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By Henry J. Sandri

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

Jan 1, 1985

By W. T. Nightingale

The three gas-producing "pools" discussed in this paper are in Sweet-water County, southwest Wyoming, and Moffat, County, northwest Colorado. Hiawatha, North Baxter Basin and South Baxter Basin gas fields became economically important in 1929 when a 330-mile gas line connected them with Salt Lake City, Ogden and towns en route. This development immediately focussed attention on the gas-producing fields and the efforts of the producing company to develop them in an orderly, economical manner. Several outstanding interests were acquired and working agreements made with others. Thus the interference of natural drainage areas was avoided, the pernicious practice of drilling direct

Jan 1, 1930

The earliest record of coal in Indiana is one of the earliest in the country. At the close of the French and Indian War, in 1763, the famous Indian trader, George Croghan, was sent from Pittsburgh on a mission to the western Indians. His party met that of a hostile chief on the lower Ohio and was captured, and were taken up the Wabash River; on June 22nd, he passed the mouth of the Vermilion River-probably the Big Vermilion-and on June 23rd, he made the following entry in his journal: "on the South Side of the Ouabache runs a high hank, in which are several very fine coal mines, and behind this bank, is a very large meadow, clear for several miles."' The mines, of course, were outcrops. A few days after this he met some Indian acquaintances who secured his freedom. This location was at Ouicatanon, 210 miles from "Port Vincent," which was destroyed a few years later, and in what is now Fountain County, probably near Coal Creek. Croghan was familiar with the coal already being worked at Pittsburgh. Surveyors who ran the township and section lines in the first ten years of the last century noted the presence of coal and marked its position on the maps in 1804.2 The next record is by Nicholas J. Roosevelt, who in 1809 examined the Ohio and Mississippi Rivers prior to starting building the first steamboat to navigate these rivers. "Not only did he do this, but finding coal on the banks of the Ohio, he purchased and opened mines of the mineral; and so confident was he of the success of the project on hand, that he caused supplies of the fuel to be heaped upon the shore, in anticipation of the wants of a steamboat whose keel had yet to be laid."3 It is probable that this account confused the date of seeing the coal with that of mining it, as an earlier account by another relative of Mrs. Roosevelt of the first trip of the steamboat New Orleans in 1811 is as follows:

