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The Business of Mining Part 8

The well-organized mining concerns of today maintain their engineering staffs just as completely as do other great technical businesses. The engineer is a very important man in mining affairs. His duties are probably more varied than those that appertain to any other sort of engineering. His operations will extend into the realms of the mechanical, the civil, the chemical, the metallurgical, the hydraulic, and the electrical engineers. He must be posted along the latest conceptions in geology, mineralogy, and physics. Besides he should be an accurate and rapid mathematician and draftsman.

The manager finds in the engineer his most helpful and trusted aid.

Often the engineer performs many of the functions usually attaching to the office of manager and, in the absence of the latter person, he may attend to all of the management. As stated above, the qualities that make a good manager are inherent; hence, to a certain extent, we may hold the deduction that good mining engineers, also, must possess innate qualities. Yet there may be pointed out this distinction between the make-up of a good man for manager and that of a good mining engineer: one, as said, cannot learn his business except through his own experience, while the other can receive vast benefit by _study_ of a theoretical nature and by _practice_.

Lately, there is much said about the _consulting_ mining engineer. His field of usefulness is broad. He can be asked to add his opinions and recommendations to those of the regular engineer, at any time; he can be used at times when the duties are too much for the resident engineer; he can be called upon to substitute; he need not live near the property, but may visit it periodically. Thus, while his retention is deemed remunerative, his services are available at a fractional part of what he would demand if he were employed exclusively by the company.

Under ordinary working conditions, it should be considered just as essential for a mine to take an occasional inventory as it is for a mercantile establishment. In truth, there is far more need in mining operations of the knowledge thus derived than in any other business. In mining, as already suggested, the business is one of selling off the stock in trade without replenishing it. The opening of more reserves of ore is not bringing more goods into the stock, but it may be likened to simply unpacking more goods in the storehouse. No new reserve can be added--they can simply be found and unpacked, as it were.

This finding entails the greatest amount of concern, and upon its successful practice depends the life of the mine. The presumption is strong that many mines have been abandoned while they really contained possibilities; but lack of knowledge of things geological, or perhaps failures to explore, permitted the operators to remain ignorant of the splendid assets that were available. Proof of this error has been found in many mines that have been subsequently re-opened.

The work of sizing up the quantity and the value of available ore is known as sampling. It is not well to limit the practice of sampling to the times only when a sale is contemplated. Reports based upon careful sampling should be issued frequently. Some companies employ men whose sole occupation is the daily sampling of every working face. The assay results obtained from the collected samples inform the superintendent just "how the stuff is holding up" throughout the mine and he governs his work accordingly. At longer intervals, the engineer should go into the work more thoroughly by not only taking very careful, scientific samples (not the usual "grab" samples taken by the daily sampler) but also by making careful memoranda of the physical appearances of the ore with its thickness and all geological data that will tend to throw light upon the permanency of each body. The engineer's monthly report will then be a substantial guide to the manager and the directors.

Managers, too, are expected to make periodical reports--monthly, quarterly, or annually--to the directors who, in turn, issue reports to the stockholders. The reports of managers and directors are not usually technical in their nature, although sometimes it is the practice of a manager to attach the engineer's report to his own for the perusal of such readers as may desire to dip into the technical affairs of the operations. Usually, the directors' reports are of a simple, financial nature, stating the conditions of affairs in plain business language to the persons whose cash has been invested in the enterprise.

It may happen that, for some reason, a special report is desired by the directors who may be contemplating some consolidation or other financial move and both the manager and the engineer will be required to furnish detailed statements concerning their respective branches. If a sale is planned, it may be that not only the company's engineer, but very probably another engineer engaged by the contemplative purchaser, will make examinations. They may work together or separately, as best suits them mutually, but it is upon the reports issued by them that the satisfactory price for the exchange of title is based.

XIX

PRICES OF METALS.

