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By James Marsh

INTRODUCTION Economists have long expressed suspicion of the economic theory of natural resource exhaustion, even in writing articles which have contributed to it (1). Indeed, the gap which separates the pure theory from practical management seems unusually wide. It is doubtful whether a mine manager could possibly know enough about the relevant parameters of his mine to steer it along the optimal paths described by the theorists (2). Nevertheless, enough faith in the theory remains that mine managers are suspected of being a separate breed whose behavior must be studied in special courses using specialized text-books, collections of readings, and journals (3). The implied hypothesis, that mines and natural resource firms are managed differently than other firms, is the subject of this paper. In the next section the theory is developed and analyzed. In section III, I discuss the implications of the statistical results that have been obtained. Finally, conclusions are reserved for section IV. THE MODEL A key difference between the traditional theory of natural resource production and that of other forms lies in the set of variables which ire assumed to jointly determine the quantity of output the firm will produce. Output, in the non-resource case, is assumed to be a function of k clearly definable and distinguishable inputs or factors of production, viz., y = f(xl, x2, ..., xk), (1) here

Jan 1, 1977

By F. E. Harris

IT has been said that carbon is "ubiquitous" with reference to iron alloys. Certainly at temperatures where carbon and iron form the solid solution, austenite, it may be readily added to, or removed from, steel surfaces. Differences in concentration potential are the sole requirements for carbon flow. To measure the rate of carbon flow, a proportionality factor, D, is arbitrarily expressed in units of (length)2 X (time)-1. If the term used for carbon concentration is weight pct C, as is customary, then a factor must be found, changing this term to one of weight per unit volume when the diffusion coefficient, D, is used in flow formulae. The determination of D values for carbon is complicated since D varies with the concentration itself. The Matano method has often been employed for systems involving a variant D. This method expreses an evaluation of unsteady flow whereby .0 is given a relationship with the numerical value of C-X slopes. The author contends that this solution is incorrect, except when D is invariant. The primary purpose of this paper is to support this contention. Here diffusion is controlled under two conditions of flow. The first part deals with the steady state; the second part considers unsteady flow under definite restrictions. Beginning with the fundamental concept, the development is continued until equations for C-X curves are obtained. The solution is then subjected to experimental data. It is realized that a great amount of reliable data is required for a rigorous proof. No such research is claimed. Instead an attempt is made to set forth the physical significance of the diffusion mechanism, and particularly to express the factors which influence the flow of carbon in austenite. Of equal significance is the implication that gaseous media may be employed with reasonable accuracy in making these determinations. THE STEADY STATE DIFFUSION OF CARBON IN AUSTENITE The fundamental experiment defining diffusion in solid metals may be readily performed for carbon in gamma iron.1 For this experiment a thin plate of medium carbon steel is chosen. The surfaces of this plate may be taken as two parallel planes which may be considered infinite for points well in the center of the planes. These two planes are held at different concentrations of carbon at a constant temperature. This temperature, 1700°F for example, is one where the single phase, carbon in solution with gamma iron, exists. When these conditions are held for a sufficient time the concentration of carbon of the different points of the solid settles down towards its steady state value. At points well removed from the ends, the concentration will remain the same along planes parallel to the surfaces of the plate.

