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Les diagrammes suivants illustrent la methode. 1 2 3 4 5 6 MICROCOPY RESOIUTION TEST CHART ANSI and ISO TEST CHART No 7' 1.0 I.I • >. |32 1^ 140 112.5 2.2 2.0 1.8 1.25 1.4 1.6 ^ APPLIED i rvMGE Inc ~^S f^ochcster. Nrw torK M609 USA THE ECONOMICS OF MINING / BY T. A. HICKARD H. C HOOVER W. R. INGALLS R. GILMAN BROWN And other Specialists EDITED BY i. A. RICKARD 00. ^ \ 2^1 1 FIRST EDITION 1905 THE ENGINEERING AND MINING JOURNAL 505 Pearl Street, New York 20 Bucklersbury, London, E. C. c c G c r.irvKH.iir, igns. The F.Ni^iNti-RiNu »^< MlNISu IcIUKNAL CONTENTS PACK. Cause; of Failure in Mining ( IVrcy Williams ) 1 The Valuation of Mines (.liditorial; ^ Ore Sorting (Editorial) ^ Sorting at juhannebburg ( T. Lane Carter) H> Cost of Shaft Sinking by Hand 15 Gold Mining as an Investment ( iiditorial ) 17 Mining kiiks (Editorial) '-20 Mining Methods at Johannesburg ( T. Lane Carter) 2VJ Notes on Zinc Mining (W. Geo. Waring) '^^ Gold Mine Accounts (H. C. Hoover) 34 The Payment of Extensions of Mining Plant out of Revenue ( Edward Walker ) 38 Ore Treatment at Kalgoorlie (H. C. Hoover) 44 Gold Mining Accounts (Chas. V. Jenkins) SO Mine Valuation by Government ( Editorial) 53 Cost per Ton as a Basis of Mine Valuation (R. Gilman Brown) ^^ Mine Accounts (Theo. 3. Comstock) *>'- Ore-Breaking and Sorting on the Rand (H. S. Denny) CK Mining Investment (Editorial) ''7 A Card System for Mine Accounts (F. W. Denton) 80 Investment in Mines ( Editorial ) 8" Gold Mine Accounts (R. Gilman Brown) 91 Card Systems for Mine Accounts (Theo. B. Comstock) 94 .Appraising Futures (Editorial) 9*^ Appraising the Value of a Mine 101 Mining Costs at Cripple Creek (J. R. Finlay) 103 Some Aspects of Mining Finance— I (Editorial) 110 Some Aspects of Mining Finance— II (Editorial) 115 Some .Aspects of Mining Finance— III (Editorial) 119 Some Aspects of Mining Finance— IV (Editorial) 122 Some Aspects of Mining Finance— V (Editorial) 125 Mining Finance 1-" Resuing in Underground Work (F. C. Roberts) 131 IV CONTIiMS. K.)l)crt>). PM'.E Mnunfi and M.llmg m the M-Javc IK^.rt ( Lugu, ^__ Co.';;"i:un;zincO;V;nU;;j::plinU.:tncMW. Spencer ^^^^^ Hutchinson) ■,,■■', )<'•' RcMTVcs ( H. C Hoover I . ■^■- ■■■ ■ jy„ K:.pn,en.anaOr.Ke.rve^n.^ ,,, Minc Enn.pmen, and " " . Benj' B. Lawrence) . . . m Mine Equipment and Ore-Kt^cr\e> lotnj. ^^^^^ Another Aspect of ^'''''f .f!'"^'"" ,,■ Ca.nchy ' to ' Ore- The Econonuc Ratio .-f 1 reatment Capacty ^^^ Resrrves ( W «• IuR:'"^' o„o Mining in Rhodesia ( F. C. Roberts) _ ^^^ Secret Re>ervcs (Editorial) ■ 206 S.cret Reserves ( F. H. BathursO . -^ • ■ ■■■■ .^U The Valuation of Gold :^.u:s^( H^ C Hoo c ^ .^^^^ ^^^ Treatment Capacity and Ore-Keser%es ( i^. .^.^^ Amortization ( F. Hobarl) ■•■•••■ '^ ' , 005 Valuation of Hold ^;-;;^ ::,^;^:r'rBancroft): ^ . 227 Mine EMuipment and Orc-Re^cr^ s '^ •',„,n,, to Ore- The Economic Ratio of 1 reatment Capacit> ^^^ Reserves ( G A. Denny) ; ■ „. , Enu^ment and Orc-Re.r.e.-^Ml^dU.r,a,) ^ Enuipmen. and ore-Reserve.- f-'^\"" ' -JlO Ore-Re.erves in Gold M.m. (J. H- Curk) ._,,^ The Personal Equation ( Editorial ) ,^„ Ore-Res.rvcs (H. C. Hoover).^.. .. • ,,,,„ No-Liability Companies (C. S. ";^^^^*^\-^ ,, ; ; . . . -jci Engineers- Estimates of Costs W. «■ '"S?^ o,s Gold Drcdsins in Cahfornia (Cuis. G. \ale).... ^.^ Minmg in Missouri ( W. R. Ingalls) ,_,,, Gold Dredging at Orovillc (H. D bmitn. ill' il \'.ilm- ( F.il'i'I'"""' ■'"'! t)rc-Ki.-- Li-aMiiB :il Cni'p Crce Sicrccy in MmitiR ( F.d Mine \'.ihiation ( I-^Jito Mine \alii;ition ( l^ 11 (iravclMimni; Co^t^ ii ((.lu-tir \V. I'lirin The Cost >f M iiiinK ( The Cost of MuiiiiR— I ( The Co^t of Mining (.1. Mine Rcservfs (I'. 11. The Cost of Min:.iK ( I' The Cost of Mining (K The Cost of Mining ( F. Cost of Chlnrlnatiiig Cri| Cost of Mi (1 M He by His Own Petar Dredging at Orovillc (L. J. The Cost of Mining ^E A F Some Pumping Data (R. Cili The Cost of Mining (James \ The Co-;! of Mining ( Fditori Deep Mining (Filitorial) . . . Notes on Mine Reports (Che Mine Reports (Editorial) . . The Interval hctwccn Levels The Cost of Mining— II (W. R. Ingalls) coxT/.xrs. V ,,lit..rial) 300 crves (C. S. Palmer) 302 k (J. K. Fm'nyt 3il5 litorial) 309 rial) : 311 W.) 313 1 Alaska and Nortluvcsl Canada gton) 317 ;diiorial) 323 (\V. R. Ingalls).. 3'24 R. Finlay) 333 Batluirst) 339 all ) •■M2 Brown ) ."MT :,) 350 ; Ore, (Philip Argain... 356 I Cr.int I •■«9 rial) 364 I) 367 lys) 37? Brown) 378 ■s) 384 387 390 F Lee) 302 398 itorial) 400 403 RAYMOND LEBI.AMC C PKOFtSSEUR TlTliLA. POLYTtCHNIQU!; t PREFACE TilK pages of this Dook furin>li a reprint of a r.iimbtr of articles, bearing upon the cost of iiiiniiig, which have appcarcil in i'nt ICNiiiM.KKiM. and M'NiN(i Joiknai. between January, 1903, and June, 11^5, a pciiod of two and a lialf years. As affectinj^ the economic aspect of a world-wide problem, I have included a luiinber of articles dealing with thcjse ethical and financial considerations which are no less important to the industry than the 'Cientitic principles underlying the actual breaking and milling of ore at the mine. I-'or the editorial comment I am responsible; some of it, in the light of ampler evi- dence or maturer thought, I would like to change; but anv alteration would involve a recasting of t'.ie material tletriniental to its value as a record of professional dis- cussion during the period mentioned. T. A. RirKARP. New York, June 30, 1905. CAUSES OF FAILURE IN MINING (January 31, 1903-) To The Editor: Sir— It has been estimated that 95 per cent of the com- mercial and industrial enterprises which are started every year ultimately prove unprohtable. Such business fail- ures are primarily due to incorrect estimation of the trade conditions which obtain in every field of commercial oper- ation. These conditions are innumerable, intricate and constantly changing, but nearly all of them are the result of merciless competition. There is relatively less competition in the business of mining the precious metals. Yet even with competition largely eliminated, I do not believe that mining enterprises have scored any less percentage of failures than the purely commercial, w'ith their increased attendant hazards of endless competition constantly accelerated and intensified by cheaper processes of manufacture and various trad- combinations. In weighing these opposing conditions it would appear as if the investor in mining enterprises should have a better "run for his money" than statistics would seem to indicate. What are the causes of unsuccessful mining? There are many causes, some of which might be elimi- nated if the investor could be slmwn them. Nearly every- one has, at some time or another, bought mining stock or "taken a flyer" ; yet how many of those whose invest- ments have proven disastrous have re-invested or "tried again"? Their speculative fever subsides after the bleed- ing. As a result, mining engineers are far less busy than they might be, and die development of the mineral re- sources of various parts of our country is thereby much retarded. A discussion of these conditions, their causes, 2 THIl ECO sum IC^ ul- MISIXG am! ihcir ultimate cliniinaUuii woukl be timely, and it might she V many unsuccessful investors the proper way to try again. After a good many years of a'-tivity in the mining and metallurgical field, I feel that I can iiiention a few causes of failure nf mining enterprises and suggest a few reme- dies. If liv writing this intrculuctory letter and inviting the consideratitin of this subject I can induce some of my fellow-workers to grasp their pens and express their ideas, I believe that the investing public might profit from the discussion. I. — St.nrti.no Wrong. Don't invest money on the strength of a printed pros- pectus or the atlvice of an "interested friend" without preliminary investigation by a reliable engineer. Don't "take a t1yer" in mining, but invest your money with the same care and discretion ymi would use in buy- ing hank stocks, real estate or a silk factnrv. Don't trust altogether to luck. Use a little sound busi- ness sense. Don't invest in a mining company that guarantees dividends. Dame Nature has snniething to say about that. Dnn't invest in a mining cnuii)any that is selling treas- nrv stock and pa\ing di\iden(ls at rhe same time. If the mine is earning dividends the company owning it seldom has a legitimate interest in selling more stock. n. — Txvi-..ti.iightfor\vardlv. aci Tding to the mood of the person interrogated. We can only reply in all seriousness, for it is a subject fundamental t.i the mining industry. Our correspondent gives a number of indubitable causes for failure, but we think he has omitted the most important of them all. We refer to the over-valuation of mines. In order to discuss the matter profitably it is neces- sary to take the simplest case of all, a valuable gold mine. Eliminate from the incpury the undeveloped mines and prospects; disregard, for the moment, the essential uncertainty of all the occurrences of ore in nature and the difficulty of estimating the quantity avail- able : restrict the scope of the investigation so as to avoid the complications due to varying metal markets — so potent tor good and ill in the mining of the baser metals: take it for granted that you are dealing with a known valuable deposit of gold ore which can be jirofitably worked under the gi\en conilit'ons of time and place, and then ask; What can make ii the basis of a losing investment? The answer can include causes as numerous as the many vagaries of human nature, but the principal source of trouble arises, we believe, from over-valuation. The appraisement of mines has undergone striking develop- ment during recent years and it merits fuller discussion than the present occasion will permit. A mine may be said to be worth a given sum when it can return that 6 rilE ECOXOMICS 01- MIXI sum as profit from operations covcriuj; a term of years, plus the interest on the investment chuing tiie period consumed in the return of the stated price. Wlien this is translated into a share capital tlie condition"-- are the same, aUhoDKh the amount of interest whicli should be returned in tiie form uf dividends will vary in percentage according to the lia/.ard of ditYerent kinds of mining. Apart from specific causes, there are several general iiuluenccs which militate against true values, 'i'here is that expectation of better things, that resolute hojieful- ness which is necessary to all exploratory work. We cannot do without it, hut it slioidd be so restrained as to regard the rules of arithmetic. It is natural to the owner, to the manager, to the intending purchaser, to all the persons to whom the success of the mine ministers, di- rectlv or indirectly; therefore, all the more reason for taking care that the valuation of the mine be iiUrusted to those whose judgment is in no wise vitiated either bv sanguine sentiment or that disturbing influence which is covered by the term participation. To sunmiarizc, mines are often over-valued bee.iuse the valuation is usually done by people who are interested in getting a maximum ap]iraisement. There is another far-reaching factor; m nes are fre- quently I)0Ught to sell. It i< a cynical truth that more money is made by selling mines than by buying them — because tliev are so often sold for more than they are worth. Therefore it happens that althmigh a property niav be recognized as worth a stated sum, nevertheless shrewd persons will be willing to pay a larger amount because thev Iiavc a reasonable expectation of selling it subsequent] V for still more. If this is brought alwut by further intelligent development, by solving knotty prob- Ictus of ore treatment, by a new equipment which minim- izes working costs, that is, by engineering talent nf the best kind, then assuredly the enhancement in price is both TUB VALUATIOX OF MIXES 7 warranted ami (k-sirvcd : hut wluii it merely presumes upon the i<,Miorance of imlividuals li in this issue deals with a subject ul very practical importaticc. Ignorance concerning the proper ])roportion of poor rock whicl; il is desirable to take out oi the veinstuff has made failures of good enterprises, and the overK)oking of this factor in luining has been at the bottom of many inexplicable over-valuations of property. Whether to sort or not, is a (jueslioii vital to the eco.A)iiucs of a mine; it may mean the choice between a small yield of high-grade material or a large output of low-grade, an alternative which immediately affects all the operations carried on at the surface, as well as underground. In regard to estimates of the future production of a mine, it is not too much to say that the tonnage taken out of the workings is nearly always greater than that calculated, because it is found by experience that such estimates, based as they are on a few regular stopes, are likely to be pitched too low as regards tonnage and too high as regards assay-values; therefore, the stojiiiig wid'' - which are determined by actual measurement should ha\e added to them an allowance for breakages of rock from the walls of the lode and the accidental inclusion of waste in other ways. The best place to do your sorting is at the working face, if you can; this is t(j be done, either by judicious blasting, wliich removes the maximum of clean ore and the mimnnim of wall-rock, or by eliminating the large pieces of waste which are always serviceable for loading the stulls. .Ml sortini; at surface is made more ditticult by the mixing which the particles of ore and waste under- go in subsequent handling, either while being b mailed into ORE SORTIXG 9 tlif cars or (hunp(.'. stri])s tin- lode by .shootintj duwn tlic adjoining wa^^tc-rock pnvious to breaking down liis ore. M'paratilv and i-kaii. jirfsfnts one extrenif ot llu' methods possible under.irroiind : while the man who need- lessly blasts a narrcnv and clean streak of liiL;h-,i," 'i-' ore ioL,'ether with several feet of adjoinin;; barren ■. mitry. Miily to give emii'oynient to a nmnber of men at snr- face who separate what could have been kept apart in the slope, illustr.ites the other ■.xtreme. It is not a mathema- tical or >cientitic (|uestii>n, and on that account it is insuf- ticientlv appreciated, but. like many other problems aris- ing in dailv work, it demands that fundameiual science which lluxlev defined as organized common sense. SORTING AT JOHANNESBURG i;v 1 . Lam. (. akii k. ( I iliriMrv 7. I'). .1 I riic (|ucj.tiiiii of r.iiMiiK lli«-' j^radi' <>\ the ore by surliny 'lUt tlie Uarriii (|uart/iti' is >>uu that lias icciuihI ^rcal al- tciitinii on the Witwalcr.-raiul, so tlial a wi-ll-c now looked upon as one of the nece»ary leaiures of a complete plant. Sorting' by hand i.-, tin- method pursued, it bemj,' out of the (lue^tion to use >ueh eoiitrivanees as jif^^s for this i)urpo>e. I'lirmerlv, the waste rock was con>idered (juite barren, and therefore of no value. A different opinion prevails now. It has been the custom, ot course, to take samples of the rock which is thrown out. but such samiilin^' is almost n>eless for practical luirjiosos. It '.■-. in fact, im- possible to determine in the ordinary way how much the waste rock is worth, for it consi.^ts of piece> ran,t,Hnte liefore it is sent to the dump, and throw thi- sample into a Ixix. W hen the box i> full the man in chari;e of the .sorting plant takes a sample of a few iHumds in weight, and sends it to the assay office to be assayed. Now, it is curious how the value of this sample varies, accordintj to the man who is responsible for it. It is pos- sible to obtain :i reliable return from the assayer if the rock is iirojjcrlv crushed and (piartered. but the (|ue.-^tion is: Does this sample pve a true indication of the value of the rock which tjoes over the dump .•' The only iM.ssible way of ijettinL: at the value of the waste is to cru-li everythin.L; to a uniform small size, and then quarter down carefully. This is a cumbersome oper- ation, and i.^ not practicable. The writer has known of SORTfXG .IT JOn.lXMSIil'Rh 11 cases u lure an assa\ of tlic waste, wliicli was put down as 4\ t I'.ut it is just jMissihle tliat in snnie cases siuli a hii^li vahie was actually in the rock ( 'n hik' mine, known to tile w ritei . liie in.iM,i^;eineiU took the latter view, and let out a contract to an experienced man to re- sort tlie whole dump. 'I he contractor was ^dven alioiu $4 jr ti 'U lor e\\r\' tc m o f cleai ■hi ed out, am a surjirisc how main- tons of ])ay-ore were olit;iinei 1 it 1. A rather pr.actical test is trieil on two of the hi^ i'Vi.r\ thiiij cept. < if C' that o attempt is m:ii fe t. irt It the waste: L's from the mine Ljoes to the null, ex- irse, tlu' rock from en cut- le value per '11 crushed has falKii, hut the ni;ni;iL;eineiit helieves that under the I. ircunistances more jirotit de 1 i\ not irtiiiL Tl le w.av the ik at it is t his : A calculation is de of tlu' cost of handliiiLr the ore after leaviii.iL: tin s' 'ituiL; tahle : .•iiid lioisti'd t sup])ose it is detiTtninei 1 that havintr mined le ore .and hrouuht it to the mill it p;ivs to al crush aintliiUL: over i.ii dwt. d th stcdi Iwt. hen it is hetter to run tliroUL;h this J,\ dwt stuff, even if onlv 1 shilliui,' ])er ten ])idth is made, rather than han,^ up a 'iiher of stamiis for lack of It is not held that sortiu!:,'- does not pay. hut under some conditions it nii,i.;ht he preferahle not to sort. Take, for instance, a hattery of 200 stamps. On account of the scarcitv of lahor. onlv ahout To of these stamps can he su pplied with sorted ore at the iiresent ti l'ii(kr thesi. conditions it is advisahle to put throiiLrh every ton ot material on which even a small ])rotit can he made. To put the matter in a nutshell, the manasjers make profits the has >f ore cms is of calculation . rather than yield per ton •hed. If lahor were plentiful, and a mine with 200 st;nnps had a -'iperahundancc of ore. the hetter policy in 7//: licoxoMics or \ii.\ixa would lie to r;ii--t' ilii L;iaili a>- iinuli a-. ]iii-'-ilili', even it by >.(i dciiiii,' till' (luiii[) a»a\i(l ratluT lii);li. Hut it wtll In.- niau\ nii'iitlis l)i.inro a niiiic \\itli jno >tanii)s will have a su]Hraliiinilauri' ni (ire t'T tlu' uiill. I In inilui>iasts nnu'iit iif siirtini;, hut it is an i'\]utiuirnt, and as -.iii-h is iiitiTestiiiLr. It will he iK.iiii'd that _' ', ilwt. wa> ]nit down as thi' \ahu' ni the wa-ir rnck. 'I hi> niiL;ht -iiiu hif^li. hut (in sunk' niini,'^ it i^ tlu- ri'iTrct \alui-. An in- vcstij^atiitn has slmuii tlu' iau-.r hI it. Tlu' (|tiart/iti' ci'tui- iry is harrcn, it' ^anipU'd a Idnt \riu\ thr iwi it \iin. hut sometimes in tin imiuidiatc neiuhh' Thdiul of the reefs careful sami)lint: will ~liow that the MipposedlN harren rock carries i;old. as^axin;^' in laie case a>. hi;:;h as i oz. per ;on. 'i'he underj;roimd manat^er of one of the Rand mines told nie that in his mine there wa- a tin\ jnrite -cam, ^oiiie di>taiice from the regular lea no douh; that sortinu;, if carefully walcluil. and done liy ^killed men. can pla\ a still preater part in the future of the Rand than it has done in the past. Like ever\ihinL; else, however, it needs careful watchini:;: if it is not doue properh'. an actual loss niiL;ht iie the result. ;i~ has heeii alre;id\ indicated. In the future it is possilile that hetter sorters than Kaffirs will he employed. .\n earnest attempt will he made to s^et at the acttial value of the waste rock, either hy occasional trials in the mil! or h\ careful sampliiiL::. ( )n some mines an attempt at rouj;h sortins.;; is tnade underLTround. the lartjer pieces of waste hein;,'- put in ])ack walls. In the >oriin^' Imuscs one of two schemes is adopted, h'.ither ;m endless belt, such as the Robins belt- conveyor, mo\is ]ias' the sorters, who throw out the waste, or a revolving; t.ahk', rin,A'//.V(, .// Joil.l.WESBURG in (lianictcr. willi a inripluTv 5^ in it ft wn 13 U' M 'Ti- ers tlirou li aste into l)ins hclnw tlu' i; Tl \\ aiir tor uasliinij tlic oil' is. of cnurse, ust ill n| a (it mo in tlic mine. Sii pP'iM- w c havi' a hlnc k of K'rounil ,J,o<) ft. loii^' l)y 120 ft. on tllc (lip 1 f( .f tlic nvi. It Is (l(."-tr(.( 1 t( orm an ostminto ni the mmilxr assavs taken, as tlicy are maiki:l. all aroinid tlie per ter o 1 tlic block. ( Ml the .assav -plans 01 main niiiK:- the assa\' \altH' o f the .seams of ijnIil-heariiiL; mater lal am 1 th a(hl 1 111 llK'hes are h raekdeil thn- I 5 in. .'It |() (1\\ t. 4 in. at ~^ (lut. All these values are taken ddun aii'l the averat^e fmiml. Suppose the result comes out thus: 20 in. at to (Kvt. <■' in. at (>o (hvt., which we call jo in. at jS dwt., the ;i\er;!!:c vahie of the '1 ne stopini; width c;in. for example, he assnnied as 42 in. Since we lia\e j6 in. at jX dwt., then for a width of 4J in. wc have 4J in. at 17..^ ilwt. To find the numher of tons in the block 300 X 120 X 3.5 13 =9,692 tons ; 9.692 X 17.3= 16-.671 (hvt, the sold contents of the block." \\"e will assmne that 35 per cent of the ore will hi hrok-en .'IS unsortal)le tines, and tliat 20 i)er cent will b' so i.0.?8 0.f)Q2 rted out. The bli>ck can tlun he valued as fo fines .]«!. = 58.(^.85 ( I ) = j.r)07 ( 2 ) — iry>.o70 (,,?» = i6;.(.7i * Tlir fiiture 1.1 is assitmerl .is the mimtier nf cvit'ic feet of nro in place ey oimhinin:,^ ( i ) and (3) \vi can rtcknn tliat tmin thi> l)l(n.k nt yrduml tliirc will he scm ti> ihc null 7.754 tons at 21.2 (hvt. Xotifc tliat the waste rock is nut cnnsidereil Iiarrcn. but is put down at lA dwt., which is a normal value. COST OF SHAFT SINKING BY HAND (I'lliruary -■;<, i9uj.) Mr. Ivhvard H. IJcnjaniiii contrihutts to the Pacific C(hist MnuT an iiiti.Tt'>tinu; stateiiicnt rcsjjardin^' thu cost of shaft sinkini; by liaiul in Cahfortiia. The table l^elow ^ives the record of wnrk in the last 130 ft. of the vertical >haft at the ( idjden |-".aL;le nnn the i^rcperty u f the L; issen La^^en (, oinily, Miiiin,!.^ (.'niniiany. C'al.— Mine Shi IN l'n< TotnU (<,). TippuKMi (J) 500 ft. $3.70 per M. $(13.30 $0 422 $84.00 $o.5('io 9-5 0t)()I 550 625 per .M. 3.44 02 5 Total explosives. $96.(K) $0,044 $2.