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By J. C. Scully

In June, 1965, Sanderson and scully5 reported at the Conference on Environment Sensitive Mechanical Properties of Materials at the Research Institute for Advanced Studies at Baltimore that thin foils of titanium could be prepared by chemical polishing in a mixture of 44 pct HF and 73 pct HNO3 in the volumetric ratio 2:3. The technique is simpler than that since reported by Rice and Orava. As-received annealed titanium (containing 0.8 pct Fe and 30 ppm H) in the form of sheet 0.05 cm thick is placed in the solution and moved up and down. The reaction is violent but suitable foils are obtained very easily and consistently. A typical micrograph is shown in Fig. 3. The small precipitates were not identified. Yamane and ueda6 observed many spotlike features which they referred to as small dislocation loops. While their spots may be due to the reaction of the warm foil with the air as suggested by Rice and Orava, the precipitates in Fig. 3 are also found when foils of titanium are prepared by electro-polishing at low temperatures and subsequently examined in the electron microscope without any inter- mediate warming. Furthermore, they are not a surface effect. It is necessary to add that alloys of titanium cannot be so easily thinned by the chemical polishing solution described above since it contaminates the a, phase with hydrogen and produces y hydride. These matters are described at length in a paper7 and their relevance to stress corrosion is considered elsewhere.'-* Author's Reply The authors are grateful to Dr. Scully for bringing to our attention his hitherto unpublished technique for thinning unalloyed titanium, and deeply regret the unintended apparent duplication. The chemical thinning solution (7 parts HNO3 and 3 parts HF, by volume) reported by us is the same as that with which, for some period in the past, we had experienced success in the preparation of foils from single and polycrystalline niobium. Its subsequent effective application to titanium was a logical step, which, clearly independently of Scully, was conceived by Mr. Rice, to whom full credit is due. A few comments are warranted concerning some of the details of the preceding Discussion. It is evident to the discerning reader that the two thinning techniques under consideration are chemically almost identical, and in that sense are equally "simple". The chemical aspect is, of course, the one of primary importance in both communications. Thereafter, the relative simplicity is dictated by the mechanics of the actual thinning operation selected by the individual investigator. Our standard dimpling, or dishing, procedure was chosen with a view toward providing, for the electron transparent areas of the sample, the maximum protection from extraneous deformation during handling. That the long, straight dislocations visible in Scully's electron micrograph of a seemingly recovered structure closely resemble handling dislocations would tend to indicate the merit of our adopted technique. Features similar to those which Scully has attributed to precipitates, without any apparent diffraction contrast confirmation, were not observed in any of our clean foils taken from annealed or deformed specimens. This was admittedly somewhat surprising since the 3700 ppm (nominal) Fe in the A-70 commercial-grade titanium examined should have given rise to TiFe precipitates. Presumably these existed but were un-resolvable. Curiously, Scully's "precipitate1' density is fairly high although the iron content quoted was less than one-fourth of that in our material. One is forced to conclude from the evidence that prior thermal and mechanical treatments are responsible for the two different types of structure observed.

Jan 1, 1968

By J. D. Forrester, Erich Sarapuu, T. C. Cheasley

John G. Tripp-—The concept of converting fuel deposits in-situ to useful forms of energy and chemical raw materials has important possibilities as a means of stretching out our fuel resources. The authors have worked in this field for years and in fact are among the pioneers in developing in-situ techniques based on underground electrocarbonization. Their efforts have aroused great interest in this subject and their contributions will undoubtedly gain even more significance as time goes on. The 4 to 5 billion tons of petroleum are proved reserves, that is, they are completely defined and could be produced economically with present methods of recovery. Reserves of coal, tar sands, and oil shale shown in Table I are not equivalent to proved reserves as the term is used in the oil industry. Incidentally, the 4.3 billion tons of oil shown in the tabulation is equal to about 28 billion barrels of oil and, therefore, presumably does not include reserves of natural gas liquids estimated at about 5 billion barrels. The relative comparisons would be more complete if these liquids together with the reserves of natural gas were included in the tabulation. It is stated in the report that production costs of the order of 10c per million Btu's could be expected from a large industrial electrocarbonization installation. The authors state that the operation probably could be operated successfully and at a profit. I would like to express my view that for the operation to be profitable extremely favorable conditions would have to prevail. For example, the coal seam would have to be thick and close to the surface in order to minimize drilling costs; the deposit should be dry and so situated that there would be little, if any, inflow of ground water; and the seam would have to be relatively gas tight to avoid excessive gas leakage. Notwithstanding the tremendous strides that have already been made, it is my hope that the authors plan to continue their development work. Experiments on underground electrolinking and initial carbonization at Gorgas, Ala., indicate a need for improved control over the operation. Subsequent examination of the underground system at Gorgas has shown that the gasification zone did not always follow a direct path between the electrodes. Undoubtedly the control of the in-situ thermal processes can be improved by further development work. With respect to the electrocarbonization of oil shale it may be well to point out that the cost of mining oil shale is estimated to be 50c to 60c per ton. These are low mining costs as compared to coal. Thus it would appear that there is less economic incentive for applying in-situ thermal methods to oil shale than there is for applying these methods to coal. As is the case with in-situ methods for petroleum, the product from the shale having the most economic interest would be liquid oil rather than gas. The authors point out that for distances up to several hundred miles it is cheaper to transmit energy as electricity than it is to ship energy as coal. This is a very important point, and with coal shipping rates rising periodically, it could prove increasingly important in the future. I believe that the authors deserve great credit for their outstanding work on underground electrocarbonization. The knowledge resulting from their efforts is of great value to our fuels technology. James L. Elder—The experimental work conducted by the authors on the electrolinking-carbonization of carbonaceous materials in situ is of great interest. The method is of great importance in the development