There is only one product of mines that has a constant market value, viz., gold. The precious metals, gold, silver, and platinum, are sold by the Troy ounce: the base metals are all handled and dealt with on avoirdupois weights. Copper, lead, zinc, tin, and nickel are quoted in cents per pound avoirdupois. Iron and manganese are curiously sold by mines to smelting companies on the ton of ore basis.

Since gold has been found in every known rock of every geologic age and is of world-wide distribution; since it possesses physical properties that long ago placed it at the head of the list of desirable metals; and further, since it does not occur in very condensed amounts, generally; this metal was selected as the standard of value by which the worth of every other commodity in the world is fixed. It must therefore be possessed of a fixed market value, and one never looks for quotations on pure gold. The price of pure gold is set at $20.6718. This very peculiar value is known as the "mint value," and is the price which the Government of the United States pays for all of its coinage gold. Among miners, as a rule, the price is thought of as $20 per ounce, and this is probably because this is more nearly the actual return the miner has been accustomed to obtain from companies who have bought and treated his ores. Most all the gold produced in the world is associated with other metals, such as silver, copper, or platinum, so that the bullion recovered in milling or smelting will usually contain the gold alloyed with such other metals and the gold is said to be not "fine," or pure.

The fineness of gold in the metallic state is expressed in two ways.

Jewelers have the carat system, while mints use the decimal system in expressing such degrees of purity. Pure gold is 24-carat fine. An alloy of 3 parts gold and 1 part copper would be considered as 18-carat gold.

In the decimal system, pure gold is called 1,000 fine, and the various degrees of purity are then expressed in their true proportional amounts.

Thus the same alloy as cited above would be called 750 fine gold.

Silver has a fluctuating market value although attempts have been made, at times, to establish its value at some fixed ratio to the value of gold. In fact, a reader may occasionally run across statistics of silver production in which it appears as though there were a fixed value for the metal, but this will be found to be due to the use of what is known as the "coinage value," which is $1.29198. This figure will be recognized as our old acquaintance, "16 to 1," _i.e._, this price for silver being one-sixteenth of the fixed price for gold. There is actually no such fixation, and prices for silver are established every business day of the year in the great metal markets of the world, London and New York.

Platinum has been increasing in market value during recent years and the quotations have ranged up so high that it is now more than twice as valuable as gold. The reasons for this high price are that the production of the metal is limited, whereas the uses for the metal have been increasing. The greatest production of this metal is in the Ural Mountains of Russia, and the output from this region is handled by a few concerns who virtually possess a monopoly. These companies are able to maintain the production practically constant and to cause the market price to fluctuate.

Tin is found in commercial amounts in but very few regions. There is but one mineral mined as an ore of tin, viz., cassiterite, the oxide, which is 78 per cent tin. Tin is found in both veins and placers and the great bulk of the metal is now being derived from the latter type of bodies in the Malay Peninsula and the Straits of the East Indies. Formerly, Cornwall produced the world's supply, from veins. Although the United States consumes 35 per cent to 40 per cent of the world's production, the country does not produce 1 per cent of this production. Since the main source of our tin is British territory, the markets are controlled by London, and quotations are issued daily from that center. Such quotations are given in units of English money per long ton (2240 pounds) of metal. However, prices are also quoted at New York, daily, in cents per pound, and there is a real difference in value between the two quotations to take care of freights and duty. For instance, on a certain date, quotations were 190 10s, and 42c. The average price during 1911 in New York was 42.281 cents.

The chief supply of nickel now comes from the Canadian districts of Cobalt and Sudbury, where this metal occurs accompanying rich silver deposits. The metal is sold by the pound avoirdupois and prices in January, 1912, ranged from 40c. to 50c.

Tungsten is a metal which has been finding more and more uses of late years, but the production has remained quite limited. Three-quarters of the world's total production in 1911 came from a small district in Boulder County. Colorado. The quotations on this metal are given in dollars per ton of concentrated ore, and the price is for a certain percentage of WO_{3}, the oxide of wolfram (tungsten). The schedule of prices announced in April, 1912, for Boulder County ores and concentrates provides as follows, a unit being understood to mean 1 per cent or 20 pounds per ton: For material assaying 10 per cent WO_{3}, $3.50 per unit; for 20 per cent WO_{3}, $4.40 per unit; for 40 per cent and more, $4.90 per unit. Ore containing, say, 50 per cent of the tungsten radical is thus salable at $245 per ton, the mineral itself thus bringing a price of 24-1/2 cents per pound.