Jan 1, 1942

By F. O. Jones

The capabilities of small proportions of divalent cations, such as calcium or magnesium, for controlling clay blocking are reported. Potentially sensitive formations can be exposed to fresh water if at least one-tenth of the salts dissolved in both the native water and invading fresh water are calcium and magnesium salts. Often, even less suffices. The behavior evidently depends upon the cation exchange properties of the clays, which favor adsorption of calcium and magnesium over sodium. Clays having sufficient adsorbed calcium and magnesium resist dispersion by water and consequent blocking of permeability. An allied phenomenon, the dependency of clay blocking on salinity contrast, is also reported. Abrupt change from highly saline to fresh water can cause blocking which may not occur if salinity is lowered slowly. A process related to osmosis is thought responsible for this behavior. Applications of findings to drilling, fracturing and water flooding are discussed. INTRODUCTION Many formations, when exposed to fresh water, can lose permeability through clay effects.',' For example, drilling-mud filtrate can cause oil permeability decreases, which persist long enough to interfere with drill-stem testing and well completion.3 Ultimate productivity may suffer when clay damage is severe, especially if drawdown pressures are low.' The injection pressures and the time required for water flooding can increase if clay blocking occurs. Earlier work indicates that clay blocking is caused by obstruction of flow channels by clays or other mineral fines dispersed by fresh water.'!" It is well known that increasing salt concentrations in water tends to prevent clay blocking. Also it is well established, although perhaps not as widely known, that the nature of the dissolved solids is also important. If, for instance, formation clays are exposed to calcium chloride solution and then exposed to weaker solutions of calcium chloride or distilled water, considerably less permeability damage results than if the clays had been exposed instead to sodium chloride solutions. The reasons for this behavior are: (1) clays are cation-exchange, or base-exchange, materials similar in this respect to zeolites or exchange resins, and (2) clays in the calcium form do not disperse easily in fresh water, whereas clays in the sodium form do. The base-exchange form of a clay is easily altered by flowing a solution through it. For example, a sodium clay can be changed to a calcium clay simply by passing a calcium chloride solution through the clay bed. There is general agreement that the reason calcium and magnesium clays do not disperse easily in fresh water is because the calcium ions do not ionize easily from the clay surfaces.' Sodium clays, however, are believed to allow the sodium ions to ionize from the clay particle surfaces. In fresh water, this allows the particle to accumulate a net negative electrical charge great enough for the particles to repel one another and, therefore, disperse more easily. The foregoing suggests that, even in the presence of a large excess of sodium, a relatively small ratio of divalent cation, such as calcium or magnesium, might serve to prevent clay dispersion. The divalent ion probably adsorbs to a disproportionately large extent, because of being adsorbed more tightly, with the result that the proportion of divalent cation on the exchange positions of the clay might then be great enough for the clays to resist dispersion. Consequently, an investigation was conducted to find how mixtures of salts in solution influence clay blocking. APPARATUS AND PROCEDURE Water permeability tests were conducted using conventional techniques. The equipment is illustrated schematically in Fig. 1. Flow rates of solutions driven through small core samples at known temperatures and pressures were measured. Regulated compressed air, usually at 10 to 15 psig, was used to drive the solutions. Core samples 0.75 in. in diameter and 1 in. long were used for the most part. Cores were saturated by evacuating and then admitting a de-aerated solution. Tight core samples were first saturated with carbon dioxide gas and then evacuated and saturated with the test solution. After saturation, 140 psig pressure was imposed for several hours. Cores were tested to insure absence of gas saturation by a Boyle's

Jan 1, 1965

By Joseph H. Allen

In the old Kentucky reports, made by the Survey of which Prof. Owen was director, the veins of the Western Kentucky coal-field were numbered from 1 up to 12. Later Prof. Shaler used letters, beginning at the top. For instance, Owen's 12 is Shaler's A.

Jan 1, 1888

By John W. Cobb

The attempts of British investigators to arrive at definite knowledge concerning the nature of the nitrogenous constituents of coal have been mainly made through studies of the behavior of coal on carbonization and gasification. There have been carried out numerous determinitions of the distribution of nitrogen in the products of carbonization under laboratory and large-scale conditions; and by a careful consideration of the extent to which nitrogen is liberated, say as ammonia,. at different temperatures and under different conditions of operation as regards atmosphere, it has been possible to form some general notions as to the nature of the nitrogenous compounds present in the coal; and at the same time to arrive at clearer ideas as to what are the important operative factors in determining the ammonia yield under working conditions. This work has been spread over many years and is summarized below. The difficulties of connecting the results in such a way as to allow of the nitrogenous constituents of the coal being described in terms of specific organic structure are great. They arise, for example, in the carbonization process, because the phenomena of decomposition observed at any one temperature can only refer to compounds decomposing at that temperature, each of them with a previous history of chemical transformations occurring at lower temperatures. To put it in &other way, the compounds occurring in the coke at any stage are not in the least likely to be those present in the original coal. The same difficulty, in a milder form, occurs when the method of differential solution is attempted. There is always the preliminary question, almost impossible to answer, as to how far the separation by the use of the solvent has involved some form of decomposition of the original compounds. In the following summary, an attempt has been made to bring together results obtained by British workers.