Jan 1, 1955

By Walter S. Lutz, J. T. Griffith

The rainfall during the last six months of 1942 in Scranton and vicinity was 24.06 in.—only 4.35 in more than the average for this district in any equivalent period—yet that rain forced The Hudson Coal Co. to handle 38.8 tons of water for every ton of coal mined. It filled to overflowing, or to a higher level, 14 flooded mine areas holding, in total volume, 8.3 billion gallons of water in storage; brought about a pumpage of 11.4 billion gallons in the months of December 1942 and January, February and March 1943 Half of the total energy generated or purchased (44,322,980 kw-hr.) was required to keep the mines sufficiently free of water to permit the mining of coal during a period of much needed output. Fig. I shows the extent to which this flooding of exhausted and idle properties has proceeded, and is known to be proceeding further, at the upper end of the Northern field. This rainfall (24.06 in.) means 80,559,444 tons of water on approximately 46.2 sq. miles of area tributary to the pumping plants. During the high rainfall period, 72,687,661 tons went underground, being pumped at the stations in this territory. This means an inflow of 88per cent, a runoff of 12 per cent compared with 64 per cent during normal conditions in a normal region. During this period no floods, either surface or underground, had to be dealt with, although the streams and rivers were high on several occasions. In general, the rainfall for the first three months of 1943 can be described as heavy but not abnormal.9 These figures not only indicate the large volumes of water to be handled but, by their very size, they also emphasize that the mine-water problem is not to be conquered, at least from an economical standpoint, by merely buying and installing more and more pumps. Into the solving of this water problem must go much planning, adhering to the principle of keeping the highest percentage of water at the highest possible level for the longest period of time; the storage of huge volumes in sumps capable of being reduced after the flood inflow and at rates less than the inflow; plans for prevention of surface inflow; provision of the minimum of pumping capacity arranged to as nearly 100 per cent pumping load factor as is possible; intercompany joint pumping plants; the conducting of water from one plant to another and from one property to another over distances measured in miles; priorities in power to the threatening situations; and. balance of the necessities and dangers existent in one colliery over another, day by day, when quantities of water are running high. Despite these astronomical figures of water volumes, their disposal to the surface is accomplished reasonably cheaply because, although the annual cost of $575,020 is a large sum, the cost per ton is about 0.1168 cents. Credit for this goes

Jan 1, 1947

By J. T. Griffith, Walter S. Lutz

The rainfall during the last six months of 1942 in Scranton and vicinity was 24.06 in.—only 4.35 in more than the average for this district in any equivalent period—yet that rain forced The Hudson Coal Co. to handle 38.8 tons of water for every ton of coal mined. It filled to overflowing, or to a higher level, 14 flooded mine areas holding, in total volume, 8.3 billion gallons of water in storage; brought about a pumpage of 11.4 billion gallons in the months of December 1942 and January, February and March 1943 Half of the total energy generated or purchased (44,322,980 kw-hr.) was required to keep the mines sufficiently free of water to permit the mining of coal during a period of much needed output. Fig. I shows the extent to which this flooding of exhausted and idle properties has proceeded, and is known to be proceeding further, at the upper end of the Northern field. This rainfall (24.06 in.) means 80,559,444 tons of water on approximately 46.2 sq. miles of area tributary to the pumping plants. During the high rainfall period, 72,687,661 tons went underground, being pumped at the stations in this territory. This means an inflow of 88per cent, a runoff of 12 per cent compared with 64 per cent during normal conditions in a normal region. During this period no floods, either surface or underground, had to be dealt with, although the streams and rivers were high on several occasions. In general, the rainfall for the first three months of 1943 can be described as heavy but not abnormal.9 These figures not only indicate the large volumes of water to be handled but, by their very size, they also emphasize that the mine-water problem is not to be conquered, at least from an economical standpoint, by merely buying and installing more and more pumps. Into the solving of this water problem must go much planning, adhering to the principle of keeping the highest percentage of water at the highest possible level for the longest period of time; the storage of huge volumes in sumps capable of being reduced after the flood inflow and at rates less than the inflow; plans for prevention of surface inflow; provision of the minimum of pumping capacity arranged to as nearly 100 per cent pumping load factor as is possible; intercompany joint pumping plants; the conducting of water from one plant to another and from one property to another over distances measured in miles; priorities in power to the threatening situations; and. balance of the necessities and dangers existent in one colliery over another, day by day, when quantities of water are running high. Despite these astronomical figures of water volumes, their disposal to the surface is accomplished reasonably cheaply because, although the annual cost of $575,020 is a large sum, the cost per ton is about 0.1168 cents. Credit for this goes

