Search Documents

By K. Hanumantha Rao, K. S. E. Forssberg, H. R. Manouchehri

The responses of calcite, feldspar and quartz minerals in a laboratory free-fall electrostatic separator after tribocharging with stainless steel, PVC and copper plates were investigated. The effects of H3BO3 and BaC12 chemical pretreatment on the electrical properties of the above minerals were examined. The changes in the electrical properties are discussed along with the determined charge, dielectric constant and electrical conductivity of the mineral samples. The electrical properties of the minerals and their responses to the electrical field during separation after tribocharging and chemical pretreatment are explored relative to the electrical behavior of the minerals.

Jan 1, 2000

By H. R. Manouchehri

The responses of calcite, feldspar, and quartz minerals In a laboratory free fall electrostatic separator, before and after tribocharging with stainless steel, PVC, and copper plates, have been investigated. The effect of H3BO3 and BaCl2 chemicals pre-treatment on the electrical properties of the minerals is examined. The changes in the electrical properties are discussed with the determined charge, dielectric constant, and electrical conductivity of the mineral samples. Electrical properties of the minerals and their responses to the electrical field during separation, after tribocharging and chemical pre-treatment, are explored for the need to characterize the electrical behaviour of the minerals.

Jan 1, 1998

By Virgil J. Stachura, Calvin L. Cumerlato

The Bureau of Mines conducted a series of tests to develop a blasting method that would reduce overbreak and rockfall hazards at a limestone quarry in northeastern Wisconsin. Reductions in overbreak were achieved by shortening the main explosive column and reducing the explosive load in shortened stemming zones in shotholes which were to form the highwalls. Two blasthole diameters, 3 and 4 inches, were used with 7 by 7 foot and 9 by 12 foot burdens and spacings respectively. ANFO, Comsol 300, or PowerAN were used in the body of the shots and Gelmax or 40 pct extra dynamite cartridges were used in the reduced load zones. Smoother highwalls were visually apparent, however further analysis by seismic refraction techniques were performed as an aid to studying overbreak within the rock mass.

Jan 1, 1989

By Yi Ran Zhang, Nawoong Yoon, Brent Hilscher, Maria Holuszko

"Ore sorting technology has been rapidly advancing in recent years. Improving expected mill feed grade has a significant benefit to project returns, and can no longer be ignored. When there is an increase in the mill feed grade while maintaining the same throughput, the mine will be able to process much more metal and improve the floatation recovery. There are many more factors that contribute toward the economics of the project by implementing sensor-based sorting technologies covered in this paper. This paper reviews the economic impact on an underground copper-silver deposit with references to the concept of ""profit recovery,"" which is the measurement of recovery based on rock profitability rather than just metal content. The economic impact of sensor-based sorting is discussed in detail throughout the paper. The preliminary economic evaluation of the project compares the mine's base case design versus a design incorporating sensor-based sorting. The paper's primary focus is on economic impacts rather than the explanation of the sensor based sorting results. The sorting data is presented on a scoping level and using a sensor-based sorting study where the best possible results are used for obtaining the grade recovery curves. Also, the breakdown and analysis of the project economics are based on the operating cost available from the particular operation. Any assumptions taken into consideration are also outlined and discussed. INTRODUCTION The mining industry has been adopting Sensor-based ore sorting technology fairly rapidly in the recent years. The ability to increase mill feed grade by rejecting waste grade rocks early in the processing stage is proving to be revolutionary for some operations. These potential outcomes should not be overlooked by both producing operations and prospective projects, thus leading to a wide range of studies on ore sorting. The answer to this is the creation of a new term and concept - Profit Recovery™."