Jan 1, 1947

By R. W. Raymond

Since the foregoing paper (see p. 387) was printed, I have received the decision of Judge William E. Church, of the first District Court of Dakotah, in the case of Michael Duggan et al. v. John H. and Frank J. Dnvey (Silva Terra—Sitting Bull case), published in full in the Black Hills Weekly Pioneer of August 9th, 1584. The journal mentioned gives also several interlocutory decisions rendered in earlier stages of the case; but I shall quote here only so much of the final decision as bears upon the .construction of the Revised Statutes concerning the apex, the end-lines, and the extra-lateral mining right, together with a sufficient statement of the facts of the case to explain the scope of the decision. " This is an action in equity, brought in the first instance to restrain a threatened trespass by the defendants upon certain mining property in the possession of the plaintiffs, known as the ' Silver Terra' claim ; the allegation being that the defendants were about to enter, through underground workings, the ground of the plaintiffs, and remove therefrom valuable bodies of silver ore. " The answer of the defendants, admitting the acts constituting the alleged threatened trespass, further averred that they had, in fact, at the time complained of, reached and passed, in their underground workings, throngh and beyond the vertical side-line of the Silver Terra claim, and therenpon justified the acts complained of, and claimed the right to pursue their workings into and through the Silver Terra ground, by virtue of their alleged proprietorship of a vein, lode, or ledge of rock in place, hearing silver, having its top or apex within the lines of a certain other mining claim called the ' Sitting Bull,' of which they claim to be the owners, which vein, lode, or ledge extended in a continnons body of mineral-bearing rock from such top or apex to the ground in controversy, and constituted the body of ore in dispute; and that it was in the pursuit of this vein, lode, or ledge in its downward course that they had passed beyond the vertical side-lines of the Sitting Bull claim, and for some hundreds of feet beyond, into the ,ground in controversy " Subsequently, a supplemental complaint was filed, setting up the entry into plaintiffs' ground by the defendants, and their claim of right to do so, and asking fnrther relief by a decree restraining the assertion of such claim, and quieting the title of plaintiffs. "The case was tried before the court without a jnry..... " Custer hill, upon which these claims are located, is situated in the village of Galena, in Bare Butte mining district, in this county. The village lies at the base of the western slope of the hill, which presents a lateral face from south to north

Jan 1, 1884

By W. Myron Davy

For more than a decade the use of the metallographic microscope, by mining geologists, for examining ores has been increasing and conclusions founded upon examinations made by it are found in several recent professional papers of the United States Geological Survey as well as in our technical publications. But most mining men have been slow to realize the positive value of this instrument in their daily work. The reason for this condition is not hard to find. The varied applications, the simplicity of preparation, and the methods of studying a polished section of ore have not been widely published. Papers in technical periodicals have been profusely illustrated by photographs of such sections, special refined methods of procedure for laboratory work have been described, and complete and detailed schemes of identifying the ore minerals have been published in book form.1 But simple and easily applied directions and, what, is more important, light, compact, and inexpensive equipment have not been available. The simplest microscope obtainable is intended for laboratory use and is much too bulky for the average field equipment; at present it costs about one hundred dollars for the instrument alone. Methods previously described for polishing specimens have necessitated electrically driven lap wheels, which are found only in permanent installations. It is small wonder that the examining mining engineer, field geologist, resident engineers, and mill men have looked upon the subject as being too involved for the field and have assigned it to the laboratory investigator. The writer has been interested in this question for some time from the viewpoint of his own work. Being handicapped by the difficulties enumerated, he has designed an outfit that has proved very useful. It is described here and its. applications shown in the hope that it may be of equal value to others, and that a start will be made toward popularizing

Jan 8, 1920

By Frederic Lahee

THE total production of crude oil in Texas during 1924 was said to be 133,613,985 bbl. as compared with 125,991,628 bbl. in 1923.1 Subtracting from these figures the yield of the Gulf Coast fields, there remains, for the other part. of Texas, a yield of 106,272,573 bbl. in 1924, as compared with 101,931,595 bbl. in 1923. This represents an increased, production of over 4,250,000 bbl. for all of Texas outside of the Gulf Coast or Salt Dome fields. Within this same region, in 1924, there were 3624 completions, of which 2352 were oil or oil and gas wells, 7 were gassers, and 1265 were dry holes. Thus, nearly 35 per cent. of the completions were dry holes. In 1923, there were 4134 completions, with 2853 oil or oil and gas wells, 2 gas wells, and 1279, or 31 per cent. of the total, dry holes. Outside of the Gulf Coast region, six major pools were discovered and developed in 1924.; two pools, previously discovered, were extended far beyond their limits at the end of 1923, and many smaller pools were opened. The major pools were the Big Lake field, in Reagan Co., the New Richland field, in Navarro Co., the Harmel, Carey, and Ragle pools, in south Archer County, and the Wortham field, in Freestone and Limestone Counties. Fields that were notably extended were the Panhandle producing area and the Luling field. Many wildcat wells have been drilled; most -of these were failures, but several opened .pools and several have had sufficiently favorable results to. lead to further drilling. The activity of the operators in searching for new production was very intense during 1924, and indications point to as feverish a campaign during the coming year. This will be stimulated by rising prices for crude oil. There are good reasons for believing that new pools will be discovered along the Mexia fault zone, in Archer, Young, Baylor, and Throckmorton Counties, in the great central region of Texas where we now have the Mitchell County and Reagan County pools, and very likely in the eastern Red River Counties including Cooke and Grayson. On the other hand, with the opening of the year, there is no new big pool in sight. An outstanding feature of the production end of the business is the increasing reliance placed on geological work and geological recommendations. Not in five or six years has there been such a demand for first-class geologists.