Jan 1, 1947

By Christian F. Baiz

INTRODUCTION Industrial minerals can have similar financing requirements to those needs of metaliferrous and coal mining projects. One of the outstanding differences is the understanding of the many different markets that these industrial minerals represent. There are in excess of 30 principal industrial minerals ranging in terms of annual production from the largest quantity such as sand and gravel, to possibly the smallest quantity of production of a legitimate industrial mineral which may be defined as industrial and rough gem diamond. (See Tables 1 and 2) Project finance techniques, analytical methods, and information requirements are covered elsewhere in this Chapter and Chapter 10. Some comments on equity finance aspects follow. EQUITY AMOUNT The amount of equity in a financing transaction provides a cushion to the lender in case the project runs into trouble. Generally speaking, the greater the amount of risk in a project, the more equity a lender will require. The amount of cash equity in a project financing transaction is between 25 and 40 percent. The amount of leverage (debt/equity) is negotiable based on such factors as the strength and extent of the sponsor's undertakings, of the project's economics, and the term of a strong sales contract. Naturally, a borrower seeks to obtain d loan with as little equity required as can be negotiated. Zero percent equity is usually associated with a take-or-pay contract (a hell-or-high- water unconditional commitment under which the purchaser must pay for the commodity as though it were shipped regardless of whether it is actually mined or shipped) with a financially strong corporate entity i.e., the parent company or an end user. As a take-or-pay contract is tantamount to a guarantee of payment, the banker views the credit basis of the loan as being other than the borrower's mining operation and therefore will analyze the creditworthiness of the institution purchasing the commodity on the basis of its corporate balance sheet. Do not confuse a take-or-pay contract with a take-if- tendered or take-and-pay contract. Another means in the United States of obtaining zero percent equity is the carved out production payment financing, typical of coal mine financing. This involves the sale, or conveyance, by the owner of the mineral property of a production payment to a nominally capitalized company. The nominally capitalized company is formed solely to buy the production payment and usually borrows 100 percent of the purchase price from a lender. Equity amounts of 10 to 20 percent generally are found in transactions which employ techniques such as an advance sale or a subordinated lease/loan. These agreements are viewed as quasi equity by most banks for several reasons. First, the proceeds represent a cash infusion early in the project's life - usually prior to the bank lending any funds. Thus, the repayment schedule is "behind" that of the bank debt. In the case of an advance sale, repayment is in the form of a long-term supply contract with favorable terms, usually priced close to the mining operation's costs. There is also usually a requirement that all costs of the project be paid for by the loan or equity, often making the sponsors financially responsible for any cost overruns. Cost overruns are a major risk in any project, large or small, and are often due to unforeseen factors such as wildcat strikes, a piece of faulty equipment, or any event which delays completion, e.g., remote location, weather, etc.. . The question of how overruns are covered can be negotiated. For example, in addition to the original debt/equity ratio of the project, there can also be a cost overrun ratio that will

Jan 1, 1985

By R. M. Raymond

RECENTLY one of the Welsh coal companies, which has an excellent plant of up-to-date ma-chinery both on the surface and underground, operated under modern methods, sent one of its engi-neers to the United States to study actual operations in the mines. He visited several of the most important and best conducted collieries, went back, and reported that the greatest difference between operations in England and in the United States was. the closer con-tact between management and workmen. By manage-ment he meant management all the way through; close cooperation between office management, superintend-ents, foremen, shift-bosses, etc., and the workmen. A visit to some of the coal mines in that country by the writer made this fact rather impressive. The feel-ing on this side of the water that the methods in use in the coal mines in England are not up-to-date was found in many cases to be quite erroneous. Many mines, particularly those with very thin beds, in which profitable operations are doubtful under the best con-ditions, have necessarily had to adhere to old methods instead of making mechanical improvements. The Powell-Duffryn mines, in the center of the South Wales district, are certainly operating successfully, and have planned their business excellently. Sufficient areas of contiguous land have been leased for extended opera-tions. Mine plants are laid out in the valley, for work-ings on both sides, on a reasonable tonnage of 1500 to 3000 tons to each operation. The beds are from 30 to 48 in. thickness, and a 3-ft. seam is considered an ex-cellent thickness of coal; in fact, the miners prefer to work on the thinner beds rather than the thick ones, where they consider it more difficult to control the backs. This company is making use of its fine coal for produc-ing electric power, which is distributed to its own operations, and for use in the communities adjoining. For this purpose methods of cleaning the fine coal are being put into use. Compressed air is generated at the central power plant and is transmitted over long dis-tances to various mines in each valley. A byproduct coke plant uses more of the fine coal and gives further returns from non-commercial coal. The long-wall system applied in sections of limited size is popular in working the small seams, and me-chanical cutting is used, also handling either by shaking chutes or belt conveyors, or a combination of both. In some mines mechanical cutting is not necessary. The backs are so handled that in the softer or somewhat crushed seams hand cutting can be carried on effec-tively.

Jan 10, 1927

By R. V. Colligan

[CONTENTS PACE Educating and Training Economic Geologists of the Future. By C. H. BEHRE, JR. (TP 2278, Min. Tech., Nov. 1948. Discussions by R. V. COLLIGAN and EVAN JUST) ....... I Mercury Industry in Italy. By EDWIN B. ECKEL. (TP 2292, Min. Tech., Jan. 1948. Discussion .............................. by C. N. SCHUETTE) 3 Chert in the Kingsport Formation at Mascot, Tennessee. By ARTHUR T. ALLEN. (TP 2299, ............... Min. Tech., Jan. 1948. Discussion by M. M. BUTLER) 5 Wall Rock Alteration at Butte, Montana. By RENO H. SALES and CHARLES MEYER. (TP 2400, Min. Tech., May 1948. Djscussions by C. D. HULIN, W. D. JOHNSTON, JR., and L. C. ................................... GRATON) 5] Educating and Training Economic Geologists of the Future R. V. COLLIGAN*-I can best illustrate my opinions by drafting another five year plan (Table 2). This plan is set up following the same stipulations outlined by Dr. Behre, namely: (I) the student is preparing himself for commercial work as a mining geologist; (2) he is attending an institution with a sufficiently broad curriculum (that is, engineering school and mining school as well as liberal arts college) to furnish the courses listed; and (3) he is not planning to continue his studies through to a doctor's degree before going into commercial work. A comparison of my study plan (Table 2) and that submitted by Dr. Behre (Table I) will at once point up the basic similarity, due to the obvious fact that there are so many essential courses which must be included in any outline of study. However, a more detailed analysis will show up certain differences, which, in fact, are only certain refinements on Dr. Behre's program. These I plan to discuss in order of their importance. The first and most important change is the addition of 12 hr of optional subjects, making a total of 24 hr of optional subjects as against a total of 12 hr under Dr. Behre's schedule. This of course entails the elimination of certain courses, which I shall discuss later. However, I wish to make it clear that I suggest eliminating these courses not because I feel that they are unnecessary, but rather because I feel the optional courses are more necessary to the complete education of the individual. I appreciate that Dr. Behre recognizes the importance of the cultural side of education, but I take issue with his thesis that the student will get it without credit and in his spare time. I do not think that the average college student, and certainly not the college freshman, is mature enough to know what he needs and where to get it in his spare time. I think it must be "spoon-fed"; he must be oriented through specific courses. University life (or should I say "college life") is too full of athletics, fraternity activities, dances, "bull sessions," and countless other enjoyable distractions, all of which contribute to the "full man." I fail to see how the average young American male can possibly sandwich in a necessary complement of "cultural activities" in his spare time. Since these latter activities do not fall within the pattern set by the "group," and show less promise of immediate return in enjoyment, or increased social status on the campus, they are bound to suffer in competition with the more popular, "group" activities. No doubt much of the criticism levelled against arts colleges, namely, that the cultural courses are useless, is well taken, for the culture

