Dan T. Eyde

Industrial minerals deposits present sampling and grade control problems not normally encountered in metal mining operations. No longer are industrial minerals simply crude ground mineral products but are in fact high purity chemical raw materials. Operators of industrial minerals mines and processing plants now must meet increasingly stringent specifications established by the consumer of the final products. Meeting these stringent specifications requires not only sophisticated processing techniques but equally important careful sampling and grade or quality control at the mine. A well-trained geological staff can assure an adequate supply of uniformily high quality feed to the processing plant. In the final analysis this results in significantly higher operating profits.

Jan 1, 1985

By Charles Berry

Conventional and nonconventional insurance is examined from the point of view of a financier of a major mining and minerals project. The paper reviews the elements of a conventional insurance program; explains why such a program is not fully responsive to the project financier's needs; examines some of the new insurance coverages that can supplement a traditional program; and emphasises that these insurance markets are still in the early stages of their development with consequent effects on capacity (insured amount) and to some extent price (insurance premium).

Jan 1, 1985

By J. E. Lawver, J. D. Raulerson, J. P. Bernardi, R. S. Hearon, D. Lynch, G. F. McKereghan

Despite recent economic problems, the future of the Florida phosphate industry appears optimistic. Florida has enormous reserves and will continue to produce a third of the world's phosphate supply simply by making changes in the present system of mining, beneficiation, waste disposal, and land reclamation. The geology and mineralogy of future deposits are discussed with reference to specific deposits. Lower ore grades, increasing power costs, and environmental regulations are necessitating development of new concepts of mining and matrix transportation. Because one of the ores to be mined in the future contains appreciable amounts of dolomite, research and development efforts are being concentrated on new techniques in beneficiation. Changes are being made in plant design to meet environmental and regulation standards. However, the expected new technology outlined for the industry depends on the geology and mineralogy of future reserves.

Jan 1, 1985

By H. Sevim, T. M. Yegulalp

This paper summarizes recent developments in modeling of underground coal slurry haulage networks to determine optimum design and operating parameters. The model presented is based on a stochastic dynamic program¬ming formulation. It is applicable in any typical room-and-pillar or longwall mining configuration commonly practiced in the US. The formulation and structure of the model is general enough to handle design problems involving more than one face and mining method. Given the stochastic operating characteristics and a system layout, the model can be used to determine the equipment configuration and operating regimes that minimize the overall unit cost of coal haulage.

Jan 1, 1985

By U. W. Lisner, V. J. Hucka

Coal, which was discovered in Utah in 1849, covers about 18% of the total area. Production in 1981 was more than 13 Mt (14 million st). However, some Utah coal mines are quite gassy. If longwall face technology is applied, then release of a large volume of methane may be expected during the mining process. Investigations on methane content have been made by use of an isothermic bubble desorbometer. A desorbable methane content of 0.5 to 16 m3/t (20 to 632 cu ft per st) of coal has been determined.

Jan 1, 1985

By M. E. Gershon

Conventional methods of drill hole site selection are reviewed briefly. Two approaches using geostatistics are then discussed, both of which have been shown to yield improved results. Finally, a branch and bound algorithm is described which will select the best locations for drilling from a user specified number of possible drill sites. Two options are discussed. First, the user can specify a maximum drilling investment or a maximum number of drill holes and the program will select the locations yielding the minimum estimation variance. This amounts to getting the most for a given investment. Alternatively, a maximum tolerable estimation variance can be specified and the program will select the number and location of the drill holes to obtain the desired information at a minimum cost. Another benefit of the approach is the quantification of the tradeoffs between investment and information obtained.

Jan 1, 1985

By P. W. Harben

Jan 1, 1985

By H. D. Peterson, G. E. Butts, J. F. Spisak

In 1978, Anschutz Mining Corp. began efforts to develop the Madison Cobalt Project in southeast Missouri. Preliminary metallurgical studies indicated that intermediate grade cobalt products, suitable for shipment to existing refineries, could be recovered from the sulfide mineralization of the ore body. However, tolling and freight charges were significant, as the refineries were located outside the US. These refineries would not satisfy the goal of strategically insulated production of superalloy-grade cobalt. The acquisition of proven, readily available refinery technologies was then evaluated. However, licensing costs were substantial and the "proven" technologies were not directly applicable to the unique chemistry of Madison materials. Faced with these challenges, Anschutz, in conjunction with the Colorado School of Mines Research Institute, embarked on an effort to develop a sulfate-based separation and refining process. CSMRI performed bench-scale and continuous pilot experiments on solutions generated through other pilot campaigns conducted by Lurgi, Hazen Research, and Sherritt Gordon. The results indicated that cobalt could be selectively extracted from sulfate media using a new generation of organophosphates. The solvent extraction system produced a solution suitable for electrolysis of high-purity cobalt. Preliminary cost studies indicated the novel process was competitive with other refinery systems. Plans to develop the detailed engineering-design information required to commercialize the process were abandoned when the price of cobalt collapsed to less than $17.64/kg ($8.00 per lb).

Jan 1, 1985