Jan 1, 1925

By H. W. Camp

Although the situation in the oil industry during the past year has not been conducive to large expenditures for development and research, there is little indication that such expenditures have been curtailed. While few outstanding achievements have been reported, considerable progress has been made in the development of new product,s and the adaptation of petroleum derivatives to new uses. The most important question facing the refiner today is the antiknock quality of his gasoline. This year has seen the widespread adoption of the term "octane number" as a measure for anti-knock values, and in the latter months of the year the public has been made acutely aware of this condition through competitive advertising. Gasoline is no longer priced on volatility and gravity alone, but on octane number as well; and premiums are being paid for material of relatively high octane rating. The situation has grown more and more competitive and has forced refiners continually to raise the octane rating of their regular and competitive grades, and at this writing the same situation exists for premium grades which have possessed relatively high anti-knock properties for some time. Straight-run gasoline produced from paraffin-base or semiparaffin-base crudes has an inherently low anti-knock value, and in order to convert this material to a higher quality it has been found necessary to crack an increasing percentage of the crude oil charge. By completely cracking the heavier portions of the crude and blending back with the straight-run gasoline, it has been possible to produce an average of 63 to 65 octane number gasoline on average Mid-Continent crude. This operation carried to the fullest extent does not suffice, however, and the recent and rapid development of the so-called '(reforming unit," has resulted. The straight-run gasoline fraction is cut into two parts: a light, low boiling point gasoline; and a heavy gasoline or naphtha. The latter containing the low anti-knock portions of the gasoline, is sent through a re-forming unit and subjected either to high temperature or pressure, or both, which materially increases its octane number. On average Mid-Continent the blend of low boiling point straight-run,

Jan 1, 1932

By Edward Nichols

These deposits, which are found in James County, Tennessee, differ both in their mode of occurrence and in their chemical constitution from any other ores belonging to the same geological horizon which are known to the writer. Taylor's Ridge, or White Oak Mountain, is a long monoclinal ridge, which starts from a point near the Tennessee River in Meigs County, and, following a southwwt .course, extends unbrokenly into Cherokee County, Alabama, where it finally disappears. It is made up of strata of the Upper Silurian rocks, which dip to the southeast. To the eastward of this ridge, which is generally several hundred feet high, are a series of low foothills or knobs, composed of Clinton shales carrying seams of fossiliferous hematites. In the neighborhoud of the East Tennessee, Virginia, and Georgia Railroad, where it crosses the ridges, considerable ore has been milred from these seams during the pst ten years. Most of the workings have been superficial, and the ores mined, with one exception,,carry a silicious and nod-calcareous gangue, and contain from fifty to sixty per ceut. of iron.

Jan 1, 1882

By Arthur F. Wendt

IN 1697 King William the Third granted unto his well-beloved subject Adolph Philipse, a certain tract of land, now known as Putnam County, N. Y. At the death of Adolph Philipse the land descended by inheritance to his nephew, Frederick Philipse. In 1751 his surviving three children partitioned the surface into nine parcels and divided them equally amongst themselves, but reserved the mineral rights which they held in common. Thus, at this early period in the history of the colonies, the existence of valuable deposits of iron-ores in Putnam County seems to have been a matter of common knowledge. Yet it is only within the last five years that the county has become a prominent, producer of iron-ore. Desultory mining had been carried on before that period at the Sump, Croft, arid Tilly Foster mines, but only a limited output was achieved, and few of our iron-masters suspected the existence of an abundance of good ores only forty miles from New York harbor. The accompanying map shows the location of those deposits of ore which are now generally known, and have been worked to considerable extent. Without doubt there are many more still awaiting the miner's pick, for no systematic exploration has ever been attempted within the borders of the county. Geologically, the occurrence of the ore is a counterpart of that of the New Jersey and Lake Champlain magnetites. The countryrock, and even the physical geography, are identical. Many small lakes dot the surface of the county. It is from these and their tributary springs and streams that the metropolis derives its farfamed Croton water. Abrupt hills divide the lakes and ponds. Some of the lakes, notably Lake Mahopac, are on the crest of hills, and are fed by subterraneous springs. The prominent mines of the county, in the order of their productiveness, are the Tilly Foster, Mahopac, Croton Magnetic, Sump, Croft, and Island mines. Of these, the first two are at present the only producers, and are quite exceptional in their nature. In fact they are the only ones of their kind in the Appalachian range, if not in the world.