Jan 3, 1925

By Paul A. Bailly

“For innovative leadership in bringing about a quantitative rationality to mineral exploration; for the impact his efforts and wide respect have made on national mineral policy issues; for his effective managerial role in major mineral discoveries; and for his lecture, ‘Managing for Ore Discoveries.’”

Jan 1, 1980

NEW MEMBERS The following list comprises the names of those persons who became members during the period of May 10, 1917, to June 10, 1917. ANDERSON, JAMES P.,-Mgr. of the Mines of the Ringwood Co., 50 Church St:, New York, N. Y. BAKER; THOMAS C., Mine Supt., Cia. Santa Gertrudis, S. A. Pachuca, Hidalgo, Mexico. - BARCUS, W. J.. E., Min. Engr., Mining and Metallurgical Dept., General Chemical Co., 25 Broad St., New York,. N. Y. . BENNETT, GEORGE N.,.Min. Engr., Butte & Superior Mining Co., 616 West Gold St., Butte, Mont. BROCKMANN, GUILLERMO, Banker, Gmo. Brockmann & Co., Room 3115, 120 Broadway, New York, N. Y. BROWN, CLYDE L Mining, Box 703, Goldfield, Nev. BRUNSKOG, CARL W., Draftsman, Consolidated Arizona Smelting Co., Humboldt, Ariz. BURRELL,. OSSIAN C Mgr., American Zinc Co. of Tenn., Mascot, Tenn.

Jan 7, 1917

By James E. Chapman

The observations here presented are not those of an expert accountant, but of one who, while he has seen considerable service in the accounting departments of large companies, has spent more time in engineering and operating. This paper is intended to cover, in a measure, mine accounting for small mines, as distinguished from the elaborate systems, requiring many persons in the accounting department. I shall attempt to outline a system embracing the essentials of accounting, and simple enough in form to permit one or two persons to carry it on from month to month, in sufficient detail to be able to tell quickly the grade of ore, the prices received for metals, costs per ton for mining and milling, costs per foot for development, upward or downward tendencies in costs, ore settled or in transit, cash on hand, stocks of supplies on hand, efficiency of labor, etc. As in all accounting, there are two main divisions: that of revenue received for what is sold, and that of disbursements made for what is bought, so in mine accounting we have to consider chiefly the income derived from sales of ore or concentrates, and the expenses incurred in producing the said ore or concentrates in a marketable condition. I. Income The revenue of a mining company from the sale of ore or concentrates comes in the form of remittances, accompanied by settlement sheets made out by the buyer of the mine product, such as a smelting company. It is the duty of the mine accountant (or the person to whom this is assigned in connection with other work) to check these settlement sheets, against both the mine weights and assays, and the schedules of prices arranged between the mine and the smelter. As a rule, quotations for silver, lead, zinc, copper and other metals enter into the settlements, and require checking, as do also bills of lading. Each step of the arithmetical calculation is also checked.

