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The Business of Mining Part 6

The "reefs" or bankets of the Rand are so termed because these ore bodies were undoubtedly ancient coast beaches or sea placers. The gravel, sand, and gold particles were cemented together into a conglomerate, then covered with many later sedimentaries, and finally the continent of Africa was so raised or altered in some manner as to bring these gold deposits into their present inland and tilted positions.

In veins or lodes, it is not supposed that ore-making minerals could have been precipitated from solutions travelling either upward or downward and obeying chemical laws if the depth were sufficient to furnish great temperature or high rock and hydrostatic pressures.

Therefore minerals which were deposited from aqueous solutions rising from depths, for example, must have retained their dissolved condition until they ascended to horizons in which both pressure and temperature were low enough to permit the precipitation and crystallization that create ores. Contrarily, descending solutions must have given off their contents before reaching the deep zones of heat and pressure, or not at all.

It is a quite common phenomenon to observe that the richest _gold_ ore in a mine is found close to the surface, if not actually at "grass roots." The explanation is simple. The gold, being the most stable of the aggregate of minerals composing the original ore, has the better resisted the corrosive attacks of atmospheric agencies and has remained nearly intact, while its associated minerals have been dissolved or altered and carried away. The same amount of gold remaining with a diminished quantity of the worthless, non-metallic minerals--the "gangue"--inevitably renders the ore richer per unit of weight (such as a ton), although per unit of volume the value remains constant, or nearly so, so far as the gold is concerned.

But with other kinds of ore, as, for example, copper, the best grades are found, not close to the surface but some two hundred or more feet down. The explanation is that the minerals of copper are considerably more soluble than the ordinary gangues and therefore the weathering and oxidation that takes place in the upper horizons of ore bodies will dissolve out the cupriferous compounds and thus deplete the superficial ore. But, by the flowing of the copper solutions to a lower zone, there occur certain reactions that reprecipitate the salts of copper upon compounds of the metal already formed and we have instances of the phenomenon known as "secondary enrichment."

[Illustration: CONCENTRATOR DIVISION, WASHOE REDUCTION WORKS OF THE ANACONDA COPPER MINING CO., ANACONDA, MONTANA. Largest Copper Works in the World.]

It was this very process that effected the changes in the character of the ore in the famous Anaconda Mine, previously mentioned (page 44). The locator's discovery was upon an outcrop rich in silver. Probably the original compounds of the vein were of both silver and copper. The silver was more stable against dissolution than was the copper, with the result that the base metal was removed more rapidly and completely than was the precious metal. The upper portion of the vein was therefore left rich in silver, and low in copper. But, as depth of mining increased, there was found a gradual diminution of the silver content with a simultaneous increase in the copper. The mines of Butte have become known as copper mines, and the wonderful records they have made are ample testimony to the fact that the change in the prevailing metallic values has not wrought serious havoc in the mining industry of the district.

Regarding the probability of veins persisting to great depths, there is this thought suggested by J. E. Spurr: "Owing to the pressure exerted by gravity, it is doubtless more difficult for a fissure to stay open in depth than near the surface. The tendency is to press the sides together. At a certain depth, it is probably the case that the pressure and the plasticity resulting from this, together with the increase in heat, makes it impossible for fissures, fractures or any openings to exist."

There are still many persons who are reluctant to let go of the cherished notion about the improvement of ores with depth. But there is no economy in deceiving one's self, and the wise thing to do is to accept the truths as they are daily proven. It may be worth while to again refer to the wonderful Camp Bird Mine. This mine was discovered in its true worth years after it had been abandoned by early prospectors because it lacked showy, base-metal minerals. However, since its true merit has been recognized, it has maintained large and remarkably rich annual outputs. As values were beginning to show a material decrease, about five years ago, an experienced mining engineer of recognized standing was engaged to give advice concerning the future exploitation of the property. After exhaustive investigation of the ground, and in the face of adverse opinions, he recommended the discontinuance of further development in depth. At the same time, however, he advised the exploitation of the ground laterally or along the strike of the very persistent vein. His advice was followed and the company's stockholders had reason to be advocates of the new theory; for a very reasonable amount of horizontal development work opened up vast stores of rich gold ore.

And yet, notwithstanding this disquieting feature that seems to apply to mining, there is comfort to be found in the consideration of the exceptional cases. Every man may hope that when he locates a new mine he is taking possession of a property that will have as extensive ore bodies as those that have been proven to exist in the lead-silver mines of Laurium, Greece, the quicksilver mines of Spain, or the copper and tin mines of Cornwall. These mines are in lodes which have persisted and have been mineralized to comparatively great depths, so that their bottoms have not been reached.