Jan 1, 2018

By A. K. Das, S. Pathak, C. Bhanu, P. K. Tripathy

Ferroalloys are integral part of steel melting process. The purpose of using ferroalloys is three fold e.g. killing of steel, modifying the slag composition and steel alloying. Amount of ferroalloys used for alloying is subject to requirements of steel properties e.g. yield strength, ductility, formability etc. Variety of ferroalloys (some-times pure metal) is used by steel industries depending upon their techno-economic feasibility. Size, chemistry and modes of addition of ferroalloys are suitably engineered to bring in operational consistency and cost benefits. Of late, Tata Steel has tried out a few ferroalloys for the first time with interesting results to meet the specific requirements of high strength interstitial free (IF) and micro-alloyed steels. Some of these ferroalloys have been put into regular use with complete or partial replacement of ferroalloys used earlier. Size of one of the ferroalloys has also been modified without any other adverse effects. This paper summarizes requirements of ferroalloys for the steel industry with special emphasis on recent trials.

Jan 1, 2007

By P Audet, D Doley

The mining industry often embraces mine closure criteria that require the reinstatement of predisturbance or even presettlement (ie historic) ecosystems. However, the extent and severity of disturbance associated with most mining activities mean that critical physical and biological characteristics are irreversibly altered. Consequently, it is rare that a reconstructed landscape can support ecosystems even close to the historic condition, and this rarity is reflected in the small number of mine leases that have been extinguished by attainment of such completion criteria. Novel ecosystems are defined as those in which some or all physical and biotic components are irreversibly different from the historic condition. Recognition of the concept of novel ecosystems allows mine closure criteria to be set according to attainable physical and biological conditions that provide safe, stable and manageable environments with acceptable ecological functions. We propose that a landscape that first maximises physical stability and economy yet will provide a range of environments for vegetation communities and fauna habitats that may be very different from those existing prior to a disturbance should be considered suitable alternatives to, eg targeting idealised historic environments. As a result, mine closure criteria should be established by detailed description of the best attainable physical conditions, with negotiated identification and testing of the most appropriate biological systems for the various parts of the reconstructed landscape. As a general practice, revegetation would use native, but not necessarily local species if the new physical environment is not conducive to the survival and growth of local species. These new ecosystems would need to be managed in perpetuity, although the intensity of management might be low if landscape design and engineering are combined with appropriate species introductions. Here, we suggest an abbreviated procedure that may be adapted in light of local conditions and circumstances for guiding decisions influencing the physical and biological properties of reconstructed landscapes that will enable novel ecosystems to meet realistic closure criteria.CITATION:Doley, D and Audet, P, 2014. Changing restoration priorities in the 21st century – opportunities for novel ecosystem design in mine closure, in Proceedings Life-of-Mine 2014 , pp 649–662 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 16, 2014

CSA mine, which is a deep level copper operation, located 12 km north of Cobar, NSW, currently uses a top down stoping method, utilising cemented hydraulic backfill (CHF) to fill and stabilise the stoping void thus assisting the extraction sequence. The stope sequence then requires development back through the CHF stope so that the necessary infrastructure for the subsequent stoping, such as raise bore pads can be sited. The primary and secondary support installed in the CHF consisted of 100 mm thick fibrecrete from floor to floor with 7 + 2.4 m long resin support tendons installed at 1.5 m ring spacing. This support system relied on the resin achieving a quality bond with the CHF, and also the fibrecrete developing early structural strength due to the use of an accelerator. In addition to the delays in the excavation turn around time, it was felt that a superior support system could be designed. Such a system was designed; risk assessed, tested underground, and trialled in selective CHF digouts, and eventually signed off as the chosen support method in CHF digouts. This paper discusses the change from a passive support system used in CHF digouts to an active support system using Swellex bolts and weld mesh, which has provided an active support system, that is superior, faster to install, reduced the excavation turn around time and is overall a cheaper support system.

Nov 25, 2010

By Nolan Eckroade, Nigel Pereira

Wireless electronic blasting systems are a new technology that enable truly wireless initiation through rock, air and water. This is achieved using low frequency magnetic induction waves to wirelessly send a firing command to groups of in-hole primers. Fully wireless initiation not only removes the limitations imposed by a wired connection to each primer in a blast, but also enables users to alter the paradigm of conventional mining techniques to advance operational productivity and reduce personnel exposure to high-risk activities. While initially deployed in underground applications, wireless electronic blasting is now being used in the open cut environment. To capture the early impacts in surface mining operations, case studies conducted at three surface mines evaluated blasts utilizing a wireless electronic blasting system against baseline blasts using conventional, wired initiation systems. The purpose of this paper is to outline the specific learnings associated with wireless electronic blasting in surface mining to date. The paper will include references to these specific case studies as well as benefits realized and applications for the future.

