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By L. D. Smith

"This paper examines the impact of the various assumptions that go into an economic evaluation, and shows how these can be combined to show an exciting result that may not really exist. An example of an embellished case (the kind that one frequently sees when projects are being promoted) is developed and the cumulative impact is analyzed to show the actual project underneath. The paper also points out some areas to watch for overly optimistic assumptions such as prices, inflation, and debt. The concept of a “bare bones” base case is proposed (constant metal prices, constant dollars, no inflation, no debt, no interest, on a project basis, after tax) as a common reference point.As well, the discount rate is examined as one of the fundamental means of reflecting risk in discounted cash flow evaluations. Current industry practice is discussed, and a methodology for the analysis of risk levels is proposed that assesses the constituent components of the discount rate: real interest, mineral project risks, and country risk."

Jan 1, 2002

INTRODUCTION The after-tax rate of return that properly discounts future cash flows is usually referred to as the "discounted cash flow-rate of return" (DCF-ROR). The method is also referred to as the internal rate of return, true rate of return, and investor's rate of return in some literature. According to Stermole (1974, p. 188) industry polls indicate that the DCF- ROR method is the number one economic evaluation decision method used by more than 90% of the industrial companies that use for- mal economic evaluation procedures. Other economic evaluation methods that have been used in the past, such as payback period, accounting ROR, etc., have largely given way to DCF-ROR analysis because they fail to account properly for the time value of money. DCF-ROR is generally defined as that rate of return that makes the present worth of future generated cash flow over the life of the project (including after tax salvage value) equal to the present worth of all after-tax investments. The "present worthing" of future cash flow involves discounting future cash flow to a present value according to the mathematics of compound interest at some interest rate. The determination of the interest rate that equates the present worth of future after-tax earnings with the present worth of all after-tax investments necessary to create such earnings is properly called the discounted cash flow rate of return analysis. Although present worth calculations are usually used for determining the DCF-ROR, the same results can be obtained by comparing income and costs of any equivalent point in time, i.e., future worth, etc.

Jan 1, 1980

SINCE I have told you of the distillation of waters and the extraction of oils from things-all ingenious and useful processes-I wish to continue to speak of the arts. I am reminded that I first wish to write down for you the discourse that I made to you on another occasion a few days ago concerning the operation of a mint, so that if you have lost it from your memory (and this would not be surprising since you have had no practice in it) you may repossess it if you should need to practice it or even to talk about it, and if you find yourself in this activity it may not be new to you. I told you, as I believe you will remember and so again I repeat, that a very great and constant diligence is required by one who wishes to operate a mint well, or to have it operated, because it has many parts which it is necessary for anyone who enters this work to understand very well; indeed, if he wishes that all the work of his helpers be done well, he will have to do it himself. And if it were possible, he should have a hundred hands and a hundred eyes together, and at the same time should be in different places, because some loss often occurs in what is handled because of the carelessness of the workers or because of their little real trustworthiness. It is understood that such things require great hard labors and many kinds of knowledge. The material handled in this work is most often either gold or silver all ready to be spent, and these things are very attractive to those who handle them. In addition to being made into pieces of money likely to disappear, it is very easy to lose, and whatever part is lacking for any reason whatever [132v] brings detriment and loss to the patron since it is a thing of value. Therefore, in short, anyone who wishes to exercise this art well, without being fraudulent therein, must watch the weights with all care because the essence of this art is naught but the division of a quantity of weight into many exactly defined pieces and the alloying of gold by carats and of silver by leghe, exactly established in accordance with what the prince grants you as remedy.* If through negligence you exceed in perfection

Jan 1, 1942

By John Stubbs

Sub-Surface Shaft excavation Mine development Headframes Surface Production facilities Product storage and loading Tailings area Infrastructure Discovery Lodge Utilities Operations complex Port Marine loading Rail unloading and storage

May 1, 2013

While SME is hosting its Annual Meeting at the Phoenix Convention Center, Feb. 28 to March 3, one of the finest collections of mining history will be on display just 15 blocks away at the Arizona Mining and Mineral Museum. Inside the museum, visitors will be treated to a treasure trove of minerals, gems, me¬teorites, rocks, fossils, mining artifacts, historical exhibits and interactive displays on modern mining. The museum is located at 1502 West Washington. For SME Annual Meeting attendees, this is a free, eight-minute Dash bus ride 15 blocks west of the Phoenix Convention Center.