There is a modern idea that has taken root in the minds of mining men of the last generation to the effect that the mines with rich ore are not necessarily the ones with big profits. There are many men looking for investments in mines whose contents are of low grade but in large bodies readily worked. If a mine with rich ore can be found and the ore abounds in such liberal amounts as to warrant the inauguration of a company with the essential working equipment, such a proposition will naturally not be turned down. However, the faith of some men is placed in those mines that may be operated upon very large scales for long periods even if the profit per ton be very small. With a large plant, the unit of expense, _i.e._, the cost of mining per ton, is less than with a small mine. With the assurance of regular outputs of ore of a reasonably uniform grade, the milling equipment can be planned to handle a mine's product to the greatest advantage. The Alaska-Treadwell Mine, on Douglas Island, is an instance of a splendid property that has been continuously operated for about a third of a century. The ore is low grade in gold but immense dividends have been declared because the ore body, a tremendous mass of eruptive rock, has lain in such a position that the owners found it possible to excavate the stuff, to a great extent, by open-pit methods, although not by using steam shovels. The ore is treated in a vast mill contiguous to the mine.

The Homestake, another gold mine, has an ore body quite dissimilar geologically from, but of dimensions approximating those of, the Treadwell. It is a great body of mineralized, crushed shales, standing steeply in the shape of a lode and carrying about $3.75 per ton. It has been followed down considerably over one thousand feet and although the grade has dropped somewhat with depth, there are known to still be millions of tons in reserve. According to estimates, the mine has enough positive ore in reserve to keep the mill running at the rate of 4,000 tons per day for several years even if no more ore were to be opened up.

This ore nets but 53 cents per ton above all mining and milling expenses; but a little arithmetic will show that this mine is worth twice as much as the mine that is producing, with more or less regularity, an average daily output of, say, forty tons of high grade ore upon which there is a net gain of $25 per ton, a figure that is rather high for the average of so-called "high grade" mines.

We must, therefore, decide that it is always wise to think twice before condemning a mine because its grade of product is low. It is only recently and by virtue of marked improvements in metallurgical processes that many bodies of mineral have become "ore." Hence it is but natural that many of the older miners fail to grasp the possibilities that lie in such deposits.

What is the line of value separating a low grade from a high grade of precious metal ore? There is no uniform practice along this line. One will notice that ores are nowadays spoken of as high grade that, before the practice of mining these described meagre deposits, were reckoned as low grade. This fact is due to two reasons, viz., the cheapening of metallurgical operations, and the greater respect that is entertained for ores of low metallic content. The Esperanza Mine, in Mexico, is called a high-grade gold mine. Its ore has averaged about $33 per ton and the profit therefrom about $19. The Oroya-Brownhill Mine, in western Australia, has had ore that carried a value of about $22 per ton and from it a profit of about $15 per ton was made. In the Cripple Creek District, ores that run above $30 per ton are considered high grade.

This means that the average rich ore shipments of the district have a gold content of about 1-1/2 ounces per ton. The expenses of mining, freight, and treatment will probably total close to one-half the gross value, or about $15 per ton.

When one speaks of $30 or $40 ore as rich or high grade, it is not to be inferred that there is no ore in the shipments which is not worth a great deal more than this amount per ton. Such lots of ore will, no doubt, contain a great many chunks that would assay many times the average value. Such selected materials would not, however, be samples; they would be what are called "specimens." The specimen has its place in mine economic discussions because it furnishes the basis of operations for the ubiquitous "high grader" with which nearly every new and rich mining camp must contend.

Some writers claim that the high grader is a product of modern conditions; but we find that he has existed for such a long time that he was given mention by the Scotch historian and scientist Andrew Ure, who wrote of the precautions that were exercised in working the graphite mines of England, a century ago, to prevent the pilfering of even this comparatively low-grade material. Even the ignorant African natives of today cannot be trusted to wear clothing while working in the diamond mines. No, the cause of high grading is the innate greed of human beings and it has existed from prehistoric time and among all peoples.

In this discussion as to grades of ore, the question may arise as to what might be reasonably considered the most attractive kind of a mining proposition. This is too knotty a query to be answered in a few words.

There are so many different phases that must be given due weight. Every mine is a problem in itself. The Minnesota mines afford the best examples of profitable iron mining. Under the classification of underground, tabular deposits such as veins or lodes, no matter in what metals their values are found, Mr. T. A. Rickard believes that the ideal mine would be one carrying ore worth $10 per ton, in a body five feet thick, with costs not exceeding $5 per ton, and so mined as to keep one million tons continually in reserve. According to these restrictions, he thinks the Robinson Mine, of Johannesburg, will about fill the bill as an ideal _gold_ mine. It has a deposit of about the right thickness to avoid excessive timbering expense and this ore body is in such a vast, continuous sheet that its superintendent can depend upon maintaining a systematic development that will assure a constant supply of ore to the immense mill for ten or twelve years in advance. This same ore averages about fourteen pennyweights (approximately $14) per ton and upon this there is assured a profit of over five dollars per ton.