By Ryan W. Siggelkow

Mines today use various methods of mining to extract ore. Because of the dangerous nature of many of these processes, remotely controlled LHD machines are being used to extract the ore from the draw point. The remote control system, although being made safer all the time, has remained virtually unchanged for many years. The basic functionality is an operator switching the machine to remote control, getting out of the cab, walking up a stand, operating remotely, returning to the cab, switching to manual, driving manually, switching to remote, and switching to manual. It seems repetitive, and time consuming, does it not? Networking, convergence, video, voice, and data infrastructures, and other technologies are growing by leaps and bounds in virtually every industry and region, except for mining. From the comfort of the living room couch, a Canadian can play hockey online with full voice conversations over the Internet with someone in Russia in real time. Yet, a mine superintendent must jump through hoops to have a private conversation with the front line supervisor underground. "Is Joe around anywhere?" If Joe hears the message, he will respond. If not, who knows? Maybe he's hurt. Maybe he's not. Where is Joe? Nobody really knows, and that is scary. Today, surface knows that the workers disappeared into the cage at 7:00 a.m. They also know that the workers will probably and hopefully return at 3:00 p.m. Is there not a better way to handle this? With such a complex industry, it seems as if, for the most part, the introduction of new technology into mining has either been overlooked or has been met with some resistance. It is time to step back, look at the process, and see how it can be improved. Key areas of focus will be safety, productivity, dependability, and cost-effectiveness.

May 1, 2010

By D Frost, G Harbort, T Lipiec, N Deonarain

"The use of flotation columns has remained a contentious issue among mill operators. There are those who consider them an essential part of any mineral processing operation, while others consider them a necessary evil, which should only be installed if there is no alternative. Lastly, there are those who believe they should not be installed, no matter how great the perceived benefit.This paper provides an analysis of over 4000 installed flotation columns, contained in the Amec Foster Wheeler flotation database. Changing trends in column flotation use by type, commodity and geographical region are discussed. The effect of changing commodity prices and the China ‘phenomenon’ are reviewed. Special reference is made to the changing face of column flotation in Australia.Of note is the fact that after falling to a 20 year low in installed flotation column capacity in 2014, flotation columns during 2015 went through a resurgence in popularity. This resurgence was in direct contradiction to depressed metal prices and was driven by brownfield optimisations to reduce off-site costs, particularly in base metals. A case study is presented comparing the benefits of column flotation at high commodity prices with low commodity prices.Citation:Harbort, G, Deonarain, N, Frost, D, Lipiec, T and David, D, 2016. Changing Trends in Column Flotation Use - Their Impact for Australian Mill Operators, in Proceedings 13th AusIMM Mill Operators’ Conference 2016, pp 93–104 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Oct 10, 2016

By T. Peter Philip, Erich U. Petersen, William J. Tafuri, Donald M. Hausen, Douglas N. Halbe

