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By Lucia Kuizon

The Antimony RARE II area is underlain principally by Mesozoic igneous rocks associated with the Sierra Nevada batholith. The San Andreas fault zone is near the southern boundary. Metallic mineral deposits are associated with the fault zone. These deposits were formed from magmatic solutions, and tend to be along shears and fractures within the country rock. Marble and dolomitic marble deposits occur in Paleozoic roof pendants or inclusions in the Mesozoic intrusive rocks in the area (Troxel and Morton, 1962, p. 52).

Jan 1, 1982

[President Vernal Mortensen Vice Presidents Colorado Charles W. Margolf Montana Art K. Neill New Mexico Robert Diederick North Dakota James A. Brown Utah Bernard Bernstrom Wyoming John T. Goodier Secretary-Treasurer Doris G. Finnie Executive Board Roy Coulson A. Z. Dimitroff Claude P. Heiner J. R. Kastler Loren V. Linville Shirl C. McArthur Ira E. McKeever, Jr. Ralph E. Moore Robert E. Murray V. O. Murray George A. Nugent John Peperakis John A. Reeves Max A. Robb Joe T. Taylor R. M. von Storch R. R. Williams, Jr. Robert W. Wilson Mike Zakotnik, Jr. Edward F. Ziolkowski]

Jan 1, 1982

By Maurice Grieves

The great majority of shafts constructed today are still excavated by drilling and blasting, a method which changed very little in over 100 years until the introduction of the mechanical lashing unit and cactus grab by the South Africans, which enabled muck to be removed as fast as massive hoisting systems could handle it and resulted in very rapid rates of sinking. Record breaking month's performances were achieved at -Hartebeestfontein No. 4 shaft, October 1960-337.1 m; Western Reefs No. 4 shaft, October 1961-340.7 m; and Buffelsfontein eastern twin shaft, March 1962-381.2m. The method was very labor-intensive, requiring a crew of over 60 workers at the shaft bottom during the drill cycle. Safety precautions were strict, but in the drive to achieve rapid advance, cases of personal injury were still somewhat high because of the large number of people engaged in this potentially hostile environment. The South African method, as it came to be referred to throughout the rest of the world, was adopted in the United Kingdom in the late 1950s in a modified form with greatly reduced manpower and nonsimultaneous sinking and lining, which was insisted on by the British Mines Inspectorate. In that instance, it was successfully used to sink the 7.3-m-diam concrete-lined shafts at Kellingley to 770 m depth, with rates of advance of over 90 m/month achieved, a British record at that time. During the sinking of the 1.15-km-deep twin shafts at Boulby potash mine in the UK in 1970, the method was again used, but for the first time ever in Britain exemptions from the mining code permitted the use of crash beams, crash doors, jack catches, and semi-simultaneous sinking and lining techniques. New British shaft sinking records of over 120 m/month were achieved in both shafts. Similar equipment and techniques were used in the early 1970s to sink several deep shafts in Canada, notably Creighton #7 and the Con zinc mine at Yellowknife in the NW Territories. Today, this equipment is standard for deep shafts in the US and the rest of the world. However, with the tremendous escalation in mining labor costs, the impact of health and safety legislation, and environmental regulations, coupled with a very real shortage of miners willing to work in this exposed situation it was apparent that an alternative to the labor-intensive conventional method of shaft construction had to be found. Recognizing the trend is inevitable, one or two major German shaft sinking contracting firms began to take a fresh look at full face boring techniques applied to tunnels and raise bored shafts. The results were most encouraging. Tunnel drivage techniques using moles had developed considerably from Colonel Beaumont's original channel tunnel machine circa 1880 to the superbly engineered Priestley machine selected to cut the British side in 1975 and the double shielded Robbins Grandori borer on the French side of the English Channel. Full face tunnel machines were being successfully used to drive uphill in inclined shafts in Austria and Switzerland. At Mapprag in Switzerland, the Demag mole drove the first (intentional) vertical transition and curve, and then went on to successfully complete the 730-m-long penstock shaft at an inclination of 35°. In Austria, the Wirth mole drove the Kaprun Glacier ski-lift railcar tunnel at record breaking rates of 457 m/MONTH (best 30 m/d) through green schist at an inclination of 29° for a distance of 3.35 km while the Hydro tunnel at Sarrelli in Switzerland was being driven by the Robbin's mole at an inclination of 35°. Simultaneously, extremely promising results were obtained using large assemblies of cutter discs on raise borer heads, such as the 4.87-m-diam X 460-m-deep shaft raised by Teton for Jim Walter Resources Inc. Bearing in mind that most mine shafts in the future (unless in exceptionally competent rock) will require some form of lining, and the trend will be toward deeper shafts as the more easily accessible mineral deposits become exhausted, it was seen that normal raise boring had definite limitations in vertical accuracy, in the limitation imposed by the drill string on the available torque that could be applied to the cutter head, and in the risk of collapse of the unsupported shaft rock wall in friable or jointed and fissured ground, since it is not possible to apply any form of temporary support until the permanent lining is being installed. A further problem was the economics of installing a subsequent lining, necessitating setting up a headgear and hoisting arrangement approaching in size that required for conventional drill and blast sinking and lining. Because of the economics, German contractors opted for a phased transition from drill and blast to the full face, rodless, out of the solid shaft mole, by starting off with a down-the-hole shaft boring machine -without a drillstring-but using a pilot hole to get rid of the muck.