XIII

VALUATION OF MINING PROPERTY.

Whenever a piece of mining property is to change hands, it is the proper procedure to employ an expert engineer to investigate the ground and the improvements and so arrive at some estimate concerning its intrinsic value. Nobody is infallible and it is a trite saying that "nobody can see into a mine farther than the last drill hole." But there is a great difference in the reliabilities of reports made by trained and by untrained men. A self-styled "expert" of the type which is so abundant in every new mining centre and about cities frequented by mining investors will probably not be able to comprehend anything beyond his vision; but the mining geologist and engineer--the man who has devoted the better part of his life to study and experience along these lines--will be able to reach conclusions upon which much reliance may be placed. This fact has come to be recognized by the men who exercise business judgment in their mining investments.

The sampling of mines has been studied and improved upon by succeeding engineers, until one may say that it is conducted along strictly scientific lines. The old method of taking a sample of a mine by scratching ore from the sides of a shaft from top to bottom and letting the collected material at the bottom represent a fair average of the ore body, has been relegated to its proper place in the evolution of mine valuation.

Without entering into a description of the methods now employed by the best examiners of mines, let it be said that every scientific precaution is taken to obtain representative portions of the ore bodies, at such intervals as seem best in each particular case; that measurements and assays are made for each and every sample taken and not for the aggregate of all the samples; that no opportunity is allowed unscrupulous persons to vitiate results in any manner; that a professional engineer will not hold nor acquire, in any way, an interest in any proposition which he examines; and that the report of a reputable engineer is equally acceptable to the seller and to the purchaser, no matter for whom the work is done.

Much discussion has prevailed as to the best means of estimating the amount and the value of ore in unbroken reserves. Associated with these beneficial disputes, there has been a further controversy as to the correct classification for reserves of unbroken ore. It is now conceded among mining men and engineers to be improper to longer make use of the meaningless but tongue-worn expression "ore in sight" as signifying any known or unknown volumes of ore in the ground. The only ore in sight is that which has been hoisted or which has been broken and stored underground. Well-known engineers have proposed the following expressions:

To denote the contents of ore bodies which have been exposed on four sides, we may say _ore blocked out_, _positive ore_ or _ore developed_; for bodies exposed upon three sides, it is considered correct to describe the contents as _ore partly blocked_; for such bodies as are proved upon two sides only, the terms _ore faces_, _ore developing_ or _probable ore_ are appropriate; while in speaking of all ore that may be expected or suspected, but which is beyond the last exposures, we may use the expressions _ore expectant_ and _possible ore_.

When it comes to the question of placing a value upon an undeveloped property--one in which there is little, or no, development work or exploitation--it takes more than the ability of the common "expert" of the curbstone variety to arrive at any dependable figures. Without any exposures, except those that may have been produced by Nature, and perhaps with no guidance from facts that might be obtainable were there adjoining mines, one might suppose that the whole matter would resolve itself into mysticism. Right here is where the trained man best shows his ability.

The greatest error of the usual investor in mining schemes is to rely upon either no report at all or upon a worthless one furnished by an impostor. _In no sort of a mining proposition is a reliable report so essential as when one is contemplating the purchase of a "prospect."_ Successful engineers, whose predictions concerning such properties have come true, are sometimes complimented (?) by being accused of possessing intuition or prophetic vision. Call this ability what we will, we must admit that _education and training_ give certain qualifications that will enable a man to arrive at conclusions which, in the majority of cases, will be found to wear.

XIV

THE MINE PROMOTER.

With the thought that has justly been given to the place occupied (or that should be occupied) in the world's financial and economic affairs by legitimate mining, there has developed a well-founded stigma upon the operations of a class of persons who have styled themselves by what was formerly considered a worthy title, that of "promoters." Since men have found that it is as possible to go into a mining deal with the same chances for success as attach to any other line of investment; since it has been proved that real, worthy mining property does not require the exertions of many middlemen to obtain capital for its development; and since it has usually turned out that these "promoters" have handed the hot end of deals to their investors, it is not to be wondered that some sort of a brand would attach itself to the men who are not in the business to benefit the industry of mining in the least, but really for the selfish gains which they can pocket at the expense of the industry.

These men are legion. The mails are laden with their seductive letters and "literature." Brokerage firms are numbered among these leeches on legitimate mining. Charlatans appear almost daily upon mining scenes.