Scarcely a month goes by that I or someone else at Newmont Mining or Newmont Gold isn't asked to give a talk on the topic I was asked to discuss today. Investors, financial analysts, geologists, metallurgists, even our government--everybody wants to know what the future holds for gold mining. Well, you're not going to get exactly what you asked for. Today, I'm prepared to focus primarily not on what the future will bring to us, but rather on what the future will demand from us. More than that, I cannot undertake because it isn't within my scope to predict how wise and resourceful everyone in our industry will be in the future. What our future will hold, as I see it, will depend on our--and our colleagues'-- responses to these very real demands. Three critical issues stand out in my mind as to what the future will demand of us in the gold mining industry. And these demands will be for: 1. The very greatest of technical expertise and innovation. 2. The highest order of environmental sensitivity and timely accommodation. 3. Planning, planning and more planning. All of these flow inexorably today from the traditional objective of any mining company--or any company in any business, and that is, to make money. Nothing as I see it, should be undertaken by a geologist, metallurgist or even an environmental department, unless the exercises will enhance profits; and nothing may be ignored which can have consequent damage to the bottom line. Thus, the three issues I've listed for you subordinate themselves to the objective of making money, although at least in the environmental area, it might seem to some that we can only incur additional costs without even a dollar-for-dollar return. I hope to disabuse you today of any such out-of-date notion. Let's tackle the first issue-- Technical Expertise and Innovation. Newmont Gold Company this year is celebrating its 25th anniversary of successful and profitable operations on the Carlin Trend. Carlin in 1961, which is when exploration began on the "Trend" by Newmont, actually may share a lot of similarities with Carlin today. They didn't then know where the gold was and, if they found it, they had one hell of a challenge mining and processing ore at a profit because gold was selling at only $35 an ounce. Today, we know where the current reserves are. But we don't know where our future reserves lie. Furthermore, we don't know exactly how we're going to mine them, and, as everyone here knows too well, we don't know what the optimum metallurgical treatment is, even if we can find and mine them. And all that despite the abundant level of modern experience and skills within the current generation of mining companies, and the fact that, even taking inflation into account, gold sells at a higher price today than in 1965 when Carlin began operations. But, of course, I'm telling you what you already know.

Jan 1, 1990

By A E. Petts

Record iron ore prices and a renaissance of infrastructure in the Pilbara have Flinders Mines poised to move from explorer/developer to an iron ore producer. The potential of the company’s Pilbara Iron Ore Project was first highlighted by the announcement of Rio Tinto’s Caliwingina North deposit to the north and the Fortescue Metals group’s Serenity deposit in the southeast. The success of Flinders Mines’ exploration has been based on incorporating landscape studies into an existing geological framework, and using this to understand the iron-rich materials that were emplaced during the Tertiary. The development of the Delta and Eagle deposit resource models highlights this process. There are three main mineralisation styles at the project; detrital iron, channel iron and bedded iron deposits. They have textural and mineralogical similarities with comparative deposits in the region. Gaining an insight into the geological processes unique to detrital iron deposits and more distal channel iron deposits has been important to understanding the geometallurgy of the mineralisation. The model sits comfortably with other regional oregenesis models and allows a contextual framework to be developed around the timing of deposition of the Fe-rich detritus and pisolitic nodules that dominate the deposits. The exploration model also allows Flinders to explore more effectively for bedded iron mineralisation developed prior to, and since the development of the Tertiary weathering landscape.

Jul 11, 2011

By T Gill, A Faragher, B Scott, V Kakebeeke

In 2000, after six year intensive exploration for high-grade haematite deposits, Rio Tinto included the channel iron deposits (CID) as a specific iron ore target in the Hamersley Province iron ore exploration program. The exploration model was simple and based on the then current understanding of CID genesis. Fundamental to the model was an interpretation that CID deposits after their final accumulation stage could be entirely concealed in their channels. Inversion to mesas and therefore exposure of the CID profile would only occur in areas where the modern drainages follow the ancient and have significantly incised their current bedrock. The model took encouragement from observations at Bungaroo Creek, where large CID accumulations occur in a deep valley incised in the Wittenoom Formation concealed below recent valley fills derived from the surrounding BIFs. Also, in the headwaters of the Yandicoogina system CID occurs below a more recent cover of calcrete and clay. After a number of failed or partially successful attempts, exploratory drilling in 2002 in the Caliwingina valley in the northern Hamersley Range identified significant CID mineralisation. Subsequent drilling programs from 2003 onwards revealed the presence of a large CID system, which stretches from the middle reaches of the Caliwingina Creek to deep under the sediments of the Fortescue Valley, a channel length of more than 30 km. Although the drilling is still somewhat sparse, the geological resource estimation suggests that Caliwingina is presently the third biggest CID system of the Pilbara (after Yandicoogina and Bungaroo Creek) and is of comparable size to the premining Robe River system (1.6 Bt), with comparable Fe-grades to the Yandicoogina global resource grade (57.7 per cent Fe). Large detrital and canga deposits overlie the Caliwingina CID, or interfinger with it, and although the economics of these are presently unfavorable, could ultimately present a low-grade iron resource of slightly smaller size to the CID mineralisation at Caliwingina Creek. Together with the recently discovered Serenity and Solomon deposits, as well as Cabbage Gum Bore and other smaller occurrences, the Caliwingina Creek deposit is part of a major new CID district in the central Hamersley Ranges, approximately halfway between Yandicoogina and Robe River. Although exploration in this new district is still underway, the preliminary indications are that this area will provide a total CID resource well over 3 Bt, and is on a par with the major known CID systems in the Hamersley Province.