(180.4(1 $17,808 Total cost of 150 fcit of shaft -Mr. r.eiiiamin adds the f( >llii\\ iiiij dct.ails : "W'drk wa.s ci'iiinien.-eil ai a piiiiit 7 ft. heli'W the 4ik) levtl and the shaft was smik i ;o ft. helnw th.at imint. The wnrk '.vas 16 I III-: lA uxoMii s oi- Mi.\ i.\(, (IniK- by liaml drilliiiL;. \vi .rkiiit,' llircc S-limir vliifts, wiili thrt'c nun on ;; -liii't. I lu' s^r'ntml \\a> taken (lul 7 l)v ij I't. ill liir ckar — fur a ilinihk-foniiJartnKiit shaft. 1 Idistiiit; \\a> ilmu' with a bucket. The cimiitry rock was hard aink'^itc, .\'i waicr \\a> iiiii innlcreii. I he shaft was tiinhered will: lo 1)\ lo-iii. sawed timbers, end-platcs and eetitrediraees .Inwtailed in. and eentie and enrner ]i<)sts gained in. The sets weri- pkieed 5 ft. between cen- tres, tilled .ind lauded sdlid bchnid timbers .and each cmih- liartinent was lined with 1 by ij-in. linin- boards set 3 in. apart, llu- wurk was CMmpleted. in 47 sJiifts. makiiiu'' an average i>f _^._> ft. ] r -hift, lini^tinL^ Jo tcms of material prr >hift. be-ides pnlt^'e^' in timber-, '1 lie timber.- were framed liy liaiid b\ ''• toreman, who directed tlie work, i'.iulileeii holes were >..-ilKd for each round. Xo. J Ciiant piiwder was nseil. 'The ^ronnd drilled hard, but broke well. I'he out>ide huK'S were keiit Iiiyh and the centre broke t'lrst. 1 dio not know of anv work dt)ne by liaiid where a lutter reo^rd has luen made." GOLD MINING AS AN INVESTMENT (K.liturml, March ;i. i9'i3) We iintc tiiat our London contemporary. The Econn- »ust. wliic oiirnaliMn. li rei h iresents the bc~t tradititjns of financial fnii^lied tl publication ot a series (j l)V 1 ts "Sju'cial Mining Conunissioner," under zei()n of opinions which characterize our friend. Mr. J. il. Curie. 'Ilie concluding article of tliis he found on another series, 111 a l)M ract oi wliicli uil page. uiiuU up with a few home truth> and that under- current of depre; itr f'"anki!css which we have learned to associate \\i th Mr. Curie's writings. The burden of these recent contributions to the pages of 'lilt- liioiioinist has been: Cold niiius are, witli rare except il the ri>k and are ins. nnicli o\ervaliiei liareiiohlers do not realize atished with a rate of interest which is too small, considering that risk; thes are careless re- rardiiu (liiestions o f ore re> bv over-rating their mine.' erves ; and, i th nd inevitablv conscfiuence. tl lev .'culate foolisl iiv. .\ s a coro It IS >UgL Mr. Curie that a certain rate of divii (lend. sted b a certain pro- portion ot (jre reserve s and a lie;ilthv cond.iiion of de- •lopmeiit are essential to any mining enterprise to be re;iarded as an investment. iliich W ule we aitiireciate tlu service done to the public and. no less, to the industry by advice of this kind, we consider that it tells onl> half the story, and is calculated to create a wrong impression concernin ikl ininiiu Legitimate gold mining is not necessarily an invest- ment, nor indeed does even so conservative an industry far nuiiiicli we 11 18 rilE liCDXOMlL S or MISISG ordciod lines anil with such cky in ;i jjroportionate dej^rec. In this country ^old luinini;- is not rankeil with railroad bonds, save b\ the unthinkin such an extent that, like the mines on the Rand, they are, humanly speakinjj, certain to return a stated sum in ca[)it:d /-///.v a definite interest duriui,' tlie period of ex- traction, but they are so few that the tinj^ers of a man's hand suttee to count iIkjsl which he can tpiole im- promptu. The moneyed man who i^-^oes into minint; to make more money kucnvs this. He does not expect to find a Ibjmestake or an .Maska-Treadwell, and if you cross-examine him xou will |)rol)ably discover tliat he (i ot want that type of mine so nuich as he seeks for a \ •' riltsburi;, a Chrysolite, a Yankee (iirl, a Ciranile ^lountaln, an Indei)ender.ce, a 'ron(3pah — that is, the superlatively rich ore deposit which makes as much money in a month as the ste;idv ]iroducer earns in ti\e years, in other wnrds. the speculative side of miniii!.^ has an attractiveness which is at the bottom of the energy w'th which it is prosecutid, and when you bring it to the deail level of ;i stead v investment you will find that the man of ordinarv shrewilne?s will save time b\ going straight to his briiker and buying bonds or con- sols. The Rand — presenting an unsual type of gohl min ing, minimizing risks anil at the same time limiting po>- sibilities — has run awa\ with our cautious adv'sor. ( )rdi- nary gold mining can ne\-er come to a strictly investment basis; from the time of the .Argonauts to that of tape Nome it has been, ;ind will continue to be, an ad\entnr- ous ])ur-uit, attractive to the liold and av(rlded by tlie timorous. (,"()/-/) .i//.\7.V(; .;.v j.v ixriisiMiiXT 1!» Strike out tin niiiii's uiucli arc not sound iuvi'stnients from the undertakings into which a sensible man sliould put his money, and you •shrivel legitimate mining into a drv 1) \\ hiel 1 wo iild )n wither from want of life. r.efore the in\estment basis is reached, the best mining undertaking nuist as surely pass through several stages >•'{ comparative speculativeness as a child must run the datu ers of mt-ask's and ium]>s. The biggest fortunes are made during the earlier stages of development: more Pl.v monev is ihade b\- h ling than bv buviiu nunes, sun ■cause the final r)r iinchtment stage of a rtrst-cl ass nunc briiiL rofit. while it n issetuial ha/arc Mininfr unde rtaki ever can (juite eliminate the conic to grief so often, not si much on account of failure to attai n an investment basi> but because they are not put on a business basis. People [ilay the fool and exjiect miracles to happen. Tlie same I)rocedure would ruin a grocery establishment. Because the occurrence of ore in nature is uncertain, and mining as a conse(juence must necessarily be speculative, there IS no reason for piling human foolishness on the top na ture"s niggardliness. ( )'i well-conducte Oi (1 mining enter- l)rises it can he said that they meet with a perceiUage of success as large, if not larger, than any iiisl, that mining meth- ods are becoming more sane; and we recognize that this consiunmation is quickened by tin good sense contained in such eontriinitions as those to which we have been referrincr. MINING RISKS (Eililorial. April 4. "Oii.t' Actuarial calculaiiiMi-- tiavc been succLSsfiilly adopted m estimating tlie value of the mines on the Rand. Such a method of a;)praism- mininj; property may not be applica- ble to the palpitatinj; uncertainties of ortlinary Rold veins, which, while they miss the comparative uniformity of the jjreat Main Reef' series, yet possess possibilities of bonan- zas, the like of which are unknown at Johannesburg. Nevertheless, the introduction of the actuary into the proverbial uncertainties of mining would have seemed a curious departure twenty years a^'O, and it carries \\ith it a certain suf^^estiveiiess which can be expressn! by simile. Mines are comparable to humanity. The new discov- ery of a prospector is like an infant, born to-day, which may die to-morrow, leavint: no record, not even a name. .•\ prospect resembles a youn.^r child, rich in possibilities, but bedimed around with all the uncertainties of imma- turity. The promising prospect may succumb to the measles of ba into a jiropertv of im- MI.MXi, KISKS 21 |](irtaiiL-c, or, i iW cdiitrary. it may have hcen dcep- iiKtl to tlic waiir k'vcl utily to disclose llic fact that cither the sulpliide ores are less rich than the oxidized product near the snrfaee. or that tlu' material, iiitherto docile to simple millin-, lia> lu'Come too refractory for profitable treatment. .\iiother >tai,'e uf develo])ment hrinijs the man to full matnritx . with a past of fair achievement and a future of contuuied usefulness, or it may exhibit the ex- hausted eneri,'ies of a waniiis; career: similarly, the mine, haviii,^ achieved celebrit\- by rueans of a prolific output, U'ives assurance of eoiuimied productix'eness. or. it may be. already shows sijjns of approachinsj impoverishment. I'inallv, both become old. the man and the mine: and, whether it t>e lont; in years or deeji -n feet, we predict with ceri:iint\ the eventual exhaustion of splendid powers. Mi'ii think ,ill men mortal but themselves: they also realize that all mines nuist sjive out at last — all save their own. Thus does the melancholy actuary drive home his sad philosophy. MINING METHODS AT JOHANNESBURG Bv T. La.ve Lakh k. TlR. c^roatrst .xprn.Hti.rc of lal.,,r ,„ ,|k- „,in.s of the Kan.l ,. n,,.,,i„. Uu- n.d. fn.n ,iK. Mo,K. ,o the n^^^ •" tlic level. 11,0 ainuum .)f work miuircd to shovel a •^'" of tock from a Mope into the ears depends „pon the cond„,,,„, oi^taitnuK' n. duYere„i ,„,„.,. T,„ ,,„,, j;''ld nnnes, uhe.e ,l,e d,p :. as f^reat as 70 , have a Kr.at advatua.e over the treqnentlv tlatten ...t to ..5 . This llatte„inl,^ taken wnh the broken foot-uall. makes it necessuv t,.\hovel over and over a.L;ain, every hit of rock, before u tinallv Kets uitu the ear. I" tlH. ,leep-level n,i„..s, a ^ood ntanv inchne-plancs ;''^;l'-n ....tailed ■„ the Hat slopes, so" as to faohtate "'^' '■•'..dh„^.,,ftheore. The ears are loaded at a„v poim " '/ ' ''"f- '""' ■■''^' "'^" '"^^^•'••■'' ■- ">^' ic'vel'helow iu-y are then detached fnm, the rope and pusiied to the ;-'>nc_at the land..,, station, where the rock ,s dun.ped llu. mstallation ,,f a., incl.ne-plane is bv no means as ^^a>.v as the san.e nnd. rtakin,t,^ would be in a coal mine li.e n.ad-bed Itas t., be blasle,! out, ani)rratr (.■iitirrK mi tl Wlun s ill Nii'MU', tlir (.■li.iiai'trr of uiuirr- (lay s pay, and serin satislicd with tlu'ir results. K- (la\ > ])ay system i L;r'iniul uperalii iiis deiiends, in a iari^e extent, nii the mine eaptain and tin- slnfi Imsses. If ihes are inferior (ir inaelive men. the rmii'iiiit nf In.-itinL: whiei' oi's (in IS siirprisin^^. If. jver. amine is fnriiinate eiioiitrli t( have .a thnrMtii^liiv capable mine eai)taiii. ulin lias the i^ift iif nianaj^mi; men. and the shift bosses under him are al.si) alert, the day's-|)ay svstem makes a verv ^"^nod sh The eiintraet svstem. huuever. setiiis the better of the twt 11 le eo mjianv never appears to lose bv it, .althoujj^li some ot the miners reeeue iiearh twice ;is bit,'- \vai"ii|4li|y coiii|iri(. lit 111' ■, r con], I makr I'rom ^,v"3 '" s^5"<> I"-!" month ihirinj,' thr (kwlopiiKiit sta.i;f, 1)111 ulicn the mill conmu'iiced o[)frations this fill a <;ri-at dial, >o that on ihis [jioprrty .Sj^o |nr month is now ahoiit llu' lii^di-water mark. I".vi'n attiT the mill starts crii-liiiii.; it {.■, consiikrcil no more than lair that rontrai.-tor> in driits and .diafts should be paid liij.;lRr than mcii en.iiaj^cd in stopinj;-. I'. rc(|uircs coiisiderahli' skill and experience to manaj;e tile contractors to the hot ailvanta^e. The mine captain .-hoiild 1)1 an exptri jiid-e of -round, ;iiid he careful to ha\e the price iieiilier loo hi-h nor too low. He must he just, i he writer once worked with a contractor in a dri\e. It w.-es iiolic. il that for three weeks in the nioiith he Worked like ;i Trojan, hnl dn! very little in the latter part of llie nioiith. 1|)mii heiti- i)res>ed f.ir an e.\|)lana- tioii. it wa.s foiiii.l th.it lie calcukued he would he (jut if he worked .strenuously all the month, so he took it ea^v after bein^r sure he had done etion-h to -et a -ood wa<;e. In tins case the jirice was e\idently too hi.^Ii. .\'or should the price be too low, f. ir if too -real a cut is made an etticient man is liable to Ka\e for another mine, where he can make more money. ( )iie basis of calculation is that a contractor who works hard everv dav. and inan- a,L;es to ilrill 40 to 45 ft. ;i ,la_x . ami to hhist successfully all the holes, should be allowed lo make about SJ50 ])er month. Will, such terms a man must w.irk dili-. lUly. ]f he lu-lects his work, or is not iiitelli,miit about it. he s the risk of In 111- in di bt at the end of the month, there are times, however, when the mine c.ipt.ain recoin- mends that the pay of a contractor wh.o has done poorlv be bn)UL,dit nj) to day's pay, and in such cases the man receives niori' than he has really earned. Discretion lias to be Used, for if ih- contractor tliinks he is ;ilwavs sure .l//.\/.\(, Ml.lllUD.S A I JUll.l.\.\l:.SliL'Ku j: tif ;it lia^! il;i\'~ p.iv !n i^ ajit in Iwiiij;^ hai'k with hu In slope contracts the ii^iial iin thml is to pay so imioh per sr]ttnrc fathom. | ilu umi kudw ,if any niiin ■• hire wlurr ihr nulhiMl ni paviiit; mi iinuh jut tun l)r(ikrii is ,,,1 eiiiplov eii. Ill iiiiiu ■^ that an- run "ii the inntracl tein, iiinih n\ tJu' re>iiiinsil)ihty i^ taki'U Iroin tile shoiil- (Krs I if thr mine cajitaiii and ])iit iipun tlie survey depart- IIKIII. w hu-h -piin--ilin- iiif the uua'-iirinLC I't tlie rroimi 1. T IIS )f St( (I ope iiiea>nMni,'-, ittit tlie [ hut iiaee o enter uittj a (hscussion trust a (lescriptiMU of the methnds u^ liall l)e ahle to write at some future (kate. '1 he prices paid for stMpiiiL;' \ai \ . of eoiir--i'. in the chlTer- i nt [larts of llie mine, and dept nd npon the ediaraeter I't tile rock, whither the slope is uiiilcrli.ind or overhand lii.U'.t est ranije I ^iiow ot. ill aii\ one iinne, is troiil $14,30 to $17.50 per s(|uare fatiioni. In other pro])er- ahhouirh there is proliahU not ties tl !>ricc htter. stope m tile (hsiriet. at lerst in the c deep mines, that IS \\o rked for less than Sij.^o per S(|uare fathom. ( )n the averaeje Sifi can he considered the prevai liiu )iitract( ])rice aioni; the Kand. at the present time. s are provided with Kat'tir labor, for which lev )a\ per (lav per man. Th e\- are eiiarLTetl or the stores t!ie\' use. sueli as dMiamiti use, canities. itc. and at some pro])erties tliev e\en ])av for the shar])- eiiiut,'- of the drills. \\ li.at is a L,'ood month's work for a contractor? The number of S(|uare f;itlioiiis stojieil out with two air drills (.and it is almost the universal practice for each contractor to run two drills exceiit in the drifts) varies as much as the prices paid ]ier -cpiare fathom. hVoiii j8 to 46 stpiare fathoms erives an i(h;i of tlie rani:;<'. About 36 scjuare fathoms, with two machines workint; a sinsjle shift, niav be Considered ltoocI work. The slopes averat;e 4,75 ft. in width. In driftiuL; there is considerable variation also. ! .'« THE LCOSOMliS Ol- MI.\/.\C III scum- drifts a rmmd of (v,.lvc 5i-it. li,,k-s is made, wliilc oilicrs ncumc \(, liolcs. A man working will, one itiacliiiic in nnfavoiahli- j,'roini(l, nut- shift per \ liaml tor macliities. and wlunevcr it is po^sihie it is done. A ulntr niiiuT i,. -iveii cliar^e of a mnnlier of Kafiir';, 30 to 40, and works the stope on r( niract 'I'lie contract system, ulncli I liave trie man ij.iiii- the >anie cla^s of work should receive the >ame wa-e.-, \n\- day. Hut llure is a certain anionnt of trailes-iii.ion feelincr even .iiimho ,]h. coiitr;ictor>. It i> ^eiurallv untaiiil- ard, and only in a few c;i-e> d.j i1k-\ tr\ to dnll nmre than four holes fur each machine. It has nitin lueii tried t'. ;ie->;i'ade them to drill nior.-, l,ut ilicy ar^^ue in the usual way, an.l do not chaiiLje. \\ hat. ilien, is the ad vain.", l;-- ■■< nsin.i;- the cuuract s_\>tein. 11 the men do not drill nn-re holes th.iii they would ,,n the day's pa}? In the lirst place, the men ii.-e their heads more. lo see [he care with which a successful cmtractor [dtcho hi-, holes, so as to break the nui.ximum amount of rock, makes one reali/e the ditlerence between a contract stores, d\naiiiite, candles, etc. ,ind waste is thus reduced to a minimum. Ami a-.-iin, the contractor does not loaf. He attends strictlv to business. Many a mana,i;er has been surprised to tlnd how early some of the contractors finish their drilling i,,r the da\'. Mixixc Ml. I Hops .11 Jo/i.i.wnshCh' l.s lint all Ulllri i|iKiU niiiirrciui' I. J I'mil a mnuailni, makiiij; nojcl pay, rtiiish drilliii),' dpcratioiis Ijy 2.30 o'clock I'Viry (lay. Ulastiiii; is imt allnwcd hcforc 5 oVIock, and except the prcjjaration nf tiic cliar^'cs, the cnntractor duc-s nothiiiR from 2.30 iitml hlastinp time It i> naiural iliat .1 maiia^'er should try u, (levi>e a sclieim uianhv the i(.tii|,any may i,'et the advantaije of thes, idle junirs. At tirst the iiifii well a -krd an 1 \tia hoi e, wtieiit Mr P lailu sih e. tile promise Iniii},' j^iveii that tiie rate per square stopcd it the selu III IK 'II Id Hot 111' ledticed. 'i'liey t'oii.t,dit shv pieterrtd to make less, r; itlier tlian overstep the hcimds of liie reeoj;nized day's work. Thei the selunie was tried. ,iiid i s'ill lieint; tried mi a sm.i scaK e, 01 payinp the coiitratiors -o nnuii d! tier to.it drilled, in i^rdir that eaeli man mav drill the maxiiiuith luimher ot Irtt p( T tractor is ii^ed a- a doiiht lilt. r.\ this arran^'eiiKiit the con- IrilKr If the plan works well, no rejjtil.ar hla-ters havinp iinthinn- ti le employed, the eontr.'ictor o uiih the hlastini; o])eralions. method of workinj.; roiitr.iets seems to have met with This con- siderahle success in oil success has attended it here ur jian, of the v.orld. .So far littU the first place, by ailopt- iiii,' this arran.uement. the responsihility f.ir the contracts shifted from the snrvey cUparinient to the shift ho: sses, and this is undesirahle. Th the scheme as leti. again, the miners oppose iieiii"; an innovation. It look s as it in the tiiture. as in the p.ist. the general \\;iv ( contracts in the Witwatersrand <;;old mitn basis of area >I carrxiiiL; on s will he on the stojied out, without any reference to the amount of drilling;, or the thickness of the slopes. ■ y[>*' NOTES ON ZINC MlNiNG Bv W. LiKci. Waking. (July 4. nyoj.) I'dluatioit of Zinc Oics. — I'lic vahir ni" anv ^inc ore (lilRiids, ( i) upon its i)(.TCinta,L;v cmitciit <-, . per miit of metal, or $10 per Ion ; with Oo per cent zinc the unit jirice is 50c.. and when they ,i>say ()4 [)er cent zinc the value per unit is 53ic., or S_u I"r ton. ft fuiiows that the miner who fails to clean his zinc ore up to the economic limit, which for zinc-blende ore is held NOT PS OX 7. IXC MIX IXC, t. < iiK'an that from 2 to A per cent of sand or earthy matter max nniain in the concentrate, is throwing away value when lie sell;^ the iii>uftieientiy cleaned material. I'or ex- ample, 1 ton of the 40 per cent ijre above cited is worth but Sio; if it can be cleaned to as^ay (jo per cent, even allow inj,'' a reasonable waste of 10 per cent in tlie opcra- ti'ii, It will proiluce i.joo lb. of (jo ]Hr cent ore, worth 3ia_\ 04 per cent, the pnnluct would wei^h \.\2^ lb., and would be worth The only fair and efjuitaljle method \et discovered for ascertaininjj; the value of any metallic ore is l)y assay. Iluur and seller are a.like protected by this means, even against (hrect fraud, jjrovided the u-nal jirecautions are taken. These precautions are; ( 1 ) That ilie sampling be thnnnighly done as the ore is delivered, and in the pres- ence iif both bu\ir ;uul selli r 1 ir their resji' iii~ible .'igents ; (2) that an umpire sample be sealed at the time of sani- plinu : (.^1 that the percentage of moisture in the ore as delivered be ascertaiiud iniitu duaielx ;itter the weight i- deterniined. The la-t jirnxi^n i> necessary because the assay can ''■\^\\- be made uji'in the dried sample, and there- fnre rt'presents the percentage comeiU nf tin ore U'.inu^ it- moisture. Obviouslv, in settling, it is immaterial whether the ilednctioii for moisture be .'iiijilieil to the gross weight "i the (ire, or to the ()rice to be ]iaid, pi r ton, or to the product of the weight by the jirice ]ier ton. bm it c.amini be applied to reduee the as^ay valuo. fft'f<,'/(/ (;//(/ ri>litnii- of Zii'C Cov.rrutratc. — The dry weight of a bin of ore or concentrate m.iy be estimated ver\- rl'>ite (coekscoml, pyru. I irom tlie sime place; j,valena from \\VbI. CitN AJo.: clean tlint from the same place, and avera-e tluor- .lu.| to 5-mm. size , 1-5 „,. , and fmer. then as.nrted by siltmj,' mto 4 sizes, namely. 5 mm. t<, j mm. ( 1-:; i„ to i-ij m.) : 2 mm. to i mm. 1 i-i.> in. to 1-2^ in. , ■ I nim. tn „.J5 „„„. ( i-_.5 in. to i-ioo in.. : la^tlv" mi.ler 0.25 nm,.. or o.oi in. The wei.trht in pounds „f a cubic foot of each sized material, closely p down, was then ascertained packed and sh.aken . . -Ti'' last'v the weight of ,a cubic lont „t e(|u;d parts ,,f the various sizes, mixed was determme.l. The specific gravitv oi each mineral was then ascertamed. a-^ given in cohmm t<. below. .Since the weight ,.| a cubic f..ni of water i> verv nearlv 62.5 lb the weight ot I cu. ft. of each miner.al in tlie snlid -late was found In multiplying the >pecific gravitv bv 6^5 g.vmg the figures of colun.n 7, The increase'in volun;.' brought abnut by crushing each mineral to the above fineness is shown in column 8. the figures of which are found by dividing those ni column 7 by those of column s. .Material. •s. - ■r, - Ll>. '7. - I.!). 4< = - 2 l.li" = .iS I.Ii. d ■n 1 1, Pure Cilen.i. .M;irca>iti' -'5«« -M«3 -'.si J JOl J .U';o 738 1 11, 4i'l 1.442 (nuimlic). . Pure Blitide. I'liiorsp.'ir . . . Clean Idiiit.. I IV.s IOO() 77.y 11,? 1 1 ^oo 97.S 754 IJI ') 71.0 100.7 75 1 i(k)7 170.7 i-'7'i 4 ,sl4 40.S .^'4 jS2 -'5.! l()(, Kit ' 7.^5 1 .4.'^^ ' .S.U' I 7(,s XOT/-:S ox ZIXC MIX/XG 31 The common statement tliat vein material oecupu?. twice the space aftiT hreakint; is. therefore, not c|uite true of rather finely connnimited minerals: and. as the al)ove resnhs show, the increase in vohmie varies acccjniing to tile shape of the panicles, since tile Hint and niarcasite lirea!