Jan 1, 1917

By W. G. Sinclair

The North Texas district incorporated in this paper corresponds with the Railroad Commission's District No. 9, and includes the counties of Archer, Baylor, Clay, Cooke, Foard, Hardeman, Jack, Knox, Montague, Wichita, Wilbarger, and Young.† Table I,Oil and Gas Production in North Texas District, has been changed to conform with the nomenclature of pools designated by the Commission in order to facilitate compilation of the data, since most of the companies operating in the area are coming more and more to recognize one central authority in the matter of naming each new oil pool. No effort is being made to discuss the structural characteristics of the region, since it is generally known by oil men that most of the oil and gas comes from Pennsyl-vanian, with some of less importance from the Mississippian and Ordovician. Development during 1944 There were 1550 wells drilled during 1944, an increase of 450. Of this number, 677 were completed as oil wells, and 11 as gassers. Production increased 1,505,025 bbl., making the year's total 43,172,005 bbl. of oil having an average gravity of 40". Development generally, however, was somewhat disappointing. The 47 new pools, extensions, or new pay horizons in old fields, had a combined initial production of only 19,146 bbl. It is estimated that these wells added approximately 10,000,000 bbl. to the reserves. The largest single addition to the reserves was in the Caddo conglomerate in the Hildreth pool, Montague County. During the year, 66 wells were completed as the result of three extensions, I to 136 miles west, northwest and north of the field. Young, Archer, and Clay were the most active counties. Eleven new potential - oil fields were developed in Young County, nine in Archer and nine in Clay. Outlook for 1945 In spite of the fact that exploration as a whole was disappointing in 1944, prospects for increased development are bright for 1945. At the close of last year, 2.1 geophysical crews were operating in the district, which, together with the Ohio Oil Company's No. I W. R. Ross, a wildcat Strawn discovery in King County, 1 1/2 miles beyond the west boundary of district 9, stimulated a lease play extending over four counties. Two of them, viz., Foard and Knox, are in the area incorporated in this report. Acknowledgments The writer is indebted to Mr. C. W. Hanley, Zone Agent of the North Texas District, and Mr. William M. Lourcey, head of the Land, Leasing and Scouting Department for the Gulf Oil Corporation, both of Fort Worth, Texas, for permission to prepare this paper.

Jan 1, 1945

By J. L. Lamon, W. Crafts

Study with the electron microscope of the carbides in vanadium-chromium-molybdenum steels after tempering up to 1000 hr at 600 teelsto 1400°F confirmed that alloy carbides are formed at the secondary hardening temperature by decomposition of the plate-like iron carbides. It was also demonstrated that vanadium carbide persists as much smaller particles than do chromium- or molybdenum-bearing carbides. Conditions conducive to the formation of fine vanadium carbides are indicated to be favorable for high temperature strength. IN order to determine the effects of long exposure at high temperatures on vanadium-bearing steels, a survey has been made of their hardness and carbide structure. The behavior of carbides in the tempering of martensite was studied by X ray diffraction and electron microscope examination of electrolytically extracted residues in greater detail than in an earlier investigation.' A group of steels with about 0.25 pct carbon and containing chromium up to 5 pct, molybdenum up to 1 pct, and vanadium up to 1 pct was either quenched or annealed and then tempered for peri- ods of up to 1000 hr at 600° to 1400°F. Their hardness after tempering agreed with the Hollomon and Jaffe2 relation of equivalency of time and temperature, and with the degree of secondary hardening predicted from composition. Further, the appearance of the carbides indicated that the time and temperature equivalency relation was also applicable to the degree of carbide development. The mechanism of the tempering of martensite was demonstrated more clearly than in the earlier study. It was confirmed that carbides develop from martensite as poorly defined plates of the Fe2C type carbide followed by thickening of the plates with a transition to Fe,C. Finally the plate structure deteriorates into a lacy mass from which alloy carbides emerge as chunky particles that grow slowly with further increase of tempering temperature. Vanadium carbide derived from tempered martensite was found in characteristically small particles that tended to grow very slowly. The addition of chromium or molybdenum to a steel with predominant vanadium carbide tended to introduce carbides of a chromium- or molybdenum-bearing type having a somewhat larger particle size. The Cr,C, type carbide particles were larger than those of the V,C, type and somewhat smaller than the carbides in steel containing both Cr,C and M,C. Similar observations were made of the carbides in the pear lite of annealed steels. It appeared that high temperature properties would be benefited by the retention of the fine carbide particles that result from a balance of composition and heat-treatment designed to produce a maximum amount of vanadium carbide. Procedure: The steels used in the investigation were made with a base of Armco iron in a high-frequency furnace at the Union Carbide and Carbon Research Labs., Inc. The steels were deoxidized

Jan 1, 1951

By Ferdinand S. Ruttmann

The Tilly Foster iron-mine is situated in the southeastern part of Putnam County, New York, about fifty miles north of New York City, on the line of the New York City and Northern Railroad. There are a number of deposits of magnetite scattered throughout the county, the most important being those known as the Tilly Foster, the Mahopac, and the deposits of the Croton Magnetic Ore Company. (See the paper of Mr. Wendt, Transactions, xiii., 478.)