Jan 1, 1982

By Richard C. Corson

Modern microprocessor systems make it possible to use several variables to anticipate changes in the process and to react with responses before upsets can be magnified by the process or by control action. Through tighter control, "insurance" can be eliminated from process set points without affecting product quality. In actual operation with a traveling grate furnace this control philosophy has produced savings of up to 20% in fuel consumption and 8% in fan power usage while producing a more consistent quality product.

Jan 1, 1982

To pinpoint dust sources and to improve dust control on longwalls. Approach Use short-term gravimetric sampling to determine the severity of various dust sources, and to evaluate dust control techniques used in longwall mining. Short-term gravimetric sampling can be used to isolate dust levels produced by various dust sources. How It Works Traditionally, gravimetric samples have been collected over an 8-hour shift, yielding time-weighted, average dust concentrations. This method gives a good indication of the full-shift respirable dust exposure of underground workers, but is less than satisfactory for identifying dust sources, determining their severity, or for evaluating the effectiveness of dust control techniques. Short-term gravimetric sampling uses equipment available to all mine operators. Two individuals composing the survey team each collect multiple (three to four) gravimetric samples during selected segments of the mining cycle. Multiple samples are necessary to insure accuracy, and to obtain a valid average measurement of the respirable dust concentration when sampling for short periods of time (typically 20 to 30 minutes). The gravimetric instruments may be carried in a sampling package or in a "sampling vest." A fishing vest with four large pockets can be used for this purpose. The sampling pumps are carried in pockets and the sampling head assemblies arc hung across the front of the vest.

Jan 1, 1982

By Cheri Eby, William R. Eby

This paper describes the state-of-the-art of pneumatic transport systems that are capable of conveyinq waste cuttings generated by raise drills during shaft construction projects. Additionaly other examples of applications pertaining to pneumatic transport systems qualified to convey abrasive and nonabrasive materials (&., gravel, shale, coal, ore, and limestone) will be presented.

Jan 1, 1982

By D. S. Choi

The paper contains a subsidence measurement taken over a room and pillar panel of a mine located in northern West Virginia. A total of 72 monuments were used to determine a three dimensional view of mine subsidence. In addition, the results of measurements were used to compute ground strains with the use of a numerical model.