< into scales and elnn<,^-lte(l ani^nlar frau'ineiUs, while the particles i.f the other niiiuniK are luarlv i-niiKtric. I'yrite and hornite wonld no floiibt j,dve verv different re- sults from those olitained with niarcasite. Specific Gravity and Coiuposilioii of Zinc Minerals. I:tc—\n the followin -iven are compiled from si,-|„dard authorities. The percenta<,a' compositions are, houexer, specially computed, usin.t,' the International Atomic Weights for Kjo,^, and refir to the theoretically pure minerals. It must be borne in mind that some of the minerals named are very rarely found in a state nf IHTtect imvitv. Thus blmde nearlv alwavs contains from O.J to I per cent of other sulphides than that of /mr. while marmatite. pvrrhoiiie ;uiil chalcoiiyrite are very vari.ible in compi isiiion. Assay ResiiUs as a Gi' - in Ore Pressinjr^ — Ti,e assay of a sample of zinc-ore concentrate, showintj the per- centage r,f each metallic element, as zinc, iron, lead, etc.. .mves the mine mana.i^er a means of .letectinij defects in the mill work. It the character of the minerals compos- iiii; the ore l-i known, the percentatre of each mineral, of which OIK elemeiu is determineil bv assav. may be com- puted from the data of the lasi cohmin in the preceding table. Ihiis i„ ,-, lot of concentrate consistint^- of blende, pynte, -alena and sand or earthy matter, the peiventaf^-es of zinc, iron and lead bein;? known by assay, the propor- tion of bleiule is fom^d bv multiplyinirthezincby looand Tim JJA).\UM/CS (>/•■ MIXIXG -I 00 >• •— C >, in s = -^ c » .■• s s ~ = '> .J J ■■- o ■- £ _• ^ X ^ -^ n ' U y o y O u e X 5 ■5:i = -.2> » = N - 4 i - o ■* d ""• — " di. .H^ - N . C § 4'^ ^ — ir. ^ 5 c " E ' J F H o 1 :.£,= • ^ U ?: tl = "-C 5* do ii USUI. U-. f-l ^ tic <^oq i ^ - ^ - - K ' « "~ M d **■ " o — ta, — ^ -n"^"" ** m' - *? « u ^~:r:; -:: o c ■? wi 5C d - .t ^ ^ >=' >i:i '^—.2 — ■= c. — « — fl in fv o O 3 CX i m - fj f) **) *•! to ' «;*. ID -t ff -O "t O- *? O lo in u-> ■4' ■4 -r -T u~* 3 yi - • ; t^ " >, ^ :<: ■^ , = i:= c . "m y S '-'H ."^ •- " — r -^ t ir .C t-^-X 3- C • ^ — o : 6t " " w ^ c , ■- .- -C <-< ~ 1> . — ■."To " tC^ ^< ^ ^ i ■SE p a ._ ! b 3 .1 S; ^o n Hi; A'OTI-S (>\ ZIXC MIXIXG 33 Ei '■K (iivuliiii; li\ iIk- ])iiix'm;i!L;' uf zinc in blende (67.10), ami -iniilarly t'nr p\nte and j^akiia. The snni uf the per- centai;es so found, deducted from 100, shows ahov.t tiie proportion of sand nr earthy matter in the material, a fact ofli'u \ery desir.ilile to k-imw. Another method i.^ to multiply the perceiitacfe of each element found hy assa\, hy a factor obtained for each mineral bv diviiliii- its molecular \\eij.;ht into the atomic \\eiL;!u uf the elenieiil. d'he following; incMmpktt list of such factors, also spe- cially CMiiijjuted from the International Atomic Weij^hts fir 1003. will be found of use to mill luaiia.L^ers as well as assa\ers : Metallic zinc Mot.illic zinc Met.illic zinc Metnllic zinc Met.illic zinc Met.illic zinc Metallic znic Met.illic iron Metallic lead Metallic lea.l .Nk'talhc lead X 1.49 X 1S44 X 1.9174 Metallic copper .X 2.8.S7 .Sulphur X 3.04 .Sulphur X 1.8718 Sulphur X 7.4.1.?!; l.iinc Lime Lime = Zinc Mende, = .Silicious calamine. := Smithsonitc (car- bonate). =: W'illemite. =: Hydro, incite. = Zincite Czinc o.\ide). = l-Vanklinite. = Pynte. — (ialen.i. =^ An){leMte = Cerussite ( Icac car- bonate') . =: Cbalcopyrite. =: Zinc blende. = F'yritc. — (ialena. X 1.7S5O (or'""r,ii) =: Calcite. '*- '.^45 = Idiiontc (Ikiorspar). ^ .! 0"-2 = Selenite (>;yp>iini). X 17064 X 1.0526 X 1.2446 X .S.385 X 2.144 <'>r 2'.t) X 1. 155 X 1.4(14 X 129 GOLD MINE ACCOUNTS (July II. 1903) 77/t' lliiiior: Sir — 1 am ,l;I.ii1 tn acccjit ymir iiuitatii'ii to iiia'a' sntnu remarks wi; the subject uf ^uKI-niiiic accnunts. All effi- ciently maiiaj;ecl mines these chiN^ ha\e s\ stemati/.ed ac- cmiiUs ^hiiuint; in result the wnrkiiij; cost ]ht ton of ore. r.ut there is a most hara'-sini; lack of tmiformitv in the methoil hy which the last result is arrived at, anil in this, some iliscussiun in your esteemed JoiuxAi. coidd lie most useful. 1 ir>l and T'lreniost, mme accounls >hould he >\stt'uia- tized in ^uch a niaiuier as t" firevent fraud, and should hi,' so jiresented as t(.) carry conviction of liouestv to the owners. Second, the accoinns should he jirepared in such a way as to show- the e.xix'nthture in varior.s de- partments on s(nue unit basis, so as to enable the iuana.[::er and his >taff to compare rt'sulis of various departmetUs and various periods within his own mine and also to compare restilts with his neiij:hi)nrs, that he may be as- sisted in hi'- intermediate campaimi for economy and im- pro\ement. Third, t'l be presented in such a way that the owner, director, shareliolder or what not ma\'. for himself, b\ comparison, determine somethinc^ of .!ie cfti- cieiicy of the mana.q'er. At the out>et 1 do not want some ii:ilf-baked person to rise and ieininnii,i .nni|iai i>"n> 'na\ .^ivc iln tn^t man a hku'k eve and put an nifttii-icnt man nn a lii^li i tdi'.^ial. r.nt all tins dm.-, m-t rrndir CMnijiari.Mins \ahK'lt.->-, tnr in tlu hands (if the man wIid kncws the riinditi"n> tlir^e same vvnrkinj; costs enalilc tlu- manaijc' to determine very i|iiit'''!\' tiu' a\emu'-- t'nr impniNin^^ the efticienex of a de- Darti'.ent. vr ])ermit the dwner of the mine to determine tiie etiliciencv of the manaijer himself. The rivalry j^rowint,' nut of snch ei imi)ari>i Ml-- in its ineeiuiw t" ecin^iniy and liiL;hest el'iieienew when teniiK-ri'd wiih capaciiy. has heen hy iM means the lea>t faetm' in red mi;,' u'ild minint^ from an ahsolute Sjieenlatinn tn an in !al enterprise. In nrder that these \aliial>K' inlluences .nioidd have fnll pkiv, iliere is a er\iiiL,' need fiT t.'Teater nnifnrniitv in the formnkation I'i mine aecMimts inli' llii- nhini.itc re^tdts of wcirkiiiL; costs. 'i"hi> i> imt a new idea, hii' the n>efiil- iKss of it is nvrv evident tlie^e lairr w.ars. In eatise nf the constaiitlv ineri'asinLT ])nliliiily t^iwn ti> workitiL,'' resnlts 1>\ reason cf the lar^i- ]iroportion of mine dwiiership 1)\- luibhc stock com[Kmies. Tliis pnl)lieit\ uf accounts ren- ders results available for comparative ])iirposcs. The lir>t purpose of accmmts recpiires im discussion here, for it is a matter <>i competent hookdrkin!^ costs, 1>\- ri'dcniptidn nr ik'pri'cia- tiMU, and ; \\i in both the c'naraftcr of the r\]K [diturt, cliar^i'd to cajiital m tlie tirst instance. and in the amount char^'ed off afterwards, for nistance. in development, some managers charj^e \\in/e> and raises to development, and nilurs to Mi .pin,L;". Some even charge repairs anome enm- panies do it on the hasis of the avera^a' cost i)er ton developed, others, to heat the income tax commissioner, write I'tV all he will allow. Some companies write off depreciation of plant im a known life for the mine, others on a hoped-for life. Some comi)anies distrihnte a part of the i,'eneral charges over capital expenditure, others char!j;e it all off to revenue at once. Some managers charge pumping to ore extraction and some partly to de- velopment, while others charge it partly to milling, as being the sour e of mill water hi or-' treatment. ..onie companies give cost of treatment on one generalized tigure, which is valueless for comparison, because one ore niav involve "tie operation, while another may involve five. Most eoni|)anies distribute treatment costs over the whole tonnage milled, yet the proportion of tailing treated by cvanide, for instance, may vary from 50 per cent on one mine to 100 per cent on another. Some i lanies deduct the cost of realizing bullion from their receipts, while others charge it to working costs, etc.. etc., ad infinitum. In a few instances there is evident intention on the part of the management to obscure real costs, but in nifjst it is merelv difTereiice in method and oi opinion. Another feature worth discussion is how far expenditure for ilissec- tion of costs is warrante mix I: ACCOVSTS 87 r;n\ . it is nn tlu^c iiiattiTs vvluTi-, if ;m ajjfrccMiicnt couM hf reaclu'd. discussinii wcnild lie most \alual)lc. It mi,i;ln l)i' a work f(ir tlu' Aiiicricaii Institiitc nf Miniiif^^ l'-"Ki- inrr> and tlic l-.iis^lisli lnstituti(i!i of Miiiiii)^ and Mctal- liir^;\ ti> ap|)iiint a cctiiinissidii to furmulatf sniiK' plan cf v\(irl\in,L; oust statcmi'nts, as a result ol sucli discussidiis. I am sure tlu' profession would loyalK introduce and adluTc t(i ^ni-li a plan, and it would meet the ajiproval of the mine owner at the same time, for the nsnlts could not hut he lieiieticial to him in the end. II. C. Hu(j\'ek. Luiiduii, June 16, iye>,j. THE PAYMENT OF EXTENSIONS OF MINING PLANT OUT OF REVENUE Hv l',l)\VARU W'ALKtK. 1 J UlV 11. I 'i^^^ ) In ;i rrrciU 1,. iniKiii Ultrr 1 fffimil t" tin.- pniK-ipk' laid '1..UI1 b> Mr. C. .\l}4i.r;i(Ui Moriiiip at tlic niri'tiiif; of ^hariliDldi.T.'- iif (ircat Ini.yall loiisnlidatrd, tliat all CNpi-niliturc (in i!i.vi.lii])nKiit of a niinr and (.-xtensioii (if nRlalluruical ]ilanl .-lnuild in- paid fur wliciu'vir pns- ?.ibU' out of rfvi'iun . 1 lu- (|ut.■.^tloIl ijcforu the sliart'- liii!(K't> ua> ulictli' lu nru plant .should 1)l' fiaid for by addnii'nal caiHtal r.i.Mil liy tin- i-^iu' nf new shares, or wlKlIier tile large balance of divisible protil (some £loo,- ocMii shiinld he devoted to tiiat purpose. ■j'he ineidi nt npeiis np the .i^itieral ipn-stion of the suitabilitv of the ordinarx methods of accouniinL; to the special case 'if mining, and some discussion of the sub- ject VMiuld be opjiiirtune. The inetli'id of kecpini,' accounts of minini; companii'S as ado])ted in i.ondon. differs in r.o \\a\ from the stand- ard system fur connnercial ami manufactnritii; eiUer- prises. All preliminar\ expenditure on pro])erty and plant. sub~e(|uent expenditure on extensions, and the cost of sinking shafts, are charged to ca])ital ; and current expenditu!\- i m labor, supplies, mainti nance, and renew- als .re ciiarged to revenue. This is the theoretical prin- cijile. but the method of carr\ ing it out de])ends ujxin the circumst;mces of each individual case. It need bard- ie lie said th;it the great de-ire of directors is to show that tluv can declare a dividend, and whenever extra expenditure iiecomes necessary for tlu purpose of sink- ing ,1 new shaft, or ])ro\iding additi'inal or improved plant, there is always an inclinatieui not to interfere with .i//.\7.V(; I'L.Lxr i:.\ I rxsioxs 39 tiu' iliviilriiil hut t II i^^tii- lu'w .siiarc- It tlu' niiiiiiiLr markit i;. l)ri>k, ami if the directors arc lu'ld in l;.hi(1 I'^ici'iii, owitiij tn llu'ir siifocssful iiiaiia'jit'im-nt ni the ]irii]Krt>, then' is vrrv little (lit'tii'nll\ m r;;' ■ tlic ad- ilitioiial capital. If. Imucvn. the market is depre-sed, and the directors do not. for one reason it another, care to a>k for snh--criiitiiins to new >harrs. then the e,\tra expense is met out of re\t'mie if possible. In other cases, when it is imp. issihle to issue new shares an piilii\ has alwnvs htin uiiaiimuiu^ly afjrccd to b> sliari'lmliliT- iii ilu' Indian ^mouii. ami as a matter of tad llu iKu ^liari'> ari' usu.ilU al)>iirtitil hy sli.nTlicild- crs /Ti' rata. An ilhistratii)ii of tlu' sn-oiid iiu'tliod of pasin^ for fxliiisions is to 1)1- met witli in tlu- case of the (ireat l-'iii^al' Consolidated, already referred to. !'.xanii)Ies of this ix)lic\ are also to l)e f( mid in I'le conipanus con- trolled by the I'.xploratioii ('.nnp.inx. 1 he 1 oiiilioy Ciold Mines, Limited, was floated l)\ the iCxplor.itioii Compain in iX()<;, witii a capital of t\}oo,(xX). In 190J additional plant, to the extent of 60 stamps and acces- sories, was erectetl and paid fcjr uitirely out of revenue. In addition to this, when the original l\)niboy Mine showed signs of exhaustion, new properties adjoining wi-ri- acquired out of revenue, without it beiiif; neces- ■-arx to issue aii\ more shares. 1^1 ( )ro Mining: & Rail- way L'oiniiany also presents another example of the policv o .le I'.xploration Companx. .\n ;iddition of IiK) stamps is now beiiij; provided from revenue. In this case, adjoinint; properties were actiuired by the issue of new shares a> purchase price. These new propertie- added to the capital vsluc of the possessions of tlie com- pany. The ori}.;inal property was showing; no sifjjns of exhaustion, as was the ca>' with the Tomboy, where a new property was acquired in place of the old one. rather than in addition to it .\ gopd example of the third way of providing exten- sions is to In' found in thi' ( ire.it I'.otilder Perseverance, Mr. Frank (iardner's chief West .Xustralian property. Tliis mine was originalb- Il'iated in ;8o5 with a capital of £175,000. .Alter the tirst three vears the oxidized ores came to an end. and gieat difficulties were experi- enced in finding a suitable process for treating tile re- A//.\7.\7, PL.IXT liXTENSIONS 41 fractory ores, riurc were lui xuriilii-. profits available for ex]Hiinifm or for crcctiii;; a larf;c plant. The cost was cntrels borne h\ Mr. Ciardrcr and bis friends, and the amount, sormthing li^t £i5i),(xx>. Iia- >-incf been niiaid out of prortts. Ilavinjj mentioned the usual inetliods of mininp-com- pany finance adopteii in Londdn. 1 will proceed to discu>> the general (|uestioii a^- lo llie .ipplicability of the ordinary methods of accouiitiiij.; to the s|)ecial case of riiinin);. It i^ held 1)\ a j,'reat many pri i|es>ional men coiiiucted with mining that far less expenditure ^lll.nld br ebart^ed tr> capital account, and that lb<' fij^aires at which the oris^iiial value of the pro()erty and plant stand amoni,' the as.sets. -ln'ulil be reduced as r.qjidly as possible .\ mine is not a permanency like real estate, and the value of the machin- ery dejjends almost entirel\' nn the supi)lv of ore. Some alteration --honld there f.Te be made in the u^ual practice of enteriufj up the price paid for the property and ei|nip- meul at unalterable figures. It is true that mn>t nf the carefully manaj,'cd mininj; companies make allowances every year for depreciation of plant, but few make anv provision for the depreciation of the projierty itself. The conseciuence is that sharehoUlers receive dividends which they ref.;ard as profits, and concurrentK the value of the -hares decreases. The real profit of the transaction in iiuyinj,^ mining shares i- the difference between the orif^i- na! purcha-e i)rice of the >hares and the sum of the total diviiknds added to the eventual price of dis] >al of the -hares. We have the continual phenomenon in l^)ndon of profits to mining shareholders concurrent with a gradual or suddi'u loss of capital. Such a method of mana.eing mining compani' -' finances is illogical. Some part of the profits nf cacj-, year's work should be devoted to the reduction of the capital account, and all expenditure subsequent to the initial cost as reconstructed and the shares ex- changed for debentures which are redeemable out of tb.e lu'i ifits. Discussion on the subject would not be complete with- out a reference being made to the incidence of ihe income MIXIXG PLAXT EXTEXSIONS 43 tax on the profits of iiiiniiig coinpaiiics. As in the case with directors, so it is vv ith he income-tax commissioners. They like to be able to siiow a large profit. They are very jealous of the allocation of profits to what they call capital expenditure. \ery little is allowed in the way of writinj; off for depreciation of plant, and profits applied to the extension of plant and the sinking of new shafts are invariably assessed. In the case of the Mysore com- pany, if the extensions had been paid out of revenue, in- stead of the profits being divide judgment 1 have taken the month of March as an average period, because, since that time, experiments with a 50- ton daily plant of another process have been in progress ORE TRI-.lTMEXr AT K.ILGOORLIli 11(1 1 lavc s tin .(.■n iliargcii into costs, soniewliat coiif cost s t-ivcn, liow ever, arc a fa ir avcraL'c. usin^ 1 Iiavc reduced all tomia,c:cs and costs mentioned in this ccjninuinicatioM froni the lonj; ton to the short ton, so (3n the footing; of American practice, nnt; the month a varying portion of a 70-stamp as tti 1)1 treated 8,444 '""s with a duty of 5,191 ton [XT -.tamp per day. The costs include superintendence, etc. I)nt nut depreciation. Water does not include boiler- feul. which is included in power. The costs of mill md concentrating 8,444 tons were, per t mg on: .Milliiic— and waKo- $0 0<>)7 ' '-"■" ""lli'iK $0.6722 Coiicciitratnitr — Salaru-, aii,l wages $0.0896 ^^■•"^•,': 0.0257 ^."'•'■"•^ 0.00J8 '"'•■" o.040t ■■^^^•'>"'« o.ooi.; Total i-oiirt-ntralint; ^ ,g,2 rolal, JILT ton inilKil $0 S'u riie cost .-.f treatment of j.t)62 tons of tailing were as follows, per ton: Salaries and waRc- jo ^ ;"^''^""" '•>;"i"'^- o:,^M l'.r..iiin-o\ani(lc „ ,__ l.une ,", °i" -/ , 00^2.' Suplmru- ,acul ^, ^^^ OtlUT Mipphos O ^, V^'7 0.027, 4t; /■///; i.coxoMics or mimwj ■I'lUal. piT tdii ni tailing $_> -715 '1'Ik' cii>t> ijf nia>tiiii; and c_\aiiiilin_L; 4SJ tons of coii- cciilraK- w (.Tc a> follow. ■>. \kv loii ; Koastincc— Salaries aiul wages $0.9407 I'ucl 0.3157 Siipi)lies o.o.V*'^ rrau^pcirt and (lr\ nif; nf ore 0.4050 Mainteiiancf 0.0443 Power o J^^\ Assaying 0. 0?<47 ■|-..tal $j,07if) Cyauuling — Salarie- aiul watres $0-539' l'i)las~ium cyaimle 0,^1/(13 Siilpliunc aeiil 0.01113 l.inie 0.0! 14 Ziiic shavings 0.0314 Water 0.0X50 Otlier supplies o.iSoj X'aintcnance 0.351:? Power o.()OJi; Assaying o . 14 j3 Total $2,640? T'ltal cii-t, per vm ni ecmcentrate $4.7209 Coiiihiiniii; tlust.' stalcmiMits of cost, ami reducing all the a\eraj;i.'s to the jjai-is of tons niillcd, \vc uhtaiii the follow iner results: Milling anil eoneentrating $0.8531 2.14JJ iiK'eiitrate o._'(«)9 Treatnuiit of tailing. Roasting and eyaiiiding Tiit.il co-t per ti'ii niiUed. Rovaltv o. 1069 Total co-t $3 37 -'4 The yield wa- ahout S14 ]>er ton. the extraction 92 per cent, and of this 65 per cent \\a> secured iioni the concentrate and tiurefore did not i).iy royalty. Tlie ile- fcctive arranijeineiit and construction uf the mill and ORE TRRAi'MEXT AT K.lLCOORUr. 17 I>uucr plant resulted in a cost for power and niam- tenancc alunc in excess of tlle^e co>is on the Urova iiruuniiill of 38.5c. per ton, altliout;li the latter treats but 4,o course of alterat ion to treat iJ,ooo tons per month, will vurk for not over S- 75, iir()bahly ,'f_'.5(). The Oroya irownhill mill is n jw in cour>e of enlarijement and al- teration, and when complete, aIthouf,di treating the most re on the field, siunild show also good results. difti II cult o owe\ er the figure of S3 above is sufficient to show tl le ■ousness of the figures of S7.86 i plus rovaltv in c- — VD// for tln' 1 )iehl cost.< in one instance and another, as quoted by Air. Argall Lack of ecpially recent and detailed data from the larger roasting mills at Kal"oorI :)f co.sts difficult. renders comparison for 1902 shows the costs on that lie .uuuial report of the ( ireat Uould er mine to be S S5 per ton, but this lias been somewhat reduced since, I believe ig about 12,500 witli the 'erse\erance, ireatin Tlie (ireat I'.oulder 1 liort tons per month, gives the latest result,- ^3(^5 ■ In what items largest tonnage on the field are included I d(j r.n know. Ilie ua-milling l)io.:K)-cyaniding method requires about 20 per cent less power than the dry-milling roast- nig method, and involves less cost of maintenance, and also involves not over yo per cent of the fir>t cost, and thertfore less depreciation; and above all it avoids dry- ing the ore and roasting 04 per cent of it. These economies are accompli-hed practically at the e.xtra expense of concentration, bromo-cyanicie and rovaltv. I he use of bromo-cyanidc partly replaces potassium cy- atii.le otherwise required, and altogether on the Lake \ lew these special items involve about 70c. per ton. ( )n the other hand a crushing mil! uf the same 48 /'///■ l:C()X().\HCS Ul- MlMXu toiii:a-e. treating Lake \'inv ore for extra drvin-, extra power, extra roa>tnig, extra cyanide and extra wear atul tear, would iiivulve fully $j jht ton There is iiothin- very novel in the Diehl proeess be- yond the well understood methods of stamp-millinR, eoncentrating and cyanide treatment of gold ores, ex- cept the grinding ,.f the entire tailing to slime' and the addition of bromo-cyanide. The rationale of the process makes niueli toward economy and steadv im- provement. The royalties expire in another four years, but aside from this I think I have shown that there is no prospect of displacing the process in that region in favor of dry crushing and roasting, especially as the comparative extraction seems to favor the wet method. Many details of Mr. Argall's understanding of Kal- goorhe practice are altere.i by present practice, more especially the fact that the dry-crushing roasting mills grind all ores to slime for t^lter-press treatment, instead "t treating a portion by percolation as he states. The wet-cru>hing mills do not return roasted concentrate to the battery. Kalgoorlie metallurgists do not have the same apparent aversion to filter-press treatment of tail- m.g as Mr. Argall. The economy of percolation of sand over agitation and filter-nress of slime for a pe- riod of six months on the Iva .hoe is but 40c, per ton beside the cost of grin.ling, of which a portion would disappear in the greater economy of filter-pressing if the whole product were so handled. The compensating advantage, in extraction by fine grinding, considerably more than makes up this difference in either process. As to the relative merits of the two processes, as ap- phed to Cripple Creek conditions. I am not sufficiently mformed as to the character of the ore to offer a judg- ment, having only been on that ground for a few days- but I might point nut that power costs at Cripple Creek are not 15 per cent of that at the Lake X'iew mine, that ORL Tia-.ITMHXT .IT K.ILGOORLIF. \'.\ the cr.t of v.atcr noiild h: almost nil. the cost of cyanide and other su n;:^., 'uss, and that the treatment of c.n- CL titrate wniml he nn.ch niure ecnnnniieah Tliese nnir items vvoidd Meiiiiit treating Lake \ iew ore uni.kTation by Cripple Creek opera- te. rs is the adaptability of this process for erection on the mines themselves, and therefore the avoidance of i.i^ht chari^es and cnstnms-mi! Ijnifus and esjiecialiy the possibility of modifying the practice to take advan- tage of some of the more favorable characteristics of Cnpple Creek ores, as compared to those of Kaltrnor- lie.* London. July 29. 1903. H. C. Hoover. , 111 a fnrnuT article on tl,e M.hjert Lake \-iew co^ts we K.ven, ,nrlu,l,n« tran-port to tlie mi.I ; in thi. statement for co, p.-jranve- purposes they h.