Jan 1, 2010

By B. W. Dyer

IN 1924, the Crescent Eagle Oil Co., while drilling the salt section of the Paradox formation in Grand County, Utah, encountered a salt that did not appear to be sodium chloride. This salt was analyzed and showed the presence of potash minerals, both sylvite (KC1) and carnallite (KMgC12.6H20). Because of the high potash content of the sample, there was considerable speculation: (I) as to whether the hole had been salted, and (2), if not, the extent, richness, and the depth at which the deposit occurred. The discovery caused a large amount of activity in the area. During the next few years, 68 potash prospecting permits were issued by the Government, 24 under the Act of 1917 and 44 under the Act of Feb. 7, 1927, each including about four sections of land. Several holes, all shallow, were drilled for potash. A number of holes were drilled for oil into the salt horizon and the cuttings collected at the oil wells were examined petrographically and chemically. The shallow test holes were not sufficiently deep to reach the potash horizon and revealed nothing of value, but several of the oil test holes gave some indication of where potash might be found. LOCATION AND GEOLOGY OF DEPOSITS The potassium and magnesium salts have been found in various places from the Denver and Rio Grande Western Railroad tracks about seven miles west of Thompsons, in eastern Utah, to Cane Creek, a tributary of the Colorado Rivera distance north and south of about 35 miles. In this locality, there appear to be five separate deposits: the Crescent Eagle area, which is in T. 22 S., R. 19 E.; the Salt Valley area, in the vicinity of the north-south line of T. 23 S., between R. 20 E. and R. 21 E.; the Seven Mile area, in the eastern part of T. 25 S., R. 2o E.; the Cane Creek area, on the Colorado River, in T. 26 S. and T. 27 S., R. 2o E. and R. 21 E.; and the Salt Wash area, in T. 22 S. and T. 23 S., R. 16 E. and R. 17 E. (Fig. I.) The Crescent Eagle and Salt Valley areas are in the Salt Valley anticline, some of the wells being in the fault graben and others outside. Structurally, the Salt Valley anticline is very complex, and can be described in general terms as a northwesterly plunging collapsed anticline about 15 miles long. In the Crescent Eagle area, the valley graben is about 1 mile wide and the salt probably forms a plug, the apex of which is in the vicinity of the Crescent Eagle well. Owing to the complex structure, there has been every opportunity for flowage in the salt to cause local thinning or thickening of beds. The regular succession of formations in the general area* is: [Cretaceous Mancos Dakota Jurassic Morrison Summerville Entrada Carmel]

Jan 1, 1945

By Sherwin F. Kelly

THAT gold ores occur in Georgia is a fact apparently not widely known outside of that state, yet in the last hundred years nearly $18,000,000 worth of gold has been mined there. The discovery of gold-hearing quartz was made in 1823 on the "Forty Acre Lot" (which now belongs to the Columbia Mining Co.), in McDuffie County, and about seven years later the first stamp mill on record was erected near there. In recent years Georgia's gold production has dwindled to an insignificant figure. However, with the increase in gold price, interest in this district has been revived, so an electrical geophysical survey was undertaken to aid in discovering new quartz veins, on a part of the Forty Acre Lot, the adjoining Hamilton mine, and the nearby Woodall property.