Jan 1, 1982

By W. R. Dengler

INTRODUCTION Shaft sinking represents a relatively small proportion of the activities involved in mine development. Because of this limited utilization, shaft sinking has been one of the most difficult functions to mechanize. Although shaft machines (muckers) were introduced more than 30 years ago, the first machines were low-capacity units, and machines of this type did not gain wide acceptance by the mining industry until the late 1950s. However, the increasing depth of underground mines and the es¬calating costs of labor have increased the benefits obtain¬able from high-speed shaft sinking. The result has been a growing need for high-capacity shaft machines. Most of the machines available at the present time have been developed by modifying existing equipment to increase the payload capacity and performance. AVAILABLE SHAFT MACHINES In general, shaft machines may be classified accord¬ing to the types of digging mechanisms and the mecha¬nisms of operation. The available digging mechanisms include clamshells, cactus grabs, front-end buckets, and backhoes. The mechanisms of operation can be classified as either pneumatic or hydraulic. Selection Criteria For efficient operation, the primary consideration in selecting a shaft machine is its capacity. The minimum capacity of the machine should match the capacity of the hoisting system at the ultimate depth of the shaft. In many cases, two machines may be needed to obtain a sufficient mucking capacity. The shaft dimensions and configuration often dictate the type of machine that may be utilized; for example, an overshot loader does not work well in a circular shaft that has a diameter of less than 5.5 m (18 ft). Similarly, a single Cryderman mucker is not suitable for a large-diameter shaft, nor is it applicable where very high sinking buckets are to be used. Other factors for consideration include the degree of material fragmentation, the abrasiveness of the rock, and the amount of ground water that is inter¬sected. Machine Descriptions Riddell Mucker: The Riddell mucker, illustrated in Fig. 1, was first introduced in 1948. This is one of the most common shaft machines in the medium-capacity range. The Riddell mucker consists of a hoisting and traveling mechanism that operates a clamshell suspended on cables. The early machines operated with a 0.3 m3 (10 cu ft) clamshell and had an hourly capacity of approximately 27 t (30 st). This type of shaft machine has gained wide acceptance throughout North America. Essentially, the Riddell mucker consists of standard components, such as the pneumatic tugger hoists that operate the clamshell. The carriage is suspended on rails that also serve as the blasting set, located immediately below the shaft timbers. To effectively position the clam¬shell in the shaft, the operator controls the carriage travel by means of wheels that are driven by a pneu¬matic motor. The Riddell mucker most commonly is used in rec¬tangular timbered shafts. However, some units have been installed with circular rails, allowing them to work in circular concrete-lined shafts. A popular practice with many Riddell muckers is to increase the capacity through the use of larger clamshells, often ranging up to 0.76 m3 (1.0 cu yd), in conjunction with more powerful tugger hoists. In some large rectangular shafts, two Riddell units have been used side by side to achieve a sufficient capacity. Cryderman Mucker: The Cryderman mucker, illus¬trated in Fig. 2, is another common shaft machine in the low- to medium-capacity range. Developed in the early 1950s, it also has gained wide acceptance throughout North America. Equipped with a 0.3 m3 (10 cu ft) bucket, the Cryderman mucker has an hourly capacity of approximately 23 t (25 st). The Cryderman mucker is operated entirely by means of pneumatic cylinders and a pneumatic telescopic boom. The boom is suspended from a sectional frame¬work that is usually located at one end of the shaft. The framework or headframe can be suspended from an independent hoisting system located either on the sur¬face or in the shaft. In large shafts of either rectangular

Jan 1, 1982

By John R. Benham

The Windigo Theilson RARE II area has a low mineral potential. There are no mines or claims in the area. The only observed results of mining activities were five prospect pits near Tolo Mountain. Samples from these pits contained no significant assays. The study area contains more than 190 million cu yds (145 million m3) of cinders in 17 cones. Development of these cinders is unlikely because their locations are remote, and other sources supply area needs. The Geological Survey has classified the area as prospectively valuable for geothermal resources. However, there has been no geothermal exploration activity.