Although copper is used and sold in very large lots commercially, it continues to be quoted upon the pound basis. The United States produces about 60 per cent of the whole amount mined in the world and the prices are made in New York daily. The amount of copper mined in this country in 1911 was 1,431,938,338 pounds and the price varied between 11.989 cents and 13.768 cents. There are always at least two quotations every day on copper, one being on "lake" and another on "electrolytic". By these terms are meant, respectively, copper produced in the Lake Superior region and the copper from other mines. The Lake Superior copper is the purest in the world and it always sells for a fraction of a cent per pound more than the other coppers which are refined by electrolysis.

Metallic iron is reduced from a number of different ores, but by far the bulk of pig-iron is made from the oxides and carbonates of iron. Such ores, in the United States, are obtained principally in Minnesota, Michigan, Wisconsin, and Alabama. As already stated, the quotations on iron are based upon the ores rather than the pig-iron, and there are two types of such ore recognized. If the ore is suitable for the making of Bessemer steel, it is given a certain quotation per ton, while if it cannot be used for such a purpose, it is given a non-Bessemer rating and is used for casting. The greatest iron-mining region in the world is in the Lake Superior country. Here are a number of districts that are known as "ranges." In some of these ranges mining is by underground methods, while in others the excavation is entirely in the open by the use of great steam shovels. The outputs of these ranges go by rail and water to the great smelting points along the Great Lakes and at Pittsburg.

The metallic zinc on the market is known as spelter. All quotations on this metal are given in two systems, the "pounds Sterling per long ton"

and the "cents per pound." The average prices during 1911 were respectively, 25.281 and 5.758 c. The American quotations are frequently given in the unit of dollars per hundredweight. This offers no confusion, whatever, for under this nomenclature, the average price for 1911 would be stated as $5.758. In the zinc-mining regions of the Mississippi Valley, the producers of ore have a practice of putting the mines' products through their own mills at the mines and making concentrates of the zinc mineral, which is usually blende or "jack," and this concentrated stuff is then sold to smelting companies at the daily quotations per ton of 60 per cent ore. During 1911 the average price paid in the Joplin District was $41.45. Since this amount bought 1,200 pounds of metallic zinc, it is evident that the miner received only about 3.45 cents per pound for his metal, the discrepancy between this sum and the New York quotation being consumed in costs of smelting and shipment and in profits to the middlemen.

Lead is sold upon a plan exactly similar to zinc. It has the same various quotations. For example, the 1911 prices in London, New York, and Joplin averaged, respectively, 13.970, 4.420c., and $56.76.

Quicksilver is sold by the "flask" of 75 pounds. The price ranges in the neighborhood of $43 to $45.

There are numerous other metals, but the more common ones are given above. Below is given a graphical exhibit of the course of the prices of lead, spelter, standard (electrolytic) and lake copper, pig-iron, and tin for a number of years. A study of this chart is interesting in noting the waves or fluctuations that have covered periods of years.

This chart is reproduced from _The Engineering and Mining Journal_.

[Illustration: DIAGRAM OF METAL MARKET FOR ONE-THIRD OF A CENTURY]

XX

MINE ACCOUNTING.

While there has been a great deal of attention given to the matter of keeping systematic mine accounts, both in the main offices and those at the works, there still is a lack of uniformity in practice. In the bookkeeping of manufacturing and mercantile institutions, uniform practices or systems have become a feature. But there have been good reasons for the absence of similar methods in mine offices.

There will be found to exist some uniformity in the accounting as practised by the mines of a particular district which are operating under similar conditions; but when one considers that the mines of various districts have quite dissimilar conditions throughout almost every phase of the business, it is not surprising that different methods must be employed in the keeping of their accounts. It is unavoidable.