Jan 1, 1934

By Kentwell D. J, Cusak C. J, Harvey-Kelly F. E L, M D. Goodz

The Morning Star Gold Mine presents an example of a prolific operation with considerable historical records, mine workings, drill hole logs and countless plans from greater than 20 adjacent mines which have now been consolidated to form the current project. Implementation of 3D computer modelling in the planning stages has provided an additional tool to integrate and refine geological models as a guide to some exploration strategies. It has allowed for a re- interpretation of the host rock units, dimensional constraints, new exploration extensions and provisional resource modelling. The initial consideration of this project was to integrate 135 years of mining history into a single database. Each historic mining area had an unrelated mine grid, often established parallel to the long axis of their main stopes; some were based on magnetic or true north. Survey plans were in chain, imperial or metric units. Through the manipulation and rotation of old grids, previously unrelated mine workings began to form continuous mineralised zones, with unmined portions still remaining in between the existing development. Furthermore the current drillhole database of >433 holes showed numerous confirmatory intersections of new mineralisation. A series of tiered tables were created within a relational database to derive guidelines for assessing data to attribute a Mineral Prospectivity Value [MPV] based on key indicators of mineralisation. Indicator logging now forms the basis of geological descriptions.

Jan 1, 1997

By ELIHU THOMSON

IN 1877, Professor Thomson delivered at the Franklin Institute, [Philadelphia, five lectures on electricity. The object of the lectures and the demonstrations, which were numerous and many of them original even to the employment of special apparatus constructed by the lecturer, was to show clearly that electricity, of whatever name, was the same., differing only in tension (as it was termed) and in the current flowing, or quantity (the old term), in steadiness or in wave-like character. In those days, the textbooks divided the subject into statical and dynamic electricity, with sub-divisions such as frictional electricity, voltaic electricity, magneto electricity, electromagnetism, thermo electricity, and animal electricity. The well-known Ruhmkorff coil,' or spark coil as it is now called (as when used for the ignition of automobiles), was employed to step, up a battery current to a high-tension discharge which would charge condensers, such as Leyden jars.

Jan 1, 1921

By John M. Arnold

Several years ago it became apparent to some of our people that; there was developing a very definite need for largee coal reserves in the West to satisfy- the need for fuel for the furnaces of electric generating plants with the rapid development of, the West, of both population and industry, it was impossible for hydro-electrics plants to keep up with the ever increasing demand for electricity. In 1960, Mr. E. R. Phelps, then associated with the engineering department of Peabody Coal Company, began a search for and development of coal deposits in the very remote northeast section of Arizona near the village of Kayenta. Travel to this section of the country was not easy even at this late date, and it was an eight hour drive from Farmington, New Mexico to Kayenta, Arizona, a distance of some 130 miles. The trip was over roads that even' a-horse and wagon had trouble negotiating and a four wheel drive vehicle was about the only type of transportation that could satisfactorily traverse these roads, as testify many badly beaten sedans and coupes that tried it. Since that time a very excellent road has been constructed from Shiprock; New Mexico to Cameron, Arizona where it junctions with another excellent road that runs north to Page, Arizona and the Lake. Powell area and south to Flagstaff, Arizona on highway 66. Kayenta is a small village nestled at the foot of the Black Mesa near its northeast extremities. The coal deposits of interest were on the surface of the mesa. This location presented another problem, as the only trail to the top of the mesa was intended for walking, horseback, or a brave soul In a horse and wagon. Once again the four wheel drive vehicle was about the only answer. To reach the coal deposits you must climb the mesa, which is vertical ascent of some 1,500 feet, and then proceed southward into the bowl of the mesa with an ensuing descent of some 1,000 feet, finally coming to an elevation of 6,500 feet, at which elevation the coal outcrops become apparent.

Jan 1, 1969

By J E. Lynch

The Weda Bay nickel and cobalt laterite deposits on Halmahera Island, Republic of Indonesia were first drilled in May 1996 by Strand Minerals Pte Ltd (Strand). Subsequent exploration has delineated four large laterite provinces, parts of which have been diamond drilled to outline an indicated nickel resource of 59.9 Mt of 1.51 per cent Ni and 0.09 per cent Co within a total indicated and inferred resource of 117 Mt of 1.36 per cent Ni and 0.12 per cent Co. The project is held as a Seventh Generation Contract of Work (COW) by PT Weda Bay Nickel, which is jointly owned by Strand (90 per cent) and PT Aneka Tambang (ten per cent). Strand is a wholly owned subsidiary of Weda Bay Minerals Inc, a company listed on the Toronto and Alberta Stock Exchanges in Canada. Halmahera is located in the north-eastern part of the Indonesian archipelago at the convergent junction of three major plates and is a region of considerable tectonic and geological complexity. The western arms of Halmahera form a classic volcanic island arc while the central region and eastern arms contain ophiolite complexes and interlayered sediments. The extensive areas of laterite discovered at Weda Bay have developed over serpentinised harzburgites and dunites of pre-Cretaceous age. Weathering of these rocks has produced laterite profiles that are enriched in nickel and cobalt. There are three economically mineralised laterite types, namely limonites, ferruginous saprolites and saprolites and all are amenable to rapid pressure acid leaching with recoveries of 98 per cent nickel and 94 per cent cobalt in less than 20 minutes.