Jan 1, 1982

By Gen-ichi Nakazawa, Masamichi Fujimori, Ichiro Doi

INTRODUCTION The major products of nickel industry in Japan are the electrolytic nickel (E-Ni), the ferro-nickel (Fe-Ni) and the nickel oxide sinter (NOS), totaling in production to 90 - 100 X 103 tons/year in terms of pure nickel content, and sharing approximately 20% for E-Ni, 10% or less for NOS, and the rest for Fe-Ni. The raw materials to be used for these products depend totally upon the imports from abroad; matte, the raw material used in the production of E-Ni, is from Australia and Indonesia; matte for the NOS is from Indonesia and New Caledonia; and garnierite, the raw material for Fe-Ni, is imported in bulk from New Caledonia, Indonesia and the Philippines. This report describes the acquisition of these raw materials, the production processes, trend of supply-demand, problem areas and the measures taken, and so forth, in connection with the nickel industry in Japan. ELECTROLYTIC NICKEL 1. History The nickel industry in Japan began in 1939 by the Sumitomo Metal Mining Co., Ltd. (SMM) with 150 tons E-Ni/month under the blast furnace smelting and the metal anode electrolysis. This was temporarily suspended after the end of last World War II, but resumed in 1952 with garnierite of New Caledonia as a raw material. Since then, the production capacity has been expanded incidentally to the increase of demand. However, since the smelting of garnierite contained about 2% nickel was very costly, the smelting process had been changed to smelt the briquettes of the mixture of garnierite and nickel sulfide concentrate imported from Canada and Australia. In 1975, this smelter was closed, and SMM's nickel refinery used matte from Western Mining Corp. (WMC) of Australia as a raw material. The refining process had been the metal anode one. The crude nickel oxide derived from roasting the high grade nickel matte had been melted and reduced with coke in the electric furnace and cast into anode. In 1970, a new refinery was constructed to produce 1,000 tons Ni/month under the matte anode process, and further, in 1976, the old refinery was converted into the matte anode process, thus resulting in the total production capacity of 1,690 tons Ni/ month today under the matte anode process. Shimura Kako Co., Ltd. began in 1951 to produce a little of E-Ni, and in 1955, they constructed a shaft furnace smelter with New Caledonian garnierite as a raw material to begin the E-Ni production under the matte anode process. Its monthly production reached 400 tons in 1957, but it discontinued its smeltering in 1963 to convert to the matte import from S. Le Nickel, WMC and INCO. In 1979, it changed the source of matte supply from the above to Soroako of Indonesia, discontinued the E-Ni production in 1979, and arranged for a total toll contract with Sumitomo. Meanwhile, SMM has developed a very distingished process for nickel-cobalt separation and refining by a solvent extraction method from nickel and cobalt mixed sulfide generated as a by-product in the nickel recovering process from laterite under the Nicaro process. Nippon Mining Co., Ltd. (NMC) also developed its own process. The plants under these processes were constructed in 1975, with the monthly production capacity of 230 tons of nickel and 130 tons of cobalt by SMM, and 300 tons of nickel and 110 tons of cobalt by NMC. SMM imports the raw material from the Marinduque Mining and Industrial Corp. of the Philippines, while NMC from Queensland Nickel Pty. Ltd. of Australia. 2. Production Status 2.1 Producers and materials Today, SMM holds the monthly E-Ni production capacity of 1,920 tons, of which 1,690 tons are from the matte anode process, and the remaining 230 tons are from the mixed sulfide as a raw material. NMC also uses the mixed sulfide as a raw material for a production of 300 tons/month. [ ] Most of SMM's raw material, nickel matte, is imported from WMC of Australia, partly using the Soroako matte from Indonesia. An example of material analysis is given in Table 1. Matte is a raw material for E-Ni and NOS, and the major sources of matte supply at present are Australian WMC and Indonesian Soroako, occupying ap-

Jan 1, 1982

Jan 1, 1982

By Kumara S. Rachamalla

Long-term stability, appropriate taxation and incentive policies are essential to attract and stimulate investment in the mineral sector. An outline of Ontario's $4.6 billion industry and associated tax incentives is presented. Producers are offered incentives under The Mining Tax Act, federal and provincial income tax acts for exploration and development by reducing Me after tax cost to 13-25¢ for each dollar spent. The Mining Tax Act provides generous processing incentives which have positive effects in enhancing investment and economic advantages of building processing facilities. Non-mining companies and entrepreneurial individuals can receive 25% of eligible exploration expenditures in grants/tax credits under the Ontario Mineral Exploration Program.

Jan 1, 1982

By Alexander May

In its role to provide technology to prevent or limit adverse environmental impacts associated with mining or minerals processing, the Bureau of Mines has conducted research at its Tuscaloosa Research Center to asess the environmental impacts of phosphogypsum produced by the Florida phosphate industry. Over the years, stockpiles containing 335 million tons of phosphogypsun have accumulated and the industry continues to generate an additional 33 million tons a year. Samples from approximately 1,000 feet of drill core, obtained from nine stockpiles were characterized using chemical, X-ray diffraction, emission spectrographic, radiological, and physical means. The data developed indicated that phosphogypsum is not a corrosive or toxic hazardous waste as defined by Environmental Protection Agency criteria. Radium concentration averaged 21 picocuries per gram and its content was inversely related to particle sizes. Thirty-nine elements were detected in phosphogypsum; concentrations of these elements did not vary with depth within the stockpiles.

Jan 1, 1982

By R. R. Fullerton

Diatomite or diatomaceous earth is composed of innumerable microscopic opaline skeletons of single-celled aquatic plants called diatoms. The unique properties of this material enable it to be used as an important filtration medium and filler. The Circumpacific contains several economic deposits of diatomite. The largest of these is located in Lompoc, Ca. This deposit is the world's largest, purest, and most uniform marine deposit currently being mined. The other Circumpacific deposits are of fresh water origin. These deposits and Lompoc's unique marine deposit are significant sources of the world's diatomite supply.