-,ve t,een omitted. F, i. e.pe ;,I v no" '•-1 out agani that tlie above eo-t. are upon a .hort- on ba -1. re coni- point- GOLD MINING ACCOUNTS Till' Editor: I AuKU't 15, I'JOJ.) SiK— 1 n vilur i.sMi c of July II, Mr. 11. C. IIodvlt. f. _\iiur rr(iuc'.->t. (>i)(.n.-> fur (li.>cu.->iuii the >ul)ject of j^nld niiuiiij.; accDiints. Ik'inj; associaud with tlu' niaiiagiiiunt if a mnnljcr of very prospcron.s iiiiuos in variou.s parth of tivj woricl, .Mr. li( i\cr sp ak.s iih li iL' atitlioritv of one 111 a positiiin to kiinw and one who appreciates the vahie if luiifiirmu V ni tl treatment of exinnditiires of capital mil ol re\ei'lie ami tl le keepuiL; ot nnniiig-cost.>^ accounts. In the business of niininj,', custom has not yet estab- lished a uniform method df char.i^dnf,' ex()en(litures for Nibk-. and (|uile within the pro\- ince of the profession, to urj;e a con.-isteni det^ree of uni- formity in the practice of statin.!?, if not of keei)iiis. wiirkmsj; costs. Tl le SUL 'cstion that a mine mimission 01 the tichnical societies be apix'inted to take up this work ouLjhi to meet with favor. Discii.i.-ion of the feature ■-u.UL^ested as to "how lar ex- penditure for dissection of costs is warranted bv results to be attained and with bow much detail it can he done within the re.dm of ;icciiracv" niiLiht lead t< a more gen- eral discussion of the whole subject of cost keeping. The results to be attained, or in other words, the ben- efits realized liy a frequent, regular and systematic dissec- tion of wirking costs, are comnioiilx acktiow ledi^ed. ilil .f Goi.n Mix/xc .iccorxTS momics arc accompli.slKd, and a material rcdiicti mminp; costs is cllirtcd in tlic ind nuiiicy. It is ix)s-,il,Ic to secnrc saviiij,' of time, inertly 1 formation of tli ■•picifi (IctaiK c ciKts of work at tl Its U' iiiiR' nt, and durinj,', ts jiro^'rcss. A better opportunity is afforded for maknit: a critical discrimiiiatuMi lietwe. i capital and revemie e.\- IK-nditures, as tlie legitimate operating exiutises are writ- ten off cacii month. And the maiiaj.;er. dependin<,r with full confidence up-'ii his monthly cn>i-slieet, is relieved of a mass of detail and his mind is free and clear for planning for the future. mo>i imp,,rtani result, and not so "cn directinfjf current operations am lint prohalily the erallv understood. IS tiK th orou,i;h industrial orjjaiiizat liromot'.'d by the conservintj intliience of a system of keeping. A department for finding costs must 1 loll ^t )c sup xeijuiar ported by the various operating departments. I written reports — the cement of commercial organization- are re(iuired from foremen, time-keeiiers and others, froii which arc secured the d.ita for recording, segregating am distributing the "ex expenilitures for 1, ilior. R records from the store eports and s (lepartment maintain a svstemati and complete control over the distribution of ppli In this way responsibility is fixed, co-operation is secured, the active interest of every employee is enlisted, and a criterion of efficiency otablished. I'pon the theorv that the person who lacks enthusiasm in 'himself can never arouse it in others, this effectual inter->tafT collaboration is preserved in the knowledge that tl lallv interested in and carcfi ic manager is per- scrutinizcs each month's statement of costs. And the best of it is that bv ■>ame organization, of which cost finding virtue of thi but a detail, these result ts and benefits are secured at tically no expense whatever. That hen maintained at no increase of exi prac- is to say, a compre- sive system of co.>;t-keeping may be establisherl an peiise tor clerical assist ance or otherwise. tl le work .as it comes into tin ////■ /:C c'.VO.U/f.S ()!■ .l//.\7.V(, .■n.-C(v,iiitiii- (ltiMriiin,iU can lie ^' > iiu tliM.h/i il ili.ii the ivj^tilar >iaiY iiMiall> iinph i>cil at ilir iiiiiu ultui' can racily lianilk- It, .\> 111 li' u I lalnirati' a piMpiT -crli.l with rca^ .lahlc a'-Mirancc that the ilcvilciiiniciit "1 a -\.-icin i>l' c^-t liinlini; luid prMM.l ihi>. And ilie .-anie esperience ha-i ilenv'ii-iraled thai ~nch a system can he pertected and ccinlncted which will exhihit in ai'^niMle (Klail, Inun ink to interest, the -i L;ri -ali. 'n ><( e\pi ndiinre-^ fiT lalmr. snpplii's and imlireci e\pen-e-.. and their ileterininate all date s tlial wlmdi wa-- scTiniislv madi' in l.iindoii i)v tlie 'rc"-uit--iit I't till.- (. nuncil I'l \\ > -t A iis'.ralian M I1H-(I\VI1- tTS, wlu) sii;;f;i.>tid iliat a miicral iiis])i.Ttiir dl iiiini'.-- he •PP ilctl I) ical visits till.' Mate for till- ]) 'nviTiiiiuni will) a viiw to irpoM' lit s.impliiij,' and (.■Iki'U- iiir KVL- ix- and otiinatmi; tlic \aliic nl the |)rn- du cinfj mines. h'urthi rim ire, thi> in>])i'eti!r was to re- ceive a salar\ whieh >hiiiild "plaee him l)e_\(ind tlie |)ale At the uRethiLr, Mr. 11. (_. IhKjver it temiitatinn. lininted uut the aii-uriht\ nt tii'. idea, hut it seiins ti> liave hecn takin ^erimivK h\ a iiumher dl tlmsi inten^ted m West .\u>trahaii mnie^. The avowed imrposi.' nf this innovation, as stated hv Its j)r(ipo>er. \\;is to <\n away with "thi' intris,' lie an< maniiiulatiiin if rket I 'perati irs lor tl leir own hasc ends, lirihe the (itticiT'; m eharL;e of tlie mine- to work the hatter in tile interests of the marktl." etc. It must i)e confessed tliat the (liver of lire re>i'rves h\- dilTerent eiii;ineers. wiiicli has clKiracttTizei i tl it seiisa tional tluctuations in the sh.ire i|Ui itaticiiis iif the K;\lL;oiirlie mines, does justify criti- cism and warrants tlioiit,ditfiil iMii^ider.-ition. ()i, several (jccasions diiriiii.,'- the Ia>t ten \(ars the sliaie market has het'ii rij.;j:;ed Ii\ concerted action hrtween managers and ojuratcirs, se ne of whom liave l)een d.irectors; in part, this is ixplained li\ the fa^ t that tlu mine-owners )f the l)oOi iccidetitalh pen rich iiKMi ii.'iM menu if 1 iiw anteci ari"' projiortion of .iits. X'.irious coterie.; have striven in turn tn iiu--t each ot'ier mi order W m i\ 54 ////•. /:c ii> ().\!U S or MlMXu to nmtrnl llu i.iii >>i |iiiMlin.tii)ii and S()iirc(.'> of iiift)r- nialii)ii .11 till' ininis. Sfvi ral ititaiMDii^ rpisodt's havf di.>>j;raciil tlu- hi-ti)i\ of ilh Ix.ilj^oDtiic iniupaiiics. and it has t\iniiir,| iiuu h l;.i(m| h.ird W' rk m ri^i"ri- West An-'traliaii nmiis i.i tin |ic]>i!iiiii .i| it s|nH-|,dili' iiiM'st- ini.!it- whii'li ni,in\'nf iIk'ii! nnu (ii'i'upv. • >l (-''urst', ilu' idc;i oi a i;i 'M rnuuiit ni-|»xtiii, 1m \aliK' the niiiu- a- an indipi'nilnn a|i|irai--ri. i> \\liiili\ taiininl; the inst i pf -amplntL; lli<- lari;c niiins nf nin ili-tiiit al.inc, thai !■', Kal,L;i h >rhr, w.aiM iim inio hall a nnllKiii (l<>llai>. a- Mr. iioowr .-aid; ilt miic I'l pi -■ iiirii ; it wonM takr a ip ini|K trni (.•n!.'iiUHr at Ka-l ihr.'c u'ar- t.p pin tlip work tlioronj;hly at l\al.L;piorlir alppiu-, aiipl n is s.n, i,, va\ that -luli a iiiaii U'Uild ni.\iT In- alik' tpi krr|i pacr with ihc uc\\ a man. mile-- ajip. iinupl lUr lifi'. UppiiM hi' till >|ipirt ppf ppplitii-al iniriL;nc. and it lii> |)p isi lippii win- -ate l)i\oiid di-nii--al lii- ppiwir wpuild liu -lu h a- 11 I- niaphi-aliK tpi (Uk^au- rxerpt mukr eoiidiiioii- f"r wliiih thrro i- no pptlur rnnipK. lint tlnrr i- aiipptlur ninvdy. l.rt it hi- rvc iLjni/.cpl 'li.it it 1- a- nn]irpit\--.-ipinal t'o'- iii^iiuir- t.. traftic in miniiij; -han-, i-pn'ial]\ tlipi-r of luiiu- iiiipKr lluir inana^'. limit, a- it i- fp.r lir.ikir- tp) hm aiipl -clI -r- turitiis fppr ihiir own accp ui;U. i.i\r nj) the idea that a man i- a hritir inana^xr li\ hic. 'iiiiiiL; a stockholder : rccopni/e that hi- jiid-iiieiit hec. .nie- \itiated l)\ lieavv IinaiK-ial panieii)atiMn ; pay him Iiaiipl-p 'iiuh ; iMt fpir pni- U\\<: lip the price p pt -iiares. hnt f.ir hrin-in- the cpi-t- of the epinipanv who-e trus- tees they are: lei them puhli.-h all infpprma!Mn fip in the mine promptl\ aiul lu fore tlie\ n-e it f. ir their piwn ad- \antai,'e; kt it he hem ath a plirectpir'- plii^nitv to sneak Mixr. r.uj'.rrinx nv coi-i.rxmi-x r .•ii-'Uiiul llic rMimr with a hi: of nftirial iiil'ornialii mi ])^■- fori' il 1^ !'■ iriiiall\ |nil)li^!ifl : aii'l tlicn. a-, a liiial sti|) cali'iilali'l tn It ~-('ii tile \aL;arii V .if hit t-^iiinatrs, iK I't (liri'i'ti 1I-, wliii h.iw li.iil ^iii'lit Kill cNiH riiiuc in the Imsi- IK'SS iif niiniiiL,' to Ik ia|ial)lr .if (.-11111 jsini; c ,n;|Htriit liianaL:.ls jnd (if -iipiiorliiii; tli. 111 InwilK when muT chnsciK Tlii. v\j|l In- imu-h (luaiur than the app'iint- nu nt 111 the iinpiis^iliK' iitVuial sn^Lrcstcil 1)\' the I'rcsi- (Knt ni" the liinncii of Wot Australian MiiiL-i iwncrs. « i IN :tt!| m COST PER TON AS A BASIS OF MINE VALUATION By R. LiiL.MAN Bruwn. ( AuMu>t j(^ lyj I llarclls sccuiul in iniportaiiLC tu tlic dctcrniination of value iKT tun, by careful and s_\ stcniatic sampling, is the (kterniinatinn of cust per ton from tlie mine accounts. The object of sampling lias been atta'nes \alue ])er ton must be deducted the total cost per ton and the loss per ton in treatment, tiic remainder being the net value ])er ton. Obviously an error in cost per ton is just as im|)ortant as an error in gross value per ton, so that it is nt ary to exam- ine with as careful s^TUtiny the method of obtaining the one as of the other. Se\-eral ])it falls have been pi d out recently in the columns of this Jch'H.nai, which will be ignored in tli's present article; or, ratiier. they are as- sumed to have bei-n satisfactorily avoitled, the desire being iku to obscure another factor in valuation which ha ^ iieen touched ujjon but lightly, if at all. It is not intended in the present article to go into the (Kiails of mine accounting, but it will be assumed that in some way or other ihe enLiineer has obtained ci tain seL;re,L;ated totals represeniing the expenditure during a cer'ain piriod in the various opeiations connected with mining and beneticiating the ore. and that the simi total of these segregated accounts represents the total cost of operations for the period in (|uestion. It is usual to divide these segregated totals by the tons of ore trcited iluring the -^ame period, and to call the (|uotients the cost per Ion for the various departments. BASIS OP MIXE I'ALUATIOX 111 a certain sense the sum of these is a cost per ton, thiiuj:;h not prupirh' to he considered the cost per ton, as the result is rather a hazy approximation representing;, perhaps. averai;e work for the mine, liut not sufficiently definite to he used wiili contidence in the delicate work of valuinj:; ore reserves. Let us assinnc certain natural divisions of the accounts into stopiIlJ,^ develipmenl, reduction and j^eneral ex- jjcnses. All tho sei^reRations can he easily grouped under tiicse headings; and this would naturally be done in the process of arriving: at the c(.st, in the manner to ho tle- scrihed. In the inexact method commonly empl(\ve(l, these totals would all he divided l)y the same tonnage — • prohahly hy the tonna<;e reported from the mil! or reduc- tion works, whereas, tlii- would i^ive true results only for the last two items, namely, reduction and general ex- pense. l'"or sloping, the result might he a])])roximate ex- cept in the case of a mine carrying a considerahle amount of ore in the stopcs. I'or development, it could give the true value onlv when the >;mie amount of ore is stoped as is developed during the period. If development falls heliind. the result per ton would he too little; if it ex- ceeds the output, it would he too much. This is the general statement of the matter, but it can he made cl'are. by considering a concrete case. It is proper to say that this, though based on practice, has been elaborated, with the assumption of certain values, to suit more general conditions. The period is 12 months. Tons treated, 30,000. Total return per ton. $5.26. Total loss per ton. ri4c. Total gross value per ton in ore. $5.00. Herewith are given in tabulatcfl form the costs of the various departments and the costs per tun, as commonly calcidated : ..s rillL ECOSOMICS UI- MIM.W; m^ ^i Tntal. ■"^I'^piiiR $5S.ooo DtvcUipmciit 50,000 Dl-dlKtliJll CIJ.OOO GoiKTal i'xin'ns(.s _'j.ooo Total Tlio foUuwins. ^JJJ.OOO tonnages are also given : Per tun basis ■■1 tMllS $1 . 16 I 00 1.84 ■+4 $1.J4 T..n., (Jrc broken in llic -tiipi-^ 10.000 Ore siaiuiinK, blocki-il mit. ready for bri-akiiif,' 100,000 Ore rcasoii.ib!;- expected, but partly, if at all. developed.. 50.01K) 'I'ulal l()0.ooo '1 hese arc tlic (|iiamities assumed to be found by the engineer on iiis invL>tigatinii of the property, and the re- coverable value per ton will be taken at the average of the pa^t year, which we will assume to have been determineil to be the fact by careful sam])ling. The most natural way of calculating the value of these reserves would be as follow s : Total recoverable value of ifio.ooo -tons, at $526 $841,600 Co.sts on i'x),ooo tons, at $4.44 ;io.400 .Apparent proia in reserves $i.?i,2CX) Ibis is manifestly incorrect, otoping ami development should not be charged against ore already broken, nor shciuld development be charged to that standmg blocked out and ready for stojiing. The estimate should read as billows, assuming the figures for cost per ton to be C( irrect : lo.txjo tons broken in stopcs. at $.' 28 per ton for milling and general expense $22,800 roo.rtxi tons developed, readv for sloping, at $344 ($i28 + $l.i(,) :... 34_,,ooo S0.0(>() tons, reasonably exyiectcd. but not doveloped, at *-t 44 222.000 Total costs S5H8.SOO Uio.ooo tons, recoverable value as .ibove ,S4i (kx) ^'*;t_ I'r"!its 2.S2!soo The cause of the great ciitTerence is t)bvious. It sin mid be noted that in the accounts, transportation and haiuUing B.ISIS OF MIX I, r.UM.ITIOX r,!t costs are assuiiu'd to belong in general expenses. TiiL' above figures must be taken as tliruwn in, apart fmni the fuiulainental matter with whieii this article openeil, and they contain errors, as was indicated in our opening lines. Reduction costs and general e.xpinse are properly re- duced to the per ton basis by dividing bv 50,000 tcin>. l>ui stoping anil development cannot properly l)e so rcdui-ed until we know whether 50,000 properly represents the tons sto])ed and the tons developed. In what follows we are using some (|uantities that an engineer examining tiie property can scarcely have C(Mne at directly, ami indeed he will be fortunate it he has them at all ; but. rectignizing their importance, by iiKpiiry and estimate, he must arrive at some sort of a probable value for them. We have, as a general proposition, that the actual amoimt of ore broken during the year is e(iual to tlie ore on hand broken at the end of the year, plus the ore treated during the year, and minus the ore on hand broken at the beginning of the \ear, in the same way the ore devel- oped during the \ear is e([ual to the ore blocked out' at the end of the year, plus tlie tons of ore broken during the year, and minus the ore standing blocked out at the begin- ning of the year. Applying this to our concrete case, we will assume the following values for tonnage at the be- ginning of the year : Rrnkcn in tlie "stopcs 20,000 StaiuliiiR l)lockc(l nut Ijo.ooo Reasonably expootecl 6o.oo-3 This -hi.ws that the ore at this mine will not actually pay expenses for handlini; unless greater economies can he' practiced; whereas, our first calculation gave a profit per ton of aliiiut 8oc. To a certain extent, then, the matter concerns the mine manager as well as the examin- ing engineer, though it is in the interest of the latter in particular that this article vvas prepared. Proceeding next with the valuati -'."^ l"r mn • • ■ ■ • $-'-;.8x) Kio.i . Ion-, (Irvi'ldiKil. ready fcir brcMkinf,', at $3/3 I jj jS - S I 45 ) lurti'ii ^ 37,^'C;JO 50.CXX1 t.'iix ,,n.-, rc.i-Diiably expected, at $(iJ3 3"-500 •Pclal $707,300 RccovoraliU- value-, as ali.ivc S_ii.(kX1 Nvt valiK- i.;i the rcM-Tve^ 134.300 111 order li> lay the whole matter nmre clearly open and even at the risk of heing tedious, it is worth our while to make another assumption regarding tonnages at the be- ginning of the jieriod, as lielow : Broken in tlu- -t..pc ^""'^■ SlandiiiK rcad\ !■ 'V brvakii 80,000 The tonnage and cost per ton follow in summary : 'InniiaKL- Cost f,>r yiar. per ton. StoniiiK 'xi.ooo $097 UfV<-l..pnK-nt ^-"^-^ " ''-. Reducii'iii .and Kvncral expense, as lietiTc 50.000 ^.-m Total $3-87 B.ISIS OF M/Xli VALUATIOX 01 On this l)asis, tlic \aliK' nf the ore reserves is : lo.ocw tuns, lirokfii iii ■-tiiiH-^. a- iH'fore $_'2.8tio loo.ooo tons, ready fnr >ti>))ini;. .it $325 ($228 + 070 ) piT ton 325,000 50.000 tons ore, re asonalily to l)c expected, at $3^7 193.500 Jtal charnes $.Ml..V!0 The trross recoverabli- v.iUu'. a^ ln'fore rolits ni ri'strves Th le (htfireiiees >h(i\\ti chneh tiie siateiiie til S4I.(«X) 300.300 L'tit with which th 1;- ])aper 1 'i>i'iie( A s a siimni;ii\ nt' the ;'.linve tliere arc two general prin- ciples til l)e eimneiateil (.■\) (,'nst JUT tun IS the (|nntieiit ol tntal d 'st divu led hv the aeiiial tdimaoe re-iiltinj^ imni that e\pen( litiire. ( r. ) Net valtie ; ler tun i> tlie "ross rec iveral)le value ]ier tini. less est pt r t.m for those nattiral (livisi()ii> tile wi'rk still to he ])erl'oriiiefl U])!)]! the ditYerent clas of ore. o f .\lth the ahove prineiples are fundamental, like 11 i/cneral stateiiieiits tlie\ niae easih he pre: to ex- ift uiei-r, alter analvsis o if the treines, and it is for the enj, situation, to decide the particular extent nf their ajijiiica- tion; a failure to reco.t:^nize them at all. on the other hand, tnav invalidate the conclusions drawn from other- wise reliahle work. ^ Tit I i iWliNE ACCOUNTS (AnRiist J.), 191,5.) I he Editor: '"^IK — Ilk' (.■niui.M' and iTcaiiiy iironiuu.,111 of the 1111- piiriant Miiin'ct .1 },'iihl iiiiiK' arc(iiiiu> liy Mr. 11. C. IIddvit in a wwm iuuhIilt uf tlir jm rnai/ k'avcs inc little clianci i.i ^11 a ,L;(i(.(i Imld. I'.ut the nccu^ily fnr (lisi-us.-.i(in cif an i.^.suc nf >iu'h vital niuiiK'nt to the nniniij.; indn.stry luad^ nic to vonturc sniiii.' Cdutrihutinn at this jinicti.. Mr. lliKiwT M'liman survici' li\ .-luittiii^ olY at tiie iintsi-t till' pmrilc piva nf diversi.' cnnditiniis. which has t(») 111'tt.n hern tlk' (.-xrusi.' icr such wouful cliaos as j^ructs till.' invr>tii;atiir wlicn he l)eL;ins to attempt tlie arranj^nni,^ of actual methods into xnne show of sy>iem. 'riie difticiil- ties in the way of imiformily lie mainly in tlieory and ni)t HI practice, arisiiiL^ not from varyin.i^ conditions, so nnicli as from lack of method or of clean-cut ideas concernini;' the ends to he sought in s\ steius of account. I presume that many engineers will >nnle at this statement, at first }.;l.'ince, liecause there can he no serious ditYerenci of opin- ion amoiif;; well trained luemliers of the ])rofession as to what ou.i^lit to l)e shown hy the books. 15ut, imfor- tnnatily. the enforced examination of the accounts of many toiuipanies proves to the writer the very inade(iuate manner in which the expected information is ohtaiiiahie. save in excejjtional instances. .Mr, Ihover la\ -^ d iwn three methods, or principles, which should u; 'Vern a proper -v,tem of accounts. In my own practici', I haw al\\a\s reconniu iided '-ncli nii'asnres as would eiisuri' these same result-, hut, perhaps, from an atlitudi' n. t exactlv similar, I. ••7o pvi'iriit fraud * * * ^,„j to carry conznc- l'..,i;c 44, July II, 1903. .i;/.\7: .u'coi'xrs 63 ticn of honesty." 'I'liis practically rri|iiiri's the kcepins:; of all ri'ccrds and liic siniitiiariziiif,'' of tlu' .saiiu' ri >ticli inaniKT as to (.■ii>iiit adiiiuaii' rlu'ckini,^ of one ofUfcr 1)\' anoiluT. This not onl\ L,'narils against frauihiKnt intent, hut it also protects servants hy verifyiiiL,' their rieords he- l'(jre the opportunity to correct possihk errors lias p.issed. 2. "To sllo\' ixpcnditurc * ♦ * „,, viu/;,- itiiit basis, etc." ihis iniportatit eiie not so much from misconception or 'itTereiices of opinion on methods > t' seL;re,L;ati' n. as from inal)ilit\' to comprehend the correct iirinciples underlying'' mine aeeounts. 3. "To he presented in siieli ci :e.;y lluil the owner, di- rector, sluireliut this necessitates a voluminous and e^ 'ni|>licated svstt'in of sc!ie(lules to lie m;ide up from departmeni.al report>, ,tnd in M -I St. t;j 77//; I:C().\\>MIL'S ()!■ MIMXU nianv rcspi'ci,- tlic >cliemf is nmrc ciimlicrsijme than is accvptahlc to AiiKrican iisaiii'. In Mexico, a plan (kviscil for ilic Lonipania Metal- hir^ica and ni n.-t.- t.-l>c\\li<.rv ni that country ni more or less nio:litieii lonn, has features whieli overeoiiic some of the objections to the I'.ritish st>le. Hie princii)le is to carry on the i;cneral ledger a moderate number of promi- nent accounts, to which totals are posted from journal and cash book, usin.i,' a subsidiary leil,L;er to ' 'ke ii[) item ized se^'rei;ations which may be specialized i any extent deemed d( -irable. With this system, the accounts are numbered serially ami all employees concer led are pro- vided with printed books, '/w'mii the complete classitica- tion by numbers and titles. In adapting' it for use in one instance, we have arrant;<-'d the i^eueral ledger to furnish information ordinarily liable t<] and to operate it \sitli keen .sati^lactinn. If it be possiljle to formulate a standard s\steni of accounts adaptable to all needs and so planned as to give comparable results as between different operators I take it that some agreement must be reached regard- ing a number of [XjiiUs on which practice now differs. These matters once adjusted, it would be wise to pre- pare a skeleton, which, on broad lines, should be very simple and compreiiensive in its segregations. Iiacli main division ought then to be divided and sub-divided to give operators free choice of subsidiary accounts. What are known as Capital accounts' over sea, as distinct from cost and revenue (profit and loss) ac- counts, have not been as clearly defined in American practice. This is due (i) to differences in tax collectors' methods, which, on this side, are variable and rarely in- trospective; (2) to the difference in attitude of home and foreign investors: { j,) to ditTerent methods of stock dis- tribution here and there, and (4) to rigid auditing abroad and the sad lack of it at home. These items, however, need only be stated as causes historical, and not as raisniis d'ctrcs in the premises. Moreover, Mr. Hoover appears to have found his discordant elctucnts largely in a country which is supposed to set the pace for us to follow, for there is no doubt that the liritish ideals are beyond and above us in their appreciation of the value of accounts. Once let the spirit move us to 'get to- gether' in the matter. 