Jan 1, 2009

By W. K. Muwais, R. G. Cuddy

"The Lower Cretaceous McMurray Formation contains the bitumen reserves of the Syncrude Mine in northeastern Alberta. This formation comprises sediments deposited sequentially in fluvial, estuarine and marine depositional environments. The Syncrude Base Mine area consists mostly of estuarine sediments, as much of the original marine sediments have been eroded away. These estuarine deposits consist of channel-fill sediments and interchannel tidal flat sediments with the channel-fills comprising most of the orebody.Channel-fills contain, among other lithologies, interbedded sand, silt and clay rich layers that often occur as sequences of inclined beds with dips up to 25 degrees or more. A detailed knowledge of the distribution of these inclined beds, their lithological characteristics and their continuity is very important in assessing the risk of mine highwall instability . Techniques used to identify and characterize adverse structures are reviewed. INTRODUCTIONGeneralThe Syncrude Canada Ltd. oil sand mine is located within the surface mineable portion of the Athabasca Oil Sands area about 40 kilometres north of Fort McMurray in northeastern Alberta, Canada (Fig. I). The company commenced large-scale strip mining of oil sands in June 1977in the area, referred to as the Base Mine, situated in the southeast corner of the company's two lease areas (Fig. 2).The mining method (Fig. 3) utilizes large electric drag lines operating on a single bench with highwall depths up to 60 metres. Feed grade oil sand (= 6 wt.% bitumen) is mined by draglines and windrowed parallel to the highwall crest. Lower grade oil sand « 6 wt. 0J0 bitumen) occurring as waste bands is selectively mined by the draglines and cast back into the mined out pit or placed on the bench and hauled by truck. The windrowed feed is delivered to the extraction plant by a bucket wheel reclaimer and conveyor system. Stripping of Recent, Pleistocene and Cretaceous overburden units is done outside the conveyor systems by mobile equipment. The 4.5 kilometre long mine is split into four quadrants for planning and scheduling purposes, with each quadrant having an individual dragline-bucketwheel-conveyor system.Surface mining of oil sand at Syncrude requires the removal of vast quantites of material. The design of the open pit mine relies heavily on knowledge of the distribution of ore and waste materials, and on the physical characteristics of these materials.The geology of the oil sand below the dragline bench at the Syncrude Mine is complex. Geological, geotechnical and hydrogeological factors play an important role in the design and operation of the mine. This paper describes aspects of the geology that impact on the design and operation of the mine. Some of the methods and procedures adopted by Syncrude to successfully overcome difficulties that the complex geology creates are discussed."

Jan 1, 1989

By D. A. Barr

High-grade gold-silver mineralization associated with electrum and argentite was discovered in a quartz vein at the Chappelle property, 273 km north of Smithers, B.C., in 1969 following a regional geochemical reconnaissance program in the Cassiar-Omineca Mountains. Subsequent exploration resulted in the discovery of numerous quartz veins with associated precious-metal values in a belt 17 by 3 km in area centrally located within Toodoggone Group volcanic and sedimentary rocks of Lower to Middle Jurassic age and a window of Takla Group volcanic rocks of Upper Triassic age. More detailed investigations, consisting principally of 5677 m of surface drilling in 57 holes and crosscutting, drifting and raising on Chapelle Vein A, has outlined a high-grade gold-silver-bearing shoot with a strike length of 200 m, an average width of about 3 m and extending to an average depth of about 40 m below surface.