Jan 1, 1887

By H. P. Greenwald

IN the year just passed the Coal Division's Committee on Rock-Dusting reviewed the status of this safety measure in American coal mines and prepared a paper thereon which will be presented at the February meeting of the Institute. This paper supplements one appearing in Vol. 139 of the "Transactions," page 87 (1940). Because that paper will be issued soon, only a summary is given herein.

Jan 1, 1944

By Cyril Jones

13.9-1. Introduction. Any mining venture or project is undertaken with a view of gaining some benefits, which, with the modern limited corporation, means earning a return to the stockholders for the use of their funds. Thus, any manager, when confronted by an opportunity of expending funds, must realize that the funds should generate a satisfactory return. The problem then becomes one of how the manager should best expend, if he should expend, funds for opportunities that become available to him. In the evaluation of a mineral property, or of a project within an operating mineral property, there must be cognizance of the fact that the final return is dependent on many factors that are not present in other industries. The primary factor in mining operations is the orebody, which has a diminishing life. This diminishing life gives the decision maker a range of choices; for by expending more capital for a larger plant, he can work the deposit out in a shorter period (16). This may, in fact, maximize the return on the investment. Alternatively, he may wish to maximize the total profits, a course which usually requires a lower capital investment and allows a longer working life for the deposit before final depletion. Other factors that have great importance in the evaluation of mining projects are the taxation treatment of mining profits from the viewpoint of depletion, depreciation, and investment credit. Investment opportunities involve expending funds at the present time in return for future benefits. These future benefits have a degree of risk in that the annual amounts of benefits and their duration cannot be fore- cast accurately. The treatment of risk in economic analysis involves the quantification of the degree of variability of the expected future benefits and also of the initial capital expenditure. This treatment in mineral exploration may be extended to cover the initial search for an orebody

Jan 1, 1968

By E. F. La Vigne

ON Aug. 10, 1884, the Retsof Mining Co. began the sinking of an 18 by 12-ft. shaft at Retsof, N. Y. Rock salt was reached in 1885, in September, at 1008 ft. below the surface. The first salt was shipped in the fall of 1885. A timber breaker was built in 1886. In July, 1895, there was a consolidation of the Retsof Mining Co., the Greigsville Salt & Mining Co., the Livonia Salt Co., and the Lehigh Salt & Mining Co. These consolidated salt companies are now known as the Retsof Mining Co., a subsidiary of the International Salt Co. Eventually all of the mines were closed except the mine of the Retsof Mining Co., at Retsof, Livingston County, New York. On July 6, 1921, about ½ mile south of the original shaft and plant of the Retsof Mining Co., a new 9 by 28-ft. concrete-lined shaft was started. The shaft is 1063 ft. deep from the top of the shaft collar to the bottom of the salt bed. At the same time a reinforced-concrete breaker and other buildings were erected. This new plant began opera-tions on Dec. 15, 1923. It was designed for a capacity of 3000 tons in 8 hours.

Jan 1, 1936

By Clint L. Milliken

The smelter is often considered the flywheel of the copper industry. No other unit can produce such a uniform product from so many starting materials. Direct-smelting ore, concentrate, precipitate, refinery slag, and scrap in almost any combination can be processed into blister or anode copper. Copper smelting practice has advanced little in the last century. It is still basically matte smelting, although the source of matte has changed from the blast furnace to the reverberatory furnace because of changes in smelter feed, and the Great Falls converter has been replaced by the Peirce-Smith converter. This lack of progress has continued because the economic forces required to produce change have not been of sufficient magnitude. Traditionally, the smelting, operation has required only about 10% of the total cost of producing copper from its ores and this minor cost item has not warranted change until recently.

Jan 1, 1971

By P. Sen, H. B. Barani, P. Sen Gupta

A critical review of the various separation efficiencies reported in literature has been made. Most of the relationships used for evaluating the performance relate to screening, classification, or concentration operations and are applicable to single-stage, two-component systems only. In the present work, a much simpler approach has been used for assessing the separation process irrespective of the type of operation and this has been extended further to obtain an expression for a multicomponent feed and multiproduct (from a multistage operation) system.