Jan 1, 1947

By Rodney G. Ravenscroft

Leasing is not a new phenomenon. Experts have identified its origins as early as biblical times. It is a method of finance that has grown rapidly and is now used in most countries, including those of South East Asia, South America, the Middle East and even the People's Republic of China. Internationally, the leasing world divides fairly easily into two groups and this is determined, by and large, according to whether a country has Anglo-Saxon origins or not. Most of the Anglo-Saxon countries have seen tax-oriented leasing become a sophisticated means of financing the acquisition of large and costly items of equipment and large projects. Countries such as France, Spain and Japan have a highly developed leasing industry but it is not tax-oriented. This paper will not address leasing of this kind. LEASING - THE CONCEPT Wide acceptance of leasing as an alternative for financing capital equipment has grown with the recognition by the users of equipment that it is use and not ownership that generates profits. Whilst this seems obvious, memories of repossession of assets during the Depression and attitudes towards leasing as "last resort financing" have raised strong philosophical resistance that has only recently begun to be overturned. A financial lease is a commitment by way of contract between a user of equipment (lessee) and a financial owner (lessor) under which the lessee makes a series of payments in return for use of the equipment. The lessee is acquiring economic value associated with ownership but not ownership of the equipment itself - that remains with the lessor. A lease is a method of financing the use of an asset; other methods finance the assets themselves. It is the taxation aspects that then become important. The lessee is giving up some or all of the taxation benefits of ownership such as depreciation and investment tax credits. The lessor claims these benefits, as he is entitled to do as owner, and takes them into consideration when determining the level of lease payments that are necessary to generate his required rate of return. These lease payments are, of course, lower than they would have been without those taxation benefits. The lease payments themselves are fully tax deductible. This is tax shelter leasing. The lessor is acquiring taxation deductions that are applied fully and immediately against his other taxable income so as to reduce the amount of tax he is to pay to the revenue authorities. It is this concept that makes financial leasing work. Governments provide incentives by way of tax concessions to encourage capital investment. Governments presume that prudent capital investment will offer employment opportunities, generate sales and streamline economic activity. These, in turn, will lead to the collection of government revenue. It makes no difference at all whether these incentives are claimed by a commercial or industrial owner/user or by a financial owner who makes equipment available for use by industry. Rather, the issue is to ensure that if an incentive is available, it is used so as to achieve its desired results. No greater or lesser incentive is available for leasing and leasing does not misuse the taxation aspects of equipment ownership. The critical issue is whether the full value

Jan 1, 1985

By C. Laird, C. E. Feltner

May different kinds of dislocation structures have been observed in strain-cycled metals and alloys. In order to understand their pattern and causes, an experimental program has been carried out to determine the influence on the dislocation structures of the three variables: 1) slip character of the material, 2) test temperature, and 3) strain amplitude. The results show that at high strain amplitudes cell structures me formed when the slip character is wavy, and that these are progressively replaced by uniform distributions of dislocations as the stacking fault energy is decreased. At lower strains, dislocation debris is formed which consists primarily of dipoles in wavy slip mode materials and multipoles in planar slip mode materials. Temperature merely acts to change the scale of the structure, smaller cells, and clumps of dislocation debris being associated with lower temperatures. It is shown that the results for many metals fit this pattern, which Parallels that occurring in unidirectional deformation. DISLOCATION structures produced by cyclic strain (fatigue) have been examined in a number of metals by transmission electron microscopy. These studies have produced a variety of interesting and often seemingly conflicting results. For example, different investigators have reported such structural features as cells.le4 bands of tangled dislocations,4'5 dense patches or clusters of prismatic dislocation loops, planar arrays,4'10 and various combinations or mixtures of these different structures. Most of these observations have been made on materials which were initially annealed and cyclically strained at low amplitudes resulting in long lives. Recently we have reported observations of the dislocation structures produced in copper and Cu-7.5 pct Al cycled at large amplitudes, resulting in lives of less than 104 cycles.4 These results, examined in combination with those in the literature, have suggested that a common or consistent structural pattern exists. Variations in this pattern appear to be determined chiefly by the three variables, namely, the slip character of the material,4,11 test temperature. and the strain amplitude. To verify this interpretation, we have studied [he influence of the above three variables (in different combinations) on the resultant structures in cyclically strained metals. Copper, fatigued at room temperature, was chosen as a reference state to which all other observations can be compared. The effect of slip character has been investigated by employing fcc metals of different stacking fault energy. Thus aluminum which has a more wavy slip character than copper, and Cu-2.5 pct A1 having a more planar slip char- acter, have been examined. The aluminum samples were fatigued at 210°K thus making their homologous temperature equal to that of copper at room temperature. The influence of temperature has been evaluated by examining the structures in copper at room temperature and 78°K. Finally the effect of strain amplitude was studied by looking at the structures at amplitudes giving lives ranging from 104 to 107 cycles. All of the specimens were examined at the 50 pct life level at which stage the structures have reached a stable configuration.12 I) EXPERIMENTAL PROCEDURE Strip specimens, 0.006 in. in thickness, were prepared from base elements of 99.99 pct purity or greater. Specimens were fatigued by cementing the strips to a lucite substrate which was subjected to reverse plane bending. This method of testing has been described e1sewhere.7 After fatiguing, specimens were thinned and examined in a Philips EM 200 which was equipped with a goniometer stage capable of ±30-deg tilt and 330-deg rotation of the specimen. On the basis of separate calibrations,13 allowances were made for the relative rotation and inversions between the bright-field images and the diffraction patterns. II) RESULTS AND DISCUSSION The life behavior of the materials under different test conditions is shown in Fig. 1 in the form of plots of total strain range vs cycles to failure. Comparisons of structures produced in the different materials were made at amplitudes which produced equal numbers of cycles to failure. The influence of strain amplitude on the structures produced in the reference state material (copper tested at room temperature) is shown in Fig. 2. At the 104 life level the structure produced comprises cells similar to those previously observed.3,4 They are approximately 0.5 p in diam and the cell walls are generally more regular or sharper than those produced by unidirectional deformation.14 At the 10' life level the