Jan 1, 1999

Since 1955 Gaspe Mines has produced 144 million tonnes of ore, averaging 0.87% Cu, mined from two open pits and underground workings. In 1994, four exploration drill holes discovered a buried porphyry/skarn Cu-Mo deposit at depths of between 1000 m and 1700 m below the top of Porphyry Mountain. The mineralization and alteration associated with the Porphyry mountain quartz monzonite does not outcrop. A total of 19,500 m of drilling in 12 drill holes has outlined 200 million tonnes grading 0.73% Cu and 0.08% Mo. Mineralization occurs as veins and disseminations of chalcopyrite and molybdenite. Drilling and feasibility studies continue.

Jan 1, 1998

The Gosowong epithermal quartz-adularia vein, in the Halmahera magmatic arc, is a new discovery in an area of primary tropical rain forest with no history of gold mining or mineralization. The newly recognized mineral district also contains a number of other epithermal vein systems, two centres of porphyry Cu-Au mineralization, and a number of argillic and advanced argillic alteration zones that may be related to underlying mineralization. Gosowong was discovered and tested through the application of basic exploration techniques including drainage sampling, soil sampling, trenching, magnetics, IP, and diamond drilling. Lapse time from the initial reconnaissance discovery of a stream sediment anomaly to the release of inferred resource estimates of approximately 1.0m ounces was just over 3 years.

Jan 1, 1997

By Jon A. Carlson, W. Scott Williams

The EKATI"" Diamond Mine commenced operation in October 1998. It is operated by BHP Diamonds Inc., which is a part of the Non-Ferrous and Industrial Materials Division of BHP Minerals, a business unit of BHP Company Ltd. of Melbourne, Australia. The EKATI"" Diamond Mine is a joint venture of BHP Diamonds Inc. (51%), Dia Met Minerals Ltd. (29%), Charles E. Fipke (10%) and Dr. Stewart L. Blusson (10%). In December 1993, an office was opened in Yellowknife, Northwest Territories specifically for the then Northwest Territories Diamonds Project (EKATI"" Diamond Mine) development. EKATI"" Diamond Mine is located 300 kilometres northeast of Yellowknife and 200 kilometres south of the Arctic Circle in the Northwest Territories of Canada (Figure 1 ). The site is located in a remote tundra area of continuous permafrost, north of the tree line, which is part of the Canadian Shield. Wekweti (Snare Lake), a Dogrib community approximately 180 kilometres southwest of the project, is the closest neighbour. The mining area and facilities lie within the 10 960 hectares land leases held by the joint venture. The total claim block (core zone and buffer zone joint ventures) covers 344 000 hectares. To date, more than one hundred kimberlite pipes have been identified within the claims. Five of these provide the basis for the present mine plan. Total capital investment in the project is over C$700 million. At full production employment will be about 600, including employees and long-term contractors, with over 33% being Aboriginal from the Northwest Territories.

Jan 1, 2001

By C. E. Ekburg

Gold Quarry is a sediment-hosted, epithermal disseminated gold deposit located along the Carlin Trend. Gold, hosted by allochthonous Ordovician siltstones and cherts, is localized at the intersection of structures sympathetic to the major Good Hope and Gold Quarry faults. The magnitude of Gold Quarry was discovered in 1979 by surface exploration and by percussion holes drilled near the Maggie Creek orebody. Four years of development drilling delineated an open pit mineable gold deposit that contains 130 Mt (144 million st) of ore at an average 1.68 g/t (0.049 oz per st) of gold and includes a high-grade core of 46 Mt (51 million st) that average 2.64 g/t (0.077 oz per st) gold. Milling of the higher-grade portion began in 1985.