Jan 1, 1885

By M. Karfakis, K. Kim, R. V. de la Cruz

The in situ deformability of a closely jointed basalt rock mass was determined by two different methods: the NX-borehole jack method where displacements of opposing curved platens were related to applied hydraulic pressures, and the modified Goodman jack method where tangential strains on the borehole walls were related to induced tangential stresses. The modulus obtained by the modified Goodman jack method were much higher than those obtained by the NX-borehole jack method. To explain the discrepancy, the influence of fractures and test variables, such as depth, orientation, hole location, and applied pressure on the calculated modulus of the rock mass, were analyzed by factorial analysis. It was found that the orientations and measurement depths have statistically significant effects. The in situ deformability values obtained by nonlinear regression analysis were also found comparable with other measurements and empirically predicted values for the basalt rock mass.

Jan 1, 1984

Jan 1, 1958

By W. C. Krumbein

GEOLOGICAL problems are approached from a geometrical (space relations) viewpoint, a kinematical (time sequence) viewpoint, or a dynamical viewpoint. The first two require sound training in conventional geology and in field methods. The third approach requires a solid foundation of chemistry, physics, and mathematics. Modern training for geologists should include close integration of basic sciences with geological principles. INTRODUCTION Our knowledge of the earth has increased tremendously during the last half century. We know more about its surface configuration, the distribution of its natural resources, the procession of living forms that inhabited it in the past, the chemical composition of its oceans, the areal distribution of its surface rocks, the movements of its atmosphere, and so on. Not only do we know more facts about the earth, but we have a better understanding of the processes that take place on and within it, such as the nature of earthquakes, the thermodynamics of the atmosphere, the chemical equilibria involved in the formation of igneous rocks, the mechanics of stream flow, the dynamics of the earth's origin, and so on. Many sciences contributed to the sum total of this knowledge, including such established disciplines as geology, geography, physics, chemistry, astronomy, biology. Out of this accumulation of new knowledge grew also a group of new sciences, such as seismology, oceanography, meteorology, volcanology, hydrology. Collectively these latter are known as the geophysical and geochemical sciences, and to a large extent they began as branches of geology. Until the turn of the century, for example, the study of earthquakes (seismology) was a part of geology, although as early as 1846 Mallet, a physicist, had suggested that the subject could be investigated by elastic-wave theory. Comparatively little progress was made along these lines until the seismograph was developed near the turn of the century; since then, additional earthquake data have accumulated rapidly, but more important, the interpretation of these data essentially has kept pace with their accumulation. In similar fashion, meteorology, was generally considered a branch of geology as recently as one or two decades ago. Considerable progress had been made in such aspects as weather forecasting, but the science dates its recent rapid rise from the year 1911, when Bjerknes first applied the principles of dynamics to the analysis of air masses. The rapid development of such disciplines as oceanography, volcanology and hydrology was due in part to the application of principles of chemical equilibrium, of dynamics, and of thermodynamics to earth problems, by men who were essentially physicists or chemists by training. The last half century, therefore, and particularly the last two decades, saw the influx of numerous chemists and physicists into the realm of the earth sciences. In the meantime the main body of geology itself showed a marked growth, and

Jan 1, 1941

By John K. Irwin

Friction hoisting has assumed a major role since its introduction to North America less than ten years ago. Interest was illustrated by a recent visit of the Adirondack Section of AIME to a new friction hoist at Chateaugay mine of Republic Steel Corp. at Lyon Mountain, N. Y. The 80-in. diam, 4-rope machine at Lyon Mountain is typical of modern friction hoists. The hoist is mounted on a structural steel tower without deflection sheaves.