1 venture the prediction that we will evolve a svstem less cumbersome and unwieldy to accomjilish the end in view. Duly crediting Mr. Hoover witl. the original sugges- tions that the Institute of Alining and Alelallurgy and the American Institute of Alining Engineers appoint a ioiiU committee to fornuilate -onie plan of working cost statements, after discussion of the subject, 1 would •'? 1: e. Si Si I C6 ////: r.COXUMICS Ol' MIMXtl \v\n\\Tv to siifj'jjf^l ri II lilu prop. as |(illnw> \xl ilu- In-tituic <>l Mining; ami Ak talluriiy and thr lii.-tiliilii'ii (if Miniiif,' lini^iiKiTs ai)])nint a joint coiii- iiiitttc of till (live from c';k1i organization i to ait a- a r.riti.sh hiilj-Loinmitttc to corroiioml and colkit (luali- tk'd opinion^ from tliiir nund)i.Tsliip, an 1 to clas>if_v tin.- anie. witli ricoinnu'iulations. Let i; Aiuciican lii>ti- tuio of Mininj; I'.n^inccrs appoint a similar committi^ of till to act indtpciuhntly on this side in the sanu' manner and uiili a similar purpose. After a iriveii jie- 1 of deliberation, let each committee o. ten select rio( iriiin Its iiwn iikiii I.er>l lip t\\(i ]ii ersons to i.^-n a new opin littce of four, to Ije charged with the duty of devel- com- ^ a plan from liie final rcpor's of the larger mittees. Meanwhile, the free discussi^ )f tht II its bearings need not be restricts. ' in any ( bject Icgree. I respectfully submit this first draft f a plan vvliicl :n niav well be nioditied in detail IV wiser heads. lie prin- ciple of the idea is one which might also be npplied to many other topics ui interest; and the fact mat many mining engineers are now euro lied 111 the respective insti tutions on both shores suggests the propriety ot estabhs ral iiig one or more j" it >tanding-committees on gene issues. In the United States we have not been accustomed to draw the somewhat arbitrary distinction which is made abroad between 'gold mine accounts' and mine accounts in general. The former reipiire in reality but the simple fiamework about whii li may be built up the more complicated systems rendered necessary by products reqti ring amplified processes. lUit, if the necessity exists for standard sprciilntions in the one case, so nnich the more are they called for in the busi- ness of mining and treating complex ores. The differences in modes of writing up particular items, as mining development, etc., with, "ther varia- MINP. ACCOrXTS (>7 tiiiii> ill praciuc iiuiili )iu «1 l)y Mr Iliiivir. uIm tlu qiK'stions raised by your Lumloii C' irrcsiKiinlciU. in an •irticK- HI till' sa^iiu' isiR' ni tti( Joi knai.; all serve to show the present lack of uniformity in method. To soMiO extent, it mav 1)( feared that Cdrrespondinj; dis- crei)ancieb in purpu>c ni.iy also be iliscei nible. I can (iiilv add at t'ii~ writing ihat my nwn ])rai'iit<. lias en- countered somewhat equivalent diver>ity of need in varying circumstances. l!ut the jijeneral plan which covers the systems adopts. d is susceptible of adjustment to these several requirements, and the books of any corporation using the method will yiehi cost analyses of a typical form, however much the details may thus be modified. Whether the particular type form is the best for all uses, and how nearly this plan will approximate til' standard to lie liiially a",i ) 111 all iIk iumu, (jh tln' Kaiicl llu' nrr i)'-l'cirf hrmi^ sent t" till' Mirfacr IS ir-uIaU'il tn a nrlaiii iiia\iiiimn ^;aiii;f li\ an arraiit^ciiKiit "i ^'v/a\u^ liars t'i\ril mvit tlio stalidii i.iii.-- at the shafts. ['hv dliji-ct, pi iiiiaril\ . is til n.tlin.1.- llic iarj.;i.st jiiixH-.s nf ore Ici siicii a i;au.i;c tliai tluTi' will he 111! lial)ility to clioke tiic oiitlLt from tlu liiii; hilt It -serves al.vj tlie seeomlarv ami euiiially iin])nitaril imrjiose of jirevemniL; roeks , if too great a si/e fioiii i)a>>iiig tu the ore-sortiiig iiouse. 1 lie ore when delivered at the .surfaci is usually clas- sified into 'tine' and 'cnarse rnek' 'i> dnni|iing the skiiiload onto a grizzly in the headgear; tlu fine, hcing nnsortahle, go direct to the mill, and the coarse ore is seiu to the soiting h'Ulse. The rock in the sorting hmise is siihjccted to scrutiny either on lloors. revi living t;,hle> or traveling belts, and the rejected waMe gees to the (himii. rile sorted ore IS fed into eire-hreakers for fiirtlur rediu'tioii. The breakers may be classitied into two generic types, the gvratory and the crank motion type, the former be- ing largelv reiiresinted by the dates and the latter by the r.lake machine. I'^ach tyjie has its supporters, but il is geiierallv considered by the moderates that the fi'mur is the belter m;ichine when niiit capacity is de- manded, and the '.-itter when miillipli-ation of machines * .Mi-lr.ict from ..dv.nncc sheets of paper entitled 'Ob-iervation^ on die .Melal!iiri.'K-al Practiee of tlu Witwalersran.l,' by II- S. Denny, read before tlie C'lienuc.ii. .\Ktalliiri;ieal and Muiini; Soci- etv oi .South .Africa. o K i:-n Ri: .iki.xi, .imj s < ) r ti.\g GS) is lint I iiil)arras>iiiy In llu- }^i ikimI iU>i^ii. ;is its, niainlf- iiaiicv i.ii.--t i> ks>. .It.' f^iiural xMpi I'l till' n !iK liiiaki T i> id rcdiK'c t'.U' (.n HI ahoiit a _> iii. cu\>v lulnrc ili lui riiijj; to ihc mill. Iiut llic avira^i in Uk' iiiiil liins ^viU l)c tMiiinl l" ixcxi-i! tlii> j;.iu^;r. (iuuij; In u>.ii in tin. ( r'l^liinf,' par; > v<.-c>i'^- ni/t(l tlril tluTr i> an aiKaiita^^f gained by Milijectin^ till.' sin^ it to 'lu -utinj; liuw.sc- in order that llurt' nia\ hi.' iIumt iinifMiiiiit) in tiK' -i/,i s of tlir iiicvcs of oil.' iliat arc -nWjutid to tin sortin- o])'.Tation. It i>, 1 tliink. doiilitfiil wluiliiT llu- jiractici. of ore rc- diKlion ill br'.ak(.r> is carried siitVuRntls far. It would appear tliat a material iturcase iiia> Ik olitainetl in ilie ^taInp duty if tliere were a succession of. say. three breakers, tach reducing the ore to smaller gaup' 'ban the last, until the tin.-il ])n'duct did iioi e.vcced an aver- a.L^e of, sav. half-inch cubes. The line of deiuarkation defining tlv point where s. in substance, to claim that tile -^ame conditions are presented in each case. This we know is not so, and. consequently, the opera- tion will more particularly apply to one case than to an- '^ 7(t TlfE ECOXO MIL'S OF MIMXC otluT, anil thcrt.' will be limits at .vhicli it uill reach its liig' ;st efficiency and its lowest. 1 propose to take a case representative ut certainly the majority of the mines on the Witwatersrand, and will deal with it both on a sorting and a non-sortinj,' basis. Assiune that we have a mill of loo stamps, a ])roperty of I or claims and 40,000 tons per claim. The total ton- nage would be 4,000,000 tons. Suppose each ton of ore delivered at surface to have the following value: 50 per cent fine, 12 dwt, per ton; 50 per cent coarse rock, 12 dwt, ; 100 tons contain 1,200 dwt,, worth, at $1,008 per dwt,, $1,209,60, equal to $12,096 per ton. Without sort- ing we get, say, 80 per cent extraction, equal to $967.68, from 100 tons: that is, $<;.676 ih.m- ton. Assume costs at $5,76 pei ton, divided as follows:' Mining $^ .=;.i ptT ton milk-il (' 15.000 ton--"t $,^".800 Cru>liin(,' o.!J ■■ " " \.H(X) .Milling o.()0 •• ■■ " O.ww CyanuliiiK' o.fXD " " "^ O.txx) .Slime luiiulling o.u " " " i,8co (H-iUTal 0.72 " " ]' 10.800 Head I .' ■(.• o..?6 " " " 5.400 Minc-dcvclopmoiit re- demption o ;j " " " 10,800 $5 . 70 $80,400 Leaving a profit of S3.(;i6, One hundred heav\ stamps crush 500 tons per day, or 15,000 tons per month, e(iual to 180,000 tons per annum. Life of mine equal to 22.2 years. The net profit made in tliat period is 4.000,000 tons ?.r $3,916 per ton, etiuat to $15.^)64.000. The present value of that amount at 5 jjcr cent compound interest is $5,470,663.73. (In this calcu- lation I have not allowed for amortization of capital.) With 20 per cent sorting we have the following state- ment : 50 tons fine at u o ..I., e(|ual to f)00 dwt. l"rom the remaining 50 tons, containing . ORE-BREAKISG G.\ Tllfi R,L\D 71 tons carryint; 2 dwt., equal to 40 dut.. leaving 560 iKvt. contained in 30 rcmaininj; tons. We thus have 80 tons of ore cont-ining 600 plus 560, equal to i,i6o dwt., eiiual to, at $1,008 per dwt., $i,i6a\". $3.28; hut a correspondint; increase in the mill when sortinj; would also show reduced workintj costs, and therefore the com- parison would onI\ increase the favorahle aspect for sortini^. 'The rock discarded I li.ive estimated at 2 dwt. in vahu', Sj.oim per 'on. We <^.'\ So per cent extraction from this, equal to $1,613. It has to he crushed, i.'c.; milled, Txic. ; cyanided, ()OC. : converted into slime and handled lJi\ ; t'ital $1.44; and the mari^in in proln would not cover it.> •-hare in dejireciation of plant and tlie loss of water in- S'lhed, while at the sani( time it is j reventini^ the treat- intiit of more v.ihiahle ore if --orted ; r.ncl all this, too, or. the assumpt'on th.at its corresponclini,' residue would only lie 0.4 dwt., and nothing;' in the slime, wliereas. it is jiroh- ahle that the sand residut^ and die slime from it would he the same as the rest < f tiie ori'. and. therefore, more th;in 0.4 pciiiivwei!j;'ht. I .-nil ]iresup]iosin^- in thest.' illustration:^ that jo '.vr cent ^'TtiiiL; is not onlv pos-ihle. hut easy of actual Inlliliinriit. There are, however, main variations in the case-- to which sorting is applii'd, and e;n-h ca-.e nnist he judfj^e'i on it> in- duidual merits. These \ari;uioiis mpv he expressed as lyins.; mainly in tlu faciov oi reef thickness. I'or instance, on a reef 3 in. thick, where the slopes a\erai,'e, sa\. 4_' in., the reef i'\atter in every ton of ore niiiud i^ onlv 7 jiir ciiit, and, ;i--^uminL: th;it we have 50 i\i- ORi:-nKi:.iKixc ox rm-. r.ixd T.i tons of fine, containing; 3.', terns of ruci, we have 50 tons of coarse rock containing:, the same proportion. In such instances it niiijht he jx^ssihlc to sort 40 tons of waste rock in everv icx) tons from the mine. ( )n the other hand, we may have 12 ft. of reef matter, of which we mine. say. the central 8 ft., and as the whole of our prodiict would he reef, no sortinj.; would he pos- sihie. Tliese are two extreme cases, and hetwecn their limits will t)ccur the variations hetween notliini; and 30 per cent sorting'. I have thus far assumed 50 i)er cent as representing^ the averag'e percentage of fini- m ore from the mine, hut naturally there are im])ortant variations in this factor depe.ident directly on : ( 1 ) Setting of grizzly hars. (2) Method ot stoping. (3) Xature of ground. II machines are used exclusively fur stoping. the per- centage of the hue will he high, while if hand Ijihor nnly is used the percentage will he low. On many mines a comhination of the tw is resorted to; 30 per cent, how- ever, represents about the minimum and 60 per cent the maximum, and something i^etv ecu the two, say 40 to 50 per cent, will be the average. With 50 per cent fine it is neci"^-;ar\ to cnrry out an actual 50 per 'x-nt table-sorting to represent J3 per cent on the tonnage mined. On the above showing it is clcai' that, where it is possible to sort out w.'iste lock of an average \ahie of _' dwt.. it is a highK protit;d)le proceecling. It is possible, however, to sort too little or too much. On a Vin. ri'ef, with ;i 4-ft. stope ;uid 40 per cent tine, 20 per cent sorting would be tar too low, while on 3-ft. reef-; and 4-ft. slopes, .'dlowiuL; 30 per cent tine. ,20 per I >i ii r4 TUB rCOXO MIL'S 01' MIX IXC cent would be far too high, and tlie average vaUio of u>e (Hscardcd rod would rctlect this. Kach case must, as before stati d, be figircd out on the particular circumstances regarding rcc! and slope thicknesses which obtain. In some cases on the W itwatcr-rand i .. ivc heard it argued that the ([uartzitc.-. immediately overlying or deriving the reef carry >ut^icient gold to make their treatment profitable, but 1 have not met any such cases ])ersonally, excepting iri some isolated sectioi ■. where the occurrence is too linuted to inllm-nt the gencr.il f[uestion. Naturally tiie object of sortini is to discard rock which cannot be treated profitably, and if the vahu of the waste rock at any time exceeds this 1 iting factor, then the operation is done at a loss. That limit will vary according to conditions, and must be computed iiide- ])endent!y for each proposition. It is not an easv matter to arrive at the value of waste rock. I know of no method of sampling in vogue to- day which could br called accurate. Tiie best check on the work is the recovery set against the value in the mine, and uie discretion of tin- managrr must be relied upon to see that there is a prop' r corrcs,)ondence be- tweti these two points. There are metluxls which suggest themselves cer- lainlv, and of these, either ■ if the two following n.i^lit be ado])ted : ( 1 ) .\ certain |)erceiitage, or even 'he whole of the waste rock coming from the sorting i)lant. to be ])asse(l ihrougli a set of two or more bieakers and re- duced fine enough to he sampled. Sami)les to be taken constantly over a juriod of one nunith and the opera- tion to be repeated every few months. (_') Five or lo stamjis to be occasionally set aside entirelv fr)r waste rock, and tin crushed prodict to be I ORL-BRIi.lKl.W; OX Till-. R.\SD 75 treated iiulepciKlcntlv uf tlio ore ])assiiij^ t'r.roui;!! the re- iiiaiiid' - of the mill. I )f these two alternatives the tirst is the nuire feasi- ble, although the secoiul i.^ undoubtedly the more accu- rate, but the expense attacliing t(j the latter method proliibits it. if a mine is nut in a position to keep its full mill going, it might use some of the idle stamps for this purpose, ane secure 80 per cent recovery in either case, and tluit the waste rock discarded in the case of sorting is 2 dwt., we then have the following comparative statement: Case for Sortiiiii — lew st.iiiips will crii-li 500 tiiiis iif iiri' per () d" .^.^SO dwt. Tiital y-^ t.ins of ore ,it iS (!wt ''-750 dwt. Eighty per cent of 18 dwt. amounts to 14.4 dwt. at $i.ai8. e(iu'l to $14,515 recovery. fi.vf'nuliture — NTiniiiK $v,?6 per toil milled ( 375 toii^ ) $I,2^o CriisliiiiK 0.1 J " " " 45 Hlfi 76 TllL RCOSOMICS 01' MIX'XG Sorting; o. U jur tnii imllod (,!75tons) $45 Milliti^i o.(«) " " 2-3 Cyaniilnit; o.(k) " " " 2-'5 Slinu' iKiiuiliiij; o. u " " " 45 General 0.84 " " " 315 Iliad ol'tice 048 •• " " l8c Miiio - (Icveiopnieiu re- ik'iiiption o.iX) '■ " " 360 I'rofit S7.315 per toil, fqiial to $-'.743,125. Ciisc for A oii-Sortim:, — I'ivu huiidrcil tons .it 14 ilwt. njiuil to 7.000 dwt.. So per cent ot 14 ilwt. cfjual to ii.j ih\t. at $1,008. i'(|ual to $1 i.jSij per ton. Ilxpcnditurc — Miiuiin $j.5J piT ten luilk'il (500 tiin> ) $l.-'()0 Cni-limK (I ij " " " '") Milliiitr o. ton.>< at $5.52') equal to $2.7^)450. DitTcrciice in favor of non-sorting. $21,375. in tlic latter case, however, there is an extra chartje for K)ss n\ uaier and fur de])reciation of the extra stamps t(j he run. and if these ;illo\vances he made there is in the com]iarisiin ai)ove made riT.iark.ahiy little dif- fermee. riie whole issue liint;;es tniallv on the value of the rcick discarded, if that value is niiK i dwt.. then sort- ini; will pruve ad\;mta,i;x ais, hut if we a'low 3 dwt. for the waste nuk. ilicn it would ])a\ to rini tin- idle -i.'uiip--. and it is nn the deteiniination of this factor th.it the ])iilic\ adopted must he guided. This cupip.arison must in no way he confused. Iiow- ever. with the c|iK'stion raised in the first illustration in wl: ■ ;i the tonnages i-usherr .'•6, 1903.) (Jur frieiiil Mr. J. H. Cii-K' has born writing- a series of useful article.-, in the Lmidnn luinuiiiiist : hi.s utterances have been CDUclied in very plain lanj-uiaj^e, and have conveyed a large measure oi unadorned fact intended obviously to puncture some of the filmy sophistries which obscure the business of mining. Finally, at some one's suggestion, he has given the readers of The Ju-i>)ioniis! a (.lose of ;idvice which summarizes a go(id deal of what he has i)reviou.-ly said. Wiih the general tenor of tluse abitcr dicta we do not (luarrcl: on the contrary, we welcome the introduction of so mucli good sense into mining matters, and congratulate the author on the excellent results likely to accrue from his out- spoken ratiocinations. However, as wc ourscKes live in a country where mining is still VMung and Impcfu:. with some of the exaggerations of youth but with all of its vigor, we take exception to certain of his conclusions. The latter nndtiuhtedly suffer from brevity: uiiqualiiied generalizations are rarely impregnable, and in this case they are obviously endangered by the enormous range of conditions covered by the mining regions (if the wor'd. Mr. ('uric says: "iJon't invest in coppir, tin or s'lver- Icad mines, but -tick to gold inine>." < )f currse, this advice is intended not for nn'ning operat.ir.'- or well- informe(l |)eopIe, but for the .average inv-.,>tor, \i.l'.o, like an innocent child, i^ supposed to wade on the edge of tile sea of tinancial s])ecnI,'ition. "Cold has a fixed value." he goes on to say, "where.as violent tluctuations in the prices of other metals u]>set all ( stimate- of the earning capacity of the mines producing tluin." W'liv, tlicn, should one not avoid risk of nnv kin.l and buv 78 /■///: liCOXOMICS 01- Ml.\l.\u Consols or L'liitid States Iximls, or cohm rvative bank stock or (k-hcium'fs of tlic most f^ilt-i-il^i-il varutv? \\ li_\ : Siiiiplv In'^aiiM' [iicipli' ulio ^n into niiniiiL; trictly in- vestment baMh (if wliich Mr. Ciirlc writes .-o much, and it .•~liri\els to feeble dimensions indeed. The investor wlu) \\ant> to elinnnate all ri-k in mining is like a man wiio expects to M-d br.thing without gettint; wet. Such ideas entirely mi>inter])rei Miv s])irit of leL;itimate mining. \\ liat shareholder, we wcukl ask. wants to fore,c;o en- tirely all the possibility of favorable de\clopment or of new disco\ery?' it is the chance of enhancing- the value of liis holding which gives zest to the business of mining. Such pos.dhility of further discovery entails inevitably the ciinal [)ossibilit\ of disappointment: the ■mcertainty cannot in' all in one direction. In other words, the mining investor only asks that he may get "a run for liis money." in (.'ornwall siiareliolders are known as 'adventurers,' tiot with the modc-n ineaning of irresponsible schemers, but with the old l-dizaljcthas idea of ni'Mi who go on a venture, take a reasonable risk, and are hopeful of a favorable return. .Mr. Lurle has ex|)ressed great respect for the good sense of .American engineers and mine operators; we feel -afe in saying that these men lieartiK disagree with any such sweejjing statements as the foregoing in re- gard to mines producing metals othe'- than gold. Of course, when the product of a mine is liable to tinctuation in market value, the i>urchaser of -t, or tiie stockholder, will expect a larger diviilend to compensate for the adili'd risk. Markets varv: even the purchasing power of gold is not constant; but ti ■ conclusion 's not to try to get rid entirely of an essential .'actor — risk — but to recjuire a proportionate return in the rate of interest. MIMfXG fXrnSTMIiXT n Tlicre arc many of diir reader*^. \vc fctl assured, wlin, if aski'd to clioost' I)tt\v(.i'ii a gold mine yitldiiij^j a small rate (if intcrist with hut little risk (such is tlu' mint Mr. Curie recommends) and a silver-lead, copper or tin mine with a larger risk hut with a hig<,'er return for their money, will select the latter. The idea that all pold mines must have 60 per cent of their market valuation represented hy net profit on ore in reserve and nuist yield lo per cent on their investment price is the dream of a doctritiaire. .\ few such mines are c|uoted on the exchanf!^cs, and tluy exist just now mainly hy reason of a Inisted hull market and an unusual condition of financial depressioi . When better times return, even these shares will rise to a fic;ure at which they will cease to fulfill the requirements which Mr. Curie exacts; and then the economist of The Economist will have a theory with visible means of support. A CARD SYSTEM FOR MINE ACCOUNTS* i;v I'', w. Ui.M I IN. Since tlic tir^t nt t!ic pri-^iiil \i'ar a vanl .s_\>tiiii has bicn 111 LiM' at till r.altk- iiijiiKr iiiiiif iit cmiukcimii wiili tlic i-iKTal .--upiiU acciiuiit, I lie >\>tnii li.i- iirovcil ^ali.->iactor\ . [\\o s^l> ui (."aid.s arc i-iii|)lo\ iil, ( (in.- ^i t is rilaiiKil in tlic >ii]ii>iy ciL'ik'> nttii-'i' and i> l^tpt ii|i tn (latf i)\ iiiiii. anil llif diIkt m. t i> kv\n in ilic main ut'ticc anil i> uritun np 1)> tlic iiiVici' ckrk>. 1 lu- caril> an- 3 1)\- 5 in. a,ui 5 1)) 8 in. r(.>pi.cti\cl_\ , ainl arc rnlci! as >lici\\n. Ihc ililiiTcncc Ijilui-vii llic iwo >• t.-' i> as I'ul- li the tirni >npplyiii^ the j;oods, cost, value nf ainounl.s consnnied and the ac- cunnt.s to which the supplies are charj^cd. i he incthud nf Using the card.v is as follows: When tile tluplicate bills for sn])i)lies are received one copy is sen' to the sup]il\ clerk, who clucks the hill ;inil enters the quantities on his cards. .\s supplies .'ire issued iiiiii)tii)i\ ui that article. I'iiis last niciuiuiKil ^lH^■ial rrji'Tt assists the ofticc force in writing up tlic otticc card-., riicsc nport^ arc tiinud nvtr lo the i^cii- cral (itVuc. At the end of eacii innnlh, when all uf iIk Mipi>l> I'lHs h;i\e luin receiveil anil chvckvd. the ot'tice clerks enter the (|iiamities and c '.-.t> on llic proper canl.s and conipnte a new ivtra^e piiie li necessary. 'Ihis average price may be computed a> clo>el\ a> iK.sired. .