Jan 1, 1969

By Anna H. Connard

SUMMARY The discussion focusses on developments in the debt/equity swap market since the Marte project was negotiated in early 1988. It emphasises carrying forward the recent market trends to anticipate the breadth and scope of debt/equity conversions for mine development in the 1990s. Secondary market prices of LDC paper, conversion values and political influences in the host countries and the use of near debt and commodity-based instruments as components of mine financing in debt/equity deals will be placed in the perspective of recent trends and expectations for the future. THE MARTE PROJECT The Marte mine is a gold porphyry deposit in Chile's high Atacama, for which financing was put together at the beginning of 1988. The Marte project was financed by a combination of common equity and loans. It was unusual that the equity infusions were made under different programs. Some of the international equity was infused with fresh funds via DL 600. Other common foreign equity was provided through the conversion of Chilean bank debt under Chapter XIX. On the loan side,. export credits for the import component of machinery and equipment were sought. Local bank financing was negotiated for the remainder of ' the project's anticipated cost. The debt conversion market in Chile was at its apex in terms of interest, activity and government support when the mine financing was arranged. The price of Chilean paper in the secondary market hovered about 62 to 66 cents per U.S. dollar of face value. Meanwhile, the Chilean government was negotiating conversion redemptions significantly closer to full face value. The government differentiated between debt paper exchanged for corporate investors who had sourced that paper in the secondary market, and debt paper held by bank investors who would incur a transaction loss in the conversion. The use of a combined DL 600lChapter XIX equity financing created different yield calculation bases for the various investors. Chapter XIX prevents remittance of profits before year 5 and capital repatriation before year 11. Investors choosing this vehicle have either for a corporate policy in the target project not to declare dividends until repatriation is allowed, or they have to seek uses for the peso liquidity that would be generated through dividend declarations in the early years. However, DL 600 investors face no such waiting period on dividends, nor do they have restrictions imposed on cashing out of the investment before the 11th year. Therefore, any equity structure with components of both investment mechanisms will have inherent differences in cost basis and future income flows for the various participants. This equity imbalance is defensible if the investment motivations of the parties are analyzed: a mining investor using fresh funds looks for a hurdle return on equity calculated at conservative commodity prices, with as much flexibility to reap upside benefits as possible; a mining investor choosing to invest through a debt conversion mechanism will realize a modest short term gain on the conversion, reducing his effective cost basis, but sacrificing some return because of the waiting period on repatriation of dividends. INVESTMENT OBJECTIVES A bank investor exchanging his own paper for an equity participation in a mining project realizes a conversion loss on the transaction. He seeks a risk adjusted acceptable hurdle rate of return to recoup that loss over time. Motivation for the bank investor to take that loss may be derived partly from a strategy to diversify its existing portfolio by internal policy and externally regulated guidelines. The bank will compare yields on its loan portfolio to that country with anticipated dividend flows discounted back at a risk adjusted rate. It will analyze the project with return objectives of yield enhancement over time and with

Jan 1, 1990

By B. Thomas Mansbach

INTRODUCTION The Overseas Private Investment Corporation ("OPIC") is a U.S. Government agency mandated to promote the economic development of the less developed countries ("LDCs") by assisting U.S. private investment in the Third World. Generally, investment decisions turn on the optimism or pessimism of the private sector's financial analysis of a project, with market price of product a major unknown in a very chancy set of projections. Discussions with American mineral companies, however, show that, more often than not, in developing country projects it is the political risks of investing in mineral exploration and extraction that pose the most serious deterrent to investment. In several of the projects described here, investments would not have been made if OPIC had not been involved providing support to the project sponsors and their funding sources. Clearly it is not OPIC's business to promote U.S. investment in a project which is not commercially viable, but OPIC's programs can neutralize the political uncertainties which act as disincentives to investment in otherwise commercially viable projects. That is to say, OPIC's programs are designed to reinforce market decisions and not distort them. Although OPIC is an independent agency of the U.S. Government, it is managed by a Board of Directors, the majority of whom come from the private sector. This, coupled with the statutory requirement that it be self-sustaining and operate with due regard for the principles of prudent risk management, requires that it operate on a business-like basis. Although established as a development agency, to the business public OPIC is both an insurance company and a lending institution, with two major programs which are available to U.S. investors in the minerals sector: its political risk insurance program and its finance program. Each has been specially tailored to the meet needs of the mining industry. The insurance program provides coverage against four basic types of political risk: Currency Inconvertibility, Expropriation, loss caused by War, Revolution and Insurrection and Interference with Operations as a result of an act of War, Revolution or Insurrection. Coverage against the risks of Civil Strife can be added to both War, Revolution and Insurrection coverage and Interference with Operations. Inconvertibility coverage provides protection against a deterioration in an investor's ability to convert local currency into U.S. dollars. This deterioration can be the result of either active or passive delays. Active delays consist of a change in exchange laws or regulations that leads to inconvertibility delays of 30 days or more. For example, if the exchange regulations at the time of contract execution allow an investor to transfer earnings equal to 18% of its registered capital per annum and the government of the host country later changes the law to allow conversion of only 12%, the insured would convert the 12% transferable under the new exchange regulations with the government foreign exchange authorities, delivering the remaining 6% to OPIC for conversion at 99% of the then prevailing rate of exchange. (OPIC does not cover devaluation risks.) Upon delivery of the local currency to OPIC, normally at the U.S. Embassy in the project country, the insured's account in the U.S. would be credited with dollars. Delays can also result from what is termed passive blockage, which includes administrative delays of more than 60 days (sometimes longer) caused by the bureaucratic tie-ups or pigeonholding of transfer requests, as well as delays suffered simply because the government of the host country does not have sufficient foreign exchange. The transfer procedure is the same as with active blockage - the local currency is delivered to OPIC in the project country and OPIC provides dollars in the United States at the then prevailing rate of exchange. The second coverage -- Expropriation -protects not only against the loss of the investment due to the well-known risks of expropriation, nationalization or confiscation by the host government, but also against