The men who engage in these deplorable practices are not from any one walk in life: they spring up from various branches of our social structure. The general public has learned that a very prominent Boston magnate will not scruple to promote a mining property even though it lacks the merit essential in attracting the conservative capitalist.

Thousands of people of small means throughout the United States and Canada have been recipients of nicely worded and familiarly-addressed letters signed by the son of a famous American author. This son, himself a writer of some repute, presumed to speak to his "friends" concerning a mining property which he promoted and into which he was glad to allow them to get with him "on the ground floor." He frankly stated that he was not offering such privileges to the big capitalists. He inwardly knew that such men do not require holdings in the Cobalt or any other region. Through the splendid work carried on by the Government postal authorities many of these frauds have been exposed and the perpetrators brought to justice. In January, 1912, the above-mentioned author, together with a number of his ilk, were brought before the Federal Grand Jury, and found guilty.

It is not the men of great capital who are induced, as a rule, into the deals of the "promoter." It is usually the common people, the persons of small means who have saved up a little spare money from which they hope to realize competencies for rainy days--a class of beings inexperienced in investments--who become the dupes of the promoter.

There have been notable exceptions to the statement that capitalists do not yield to the seductions of these men, but recurrences are liable to be few. The great business man is fortified by experience against forms of treachery and he is, therefore, not so susceptible to the allurements of any "promotion," be it mining or otherwise.

If one investigates these advertised mining "promotions," he will often find that the money paid in by the small investors purchases a very small portion only of the capitalization. The men who conceived the scheme of "promoting" a concern have carefully arranged to hold a majority of the stock, so that should there, by any chance, prove to be a mine, they are the ones who will reap the greatest benefits. Further, it often transpires that the contributions of cash that purchase the small interests do not perform the function of development for which the stock was ostensibly put upon the market. Perhaps somebody has a desire to get rich quickly. The operations of such frauds are so obscured and so complex to the average individual that sufficient evidence can seldom be procured to prove any violation of law.

A witty newspaper paragrapher once remarked that out in Nevada the old adage "Death loves a shining mark" was changed to "Death loves a mining shark." It would seem, however, that if Death were to love the person bearing the odious, well-understood title of "shark" enough to claim him early, the business of mining would be materially benefited. The post-office officials of the United States are to be commended for their efforts at curbing the despicable operations of these fakirs.

Occasionally the papers come out with the news that a firm's offices have been raided and their business stopped. These news items fall as awakeners upon the hundreds of gullible, middle-class persons all over the country who are known to actually force their cash remittances upon these fraudulent operators, much upon the plan of a department store's supposed bargain sale.

In spite of the "bad name" that has been attached to the persons engaged in starting up enterprises, there is a real need for more activity in the matter of inaugurating real, legitimate mining enterprises. Persons who devote their brains and energies in the direction of furthering worthy mining propositions do really "promote" the interests of such companies. What shall such persons be called if not "promoters"? There does not seem to be any other word that expresses the occupation of such persons. The real solution of this dilemma in which the honest men engaged in such work find themselves placed is to denounce, forcefully, the charlatan as being not a real promoter but a gross misrepresentation of one.

Let us, therefore, remove the odium from this title and give our approbation to those persons who are earnestly endeavoring, by honest means, to place mining enterprises upon strictly business-like footings.

The mining industry needs promotion and promoters.

XV

INCORPORATION AND CAPITALIZATION.

Let us consider the legitimate financing of a new or a reorganized, worthy, mining proposition. It is the universal custom to own and work a mine under the laws that govern a corporation and, for this reason, the mining man of the day is familiar with the practices of incorporating.

It is something of a question at the start to decide what is a fair price to fix upon a property as a whole--that is, to decide what the capitalization should be. There is no rule to be followed in this matter. Some organizers will decide to capitalize at what is expected will be the value of the property after some time. Other men will stick to the idea that it is the proper thing to capitalize for what the property will invoice at the time. The higher the capital stock, the greater number of shares there are for sale, usually. With a conservative capitalization, there may be fewer shares for sale, but each share is worth correspondingly more and the chances are much better for an advance in the price per share whenever the mine becomes productive. There are investors who will carefully investigate this feature and will shun any mining stock which has any appearance of over-capitalization. It would be well if all investors were to follow this precaution.

But what about the price at which to capitalize a prospect? By a prospect we here mean a property that has been favorably reported upon as worthy of development but in which, up to date, there is little, if any, showing of values or reserves. The engineer's report has recommended the property as containing the possibilities of a mine. How much is it worth? Can he or can anybody even roughly estimate the sum?

An engineer frequently does fix the sale-purchase price of a property, but it is not so usual for him to decide upon a valuation for capitalization. A very good guess may be made, perhaps, if there are similar and neighboring properties which have been developed.

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