Jan 1, 1978

By Karl J. C. Harries

"1.1. WHAT ARE AGREEMENTS AND HOW ARE THEY FORMED?In order to have an agreement, at common law, there must be an offer, acceptance of that offer, and consideration passing between the parties. In addition, the material terms (i.e. the basics or substance) of the agreement must be discernible, preferably by means of documentation. Although these concepts may appear simple and straightforward, the law relating to them is voluminous and complex. Some brief comments are worthwhile.• Offer/acceptance: Both offer and acceptance should be in writing, but they need not be. The actions, conversations, and/or correspondence of the parties may constitute either or both of them. Notwithstanding, the local law or practice of a jurisdiction will impose some specific requirements for certain types of agreements. If these requirements are not met, the agreement may be unenforceable. For example, Ontario’s Mining Act requires transfers of unpatented mining claims to be evidenced in writing and recorded.1• Consideration: Consideration is usually thought of as being money, but it can be virtually anything, even “the premises” (i.e. the mutual covenants or promises contained in the agreement itself). In addition, if one party, relying upon the offer of another, does something to his detriment, then the doing of the act can be considered to be an acceptance of the offer and, under the legal concept of “detrimental reliance”, can also be consideration. Whether or not detrimental reliance exists will depend upon the circumstances of each case.2• Material terms: The requirement that the material terms of an agreement must be discernible does not mean that all of the terms of an agreement must be documented or even have been considered, just the basic or material ones. In addition, it will be up to a judge to decide what is material – not necessarily the parties. In order to establish the material terms, a Court may look at all relevant documentation and may hear oral evidence. It will resist “writing the agreement”"

Jan 1, 2003

By Karl J. C. Harries

"10.1. INTRODUCTIONDefinitions are a necessary part of every agreement. Their purposes are to assist the reader in reading and understanding an agreement and to attempt to avert potential confusion and, therefore, disputes. In some circumstances, they may be critical in deciding a dispute. As they are often substantive, they should not be treated lightly.It is far easier and less confusing for a reader to read “the Company” or “the Recipient” than to be faced with “the party of the First Part”, or to see the “Jones Property” than “that part of the property hereinbefore described in paragraph 1.01 hereof”. It is also advisable not to use “-ee” and “- or”, as in payee and payor.One thing must always be remembered: once a word has been defined in an agreement, it will always have the defined meaning unless the contrary is clearly indicated or is required to make sense of a provision.2 It can be confusing for a reader if commonly used words are defined in other than ordinary terms. Unique words that will stand out in the text are more likely to be recognized as having special meaning. It is also good practice to identify defined terms by capitalizing them in the text of the agreement. Boldfacing of definitions is also sometimes used for this purpose but, as boldfacing is not easily identified in handwritten revisions, it can be missed in the press of negotiations, especially when several typists are involved. Lack of consistency in identifying defined terms is not a fatal mistake, but it can create confusion, especially if the reader is new to the agreement or is reading it in a highly technical manner, such as when there is a dispute.If definitions used in the main text also apply to a schedule, they need not be included in both. Omitting them from the schedule makes the agreement look shorter, which to some people is a benefit. If definitions are not repeated, make certain that the schedule clearly indicates that words defined in the main text have the same defined meanings in the schedule3 and are clearly identified as defined words. In considering whether or not to repeat in a royalty schedule definitions appearing in the agreement proper, think of definitions as an aid and a reminder to the reader. Repeating them will help a reader, if only by saving the nuisance of remembering where to find them in the main text and constantly turning to it. All the definitions needed to read the schedule will be right there, so that the schedule is a self-contained document. Just make certain that, if you do repeat a definition, you repeat it in identical terms. If you have to change any defined term to make it fit the royalty provisions, use a different word or phrase as the defined term to warn the reader that he is dealing with a different concept.4"