\s soon as thi- pay-n.>ll i> lim^hed at the first of the tollouini; nuinth, heforc which time ihe ^njijily ehrk will ha\e MMit ill hi^ two nji'irt--. the uttiee I'nrce takes ihe re- ]iort of the s'!ppl\ clerk and ennipletes tin- eiitri s on the ot'ticL car.l-. d'hc special ri pnrt of tie >iii)|)l cKrk, shiiwiiiL; the total amount i^sned ni each kind (if .Mip- |)lirs, is nsed to clieck the work I'f pickinj^ out the in- dividual records from the detailed report arraiif^ed 1)\ accounts, and iiiMires all entries heiiif.^ maile (ui tach card at the same time. When the entries are tini^heil on a card, .'Uiunie(l from the cards to the ^np])ly clerk's special report ami afterward checking; the footins; of this report with tliat of the detailed report, a ^M)od check on all the ckricil work but the nuiltiplication IS (ibtaiiied, ami the aver.ine price checks that near enouj;h. The v;dnes having- been obtained in this \\a\' for the >iipply cKrk';- ri'purt. the main functioii (if the car(l ceases as far as the mine bonks are concerned, and the iJ; MICROCOPY RESOLUTION TEST CHART ANSI ond ISO TEST CHART No 7' 1.0 I.I m Ilia if 1^ III 2.5 || 2.2 2.0 1.8 1.4 1.6 ^ .APPLIE D IIW1GE Inc =1 ■ - ? Las! Mij.'-. Sf'se! r^= -hester. Ne* YorK 1 4609 uSA ~~ ■fi't Afl? - nwin - Chnnp 82 Tllli liCOXOMICS OF MIMXC sui.ply clcrk'> report is then used in the usual manner. If anv allowance is to be made for freight and other exi)en.se connected with sujjplies not covered liy the original supply bills, such allowance can be made oy adding a certain ])ercenlage to the footing on the su]!- ply clerk's report. .\t the ISaltic the sujiply account on the ledger will in future be charged with the anmunts of the supply bills only, and credited with the amounts as figured from the cards. The cost of handling sup])lies to and from ware- houses, the cost of heating ;nid lighting these buildings, and any other expense connected with the caring for supi)lies, are all charged oti' each month as they occur to one of the general expense accmmts umler the name of caring for .supplies. The freight bills paid each moiuli for supplies are charged ofT the same month to the vari- ous ex]jense accounts in i)ro])(irtion to the values of the supplies used by the.se accounts. This method of liand-. ling freight and otlur e\]Hii>e connected with supjilies is as fair as any other in general use, and has the fol- lowing advantages: l-'irst. the balance shown by the sup- ply account on the ledger should check witli the balance shown bv the cards; second, b\ keeping the expense of caring for supplies by it>elf. this expense stands forth conspicuously each month and can be looked after the same as any other operating expense. ihe time re(|uired to write up the cards is not as much as one might suI■)pl•.^e. At the Ikiltic 4S air drills are in ciperation and al)out 750 men ire employed, (In Jime I there were in use S~I cards i<\ each kind, and the vahu' of the su|)plies on hand shown by the cards was abimt $jS.oists of a chief ^'Icrk. niir a>si>laiu, oiu' tinu- kocjuT and niK- >v.])\'\y cUrk. It tako llir ckrk and hi- a>si~iant alxml i ;l dav^ m uriu- up tin. i.-ar(U aftir tlic snpjilv L-'urk'> nixirt.- arr nccivcd, -\~ previously stated, the data taken from InlN are eopieii on the eards at the eiiil of the month when the office work is li,i,ditest. Wl-.at are the advanta,i;e> of the card >\stein:' L'nder our old method the >ui'ply account \\a.> chart;ed with all expen>e coimecled will) the supplies, and then lo i)er cein was added to a jjncc list to m>ure a balance on the sile .-ide of the account, dhe list of i)rice> could not he ke])t correct, hecau.-e jirices chan<;e. and the avera,L;e ])rice of the .--tock on hand \va> not known: therefore, the prices were seldom ri,!;ht. and the lo per cent addi- timi to this ap]>ro\unate ]irice only served to iiisurc char,i;ing utf enough. When the time came for taking an inventory these ])rices would he put on the list turned in to the ottice. and if the total \ahu' was -utficiein to balance the ac- count, evervthing wa> considered satisfactory. ( .eiier- .allv there was a •uri)lus, bnt ju>t where it came in was 11, ,t kno\Mi. If there was a diticit, anotlier round of warehouses and surface would be imnle and each trip would result in tinding something that had been omitted from the original inventory. d'liese tinds might bal- ance tlu' account. if the^ did not, then tlie .Uhcit would be charged off and another \i'ar started w-ith- out knowing just where the deficit oci iirred, Tuder the card .\stem the balanci that shoiihl be on hand is shown on the first of each month and this can readily be clu-cked, m most ca-Ms bv in-pectiou, if de-ired. In any I'vent, the cards cluck the consnminion, because, when a n(|uisiti()n is j)Ut m for more of a given article, the cards should show the stock of that particular artich- to be ii-ed up or nearly so, r.v cuterinu- the exact bill-cost liU the uftice cards and i.lIW SVSTr.M FOR U/.V/T .iccorxTS srj 5 1 ! " ■■ 1 i 1 5 !L = 1 d ; i i j--^ ■ " s " a ^ — S 8 8 S 1 IB « e s s c e e > s ; « s;'''"«';8 «sa r « - fi ; - : t -J. J 1 S t! E 1 § § 1 g 1 3 8 s s 1 5 8 s 5 1 s s 2 e s E 8 S 5 _t. s M e 5 1 J 1 i * 1 : * s is* s 1 ® 3 1 ' i - i a J a - -t ' i jj i il 5 I I Ait I 86 77//: r.COXOMICS OF MIXIXG ccinipuliiij,' tlio avrrai;!.' price each inontli if iifccssary, tiu' supplies an- cliarj^cd nfif at exactly the pnjper price. With certain sii])i)lies winch are bought in bulk and issued in small (|uantities that are not accuratelv meas- ured, such as waste, oil, etc., the (piantity reported as consumed can be increased, and the price kept the same and chances of a deficit avoided. l>y charging only the bill cost to tile supply account, the balance as shown bv the cards slundd check witb, the balance shown by the account. When the inventory is taken it is onlv neces- sary to determine whether tlie balances called for bv the cards are on hand. If there is any deficit or surplus it is known just where it occurs, and the trouble can be located at once and a remedy applied. I'.v this method the exact cost per ton for supplies is known from month to month, and the average for the year should not be atTected by any surplus or deficit. In addition to these advantages there are other im- portant ones, especially wliere the purchasing is done at the mines. It can readily be seen that from time to time as supplies are purchased it is easy to run over the cards and make up an order covering a sufficient quantity of su])plies to ofTer an inducement to dealers to figure close. Then, too, by studying the consumption of sup- ])lies as shown by the cards, it is often possible to sim- jilify the stock carried, getting rid of some sizes or ado])ting certain standards. In conclusion, I wish to state that the successful intro- ■ luction of this system at tlie P.altic mine has been due largely to the capacity and energy of the chief clerk. Air. William C. (./ole. INVESTMENT IN MINES (tJitorial, October 3, 190J ) In our last issue we discussed the general advice on mining investments which has appeared in the London LaDwinist from the pen of Mr. J. H. Curie, the Special Mining Commissioner of that most excellent financial chronicle. Mr. Curie himself has done excellent service in clearing away cobwebs from the business of mining, so that his ideas come as from one having authority and not as the scribes of the daily press. Nevertheless, we think some of his sweeping conclusions go beyond the mark; for instance, the dictum that "there is only one correct way to value a mine — that is by its ore reserves. Any other basis of valuation is wrong." As an antidote %o the twaddle of descriptive matter which used to form the larger portion of mine reports not many years ago such a statement as the foregoing is distinctly bracing, but Mr. Curie is giving his patient, that is, his client, a corrective which will produce spasms if taken without dilution. We are all agreed, all of us who want to see mining conducted upon the principles of sound business, that the determination of ore reserves is fundamental, and that the amount, value and profit to be derived from such reserves must be the basis of any appraisal of a mining property — but that is not the whole story, by a great deal. One mine may have $500,000 of ore in re- serve with a net profit of $300,000, while another may have only $200,000 gross, with $100,000 net profit as- sured, and yet the latter may be worth more than the former. One mine may be like a man of advanced years with a fine record of achievement and great capacities apparently unimpaired, but still with the certainly of ////: .':C (^\U.l//C.N Ui MJ.\I.\(, a pruxiiiiati' ccssaticjii in lii> aiiivitics. wliilc aiioilur mine may Ijc cuiui)aral)k' to a youiij^- man with \\"\ niucli tu spuak of in ihc i'. :.\ of work done, but with j^nat powers and ihi- promise of a fmc career. W'e re- niendjer a mine whicli wa> carefully surveyed and samjiled. with the rcMilt that il showed ore which wctdd vield $436.iHH) net protit, but most of the heading's were poor and the ore bodiics were evidently erratic: such a property was worth no more th;in the net vahie of the ore. if it were wnrth a> nnicli. the interest on the money invested durint; the period re(|uired to take out the ore reserves beini; balanced auain-t the sli.ijht chances of fur- ther successful development. .Another mine with $80.- 000 of profit assured was sold for $250,000 cash, and subse(|uentlv made three men millionaires. Of course. Mr. Curie is addressing F.nsHsh investors in mininp: stocks and not expectant purchasers of mininpf property; nevertheless, the same consiilerations hold <:];ood. W'e mi.i^ln instance the Tondxiy mine, situated in Colorado but owned largelv by I'.ritish investors. That mine was bought mainly on the fine showing made by o/c le- >erve^ which were over-rated and. as a consC(iaence. it proved a disappointing investment: beyond the original ore blocked out at the time of inirchase very little more was ever opened up. Subsecpiently. thanks to an ener- getic manager and a capa!)le directorate, the company purchased an ailjoining young mine, practically a pros- pect, which, though secured for a fraction of the sum paid for the original 'I'oinboy mine, has since turned out a much more valuable property. It is a fact that the Tomboy shares were worth more on the purchase of a jirospect than on the acquisition of a well-developed large mine. ( >re resiTves are not everything: expansion ami de- velopment are of the essence of successful mining. It has been pointed out in these columns >hat a mining L\'n-.sTMi:\r i\ Mixr.s 89 prnponv iiiav bt.' ruiiKd l)> liaviiif:; too imu-li .)rf-l)car- iiiL,' ,L;roiiii'l ii|niuil up. Itir the co.si ni kiipiiiL; the kvcls uptii, (liaiiiiiij;- (.■xti.'iisivc opening's and ruiiuwiiip tlic linilnriiiL: iii,i\ irpi\M.'in a hij^li rale "f iiitiTi.st uii till' capital Imii.l; (I'uniant in tlic on; reserves. Tiiis re- fer"- ]iarticul;irl\ Ui iron and eoal properties, but it may verv well ajjph to laVL^e l(i\\-,i;rade j^old (le])osit> such as those of the Kand i>r inin,> belon^'inj.; ti the cla-s nf the lloniestake and Ala.-ka Treadweil. In Mther worils, it is not ])rotitable to o])en u]) ore risirve> nnieli in ex- cess nf the tnnna^H' e(|uivalent to the output f.ir a cer- tain time. That period may be iletermined by the expense of niaintenance. as already described, and the character of the ore deposits; if these are erratic or s])ora(lic. it is obviously nece>sary to ".i^dve liosta.t^es to fcjrtune' and ensure regularity of production by averaging a large nund)er of discoveries and stopes of varying; tenor. Mininix would nut engage the energies and interest of so many if it were but a question of running a tape over blocks of ore and testing their value by sampling: all this is, we repeat, fundamental, and Mr. Curie has done well in emphasizing this basic fact ; but. beyond such necessarv procedure, it remains a fact that the attract- iveness of mining, that feature of it which reipiires the most judgment, is the weighing of probabilities in future development. It is on the chances of this that men buy and sell mines, taking bigger risks than Mr. Curie is willing to face, but expecting larger returns also. We venture to doubt whether lo per cent investments on a basis of ore reserves will ever be a leading feature of gold mining activity; rather, it is the 20 to 25 per cent re- turn with the chances of n speculative enhancement which engages the mine ojierators who are most suc- cessful. .After all, the best kind of mining is that actu- ated hv the combined skill and spirit exhibited by the Cornish 'tributer' nr more modern lessee, or 'leaser," i 5i |i I' '.Ill /■///•. IaOXO.MH S Ol- MIMW; who sizi'S up a certain i)()rti Imilt np inininp in the past and will make it the great in- dustry in the future. GOLD MINE ACCOUNTS y/if Editor: Siu — It ih, iHTha])s, not astoiiisliin^ tlial so little has hcon written on this discussion which Mr. Hoover so comprehensively opened on July li, but, none the less, 1 nun to a disappKintnienl which inii^t be .shared b) an iniporta t cuntinjjjeiit of the profession. The snijject is sn lari,'e that eiif^ineers may well hesi- tate to attack it in the limited area of Di.scussion,' and >et 1, for one, believe that nuich can be gained by an imlimbering of ideas upon the subject. Ildokkceping pure and sinmle is a matter of arith- metical accuracy and has been developed into a science. Acccjunting is a broader term and depends for its value upon the proper segregation of items. The subdivision of Mine Accoimting (1 take the liberty of dropping Mr. Hoover's word 'ld." which seems to draw a distinc- tion scarcely necessary in this country at least) is one of the tools of the mining engineer and one that nowa- days is of increased importance; and it certainlv seems that the developments in other lines, in Mine Surveying. for instance, or Economic (ieologv or Metallnrgv, have outrun those in this no less impcjrtant one. It would seem, then, that a discussion of the subject could not but result in a clearer appreciation of the needs of the case and at least a nearer approach to uniformity in practice, though it is scarcely probable that anything apiiroaching the tmiformity of surveying methods could be hoped for. Mr. Jenkins has indicated how easily segregation can be accomplished, and 1 for one can bear witnes.s to that from personal practice. Probably the niajoritv of engi- neers would cordially adhere to a practicable uniform f)L' I'lir. F.COSOMhS ()!■ MIXING system i'mt slii,-. Mill, it i.-^ ildiiUii'iil ii .ni> Usn iii.iii.iuiT-- (li-sirc, (>r many niiiR-> (Uiiianil. liu >.iiin ilt;.;rn ..r kiinU of segregations ui costs, so that any universal' sy>lini must be one of great elasticity. VVc can scarcely expect iliat mine managers will fa\i'r am s\~tuii that ilemands the earr\iii}; nf ai'Ciiuiit> Wn wliuli they see iiu use, so ih;it our ])r(ipnsc(l >.\siiip. Iml^t he e.'ijiahle nf simplifica- tion tu a few I;a>al aeenimt- a.-- well a> nf iiitinile elalm- ratinii. 'I'lure are ca>es where, tn iirn])erl\ man:ige ;uid check up a hu>ine--s and tn carry nn 'lie ■■iiiterminahle c;mipaign for ecniiniuv and improvement," the manas^'ir may have to subdivide extiMisively. and it is almost cnii- ceivahle tliat there are other cases where the "■morbid" iiii>applicatinii nf (iiiiend l.edt^cr Accnunts, spnken nf b\ Mr. C'oni'-tock. (|uite tills the need; ami this diversity nf need must he duly considered in devising an/ general system. IJut there is a ])articu]ar class of accounts that have ahvavs been a stumbling blnck, in the h.-'udling of which there are serinus and fundamental ilivergences. Mr. Ibtnver has referred tn ihe;-e in llle .^ecnnd C(jlunm nf h'\> discussion, and mi anntlur ])age of the same number of the JorKX.M. are tw. i .-md mu-half cnhmins on a simi- lar subject.' 1 he .L;ainiit nf common vari.atinns is clearl\ and concisely run u]) bs Mr. Hoover, while Mr. G. A. Denny, in the 'Deep Level Mit.es of the Rand,' ex])and,< the matter mnst lumiiiniisK . I am reierring. of course, to that list of accounts that includes Capital, Deprecia- tion, Maintenance. Reserve Fund. .Amortization of Capi- tal and Mine Development Redemption, to use Mr. Deiinv"s own headings in the latter half of Chapter X of his book. I am not so foolhardv a^ to open a discussion on these vexed (piestions here, but the arguments stated by Mr. ' 'r.iynient of Rxtcnsinn of Mininp; Plant Out of Revunuc' By J. 11. Curlt. Ihis JoLRNAL, p. 4.S, July li. 1903. GOLD Ml.\ ILLUI .. / S" 9H I), nnv t>'" 'i"J <■"" show most tlcarlj irate views iliai iii.iy lu^jically l)t' held. In vifu ^i iiu--. tluii, '' WMiiM sicni tliat tile iiiD-it that coulil i)f iloiic in regard til iliis system of aci.i>iiiil > 1)\ any such joint coniinis- .-ictn, as was ijrojmscd l.v Mr. llooviT and sccondi-d witli fhd)i)ratiuns hv .Mr. ('()ni>t(K-k. umuI.I he tn urL'i' the general aduptinn 'if eertai'i l)niad jiriiiiiple'- invi''-in,L; ihe (Uniand fur an e.xplieil statement in eaeli insianee as tn ju.'-t what eaeli accDiint included. In regard to the < •piratint,'' .Vccutnit--. si'Rrcgatiwns shmild he so niach' in tile hooks ui first entry, evtn tlion^h imt carried intu the ledpjers. that ex{)ert examination could re-apportion costs at am time. I )n lines such a> the^e it .'^eeins tn me that a rcasnn- ahle iiniitirmit\- enuld he expected. I'.esond that it wunld scarceU he ])iissihli' to '^u. R. (jir.M.w F'.RowK. San Francisco, Sept. i6. ifjo^. li 4 I I l\ CARD SYSTEMS FOR MINE ACCOUNTS The Editor: Sir — Tlie use of card svsiciiis in niultitmliiious varia- tion in alni()>t I'vory liiu- of hnsincss except niiniiii,' has now become a recognized essential to proper accounting. W'c have hooks of great value explainuig in detail the aj)- plication of such systems to factory costs and to classi- fication and summarizing of expenditures in mercantile houses; the keejiing of records in accessible form for practical business purposes is used by banks, trust com- panies, msuraiice companies, libraries, physicians, den- tists, mercantile agencies, real estate agents, telephone and telegra[)h coni])a;ues, gas companies, attorneys, collection agencies, manufacturers, railroads, churches, architects, Iiotels. publishers, societies and by almost every conceiv- able class of industries, except those connected with min- ing and metallurgic practice. There are some important mining companies, smelting works and mining engineers that have taken advantage of the ready supply of filing cases and card stock in the market to make more or less desultory attempts to im- prove upon the common slipshod and ineffectual modes of accounting which jjrevail in these departments. That this practice has n(jt become general is attested by the experience of the writer in consultation on the subject of mine accounts, and very recently by the reading of a paper by Mr. ]•". W. Denton, which was published in this JoiKN.SL. September 26, 1903, p. 471.' Without desiring in any maimer to detract from Mr. DeiUon"s paper, I merely wish to refer to it as proof that tJie mining fraternity is far and awav behind the times * '.A C:\rA Sy-tcm fnr Mine Supply Aooiuntv' l!v V \\ Ocn- ton. P;iper rt-rnl licforc -.lie Lake Suinrirr Mitmii; In-titntr, August, If>5,? CARD SVSTRMS FOR MIXE ACCOUNTS 9.", in failing x.< -dopt modern approNcd methods in the countintj hou .e and alioui the works gi.nerall> . For tliere is nothing different in the lorins and uses outhned in that paper from what are ordinarily in op'ration at thou- sands of well-ref^ulated commercial establishments not en >tnnmaries of each clay's report, on sheets with cohmms for each suniniary accmmt. .ind hori- zontal ntnnhered lines from I to 31. The sim])le adding of the columns gi\es tot.als for v:\ch accoimt for the month, or for an\- minor period, if desired at an\- lime. Cohmms are provided for values by day and by month, and c;t'y\tliiiii^ relating to the business for the month is in the hands of the accoimtant on the last dav <'i the r ■ CARD SYSTIiMS I-OR MlXr. ACCOUXTS ttT iimiuli. Till' niana'jji'r \m> a.ailahlc each iiiglit a correct replica of the (la\ 's business, and can readily .-.trike leak^ and lapses at once. Moreover, the whole of the month's business is ref^istered in convenient form for immediate transmission to the home office. This is not a theoretical statement, l>ut one verified thorou.L;hly in my own prac- tice to the full satisfaction of all. from directors and share- holders down to the Inuiiblest employee at the mines. < )ne point must be made perfectly clear, and that is all that space will now allow. The one secret of success in this line is to substitute forms for clerks. The old system of accounting employs cumbersome hooks of record ar- ranj^ed only by the dates or page numbers, re(|uirmp an index or a s\stem of back references, 'i'he modern i)lan here advocated classifies all items immediately, makinij well-devised forins and self-indexinL; appliances replace clerk hire, in larpe measure. I'.y this method, jjroperly handled, I have been able to .<;et lari^e pay-rolls readv with all details of work done, deductions for rent, hospital, store account, etc., within r)ne day of the close of the month, besides havin.c: at the accountant's elbow a suffi- cient daily record of every detail of each man's employ- ment, indebtedness and balance due him beyond chance of dispute. Tt is surnrisint:; Imw simple and accunite the method is, once the pro])er forms have Ijcen worked out. Here is where the ^'''-''iter part of the biain work must be applied. Common sense and the faithful recordinL,' of details 0)1 the s^ot, with a filint^ of forms each eveninLT, will accomplish all the rest, pnnided that the forms them- selves be prepared by a master hand. Perhaps some fur- ther illustration may he forthcoming: later, if your readers evince sufficient interest to make it profitable. TriEO. B. COMSTOCK. T.os .\n,c:e!cs, Cal., Oct. 3, 1003. ; APPRAISING FUTURES ( KiJiIurial, Nuvciiibcr 7, iyuj.