Jan 1, 1982

By Philip H. Nelson, Richard Lingle

Vibrating wire stressmeters (VWS's) and borehole deformation gages (BDG) were deployed in two in-situ heater experiments at Stripa, Sweden to determine the thermally induced stress changes in the rock mass. The heater experiments ran for 18 months, including a six- month cool-down period after the heaters were turned off. Gages were installed in both horizontal and vertical boreholes and were subjected to temperatures ranging from 10°C to 120°C, depending upon the distance of a gage from the central heater. Most gages operated in a moist environment because groundwater flowed into many of the instrument boreholes during the experiments Of the 36 VWS's installed, six failed. Failures were attributed to corrosion of the vibrating wire due to moisture entering the gage body. Of the 30 BDG's installed at the beginning of the experiments, 22 failed, also as the result of water entering the gage body. Modification and reinstallation of the gages eliminated the problem of water infiltration, but much data from early stages of the experiments was lost due to gage failures. Calibration of the VWS in blocks of Stripa granite showed a lack of repeatability. Variability in calibration results are attributed to seating effects, to variations in the elastic modulus of the rock, and to changes in temperature. These three effects combined to produce an error judged to be approximately ±33% of the stress changes measured at Stripa. In contrast, the major source of error in determining stress with the BDG appears to be the uncertainty in rock modulus and thermal expansion coefficient. Sample calculations based on data acquired near the end of the experiments (during cool-down)

Jan 1, 1982

By L. J. Froisland

The Bureau of Mines conducted a 4-year research program at Uravan, Colo., on a 2-1/2-acre reclamation plot on the slope of a uranium tailings pile that had been covered with mine waste rock. The purpose of this study was to determine the effects of plant species, type of irrigation, type of fertilizers, and use of dust control chemicals on plant growth and surface coverage. Best grass coverage, nearly 100 percent with 240 plants per square foot, was developed in a section that was seeded with crested wheatgrass, fertilized with sewage sludge, and sprinkler irrigated. For comparison, a section that had been treated with commercial fertilizers developed 3.1 crested wheatgrass plants per square foot and 24 percent coverage without irrigation, and 8 plants per square foot and 75 percent coverage with irrigation. Results of spraying a dust control chemical were inconclusive. Russian-thistle invaded all test sections and ranged in density from 0.6 to 7.3 plants per square foot.

Jan 1, 1982

By Jack J. K. Daemen

A wide variety of subsidence prediction methods exist. They can be classified into empirical methods and mechanistic models. The empirical methods include profile functions and influence functions (Brzuner, 1973a,b; Kratzsch, 1974; Berry, 1978; Hood et al., 1981), the two empirical approaches of most practical value, if only be- cause they are readily programmed on calculators or computers. The profile functions have the advantage that they allow for ready determination of the necessary empirical parameters from field observations. They have the disadvantage of being restricted to subsidence calculations at a very limited number of points or lines above very simple (rectangular) mine geometries. This reduces greatly their practical applicability for damage predictions, which usually require estimates of strains, slopes or curvatures at structures that have arbitrary position and orientation with respect to planned mine excavations. Influence functions can be used to calculate subsidence at any point near an excavation of any in- seam outline. The main difficulty associated with empirical influence functions is the lack of uniqueness in the relation between subsidence and its cause, the convergence distribution over a mined excavation and its immediate surroundings. A secondary practical difficulty is the need for fairly arbitrary adjustments near the excavation edges, usually in the form of compensation zones (e.g. Brsuner, 1973; Hood et al., 1981). Determination of the appropriate empirical constants in influence functions is facilitated greatly when a direct mathematical connection exists between influence and profile function (several examples are given by Brauner, 1973 and by Hood et al., 1981), so that field data can be used to determine the parameters through backfitting of the profile functions, which is considerably simpler and more direct than backfitting of influence functions.

Jan 1, 1982

By Michel Dagbert

The determination of the precision of reserve estimates (tonnage, grade, quantity of metal) for an entire deposit or a large block in a deposit has received some attention in the early developments of geostatistics. A general formula to derive the estimation variance of any linear combination of a large number of sample values can be found in any geostatistical textbook like David (1977) or Journel and Huijbregts (1978). A particular case of this general formula is of course the kriging of the entire deposit. However, besides the technical difficulty of dealing with many samples the application of this formula necessitates the knowledge of the covariance between any two samples in the deposit. This is quite unrealistic in the usual case of limited stationarity where the assumption of a covariance or a variogram just function of the distance vector between two samples is only valid for samples within the same area of restricted size.