Jan 1, 2003

By Karl J. C. Harries

"11.1. INTRODUCTIONA royalty is the most common form of interest retained by an owner who is disposing of his property or by a joint venturer who ceases, voluntarily or otherwise, to participate in the joint venture.1 Rarely does a non-participating party have a direct interest in the property and/or assets of a project, except during the period when a non-participating joint venturer may be having his interest diluted.2 In fact, it is most unwise to permit a non-participating party to have such an interest. It may give rise to significant problems that could prevent or substantially delay the development of an orebody and require a considerable amount of time, effort, and money to correct.3In negotiating a royalty, it is important to be aware that there is no law or convention that says, “You just don’t do that in a royalty agreement.” As with any agreement, inventiveness and flexibility on the part of the negotiator are not just assets, but virtual necessities. It is also for this reason that it is essential to read the royalty provisions, particularly the definitions, fully and carefully, especially if you are the recipient. On the other hand, if your inventiveness and flexibility cause your accountant to question the advisability of one of your ideas, pay close attention to him.4 He will, no doubt, have had experience with many royalties, and no competent professional adviser disparages a client’s ideas without good reason. Besides, he will probably be the person who will be determining the royalty or certifying the determination of it. At the very least, he will be auditing your general financial statements, which must, of course, reflect the royalty determination. Heeding his advice not only may make the determination easier but also will probably save you money in professional fees later on. Nevertheless, do not simply accept his comments or recommendations without understanding what they mean, why they have been made with respect to your royalty agreement (sometimes professionals have comments that they make as a matter of course and, even though they may be valid, you should require them to be justified to you), and how they will affect your royalty determination.It is surprising how many corporate payors insist that their standard royalty provisions5 be used as a matter of policy, thereby effectively tying the negotiator’s hands. It is even more surprising, and to professional advisers frightening, how many of the senior employees who insist that such a policy be adhered to, virtually without variation, do not know what is in the standard provisions and would be hard-pressed to explain them to a property owner. If standard provisions are appropriate, by all means use them, but do allow experienced and sensible negotiators some flexibility and make sure that everyone within the corporation who may have to use such provisions – negotiator and supervisor alike – knows what they contain and why they are as they are. For example, there are often good and convincing reasons to describe a deduction in a certain way or to include a certain specific type of deduction. On the other hand, quite often the answer to the question “why?” is that “it has always been there”; this is, or should be, an unacceptable answer. In any event, if you, as the negotiator, appear to know what you are talking about, are familiar and comfortable with your royalty provisions, and are backed up by your boss with the same words or reasoning, a property owner cannot help but be satisfied that you are knowledgeable, even if he still does not agree with your provisions. Finally, if you do use standard provisions, make sure that they are reviewed and updated regularly."

Jan 1, 2003

By Karl J. C. Harries

"12.1. NO DEPRECIATION/GAAPAll calculations and computations relating to the Royalty shall be carried out in accordance with generally accepted accounting principles consistently applied to the extent that such principles are not inconsistent with the provisions of this Schedule and the agreement attached hereto, it being specifically agreed that nothing herein contained shall permit, or be construed to permit, the Operator to deduct any amount for depletion, depreciation, amortization or any deduction that represents a non-cash outlay.Comment: In cases like net profit royalties where recoupment of prior expenditures is permitted, care should be taken to avoid any implication that depreciation may also be taken. It is only logical and equitable that Property Owners should not be permitted an apparent ability to “double dip” with respect to deductions. A provision like this example should accomplish the task. It will be noted that the example specifically contemplates that the negotiated arrangements will prevail over any requirements of GAAP. Accordingly, if the parties agree to an unusual formula for recoupment, it will not be set aside to accommodate GAAP requirements. Under GAAP, revenues and expenditures are accounted for on an accrual basis. In addition, it specifically prohibits the taking of non-cash deductions, which is in keeping with the concept of recoupment.Although in some ways the example states the obvious and could be considered redundant, its presence, especially in provisions contemplating recoupment, makes it clear to the financial people that there may well be some variations from normal practices dictated by GAAP, while at the same time confirming the availability of GAAP to fill any voids.The accounting profession often makes the caveat that application of GAAP is an “art”, not a “science”. GAAP do not provide a cure-all and can create problems that will have to be addressed. For example, GAAP contemplate that asset costs are to be reduced by investment tax credits, which can cause a problem for a payor with more than one mine."

Jan 1, 2003

By Karl J. C. Harries

13.1. RIGHT TO RECEIVE ROYALTY CONTRACTUAL ONLY1

Jan 1, 2003