> ( )n anmlicr paj^c wc jmhlisli a letter from an exper- ienced .shareholder concerning the appraisal ol the poten- tialities of a mining property. I'.xcept in the rare case of a mine which has been bottomed, or one the ore reserves of which are restricted within an area already fully tested, tiiere is a "sdmething more" than the ore reserves which has to be included in any valuation, llow much value to attach to the varying chances of further success- ful deveIo])ment is a problem which always comes up as soon as the measurable ore reserves have been determined. From the very nature oi the case, no rule can be laid down. How much usefulness and beneficent work would you estimate to be includid in the future of a capable man of 40, 50. 60 or 70 years of age? While the amount may be inferred from his performance in the pa.it, never- theless the acconi])lishment already to his credit may have been won at the expense of his vital powers, and the measure of it might be merelv a subtraction from the total to l)e credited to his whole career. Obviously this reason- ing will depend upon whether the man is 40 or 70 years old. .It any rate, the simile is not without its counterpart in the case of appraising tiie future of a tleveloped mine. A well-known Tasmanian mine has just been made the basis of a com])any formed in Lonuon. The (iroperty is capitalized at £500,000; the report of reputable engineers states that it "should he capable of producing a profit of from £((5,cxK) to £i(X),(x» per .lUnum, assuming thai the reef maintains its size and value." Should certain exten- sions of levels and cross-cuts meet with the success an- ticipated, the ore reserves will amount to a tonnage ecpial to three years' production on the scale outlined. The APPRAISIXC. rUTURES 9!) mine is worked out down t;) 718 ft., it has an ore-body abdiit 1,500 ft. ionj,f. wiiioli iia-- iieen cut. but not proved, at 1,000 ft. Of ore blocked nut, tlicre is only 8,500 tons, equivalent to a net profit of abmit iy.ooo, and lla esti- mates of future production are based on tlie e.\,)ectati()ri of uninterrupted persistence and continuity. Even these estimates show a return of only 60 per cent on the capital. so that a shareholder is taking a fair risk for 60 per cent of bis money, and a long shot for the balance. And this is without retjard to interest on the investment. In this particular instance, the probabilities of future successful develnjinient must be weii;hed ai.:^ainst extremely heavy pumiiinLj costs, the full extent of which is a matter of uncertainty, thousjh the tjovernment j^eoloijist, Mr. \V. TI. Twelvetrees, who doubtless expresses local ojiinion, has arrived at the conclusion that the ijunipiui^ i)lant, to be installed accordint:;' to the plans of the company, will prove inadequate. At all events, here is a factor of im- portance wliich nnist offset even the apparent persistence of the ore-shoot ui)on which the estimates of profits are based. As the flotation is an honest one throusjhout, and the undertaking: is in the hands of thoroutjhly capable men, it affords a i^-ood example of the ideas of different people upon this difficult question of mine valuation. We would hazard the opinion that, as a rule, with everythincf lonk- infj favorable, a mine in the viirnr of its life is worth about half as nuich a,L,^ain as the net profit in si<;ht, but this re- fers oiilv to n.ines which have apex rights and can po down indefinitely on the dip of the lns : moreover, it is but a rouph approximation of the chances, iust as one miijht sav that a healthv man of 40 can reasonablv be expected to en(,'ai;e actively in his profession or business for twenty years lonjrcr. In practice, the cnerinccr will weiqfh the evidence in each case — and it will never be the same I i t lull JUL LICOSOMICS (J I- MIM.W, in aiiv two mines — and he will realize that a prcjperty i> ixpeetcd to return not the capital alone, hut a hit^h rate 111" interest during the time reijuired to ^et the retum of iliat capital. This refers to lar^c developed mines necessi- latiiii; heavv capitalization; the question of the price of unproved prospects, or likely looking young mines, allows a scope for appraisement beyond the restriction of any :..;eneral rule. Then comes that insistent and final factor 11) all these ratirtcinations. namely, the personal equation Hut that is aniither storv. APPRAISING THE VALUE OF A MINE The T.ditor: Sir.— Your editorial in tlie issue of October 3, deal- ing with Mr. Curie's system of valuing a mine, opens the way for a discussion on a point which is often raised in London. Among mining engineers and others fa- miliar with mining operations there is a desire that some system should he adopted for appraising the speculative value of a mine, in addition to the value of the ore blocked out or exposed When a property is offered for >ale. the vendors naturally stipulate that something ti.orc than the ore reserves shall be considered when the price is being arranged. This extra value of the mine is at present appraised in a haphazard way, and it usu- ally amounts to just as much as the vendors tliink they can squeeze out of the purchasers or the public. It is quite impossible to lay down any hard and fast mathematical formula to meet the requirements of the case, because the chances of the continuity of veins vary with practically every imlividual mine, or at any rate with each particular geological district. Also, the spec- ulative value varies relatively to the value of the ore re- serves, according to the amount of development done. In the two extreme cases of a prospect and a limited proved deposit, the relative values differ widely, for in a prospect the speculative value is everything, while in a property, like some of the Johannesburg mines, the speculative value is at a minimum. In spite of these two very obvious obstacles, I think some general agreement might be found among mining men for dealing with this factor in the value of a mine. Some standard sys- tem for reporting might be adopted, so that the opinion of the engineer as to tlie money valuv of the chances KIL' THIi liC()\'()MICS (>!■ .\//.\7.V(; of further oic l)tinc: discovered witli developiiKUt mij,dit 1k' {.'iveii without hein^^ iiiismidcrstoi)(l. 1 am aware that many engineers will object to a proposition which wotdd saddle them with sucli a prave responsihiHty, and I aihnit that, in the Iiands of men of no professional pride, this mnction or duty would i'e wasted and perha]>s nu,>- used. TIk mininjj profession is so strong in influence for good nowadays, however, that tlie responsibility might i)e safely undertaken. I'.oth Tin-: Encinijckinc AN'ii W..s\yr, Journal and the Institution of Mining and Metallurgy have done excellent work in checking the abuse of "ore in sight' by inducing engineers to adopt a more definite plan of rcportmg on ore already blocked out and developed, and the further step of giving an opinion as to the possibilities of the future, over and above the ore actually discovered, would still furtuer assist in suppressing rotten tuiance and over-capitaliza- tion of companies. I give this suggestion for what it is worth, and hope it will receive the attention of luining men. SHAREHOI-nER. London. ( >et 14. 1903. II MINING COSTS AT CRIPPLE CREEK (November 31, 19"3 ) The Editor: S,R_Thc peolopy and vein structure of Cripple Crcik have been described almost ad muscam by many writers, but so far as I have obscrvc.l, little has been said to the engineering public about the very vital problem of how to make money out of these much-discussed deposits. The impression seems to prevail among mining men out- side of tlie district that Cripple Creek methods are crude and operating costs high. Now, while glaring examples may be produced, in the district, of almost every fault that coulvl be mentioned in the management of mines. I think that the conditions under which the Cripple Creek mine superintendent labors are not thoroughly under- stood, and that the methods employed, while they may be behind the times in some respects, are yet fully up to the average in others, and even ahead of the average in regard to certain features of mining practice. A man brought up in the Lake Superior region, where iron and copper ores are mine cn>t fuvcring all tlie outlay t does not com- pare unfavnralily with that of mining in such places a- Butte, tile C leur d'Alene. ur e\en Lake Su[)erior, wlun it is con^idered that labor at Cripple Creek costs 4_'.5c. an Imiu-. as against probably 2J.5C. in Michigan. It nm;it be ren!end)ered that the above cost, of 5^250 U> $3.50 for crude rock, includes the cnst of sorting the ore, which is C(|uivalent to that uf milling in other camjis, and is fully as exjiensive. It may be said, theru'nre, that nn the basis uf crude rock hoisted the Cripple Creek mines have no reasun to h'- ashamed of tlieir costs, as compared with those of other places. This is I'mjihatically the case, in view of the fact that the specific gravity of the Cripple Creek rock is much I -s than that (jf lead, cop])er or iron ore; that most of the rock is broken from shafts, drifts, raises. or from stopes cut out as narrow as po-sible; that these working places, from their \ery nature, ])rcclude the uso of appliances designed to handle material on a large scale, and that the suriace ])Iants are hampered by the fact that, wlun the mines were i^tarted, uo attention was paid to any future necessities, and consecpientiv the e(|uip- ment has been built up niec<.nieal, and is verv far from being economical. I hasten to state, however, that a low cost per ton, cither of crude rock hoisu'd or of sorted ore shipped, does not necessarily indicate either good mining or good management, and is nearly as apt to indicate the con- trary. Two mines may be working in exactlv the same kind of ore: and one may ship ore at more than twice the cost for mining that the other does, and yet be doing better work r.nd making larger profits. MINING COSTS AT CRlPI'l.E CREEK 105 1 C 3 u " " - J £ V 'o o • -HI -V>- f^,0 i *' "' ~ "^ r»-,3 o -r ■»■. -t -T ,r, _ O - - O O Vr ay O o 1 ^ ^ • . t /; K "I _ e i^ tN. "1 . vo '5C -12. -1 o d - : 6 o • n£. - = ^ '^ -r r? o — . ■ '1 I s ^ •Si C •a- X "~. "• "'■'X, ~; f^ -t ?, - c - *l -I N o d d c o d d d i£ ■A rt r. ^ r. r. O C 1^ 5 -^ Z .^ - '3 :^ -^ - ^ t^ ^ ♦ lOtl TllV. liCOXOMICS <>!■ MIMXC To clear \\p tlii> paradox, it i- lU'cos.iry i<< call atten- tion hastily both to the cliaraeicr of tlic ore hoilics, ami to the coiulilU)ii> of ^ale ai"l treatment. t ripple treek has aK\a>- been ilr-criheil as a hi^'h- ^raile camp. 'I'hi-- is partly true, ihe ore occurs m a multitude of small veins, eiilier siiiKle or in aggregates. In the small seams which constitute either the vein it- self, or a comi)oiunt pan of it. th.e ore is rich, but the rock on the walU, or between the seams, is either wholly or partly waste, Tlie rich seams may vary in thickness from a mere crack to a foot or two, and for these widths may carrv from one to several hundred ounces per ton. There are no large orc-hodies in Crijiijle Creek. It is doubtful if any si.igle ore-body, or even any .single vein, has priiduced icxi.oo) tons of shiiii»ing ore. The largest and best veins have been found in the granite, where the rock-walls tliemselves are sometimes uniformly im])reg- n.ited with r.ick vali.e for a width of .v "r 40 ''■ '" ^"^"'^ jilaces large amounts of cie;!n ore ii.ive been miiud and shipped without sortii-g. but only in the swells, when the veir. narrows down, it is always necessary to break some waste, in order to make room to work. The ore. therefore, is mined from vons of such a char- acter that it is impossible to get it out without mixing some worthless rock with it. Tlie problem of handling this ore economically depends ,.n the cost of treatment. This cost is at present— an ' is likely to be always— so high that it becomes very essential to throw out as much waste, or low-grade ore, as pos>ible before shipping. Could the ore be treated for a dollar or two a ton. the proposition would be entirely ditTerent. The rich seams in tlie veins are always so friable that a large part of the value goes into tire, and can be saved bv catching the latter on a griz.dy. generally with about ^-in. space be- tweeen the bars. Sometimes the proportion of value that can be saved bv this method will be as high as 90 MIMXG COSTS .IT CRIPI'I.Il CRI F.K 107 per cent, or fvi'ti ninn- of tlu- total guM in ilic vriii SoiiH'tiiins it iiia\ 1)C' Dill} -'5 p aNo Ixcn provt'il possible to save coii-iiderahle on , simply 1)\ wa^h- iii^' the (hi.^t otT llie wn^-te rejected fn,m the ore-house, ami colicctiiiR this dust in the form of slime. It will be evident to anyone who considers these facts that tile proI)leiii of niininp ("ripjile Cnek ore i^ not so much one of breaking tons, but of savii't^ value. It must be obvious, for instance, that in a vein ulure the value Ro into the fine, it may be very ea>y to l)reak t'To much into fines. It may l)e far preferable to take less out of a .slope at a greater cost. It is eijually fibvious that, after the ore is brout,dit to the surface, it will pay to reject bv sorting, even at considerable I'xpetisc. all rock re- maininpf in the ore that will not pav for frei!.,du ami treat- ment. In other words, the pmbleni is n>)t simpK'. but complex ; it is a questi ////: /:'c(;.\(;.i//c:v ()!■ mimm; 5.000 ti>n>. at J,^r 50 l)i-T tMii S187.500 Cost of 111 in lilt; ami -drtint;. $(1,50 iht ton .S'^-Soo I'rciKlit aiul trcaiiiit lit, : in thl^ ciibc have fallen SiJ,5(J0. The ocist tnr mining,' per tun i^ mnn.- than twice as .qriat; the ci)>t fnr frei,i;hl ami treatment per tcin IS .i^j Ljreater; the apparent siidwint;' 1)\ the superintendent very had; hut nevertlieless he has made fur the eumpany •Si i,J5o clear iirufu m the tran>actiuii. In the first case mir lutal cu>t i"r minin.t^. frei.t^ht and treatment is onlv Si 1 .J5 per luii ; in tlie >ecu!id ca;-e it is S17.73 jier ti>n. Imt tlieri is mure muney in the hi her cost. 'I'his is an example that has heeii wurked uui in practice. It should ],': very plain, theti. that nuthmi^ cun'd he mure aliMird than tu juds.;e the merits uf a superintendent in Cripple Creek merely hy the shipiiins; cost ])er tun of his ure. .\ii\ iijiiniun inn>t he funned un a j;uod many otluT ci 'n>iileratii ms. Mere. 1)> the WAV. 1 wish tu avuid RiN'ini;^ the impre--^ion — which wiitld he a satistactiun tu many — that it is nut wurtli while tu keej) a close recurd uf the costs oi mining. On the contrary, this is unc puim that is tiiu often over- looked. Costs can he kept in the fullest detail at a merely numinal expeii-e. .\ sjciud system uf cust-keepiiii; is so ah>olutely essential that no property of anv size can be run successfully witliuut it. Xu matter how able a man may he. he can ltc t in iter result-^ if he knuws just what it c(5sts him to do his work, liut the costs, once obtained, must be used with discretion, always bearing in nn'nd that the desired result is the greatest net profil in dull.irs and cents, and nothing else. To give a better idea of the coni])lexit\ and cust of MIMXG COSTS .IT CRIPTLI: CRJITK Idi' (iIxT.itiii,- the larger mines mI the :anip. the fuUow.nt; staleiiieiil uf operations at one ui the largest prnpcrties (luring one nmnth may he of interest ; i.S.ijio tons of rock- were mined from 40 ditYerent and separate ^topes at a cost of ^^Jo; per Inn, nr S,59.(jtop.ng: 2.237 ft. of drifts, cross-cuts, winzes, and raises in 4') different headings, at an average of $6.91. $15,455.21 ; ore-snning and loading cost, $S.ij nianas^'ers and consnltini; entjinecrs in consideration nf receivini,'^ £850 per aiinutn in salary, office rent. ttc. "and in additi"n j.l jier cent of the net profits distnhiued hv the coni]);m\- in every year, whether in th.e sliai)e of ca>h or shares, hnt such additional ri niniuT.'i'ion ■-hail not exceed in an} nne ytar the sum of £2,500." It appears to us that the terms and coiulitions arc fair enough and that the jirofessimial services of the enL^ineers are secured ^n a decidedlx reasonajjle hasis. Concerniiiu the value of the mine, we cm express no opinion. Jiihn Taylor & Sons has existed for thn.e tjenerations : the Hrm bet^an by undertakinjL^ the direction of mines, and eveiititall\ also, in certain cases, as wf have seen, it has assumed [lart (jf the resjmnsibilit} of lindint; the capital necessary for their development ; thus the t'ni;mcial side <:;re\v out of the professional. With il;e l-.xploration Com- pany. Ltd.. the purcha.-e nf proi'it.able luim'S led to the technical manaseiiu'iit of them l<.l uiih-ut limit, a lar-u pait ni liio in- diurstihlc tinaiu-ial paiuT n^w lluuvriiii,' in lluii city Wm^ orihis description; l.ut it is nulv nf late that the same manifestation of mininir activity ha^ heo nie apparent m New Ynrk, There are so many ■American' an-l ■rnited States' ami Mexican' Finance. I'.Nploratinn. Develop- ment, Secnrities, Investment and Trospectins c.mipaiues is extremelv diffuult t.. i)revent eunfu.Mon, thnai-h ilaritv of name, hetween the few snhstantial con- hemeral creations. This that It mere sinii ccm,s and the larger mimlier of e] activity in the financial incubaf-r is due lar-ely to the suc- cess of the h:n,t;lish companies, hut more particularly to the conspicuous position anpiircl l.y the ( hiLT-enhenn h.x- ploration Companv, one . f the many channels tlimu-li which llnw- the irr'.pres.-il.le tinancia! ener-y of a lari,'e family <'\ extremely clever mer. 'Iheir success has rtjanize for the same intrixises. Min- m prompted others to ore en-ineers who have -rown t;Tay in active service nave vie-we.rwith chat^rin the wealth aoiuired hy nne or two of their own profession wh.mi financial p.articipatinn has made rich in a few ve:irs. and have come to the conclusion tliat thcv. too, wnnhl take their part in the ni-re lucrative liranchcs of that manv-sideucce>>iul i)r()ni()ti.T ; (Hic- iiiaii, with iiuiri' of the financial instim-t tlian the prntVssiunal, wins; but lur every such case a hundred wreck tlieir careers in their eagerness ti) drive crooS-cius to weahli. It is a difficuh problem; the engineer is entitled U< \u> share of the profits of mining, and he should receive a re ward no less than that of the promoter. Should he there- fore become a partner with the capitalist? The same (piestion has often arisen as between the architect and ihi' contractor; an architect can join with the contractor in the risks of the building trade; he may himself become a contractor and, not content with making drawings onlv, proceed to build the structures which he designs. Never- theless, the . issued nf late hv txi)l(jrati()n conipanii.>i (ir^'anizcd in New York. in the pages of whicli reference has been made to the suece.s>es oi similar undertakings in London and else- wiiere. Several EngHsh organizations are ([uoted by name as examples of this kind of business activity, but it indicates how little is known concerning the ins and outs of the Lordon arena, when three or four corporations, of entirely dissimilar character and methods, are given as models for American enterprise. ( )ii the other hand, the me-c fact that London has been the leading mining market of the world since the modern developiuent of mining began, warrants our turning thither for examples of well -onsidered methods in the management of finan- cial organizat'ons. By the mining men of this country, the Kxi)loration Company has long been held as the typical London house making a business of promoting ir.ining undirtakings. In many respects there is a war- rant for this, altlunigh it nuist not be assumed that even this highly reputable concern has been unifomdy suc- cessful. A few y -TS ago it illustrale Tim LCUXOMJCS Ul- MIMXu the risks u.' u unua a> imicli a.- po>MliU-. wliilc at tin- same lime K'viiiy tliat niiiil pro quo wliicii i.-. the c.-.^cncc of MJimil lui.MlR'SS. Sunic ijf ihc rui-'MU meiliuils adoi)tcil in cuniicction witli well-known mines will prove ^uy^e^live to those wii'i ma\' Mt mil nn ilic .^auic ([iK>t. When llie lixploraliun Luinpanv aci|uireil i^l ( )ro mine lhe\ look an option lo purelia.-e, irom Mr. ll:iL;j;in and hi» paruur^. ilie whuU' of the >hare.- of ilie Ainen- ean .Mniiiii; L'ompan>. wliieli owned V.\ • )ro nnne, and then formed ihe lul_l;ll^ll cnnii)an> willi a capital iif i(juo,c_x)u; this repre>ented llie ca~li purchase C(jiiM(iera- lioii fnr llie properly, plus workiiij; capital, and left Mime few tlu)U>aiid --hareN unissued, in ihe hands of what is now 111 (.)ro Mininj; & l\aihvay Company. In other words, the i''.x])Ioration C'oiii]iaiiy tiinied over the pri ip- erty complete to the luigli>h or<;anizalion at ah>olule co^t and without adding a dollar hy way of profit, and, in addilinn lo all thi^, it.-elf defrayed the co^-t of re,i;istra- lion aiui all the expenses incidental to the formation of the new comiiany. The Exploration Company then solicited snb.-criptions from its friends in London toward the capital of lil ( >ro .Miiiinj; iV Railway (_'oiii]iaiiy. charging them 5 per cent, or one >lMllin_<; j/er share, which r, pre>eiit>.d the I'.xpioraUon Loni]iauy's prolit; hut iiiaMiitich as the vendors took a large number of shares in lieu of cash, and could not, therefore, he asked to i)av till.-' one .shilling ; r rhare. and as. of course, llie aiiiouiit Mihscrihed by the l^xploralion Company itself ilitl not represent "N' proht ( a> it also had to pay commissions, expenses, tlotation charges, and so fi.irth, out of the priilit il did receue in ihi-. ir.:inner). the net gain of tills large transaction ilid not exceed ii5,(xx). It is perhaps the only instance in which an Rnglish coin- pan\' ha> aci|uired a properly at absnlute bedrock cost; - - - • ■ ,.u .,f .1,,, ._,..,..