Jan 1, 1985

By Jan H. Hommen

TRENDS IN MINE FINANCE Reviewing historical trends may help in dealing with future funding strategies. The first trend is the increase in the use of debt to fund corporate America. Surprisingly, when comparing that with other corporates in the global marketplace, the U.S. does not look too poorly. Japanese, in particular, but also German companies, are much more leveraged than their U.S. counterparts. Note that in Japan and Germany the government and the consumer have shown substantial restraints when it comes to credit. Not so in the U.S. where the savings rate (4%) is much lower than that in Japan (20%) and in Germany (14%). As a result, the cost of leverage is substantially lower in Japan and in Germany than in the U.S. Lower debt costs in these countries allows one to obtain more of it for the same price. The close relationships between financial institutions, corporations and governments in Japan and Germany also make the risk of leverage more bearable and understandable. Also note that interest rate volatility in these countries is more subdued. The investor base in common stock is also changing. Private pension funds have been net sellers of equities during the last few years while public pension funds have been net buyers. Individuals are basically out of the market. It is estimated that over $330 billion of equity was retired in the U.S. through 1986-1988. The reasons are well known: restructurings, buy-backs, takeovers, mergers, and buy-outs. This de-equitization is likely to continue as the cost of equity capital is higher than the cost of debt capital, even on a before-tax basis. Because there has been no market for equity since October 19, 1987, junk bonds have replaced equity capital in the corporate finance structure. The non-investor-grade borrower has access to the public markets through high-yielding debt securities that often look like senior equity. Deregulation has also provided 24-hour markets; securitization can now liquify assets that before were rusting on balance sheets; information processing and communication tools give facts that are instantaneously available, creating the need for products to cover risk and exposures unknown before the start of the information and technology explosion. Thus we now have swaps, options, futures, options on futures, caps, as well as program trading, portfolio insurance, index funds, etc. Globalization will be unstoppable. Today's environment demands it. Corporations are now global competitors, even though they may have never shipped a product off-shore. Boundaries are disappearing and impediments have been removed. Stocks can be issued in a global offering with distribution in all major financial centers of the world. The high leverage of Japanese companies has made common stocks very scarce, which with the high savings rate, makes equity capital inexpensive in Japan. If markets were perfect everyone would issue stock in Tokyo and buy it back in New York. This would certainly stop the bleeding on the balance of payments. With the deficit balance of payments in America, it is no surprise that the cost of money is expensive here. The risk-return relationship on U.S. equity is not favorable enough to appeal to Japanese equity investors. The Tokyo-market, helped by a stronger yen, surpassed New York as the most important equity market in the world. The question is, will the Tokyo market hold up when Japanese domestic consumption increases at the expense of savings? In the U.S. debt markets, the plain vanilla debenture is making a comeback after a period of absence. Commercial paper has replaced short term bank borrowings for working capital funding by larger corporations. The banks have made an interesting comeback with loan sale programs that will continue to attract borrowers. There will be a continuing

Jan 1, 1990

By H. M. Chance

Jan 1, 1886

By S. S. Clarke

ABOUT two years ago some of my friends were discussing the amount of drill-steel breakage that was permissible or not excessive, per month, per rock ton, per ton of steel or any unit of measure or output that would give a comparison between different kinds of drill steel. No one seemed to know what life to expect of steel, or what percentage of breakage might be termed excessive. In fact there were no operating data available to guide one in selecting the best steel for our mines, nor could any ideas or information be secured from the steel manufacturers. One was merely told that so and so used their steel and it was very satisfactory; or else one was given a highly technical lecture on their specific heat-treatment. Any estimates on expected breakage were just guesses, ranging from a fraction of a per cent to as high as ten per cent per month.