Jan 1, 1987

By E. J. Berentsen

The Turquoise Ridge gold deposit is located near the Getchell Mine, 72 km (42 miles) northeast of Winnemucca, Nevada. The deposit is owned by First Miss Gold Inc. The host rocks consist of Ordovician and Cambrian age shales and limestones. They have been crosscut by the northeast-trending Turquoise Ridge shear zone and northwest-trending shear zones. Gold mineralization occurs at depths from 427 m (1 400 ft.) to 671 m (2 200 ft.), along the intersection of these structures. Large tonnage, flat-lying deposits occur where folded, favorable beds are intersected by the faults. The carbonate within the beds has been replaced with silica, pyrite and arsenic sulfides.

Jan 1, 1996

By J D. Goldsworthy

The McPhee Creek bedded iron deposit is a recent discovery made by Giralia Resources NL (Giralia) in the northern Pilbara of Western Australia. The deposit lies 30 km north of the town of Nullagine along the southeastern margin of the East Pilbara Granite-Greenstone Terrane (EPGGT).The McPhee Creek area is located in the Kelly Greenstone Belt in the southeastern part of the EPGGT. The Archaean aged greenstone belt consists of volcanic and sedimentary sequences including the Warrawoona Group and the Gorge Creek Group. The McPhee Creek iron ore deposit lies within banded iron formation (BIF) rocks of the Gorge Creek Group. The structure of the McPhee Creek area is dominated by a northeast trending, upright synform (Sandy Creek Syncline) and associated folding that is truncated by northeast trending faults in the east. Iron ore mineralisation is predominantly stratabound and follows the dip of the bedding – however, in some areas, particularly in the southwest of the deposit, mapped steep to moderate dips of bedding planes are at odds with underlying fl at mineralised zones in drill sections. Zones within the deposit that contain substantial thickness of iron ore correspond to areas of complex folding suggesting structural control and iron enrichment in fold hinges. Petrographic analyses confirm mineralisation is goethite dominant and the deposit is strongly supergene enriched.Giralia initially identified iron ore potential in the McPhee Creek area through the presence of a small known channel iron deposit (CID) mesa. Giralia began exploration in 2008 by re-drilling a portion of the CID (subsequently named Crescent Moon) and reported a small low-grade Inferred Mineral Resource. Target generation in the wider area utilising Geological Society of Western Australia maps and Ikonos satellite images identifi ed strongly ferruginous outcrops associated with major structures along an 8 km long range located 2.5 km to the west north-west of the Crescent Moon CID deposit. In late July 2008, a total of 62 rock chip samples were collected during a helicopter supported sampling program conducted at McPhee Creek. Samples taken from haematite-goethite enriched BIF and canga zones outcropping intermittently over the 8 km length of the western and central areas of the prominent range assayed up to 63 per cent Fe. These zones represent the discovery outcrops and surface expression of the McPhee Creek main range iron ore deposit.Follow up sampling, geological mapping, bulldozing of access tracks and ramps and reverse circulation (RC) drilling commenced in September 2009. A maiden Inferred Mineral Resource was announced by Giralia to the Australasian Securities Exchange (ASX) on 15 December 2009.The current Indicated and Inferred Mineral Resource at December 2010 stands at 260 Mt grading 56.2 per cent Fe, 0.12 per cent P, 6.7 per cent SiO2, 2.3 per cent Al2O3 and 9.5 per cent LOI at a 50 per cent Fe cut-off. McPhee Creek is one of the largest iron deposits found in Archaean BIF in the northern Pilbara.