Mines extracting different metals or different kinds of coal will find it necessary to keep quite unlike records. Mines with their own mills will likewise require a different system of accounting from those that ship their products to custom works. Open and underground mines will need quite different styles of accounts.

So, it is not possible to recommend any one method of mine accounting.

The best way to become posted upon this subject is to investigate the schemes, the blank forms and the books of some of the established, successful companies here and there about the world. In this way, ideas will be collected, and it will be possible for the investigator to evolve his own schemes for recording the accounts of his company.

It has come to be recognized as contributing to economy to maintain systems of accounts that will enter into minutiae concerning every branch of the business. Just how far this can be carried without creating office expenses that will exceed the benefits to be derived from the detailed information remains a question to be decided by each manager.

There are companies with accounts so perfected that it is possible to quickly ascertain, to a fraction of a cent, what the expenditures of any day have been for any particular part of the operations, as for instance, the haulage per ton underground, or the fuse employed in the blasting of a particular stope. Such details are highly useful since they prevent leaks in the costs; but it is a problem to decide to what extent it is economy to carry them. These data also furnish the superintendent information concerning the efficiency of his many laborers and the machinery. Labor-saving inventions, such as the printed blank form, and the loose leaf, are put to excellent use in mining offices.

There are strong companies operating great mining plants whose records are open to the perusal of any individual, be he stockholder or not. In the office of such a company, a person may turn to the accounts and see for himself how much it costs to maintain each and all of the operations and he can learn the size and the value of all shipments of products of any sort--ore, concentrates, coal, matte, or bullion. Again, there are those companies that are so secretive about everything connected with their work that even the Government is unable to learn any particulars, except at very great trouble.

The Portland Gold Mining Company, operating a great property at Victor, in the Cripple Creek District, is an instance of the first sort, while the United Verde mine, at Jerome, Arizona, may be taken to represent the second sort. Both of these mines have made splendid records. It cannot be seen wherein the second mine is required to maintain secrecy, for there is no danger of litigation from neighboring property holders, the one company controlling, practically, the mining in its neighborhood.

The presumption is that the owners hold their business to be nobody's else and they have a right to keep their affairs secret if they desire.

On the other hand, the Portland is surrounded by good mines which profit by knowing the details of operating costs and incomes of their neighbor; but it is found to cost no more to be open and above board than to keep things under guard. The Colorado Fuel and Iron Company will not divulge any particulars concerning its mining movements; but there are other just as great mining companies that will explain every detail.

The Clark copper companies, of Butte, Montana, did not permit much information to escape their offices, while the neighboring Amalgamated companies gave particulars freely.

The question of secrecy should be considered, and if there is no very good excuse for maintaining a privacy it should not be instituted. The trend of all modern thought is along the line of publicity in all our dealings. The only persons who have a reasonable right to be secretive are those who have something they do not care to share or divulge to their fellow-men. Law breakers, tax dodgers, and trespassers, could be put into one class; persons doing research work which it is premature to publish are a more respectable class; manufacturers with strong competition in the sales markets are in a measure excusable; even a mine which is producing some material in the sale of which it attempts to maintain a monopoly might be excusable. But it is hard to see what excuse or benefit there is for a coal or a copper mining company to prevent a knowledge of its affairs, if the business is being conducted along strictly legitimate lines.

XXI

INVESTMENT IN MINING STOCKS.

As a feature of investment in mining stocks, there has always been a more or less open lure. Generally much larger returns are promised or are expected than in other kinds of investments. There may be absolutely no intention on the part of the seller to create this impression; but there does, somehow, exist in the memories of people accounts of wonderful fortunes that have been made in mining.

There is an amount of uncertainty about any mine or prospect that appeals to the speculative proclivities in humans and it is hard for most persons to resist the notion that greater or richer bodies of ore may, at any time, be discovered in their particular mining properties.

Concerning the average stock purchaser, then, we may conclude that it is speculation rather than true investment that he is seeking.

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