Jan 1, 1933

By Michael A. Gustafson, Fernando B. Sotelino

INTRODUCTION The degree of success of any new project will ultimately depend on two factors: (i) the underlying economic strength of the project; and (ii) how successfully the parties involved can coordinate their interests to establish a financing structure which indeed capitalizes on the project's inherent economic attractiveness. A project's underlying economic attractiveness is determined by its inherent comparative advantage in accessing the factors of production, combining these factors of production to create a product and marketing this product. Initially, the decision regarding whether to go ahead with the project - the go/no go decision - has to be based on its total ability to generate cash flow returns to project participants to compensate them for resources committed and risks undertaken. The extent to which project sponsors will actually benefit from the project's inherent economic attractiveness is fundamentally dependent on their ability to establish the long-term financing arrangement which best meets the objectives and constraints of each project participant and sources the most advantageous funding. The decision regarding the financing of the project, the "how-to-go" decision, is then an attempt to find the capital structure, consistent with market terms and conditions and sound financial management policies which will best: (i) match planned outflows with cash inflows; and (ii) maximize the return for project sponsors. This article makes use of a case study to illustrate the analytical process involved in dealing with the go/no go and the how-to-go decisions on a project. Though most commonly applied to project finance situations, the guideline described herein is equally applicable to other financing situations, such as leveraged buyouts and debt restructurings, where timely repayment of debt depends largely on the future cash flows to be generated by the entity being financed. Our case study is of a hypothetical expansion of an existing copper mining operation in Latin America. The company, Latin American Copper (LAC) currently has 147 million metric tons of proven sulphide ore reserves. The existing mine complex consists of an open pit mining operation and a conventional flotation plant with a processing capacity of 20,000 metric tons of ore per day. LAC sells copper concentrates primarily to Japanese custom smelters. The mine has been in operation for 5 years, fine copper production last year was 108,240 metric tons, and LAC currently has assets of $175 million and net worth of $135 million. Due to a recent increase in proven reserves, LAC is considering doubling the treatment capacity of its flotation plant to 40,000 tons per day, and expanding its mining capacity to meet the additional concentrator capacity (the "Project"). Project capital expenditures and incremental working capital have been estimated at approximately $210 million. The construction period is expected to cover one year, including a three-month start-up phase. The Project is to be funded by a combination of equity, senior debt, including both supplier credits and/or commercial bank term loans, and subordinated debt. LAC's shareholders are willing to commit a maximum of $50 million to the Project. A government development agency, which is also a minority shareholder, might be willing to lend approximately $40 million to LAC in the form of subordinated notes, depending on the ability of the Project to generate foreign exchange reserves. Commercial banks cannot be expected to offer loans with maturities longer than ten years. The Project is expected to increase the value of the firm because: (i) It will solidify the Company's position as a low-cost copper producer by taking advantage of economies of scale. As a result of the expansion, cash production costs are expected to decrease 7.0[c]/lb. and all-in costs 11.0[c]/lb; (ii) The potential earnings stream from the sulphide ore reserves will be realized

Jan 1, 1985

By Robert L. Davidoff

INTRODUCTION The impact of taxation differs substantially from state to state in a complex fashion that depends on both the physical characteristics of a mineral deposit and on the price of the mineral commodity relative to its costs of production. A comparative analysis of the tax structures of eight states (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wisconsin) showed wide variations in rates of return for any given type of mineral property, with no state having either the most burdensome or least burdensome tax structure under all circumstances. Three hypothetical mineral operations were analyzed: a producing open-pit copper property, a non-producing underground platinum operation, and a non-producing underground gold operation. None of them corresponds exactly to an existing property. Each of these property types is further defined to have ore feed grades at three different levels, leading to three potential profitability levels, referred to in this paper as "economic", "marginal" and "subeconomic". Thus the differential impact of state tax structures is measured for mineral properties of different types, as well as for different profitability levels. Montana is used as the base case. This study does not address the topic of corporate structures or tax consolidation. There are no costs assumed external to the operation of the deposit (e.g. exploration to locate additional deposits). Two types of analyses were performed for this study. The first calculates the total cumulative tax payments in each state using all applicable taxes (including U.S. federal income taxes and examines the resultant differences in discounted cash-flows rate of returns DCFROR's amoung the eight states. The second is a sensitivity analysis that examines each type of state tax separately (i.e. state income, property, and severance taxes) in order to isolate and examine the differences in tax payments that are due to the difference in rates and methods of computing specific types of taxes in each state. The results of this study serve to illustrate the complex nature of interactions among various taxes. For example, property tax is a deduction in calculating severance tax in some state. Changes in property-tax and severance-tax payments both enter into the calculation of state and federal income-tax liability. This, in turn, could change the timing and usage of tax-loss carry forward amounts and investment tax credits. Additionally, the physical characteristics of a property, the method and costs at which the mineral will be extracted, and the profitability level at which each property operates will affect tax treatment. Each mineral operation was evaluated at three different predetermined profitability levels, referred to using the terms economic, marginal and sub-economic. These three profitability levels are defined by the ore feed grades of the primary commodity that yield in constant terms, approximately an "economic" 18% DCFROR, "a marginal." 10% DCFROR, and a "sub-economic" 5% DCFROR, respectively, under the Montana tax structure. In the analyses, the mining and processing parameters for each of the three types of properties were assumed to be identical for each of the eight states. It was assumed that each operation produces at full operating capacity throughout its life. This implies the level of mineral commodity demand will support the inferred commodity price, such that each operation will be able to sell all its output. The analyses performed for this study were done using a comprehensive economic evaluation simulator that is used in the Bureau of Mines, Division of Minerals Availability MAS program to perform DCFROR analyses. All economic evaluations performed upon these data (see appendix 2) were in constant January 1981 dollars. By-product prices used for the analyses were: [Gold $425.00/troy ounce Palladium$200.00/troy ounce Silver $ 10.00/troy ounce] Typical cash-flow calculation layout is given in Appendix 3. The initial step for each evaluation is to define an "economic" profitability level scenario. An 18% DCFROR rate in Montana was considered the