Jan 1, 1980

By Helen L. Cannon

BOTANICAL methods of prospecting for metalliferous ores are based on the premise that deposits at depth may be reflected chemically in surface vegetation. For the past several years, on behalf of the Atomic Energy Commission, the U. S. Geological Survey has investigated on the Colorado Plateau the application of botanical methods to uranium prospecting. Results suggest that orebodies may be found under a considerable cover of barren sandstone through the absorption of uranium and associated trace elements by plants growing at the ground surface. Plant physiologists have demonstrated that uranium is a necessary nutrient for plant growth and therefore is present in all plants.' The amount present is small but measurable. The absorption of uranium by plants growing over ore deposits forms

Jan 1, 1955

By W. S. Sanner

Experiments were conducted to determine the quantity and purity of ultraclean anthracite that could be prepared in the laboratory, using conventional separating techniques. A low, a medium, and a high-volatile anthracite were studied. Specific gravity separation followed by grinding, screening, and refloating at lighter specific gravities yielded small quantities of material purified to 1.0% ash, as follows: from low-volatile anthracite, 0.7%; from medium-volatile coal, 1.0%; and from high-volatile coal, 2.3%. The reduction in ash had no appreciable effect on the volatile matter or sulfur content of the coal. The limited quantities of material containing 1.0% or less ash obtainable indicate that if ultraclean coal is desired, a practical approach should include the processing units as an integral part of a convc.ntiona1 dense-media washing plant. Anthracite preparation practices during much of the industry's history were geared to maximum recovery of the larger sizes, pea through egg, which were used in hand-fired, domestic furnaces. Those sizes were cleaned to meet trade requirements, and the smaller sizes were usually higher in ash content. The impression, thus, was that ash content of anthracite always increased as the sizes got smaller. It was presumed that it was impossible to wash the finer sizes to extremely low ash contents. Following World War 11, the classical domestic market began to decline and the finer sizes assumed an increasingly large share of the market. For example, in 1949l 61% of the production was still pea and larger. Fig. l2 shows that -by 1955 these sizes accounted for only 50%, and in 1965, they were only 39% of the total anthracite produced. With the reduction in the market, increased quality was demanded, especially in export markets, and an increasing number of dense-media magnetite washers were installed in new and existing cleaning plants. In 1965, the coarse coal prepared at 59 breakers in the anthracite fields was sampled by the U.S. Bureau of Mines (USBM); approximately 50% of these plants were equipped with dense-media magnetite washers.3 Since 1950, more attention has been focused on the use of finer sizes for numerous industrial uses, including iron-ore sintering, pelletizing, foundry coke-making, cement manufacture, production of calcium carbide, and of carbon electrodes, etc. Most industrial uses require relatively clean anthracite, such as 10 to 11% ash for sintering and foundry coke, 7% for aluminum melting-pot cathode carbon, and 5% for carbide production. Hence, cleaning methods have been improved to the extent that dense-media washers, hydraulic cyclones, and flotation cells have been introduced as fine-coal-cleaning devices. It is now possible to wash the buckwheat, rice, and barley sizes (9116 X 3132-in.) to ash contents as low as 8 to 10% in dense-media devices, but washing the -3132-in. sizes to those limits presents more difficult problems, due mainly to the fineness of the material. This USBM investigation was conducted to determine the amount and purity of ultraclean anthracite that could be prepared in the laboratory, using conventional separating techniques. The goal was to reduce the ash content to a level acceptable for industrial carbon uses, including electrode manufacture, which generally requires an ash content of 1% or less. While low-ash content is of primary importance in selecting industrial carbons, the amounts of other constituents are also important, including iron, silicon, titanium, nickel, vanadium, and sulfur. They were not considered in this work, since their occurrence in deashed anthracite has been studied elsewhere.4 The results of the present investigation were used to design a flowsheet, suggesting a method for producing ultraclean anthracite as part of conventional preparation practice, using dense-media vessels, crushers, pulverizers,