Jan 10, 1963

By Luis N. Henriquez

One form of encouragement for the small copper mining sector in Chile has been the construction and management of custom mill facilities to process the ore. The paper describes an economic analysis framework for the evaluation of government custom milling opportunities. Feasible mill locations and capacities within a region are selected and the infrastructure and milling costs associated with each combination of location and capacity are assessed. For each combination, the economics of developing and operating known copper deposits in the region is evaluated, and an optimum cut-off grade and mine capacity is selected for the deposits which justify development. Since the total ore supply from mines in the region may exceed a particular custom mill capacity, mine development is scheduled to optimize the economics of the mill facility. Finally, the best custom mill location and capacity is selected on the basis of overall costs and benefits. A copper mining region in northern Chile is used to illustrate the application of the model. A mobile mill approach is examined and compared with the fixed location mill alternatives. Results are analyzed as a function of copper price.

Jan 1, 1977

By J. R. Hoffert

ON Oct. 27, 1941, the Sanitary Water Board of the Commonwealth of Pennsylvania called a meeting of the representatives of the coal operators in the Schuylkill River Basin, and frankly suggested to the operators that they "clean up their house" before someone else came in and did it for them; that they should not emulate the railroads with their "public be damned" policy and its fateful results. It had been four years since the passage of the antipollution law of 1937, a law which exempted silt from collieries until such time as a practical method existed for the removal of their water polluting properties. It had been fifteen long years since Sisler, Frazer and Ashmead concluded that 900 million tons of culm and silt had been deposited in Pennsylvania's streams in the process of preparing five and a half billion tons of anthracite for the world's consumers. Fine coal was being "mined" in the streams by "washeries" and river dredges downstream from the collieries, and silt banks no longer held back the endless black stream entering the Schuylkill at the rate of 350,000 tons per month. The coal operators were apparently working on the outmoded assumption that each ton of fine coal prepared displaced a ton of larger sized, more profitable coal. The meeting between the Sanitary Water Board and the coal operators signaled the beginning of the end of Pennsylvania's pollution problems. As a result a committee was formed at that meeting by the operators to find out what conditions were at each colliery. The Bureau assisted in the indication of methods of measurement and sampling and in the development of forms for reporting the needed data. One large producer had its chief engineer supervise the gathering of the information concerning the quantity of waste waters, the amount and sieve analyses of the waste solids, and the existing means for retaining

Jan 3, 1950

Jan 1, 1946

By Burt C. Mariacher

Two AIME sponsored symposia to be held during the year 1970 will examine copper, lead and zinc metallurgy in considerable depth. MBD and the Extractive Metallurgy Division of The Metallurgical Society will participate in both. Thus, the full field of minerals and metals processing including milling, smelting, and refining will be covered. Since these symposia hold special interest to MBD members, it was felt that a useful purpose could be served by devoting this column to a description of what has been arranged for the registrants.

Jan 1, 1970

By Dorsey Hager

The possibility of oil and gas production in Alabama his been little considered as yet. Gas and some oil have been found in northwestern Alabama, near Birmingham, in the Pennsylvanian beds, but the oil and gas possibilities in the Cretaceous beds are not generally appreciated. The recent activity of oil companies in that State has attracted much attention, and in this paper the main structural and the general strati-graphic features are described. Four favorable areas are outlined. These contain folds of major interest. There are other favorable areas which have not been mapped-l Commercial pools discovered in this area would have the advantage of being near tidewater. Mobile, Ala., on the Gulf of Mexico, would be the logical site for refineries and shipping facilities. A pipe line could readily be laid to that city from the Hatchitigbee and the Jackson areas. The logical outlet for the Geneva and the Gordon areas would be Panama City, Ha., on the Gulf of Mexico. Topography The whole of the area under consideration lies in the Gulf coastal plain and slopes gently to the southwest and west. The elevations vary from 200 to 400 ft. (60 to 121 m.) above sea level. The streams have sunk their channels into this gently sloping plain, the main drainage flowing south or southwest into the Gulf of Mexico. Between the

Jan 1, 1918

Jan 1, 1906