Jan 1, 1985

By C. F. Clausen

"Cement" means binding agent or glue. It is derived from the Latin word "Caementum," the name of a limestone, chips of which were used in mortar more than 2,000 years ago in Italy. During the middle ages "cement" or "cement" generally denoted mortar. Today it means any binding material. The Thomas Register lists nearly 200 classifications for "cement" including automobile cement, household cement, rubber cement, etc. The material most commonly associated with this word, however, is portland cement which, when mixed with water and allowed to hydrate, is a ceramic binding material used to cement aggregates (crushed stone, gravel and sand) together in "concrete," the most universally used building material of today. It is estimated that more tons of concrete are used annually than all other building materials put together including steel, lumber, gypsum, bricks, tiles, aluminum and glass. Its use in foundations, building construction, sanitary work, dams, railroads, and highways, makes it difficult to conceive of modem civilization without concrete. A survey made in October 1955 showed the following uses of portland cement: [Percent Highways20 Nonresidential buildings20 Residential buildings15 Military construction10 Sewer and water works8 Public utilities10 Other (conservation, farm, and maintenance and repair)17 100] As of today, the percentage for highways is probably even higher. Ceramic binding materials have unquestionably been used in construction work for thousands of years. The mortar between the blocks of the great pyramids was calcined gypsum (plaster of paris). The use of calcined and slaked limestone goes back earlier than the Roman Empire. Gypsum, however, is relatively soft, and common lime mortar is not "hydraulic," i.e., it does not harden under water. The Greeks and Romans discovered later that an addition of a finely divided active siliceous material (Santorin earth or Pozzolana) would react with slaked lime to form a stronger, and hydraulic, cement. The Appian Way in Italy, Colosseum, and the great Aqueducts built by the Romans were made with this type cement, and some of these structures are still in existence today. However, not until 1756 did some serious research result in the development of better cements. In that year the English engineer, John Smeaton produced a stronger cement by burning a limestone containing considerable proportions of clayey impurities. Other investigations and improvements were made by Bryan Higgins, Bergmann, Joseph Parker, L. J. Vicat, J. F. John, James Frost, and I. C. Johnson.2 Traditionally, but perhaps unfairly to others, the invention of the prototype of today's portland cement is credited to the English mason Joseph Aspdin who in 1824 obtained a patent and gave the product its name, because in color the mortar produced from it resembled a natural building stone obtained from the British Isle of Portland. The contributions of Johnson and Aspdin were primarily the important step of preparing a synthetic mixture of lime and clay without depending on raw materials found in nature which might contain such elements in desirable proportions. However, even these early

Jan 1, 1960

By Roy A. Lindgren

Since the year 1643, when the first blast furnace in America for treating iron ore was built at Saugus, Mass., out of mica schist quarried in the neighboring district, the procurement of a suitable refractory for furnace lining has been a problem of concern to the operators of furnaces. The stacks built of mica schist continued to smelt iron ore until about 1836, when, according to F. H. Norton, the first firebrick were produced1, at Queens Run, Pa. Other writers speak of brick having been molded and burned in Massachusetts about the year 1834. In 1841, Andrew Russell began to produce medium refractory plastic clay brick near East Liverpool, Ohio, that were used for lining blast furnaces1. The well-known Kentucky clay-producing district was not opened up until the year 1871, but since then it has produced a large percentage of the linings for iron blast furnaces. While some strides have been made by the refractories industry during the 100 years that have passed since the first firebrick were produced, it has been only during the last two decades that any real progress has been made towards bettering the product, even though the method of production had improved. Perhaps the fault lies with the user of the brick rather than with the producer, for not sooner demanding a superior product. During the past 15 years the tonnage produced per lining has increased from 500,000 gross tons to 1,000,000 gross tons, and now some furnaces are producing 1,600,000 gross tons and better on a single lining. It is true that enlarged capacity of furnaces and improved practice have accounted for some of this increase in tonnage, nevertheless better quality in firebrick must be given credit for its share. However, we are not yet ready to say that we have reached a maximum life of furnace lining. We believe that a better product can be produced and that the refractories industries of America will, through their extensive research depart-

Jan 1, 1937

By J. A. SINGMASTERN

THE New Jersey Zinc Co.'s vertical retort plants are believed to have been in continuous operation through the whole year. At Palmerton metal purer than that made from the same ore in the old plant has been produced and has been able to compete successfully with very pure electrolytic metal in die castings and other special uses where extreme purity is worth money. A new plant using this process was put in production by the Grasselli Chemical Co. at Meadowbrook, W. Va., early in the summer. It is said to be working very satisfactorily. It is understood that this plant will not produce high-grade metal. Two patents issued to Bunce and Mahler (Nos. 1,749,126 and 1,749,127) describe a method of operating the vertical retort so that practically lead-free metal can be obtained from ores containing consider- able lead. The zinc vapors and other gases leaving the reaction zone are filtered through a column of material maintained at a temperature high enough to prevent much zinc from condensing. The filtering medium is either periodically or continuously changed.

Jan 1, 1931

By C. W. Davis, L. R. Messer

THE name fuller's earth, which was derived from its early use in "fulling" or removing grease from woolen goods, is a term that is generally considered to designate mineral matter, containing hydrous aluminum silicates of the clay group, which has a high capacity for removing colors from oils, whether of animal, vegetable, or mineral origin. Fuller's earths are usually dried and may be "tempered" by heating or may be treated with water or reagents to improve their efficiency. For our purpose the term "acid-treated earths" will include those products from the partial decomposition of mineral water by acid which are equal to or more efficient than an untreated fuller's earth from Quincy, Fla., when used in bleaching mineral oil by the "contact" process. In general, the contact process for treating oils consists of heating and agitating a mixture of oil and finely divided adsorbent, the latter being subsequently removed by filtration. The term "adsorbent" is used because, although there has been a great deal of controversy over the mechanism of removal of impurities from oils by mineral matter, there is no doubt that adsorption, which involves the surface of the solid, plays a major part.' The properties that make fuller's earth useful in the treatment of petroleum products by "percolation1' and in the purification of edible oils by the contact process have long been studied, but the comparatively recent adaptation of the contact process to the bleaching of petroleum products has made desirable the further investigation of fuller's earth and other adsorbent earths.

Jan 1, 1929