Jan 1, 1970

By Richard L. Gordon

Minerals long have been important commodities in international trade. As an inevitable result, the governments of the world have employed a wide variety of programs that affect the flow of trade. Roughly speaking, we may distinguish between the desire of more developed countries (MDCs) like the United States, western Europe, and Japan to control imports of minerals and the concern of less developed countries (LDCs), like India, about exploiting and exporting their minerals. The terminology used to describe different countries and the classification of specific countries into groups is unsettled and often changing. The poorest countries have been characterized as backward, undeveloped, underdeveloped, and developing. The problem seems to be in selecting a term that is both accurate and polite. Less developed seems, for reasons outlined by Hagen [pp. 51-57], the most convenient term. The borderline between an LDC and an MDC is always open to dispute. Objective measures are difficult to develop because of deficiencies in basic data, and enormous conceptual problems arise in making valid comparisons from even good data [see Hagen, pp. 7-28]. Thus, policies of the MDCs can be evaluated chiefly by using a few basic arguments for protectionist attitudes towards international trade. In dealing with the LDCs, a more far-ranging evaluation that covers general economic policy goals, the role of foreign investment, and the indirect effects of trade is required. This duality breaks down when trying to deal with the depressed areas in an MDC; here the issues are more akin to those associated with problems in an LDC. Similarly, variants of arguments used in LDCs appear in debates about foreign investments in MDCs. The whole discussion of minerals in LDCs, moreover, has obvious implications for MDCs like Canada and Australia. They, too, must face problems about the best utilization of their resources. THE RESTRICTION OF MINERAL TRADE BY DEVELOPED COUNTRIES[a] At least to some extent, the world's leading industrial nations have intervened to control the inflow of minerals. Such regulation is particularly pronounced for energy. Both the United States and western Europe employ

Jan 1, 1976

By William P. Lohden

INTRODUCTION It is recognized that, for a variety of reasons, some companies in the mineral industry today are by no means cash-rich and, in fact, are reporting a growing proportion of long-term debt in their capital structures. A review of recent balance sheets of small, medium-size, and some larger companies, indicates that a fair number still have substantial positions in cash equivalents such as U.S. government issues and other short-term money market instruments. In part, this paper concerns itself with companies which have sufficient cash and equivalents and/or cash generation to internally finance mining projects or expansions but which, for some reason, choose to borrow funds. Misconceptions which appear to frequently underlie so-called "leveraging" decisions are explored in this paper. Also considered arc' those circumstances under which any company, including one that is cash rich, should consider borrowing for a project in an amount beyond what would otherwise be necessary based upon its internal financing ability. I do not attempt to cover the raising of equity capital in public markets in this paper. OVERALL RETURN ON INVESTABLE CASH If you approach an individual with an investment which can be financed from savings, or by borrowing at a rate higher than one is earning on savings, that individual will quickly tell you that to pay interest at a rate higher than is being earned on savings would reduce overall income. Assuming that additional investment opportunities are not currently being considered, the individual concludes that a draw-down on savings, leaving a cushion for contingencies suited to individual circumstances, is the correct financial decision. For reasons discussed later, the simple mathematical logic leading to this conclusion tends to become obscured at the corporate level. When Leveraged Studies Are Inappropriate or Premature Surprisingly, I have heard of a number of companies that could afford to finance an investment solely with internal funds, which have made DCFROR (i.e. discounted-cash-flow rate-of-return) studies not only on a 100% equity basis but also on a leveraged basis. Certainly, a leveraged study would be appropriate if additional projects were competing for more capital than was available internally. Often, however, other projects are not far enough along to warrant a leveraged study and there is some danger that a project may be undertaken because it has an estimated acceptable rate of return, on a leveraged basis, that is not ultimately earned because some of the other projects are postponed or abandoned and borrowing is less than expected. For the above reasons, until it has been determined that (1) borrowing is a reasonable certainty for a particular project and (2) the timing and amount to be borrowed has been determined within a reasonable range of accuracy, I believe it is inappropriate and misleading to calculate DCFROR for a project other than on a 100% equity basis. Even when there are several projects currently competing for funds and borrowing will be required to finance one or more of them, using the common yardstick of calculating DCFROR on a 100% equity basis is a safer method to initially evaluate and compare the attractiveness of the projects. Many companies, whether they would have to borrow or not, will reject projects that on a 100% equity basis do not meet their minimum rate of return standards. Some companies which have to borrow will undertake a project provided the project's DCFROR on a leveraged basis meets its minimum return standards. The danger of this approach is that even moderate shrinkages of estimated cash flows could plunge return below

Jan 1, 1985