Jan 1, 1982

By J. I. Paige

The Bureau of Mines studied methods for recovering unreacted titanium minerals and petroleum coke from titanium chlorination plant wastes prior to neutralization treatment with lime. The objective was to recover valuable raw materials and to reduce the amount of waste materials that must be treated for disposal. Samples of solid wastes were physically beneficiated by gravity concentration (tabling) to recover titanium minerals containing 69.0 to 92.4 wt-pct Ti02 and by selective carbon flotation to recover petroleum coke containing 94.0 to 96.8 wt-pct C. Laboratory data indicate that the recovered titanium mineral would decrease the amount of solid waste to be disposed of from 32.8 to 53.9 wt-pct. The recovery of coke would further decrease the amount by additional 32.9 wt-pct. Preliminary tests conducted on recovering vanadium, chromium, and columbium from liquors obtained by leaching chlorination residues also have shown that (1) 97 pct of the vanadium was extracted from leach liquors in a two-stage solvent ex-traction procedure and (2) 58 pct of the columbium and 40 pct of the chromium were separated from the leach liquors by an ion exchange technique using a strong acid resin.

Jan 1, 1982

By Dan Nilsson

INTRODUCTION A company must have an objective, and that usually is to earn money. In some countries an objective can also be to reduce unemployment in an area or to develop nonindustrialized areas. Government-owned companies can also have as an objective that of serving the com¬munity. This discussion is limited to the consideration of normal companies wanting to earn money. Such an objective, however, has to be defined in more detail. It is not satisfactory only to maximize the total annual profit from, for example, a mining project. In comparison with most other branches, the mining in¬dustry is very capital intensive. When starting a new project, the mining company must invest a lot of money in mines, ore treatment plants, etc. It is normally many years before any income is received from the ore. Fig. 14 illustrates the payments for a new mining proj¬ect with an expected lifetime of 10 years. Whether this project is a profitable one depends on a lot of things. If the company has a shortage of money, it can be impossible to finance the project. Even if the company has enough money, the management may think that perhaps the project may not return the money fast enough. Such limitations will not be discussed here. Suppose that the company has internal funds from its own operation or can borrow them. Since the mining company must invest the money in advance, it is not satisfactory only to add all of the costs during the mine's lifetime and compare them with the total income during the lifetime. The company must include the time value of the capital. In this appendix, the basic investment theory neces¬sary to judge the profitability and costs of mining proj¬ects will be discussed. INVESTMENT THEORY Time Value of Money If a private person has a dollar and puts it into a bank, he or she will receive interest. If the interest rate is r%, the value after one year will be $(1 + r), after 2 years $(I + r)2 , etc. The interest rate represents the time value of money. If the same person wants to have $1 in the bank af¬ter one year, he or she has to put $(1 + r)-1 in the bank today. If the person wants $1 after 2 years, it is neces¬sary to put $(1 + r)-2 into the bank today, etc. So one dollar today is worth more than one dollar tomorrow. It is, of course, not correct to compare money at differ¬ent times since each dollar has a different value. It is necessary to transform all payments to the same point in time. That is called the calculation of the capital value of a cash flow, and to do this an interest rate is used. In the same way, the cash flow from a project like that shown in Fig. 14 can be translated to any other point in time. Most common is to translate all payments to the beginning of the mining period. That capital value is often called the present capital value. Interest Rate What interest rate will the company use? A com¬pany, just like an individual, has the basic alternatives of keeping its money in the bank and receiving interest, or borrowing money from a bank and paying an interest rate. The interest rate represents the time value of money for the company. If the company has a shortage of money, or many good potential investment projects, it has to use a higher interest rate than if it has a lot of money available. Most companies also increase their interest rate as a hedge against the risk involved by using money for uncertain investments, because of taxes, etc. Capital Value When the interest rate has been decided, it is possi¬ble to estimate the capital value of a project. Here the discussion will be limited to the estimation of present capital values. Suppose that one wants to know the present capital value of $1 (Fig. 15), which will be received after n years. To transform it n years back in time, one must multiply it by the factor (1 + r)-, where r is the inter¬est rate the company uses. Table 1 gives these factors for different years and interest rates. Example: At the end of year 5 a mining company has to invest $50 million in a new mine. What is the present capital value at the end of year 0? The company uses an interest rate of 15%a.

Jan 1, 1982