Jul 11, 2011

By E. J. Berentsen

The Turquoise Ridge gold deposit is located near the Getchell Mine, 72 km (42 miles)northeast of Winnemucca, NV (Fig. 1). The deposit is owned by Getchell Gold Corp. The host rocks consist of Ordovician and Cambrian age shales and limestones. They have been crosscut by the northeast-trending Turquoise Ridge shear zone and northwest-trending shear zones. Gold mineralization occurs at depths from 427 to 671 m (1,400to 2,200 ft) along the intersection of these structures. Large tonnage, flat-lying deposits occur where folded, favorable beds are intersected by the faults. The carbonate in the beds has been replaced with silica, pyrite and arsenic sulfides.

Jan 1, 1996

By Kris Inwood

"In 1879, when the Dominion government initiated its controversial program of industrial promotion, iron smelting in Canada was limited to one company producing coke iron on the mainland of Nova Scotia and three small charcoal blast furnaces in Quebec. There was no steel production. By the eve of the First World War, iron and steel were being produced in very large quantities, the companies active in 1879 had disappeared and new centres of integrated iron and rolled steel production at Hamilton, Sydney and Sault Ste. Marie had come to resemble the industry as we know it today. The most dramatic change was that at Sydney, Nova Scotia, where in the early 1900s, two steelmaking companies established works. The Sydney developments have been explained as the result of resource discovery and technical change. W.J. Donald, in his authoritative account of the Canadian iron and steel industry, observes:(1) ""The most rapid growth of the Canadian iron and steel industry has occurred since 1897 ... The remarkable growth has been caused largely by the new conditions of the industry. The discovery and use of Newfoundland ores, together with the availability of Cape Breton coal, has made the Nova Scotia industry not only possible but profitable .... It is a safe conclusion that the Canadian industry would not have been an important one, had it not been for the discovery of the Michipicoten and especially the Wabana (Newfoundland) ores:' Donald also argues that metallurgical progress had been necessary to render the ores valuable. ""Newfoundland ores ... contain a considerable amount of phosphorus, and were made available for steel-making by recent inventions:' The purpose of this paper is to re-examine Donald's story. It will be argued that the origin of steel-making at Sydney is somewhat more complicated than Donald has indicated. The difficulty with Newfoundland ore extended beyond its phosphorus content and a resolution required more than the basic open hearth furnace identified by Donald. Moreover metallurgical change was only one of several developments necessary to induce industrial investment at Sydney. Surprisingly, however, the discovery of iron ore in the late nineteenth century does not appear to be part of the explanation."

Jan 1, 1999

By Kri Inwood

"IntroductionIn 1879, when the Dominion government initiated its controversial program of industrial promotion, iron smelting in Canada was limited to one company producing coke iron on the mainland of Nov a Scotia and three small charcoal blast furnaces in Quebec. There was no steel production. By the eve of the first great war, iron and steel were being produced in very large quantities, the companies active in 1879 had disappeared and new centres of integrated iron and rolled steel production at Hamilton, Sydney and Sault Ste. Marie had come to resemble the industry as we know it today.The most dramatic change was that at Sydney, Nova Scotia, where in the early 1900s, two steelmaking companies established works. The Sydney developments have been explained as the result of resource discovery and technical change. W.J. Donald, in his authoritative account of the Canadian iron and steel industry, observes:""The most rapid growth of the Canadian iron and steel industry has occured since 1897... The remarkable growth has been caused largely by the new conditions of the industry. The discovery and use of Newfoundland ores, together with the availability of Cape Breton coal, has made the Nova Scotia industry not only possible but profitable ... It is a safe conclusion that the Canadian industry would not have been an important one, had it not been for the discovery of the Michipicoten and especially the Wabana (Newfoundland) ores""Donald also argues that metallurgical progress had been necessary to render the ores valuable,""Newfoundland ores ... contain a considerable amount of phosphorus, and were made available for steel-making by recent inventions.""The purpose of this paper is to re-examine Donald's story. It will be argued that the origin of steel -making at Sydney is somewhat more complicated than Donald has indicated. The difficulty with Newfoundland ore extended beyond its phosphorus content and a resolution required more than the basic open hearth furnace identified by Donald. Moreover metallurgical change was only one of several developments necessary to induce industrial investment at Sydney. Surprisingly, however, the discovery of iron ore in the late nineteenth century does not appear to be part of the explanation."

Jan 1, 1983