^. ..;„,, ^uMi: .isriiCTs or Mixr.'c nwixci- \v It (.aiiiiMt 1r' >aia thai thi> nuth-l ,,i trratiiii; a pmiKTty is a good prcccduit ^r a naM)naljlc husiia.vs propnsilion. In the case '-f tin- iMinboy luiiu'. \\h- l^xploratioii Company foUowr.l what i> knn'.sn in I,.in.l<,n a> ilu' llanu'.tcm Smiili iiractuc; iliat i> to say, tlu'y purchased 51 per cent (It the -liar... nf the American conipanv, and merely suh-crihed. and imhiced their friend- tn suh- scnhJ. for the -hares m that C'.inpai.y. SvihsequeiUly. finding this scheme iness to a comiKiny fornieil in l.oiidoii, and iIk- American -tock- hulders now hold shares in the luiglish compaiu, iti- -tead of the l-jiglish stocklndders holding shares in the American. This i- also a ]iractice which doe> not at all commend itself; for, while 51 per cent. -if course, gives the control of a projierty. it is obvious that the sale of a few thousand -hares vsill transfer that control. The practice now ad-pled by the I'.xnloration Com- pany is appro.ximately as follows; If a mining property is brought to the notice of any one of it- represeiiiatuvs, and he (an engineer) is satisfie.l with the i)reliminary in- vestigation, they arrange to take an opti.m upon the propertv, preferably for about three months; and if it then holds up to a complete and searching examination, they, prior to the expiration of the option, form a com- pany in Lonilon to ac(|uirc the mine, making themselves responsible for the purchase, ■-ttering to tluir friends a participation m the und.Twriting, for which probably a commission of 5 per eetit in cash is paid; then they make a public issue, and if the business is of sufficient dimen- sions, they reserve a certain number of shares tor prefer- ential allotment to the shareholders of the Exploration Company, should they be disposed to make application for the same. The capital of such a new company is fixed at the cost price of the property, plus whatever may be necessary I- if; ili I I IIS mil hCO.\()MlCS Ul- .\lL\l.\u lor workiiij,' capital ; and, ;n addiiioii, a ^inn from 5 lt> 10 iKT cent, accordiiii^ to llic .-izc of tlu iiropcrty, is ,si't asidf as tin- promotirs' ( Mx])lorali(iii tinnpany's) prutit; iinlf.s.s a luiiK, on I'xamiiiatioii, sliow> tliat it can stand siicli pronioicr>' p-otit, and ^till procnl a j^ood mining ciiancc of j^'ivinj^ the sliarcliuldcrs tlicir money back with a sul).staiitial rate of interest, it is not consid- ere!/(.■ of the ])roi)eit\. lor what nn,L;lil he a reasonable percentaj^e on ;i ])iirchase price of $500,000 woidd be excessive and unreasonable on a pro])erty of $5,(xk),(kx). The [ihrase 'underw ritini; the capital' means that the organization i)riii^inp; out a company with a capital, say, of £i,fKK),ooo, would 1)\ thenisehes and their friends un- dertake to subscribe for the whole or an_\ |)ortion of the capita! not taken l)y tlie public, ami in consideration for such j^uarantee they would be paid an underwriter's commission of, say, 3 ])er cent. The forei^oin.ij, of course, only applies to minini^ properties too i)i(r for the jiromot- intjj orj^anizations to handle alone; but in the case of any mine which ccnild be {)urcliased and e(|uipped for say, $500,000. or even $i.o(xxooo, if the property was consid- ered to have attractive prospects, the I'.xploration Com- pany Would be much disposed to take the whole f<.ir its own account, and work it as a private business. ( SOME ASPECTS OF MINING FINANCE-IU (l.-lu.irial. Dcccrnlitr i;. 19"J) Wo havo ikscrihcd some of tlic imtli.HU adopted hy conservative liouses engaged in the aciiuisitioii of nim- iiig property. 'I'lure are several well-nianaRed financial organizations in London, sncli as the L'on>oli(lated Mnies Selection Company, uiiich do imt tloat mines 'ufT their own bat,' as it were, because a single undertaking of any magnitude would entail the absorption nf mo-t of their capital; therefore, instead if u-ing up their resources m one big deal, they participate in several ventures. Either they obtain an allotment ..f interest in a business about to be issued by another llou^,e, an/• Ml\l.\u Mr. Uaiur AK Ultiii.:!, naiiu'l llii. Miius Si'lcctioii Loinpaiiy. TIic MiniiijT and l''iiiaiici.il Iru.st iiia\ alsi) be (lunicil as liaviii;' been fuiiinkd iiii a >eii>ibli.- basis, ami. al- tli'iiii^h it is a cuiicerii uliah lia-~ \\ith,lra\\n iiitd tlie privaiy ul iiiaciivit\ . it |)la\nl an innmitant part in tlic 'levelupuRiit of many Mlcbratcd Anurican nums. ain(iii,i( \sliitli the l)e Lamar, m Idaiio; th'' Mlkln iri. iii ^^)Iltana, and tiie liarijua llala. in .\rizi)na, may be iii- staneed. Mr '1". A. Ccnnett wis the foniidi r iif thi-- conipanw lie i.;ave his services as mining en};nieer mh the nnderstanding that he was to reeeive no salar\ or retainer, but a lar^'c share ia a:i\ ini-ine>^ re-ulimt; ir^Mn his active search for a pood nnne at a fair ])rice. lie stipulat. d oiiI\ that his e.xpeii^i'S >Iiould be paid wlien he ua> aetnalU' in the field. This was a fair and practi- cal scheme It Worked snceessfuUy, imtd the di.sap- pointnunt of the Hannia llala ^ave a severe cheek to the further expansion ni the eoni[)any. The Miiu's L'ompany, L.td., was another concern wTiicli took an important part in .\nieriran minini.,'. It was fornitd by Mr. jidn"" Darlington and others, and was rispon.silile for biinL;inL^ out the \'ankee ( lirl. .\ew (ius- ton and .Ini'. rican liille mii'.es at Red Mountain. Cohj- rado, but it lo.-t its standing thronLi^h the over-capitali- zatitjii which marked the last of these three important flotations. Then, there are all sorts of venturesome concerns, which make a brief splash or a lonij-continued splutter, following risky methods which may be described as financing nn the edge of a razor. Lvery once in a while they get a brief notoriety, commencing in the financial press and ending in the police court. Several exposures of folly and trickery have discrt-ditetl ruining during recent \i'ars. hut the drear\ messes of liottcMiilev. Hooley and Wright are brushed aside as episodes ' > be forgot- sn.MF. .isrr.cTS or mixixc pinancf. 121 ten with ilu iiidc^-t'iu-v lit ;i Imrrir,! t'liinTa'. In truth, they ri'iJrcMin but the iiK^rc (.xtrfinc luriiis uf r(.\kU'ss thiano-, wliicli arc no m<5rc a part uf IcKitunatc mining than thf iniquities nf thf race-course are necessarily a part 1 t tiic business of breeding good hotses. m M SOME ASPECTS OF MINING FINANCE-IV (KJiturial, Iicttmbcr ^4. 190J.) Many 'develoiJiiient' and ■(.xploration" companies, wliich start witli t;ood iiuciUicjns, slide down an easy desL-i-in into ur(ln,L;-l.loin,^^ nK-rily fnmi the lack of innd>. Let tlie organizers of sueli enterprises realize this brutal faet: \oU cainrnt finance legitimately without money. To such gentlemen a> are organizing 'exploration" companies we would give the advice which the Austrian general, Monticucoli, is said to have given to Maria Tiieresa, when he told her that three things were neces>ary for waguig war succcssfuUv — the tirst was money, the second was — money, and the third was— money! Unless a financial company has funds sufficient to carry out its undertak- ings, it will other he >(|ueezed again>t the hard wall of adversitv, or it will .-loop to (piestionahle practices. It is as difficult for a promoting concern to be tmiformly hon- orable, when trying to carry out big undertakings with a small capital, as it is for the wicked man to enter heaven. Xo array of names, or nndtiiili.-ity of business interests, will >ufficc. The iimliii' Jcs clioscs. which pursues the p.mr financial comjiany trying to push large operations, is one of the brutalities of existence. ( )n the other hand, the utilization of a very large capi- tal, ni actual purchase of properties, is not within the scope of the tvjiical exploration company. Such action leads to a crippling of resources, because it requires the further use of funds in the suj.iort of the market fo" 'ts own issues. .\ comi)a,iy which brings out a big mine, and becomes itself a large purchaser of the stock, is apt to be tin- hint .-f surce--fid '',ar attacks, unles> it i> in a position to jirotect its holdings. The story of Lake \'iew Consols. Le Koi. and other mines which have sutYerL-d uueer vicissi- SOMF. .ISPECTS OF MFXIXC FIX.iXCF 12^ tildes on tlu' stock (.■xchan.m-, illustrates hnw dangerous it is for an issuin<; house to be 'lonjj;' on its own shares. An exploration company, primarily, is not an invest- ment cori)oration. hut a house of issue; its most profitahle avenue of ener«;y is in scouting.: for good mines, in order, hv siftinir ri large number of likely properties, to secure the option finallv on one which, after thorough exaniin.i- tion. it can commend to its clients. In this busines-;. as in all others, it is a mistake to confuse the operations of a broker with those of a principal. The exploration coin- p.inv will find it advantageous to act mainly as a corporate broker, for the buyin.i.;; and selling of mine-. Therefore, a capital -ufficient for active scouting, and the thorough investigation which comes after picking out the mines that warrant it. together with necessary payments for options, should suffice. .\ capital of £100.000. or $500,- 000. should be amjile for ,dl work of this kind, during a period of several years, but it must be available as cash. With such a capital, it is iiossible to pay a :;o per cent divi- dend on the completion of a successful deal, while, at the same time, there is money enough to meet the t'xpenses of a prolonged and extensive search for that most desir- able business — a profitable mine with possibilities of de- velo[unent. Having finally found and secured a good mine at a fair ]irice. the next ^te]) re(|uires as nuich judgment a^ any which have precdled. Companies whicii trv to make a gr. ij -onp on one transaction, regardless of rhyme or f - I dwavs meet with a most miserable sma.sh sooner or later— 'isu.allv sooner. In these matter-, as in nioi 1 I: L'l run EcoxuMics ui- .i//.\7.V(; iiIVr-i- a lar,L;i.' .'-liaii' ni lik- l)i->t mines that loiiiv I'j market. I 'u the utlier haml, experience shows iliat, with rare ex- ee[)tious, mu.^t liuaiiee e(jm])anies which have niade > iie ur two successful tlntations hectjinc si > L;reeil\ that tiie\ pro- ceed to over-capilah/.e their next issue, and s.rani to mait"n and N'ankee t lirl mine.- had \\e matters an intelli- gent cojjnizancc of what lia- happened to others is nnich cheaper 'Ikiu the hitler pill ' i ex])erience. which is the in- evitable medicine doled out to the heedless and unwary who tread along the difficult path of mining finance. .\! a time whc-n U'w exploration companies of every kind are heing organized in Xew ^'(Tk, it will not he lie'.d im- proper to (hveil ui)iin tlic dangers which they may encounter, tlie success which they nia\- win. and the stiuiulu- tl.ev can ailord to legitimate mining. m SOME ASPECTS OF MINING FINANCE-V ( Kdltonal. December 3'- 1903' One form of unpractical finance wliicli is prevalent in this country is unknown in lingl.Mul. We refer to the orgariyri'ion of cnnipaincs with a lar^e nMinnial capital, -av, i.o(JO,ooo shares, a part of which is i,Mven out as lullv i)aid stock in exchani;e for the mine, while the bal- ance i.- peiliUeil ai a hi-" discount to the public in order to secure workin<;- capital, and. mi many cases, to make a qtiick pnjfil for the cnncu-n at the hack of the opera- tion. Such practices are rendered imiios-ible in I'.nf^Iand by the Companies .\ct>, regulations covering- the organi- zation and procedure of corporate enterprise. Under the lax statutes obtaining in several States a syndicate can take t)ver a small nmie oi a mere prospect, organize a $i.(Hj apt to call itself. represents a number of mines in com se of developu'.ent and 'pooh' the various .-hare- so as lo make a combina- tion or 'bargain' offer, in < rder Im ]irocure the money needed to make mines out of hole- in the ground. 1 he price of the stock is raised according to the circum- stances, and among these circmnstanci - the needs of the mine are apt to be less ,)f .a measure than the facility with which the stork can be -old to simiile-minded \)vo- ple in a fool's hurry to get rich. There is an enormous amount of money subscribed. and mostlv ]n>\. in this wav during llie c.uirse of a yi'ar, especially among si rvant gnds. clerks, railroad conduc- tors, tradesnieii and hard-wr)rking people with small sal- m V I ii i I lliti /'///: EtUXOMICS Ul- MIMXG arics. Juwa, llliiuiis. Indiatia, and tlic rct;i(jii.-> most uut of tuuch with [jriciiius metal mining, arc ti.rtilf ticlil> i<'V cntt-Tpribing organizers of sticii schemes. (Jt'tice-liuIiKrs of local repute, or other persons of some nutoriet}, are maiie directors antl are given blocks of stock, to the intent that they may serve as lures to the people in vari- ous localities. Then reports of ]irogress are sent in by self-con^tltu;ed 'experts,' and 'divi(lend>' are declared, out I'f the >ubscriptions, so as to lia>ten the instalments on the -tiiek; for it is usually sold on this [ilan. so nnicli l)er mi nth nut of the earnings oi cnniparativel\ pour in- ilividuals. These are tlu' midertakings which are liber- ally advertised in the dail\ jiress and in the illu.strated weeklies. I)ii;mg the recent [irosecntion of a not(jrious mining promoter, it was shown that out of i,_'5o,(kxi shares, valued at $i per share, in a company ojierating a mme in ( iregon. there were is>ne(l, and held, 25 shares in California, 14 in Lanada, n in Delaware, iu6 in Illinoi'>, J5 in Indiana. 42J in \:<\\d. l<\ m Kan-as. i() in Maine, jj in Maryl.'ind, f^T, in Massachusetts. 14 in Missi>si]ipi. 41) in Missouri, 4S in Nebraska, iS in Minnesota, 16 in .\ew Jersey, 68 in .\'ew \'ork, 1)3 in Pennsvlvania, 70 in \\ asli- ington. 50 in Wisconsin, rmd ihe remainder in other . States of the L'nioii. This di.^tribution suggests forcibly what ettHrts nui^t h.'ue lueii made to sell the shares wherever a gullible hea.l bolibed up. The favorite scheme for ^ucli undertakings is a 'tun- nel' or a, uliicli are to i)e removed through the facilities afforded In- such a drainage adit. Ideal cross-sections exhibiting a I soMi: .isrr.CTS op .u/.v/.vc; i-f.\\i.\cn n*? multiiilicitv of veins, an extieniely steep contour of tin- surface, and ore re-erve^ commensurate with tremen- dous ''.lacks.' are added to highly colored descriptions of the futnrc of the undertakin^^ Sliare> are offered at lo cents, to be increased to ^5 cents within a spocitied pe- riod, and other advances may ensue, dependent upon tiie rephes evoked l.y the circuhirs which are sent out. and the advertisements and favorable readins notices which appear in all kinds of jiapers. rehgious and old-fashioned periodicals bein- jireferred by ihi- type of promoter. A rather unicpie method of advertising a gigantic minmg swuuUe some time a.i^o was ihe sendiiii; of 'lecturers' throughout the country on a special railroad car; tlu duty of these fakirs was to tell the u-isuspccting inhab- itants of the smaller towns \v .v fortunes had lieen made by investors in mining shares, and to expatiate upon the niillions that lay idle in tlic 'treastire vaults' of the property, the stock tjf which was offered at 'rock-bot- tom' prices. .\s the work at the mine ]>roceed~. the im- patience of the ignorant investor is fed with accoimts of rich strikes, veins one inch thick ■■ro>s!ng a working 5 ft. wide being likely to appear as 'ore 5 i',. across.' while assays of specimens of walnut size are (juoted under the guise of 'averages.' Wiien. eventually, sonic of the subscribers cease to sef.d in their instalments, they forfeit their interest, and the anxiety of the survivors is allayed bv reports of 'well-known experts' and 'profes- fors,' -vho are vouched for by State officials or country bank-managers in a luagnificently vague manner per- mitting of easy retreat. Sometimes a withered enter- prise will receive a new lease of life by reorganization or consolidation with another property equally worth- less, and the un-ophisticaled :~h,ircholder is again called on to contribute oy surrendering his old stock and pay- ing an additional fee for the new shares. .\nd so the mockerv of mini'iL' goes on. until the money suliscribed m ji- IL'S /■///: liCOXUMICS (>!■ MIX 1X0 lias all \n\]\ u.-id up in salarii^ for ilic insiders, and linally a IidIc in i\\v .^imnul wiili a iluni|i is m'izliI l)y an natf stuckhoUkr. whose first touch break.-, down the uhole house cjf cards — marked cards, at that, 'I'lie South Sea bubble and its associated frauds of ihe year 17J0 have many a counterpart, even in this da\- and Lreneration. What we chierty object to is, they are described as mining. MINING FINANCE. The Editor. SiK_l ho|je tliat \ciur artalcs on Mining Finance," recently ;niblislie(l in the Jolu.nai., will be uidely tvm\, and uill >erve to i;ive the public better ideas on tlial sub- ject, and especially on the proper function of exploration companies. The public, even that portion which cmi- eerns itself at all abnut the subji.ct, has very hazy ideas of tnininj^ finance. 1 have even met niinmi,' engineers, who were well ui) in their profession, but were rather like a sailnr on Imrseback wlicn it came to the tinancial l)art. If p^' pie who have money l<< invest U'.uld (jiily look into this matter more, there would be fewi-r cm- plaints ai)OUt mining investments. How often we have seen f.iirlv i^ood minin.g propositions hampered by capual out of all proportion to their value: and. on the other hand, we have seen mines kept back in their development for want of money, which culd be well spent ui)on them. I was specially iiUerested in what you have said about exploration companies and their jiroper functions. The popular mind has been snmewhat confused on this point. Ouite a number of pen])le, I hnd, have a .general idea that ;m exploration company is .somethintr bkc the •lioldmi; companv'— that ])erniciou> modern device, which has played such a malignant part in railroa 'Hie particular mine t(j de-crilie, he tiiid.^ incdnvenicnt limitations; the possibilities nf lindini; an iiidelinite nunilicr ^ive his men- dacity full scope, r.ut this is inevitable, since all pood things mav be i)er\erted to evil ends; and this incidental abuse does not destroy their real usefulness. It does not seem to me that we have ever had a really satisfactor\- niinini; market in this country. 1 do not mean bv this a mining; stock luarket, Inu a market in which mines, or pood jiroperties, can be disposed of in a .satisfactory way. The jirospector, or the niinini^ en,t:;ineer. who has a prondsiu},' mineral property, needinji^ capital for its develoiimeiU. often does not know where to go. If he ha^- no friends with niomy, it is not an easy matter to se- cure his capital or dispo--e of his property. Too often he falls a victim t'o the promoter or to a broker of the consciencek'ss class, who reaps all the profits. The ex- ploration company — or companies, for there is room for more than one or two — of the ritjht kind would help very materiallv in makint.;- the market that is wanted. Such companies, too, when well established wonld be in a posi- tion to command the attention of investors, larc^e and small. Oi conrse, they will be liable to make mistakes sometimes; but. with any sort of pood management, the proportion of such failures will not be larpe, I hope vou will be able to develop further these ideas, whi'di I have expressed in wliat, I fear, is a rather incon- sequent w;iy. I want to see general investment in mines increase; for I know- that, if reliable ways of doinp it are provided, such investments will ]>e far better for the pub- lic than the putting of their money into Iilind pools and watered industrials. Ixvicstor. New York, Dec. C, 1903. I I RESUIiNG IN UNDERGROUND WORK. (December lo, ly^J.) 'I lie Editor. Sir — The article appearing in your issue of September 12 (referring,' to the urigin cif the term Te.sue' as a[)pheil to uiidergrouiid work) brings lu tniiiil j-onie jjractical e.\])eri- iiieiits carried out by the writer a tew years ago, in whicli an attempt was made to determine tlie relative merits of this system of dealing with narrow' veins of high grade, as against the method of breaking the reef and adjoining rock, together with an id' a of sorting out a high per- centage of the non-auriferi lus product. In the cases cited the a nnt an absolute guide as to what the work should cost umkr simi'ar conditions over lart;e areas, they indicate the most pn.tital.lc method of handling ore occurring under thcsf conditions. r.xaiiiple A shows a loss of $23.76 on the operation, while in r., where resuing is resorted to, a profit of Si.4(iw.4n is made. In ixith cases 6 in. of quartz was dealt with. In the second comparison. C and D. a 12-in. viin \al- lui! ;it ^n dwt. was worked, and while tlu- discrepancy is not so m.irked. it is shown that mider these conditions there is Mill a consideraliU- martjin in favor of resnini^. '1 lu' last example, E. is pnrelv theorelical, a.i far as the iHTcentage sorted is concerned, and is c^iven m further support of the contention held. CoDitirisons Between Strif-fhii: Xarrn:^' Reefs and Sl.'l^iiiS Them '.eilh U\iite Fxample .'\.— Width of reef. 6 in.; v.iluo. 50 dwt. Stopinir wultli. .10 in ; v.iliie. 10 dwt. One ton contain.s 20 per cent of reef and 80' per cent of waste: 5 per cent i> sorted, 5 per cent "t So per cent is 4, leavina; 76 per cent of tlie wa-te. So that oO per cent HOI'S to the mill witli a value of 10.41 v'- cry. 75 per cent of .so dwt. ; that is. .37 5 dwt. at $o. To iimiiHK S""' ton- of wa'itc. at $J 40 $'■ ■■ nulliiiK UK) tons (jf rtcf. at $,!(« " llalnlllIl^; 1 10 loll", of wa^ti, at $048 " traniiniiij; 100 tons of rtif, at $0 V) " hoi>titiK icx) tons of waste, at $18 ■■ hoisting iix) tons of ri'cf. at $iS ■■ iiiillniK 100 tons of rcof, at $1 <)j '■ rcdciniilioti, at $o.(X) " cliarKi-. at $0 Kj " pninpuig. at $0 7J Total expenses for too tons Vahif of n"'d recovered. 100 tons $I.JOO 00 ?(o (Xj 5K 80 .^.fxxi no I'rolit by stripping Ji.tri^O Fxample C— Width of reef. 12 in.; value, .^o dwt per ton. StopniK reef and waste together .Vverane valne of .^o ni . IJ dwt.; 40 p'T cent of this is reef; 60 per cent is waste; 5 per cent is sortdl. equal to ,? per cent of tlie waste; leaving Q7 1«t i^^"* t" mill, aveninmg 124 dwt ; 75 per cent recovery ..f 1J4 ilut is ii.\ Value of gold in 100 tons {•).>, 8 .1- «.).' So I rannning J03 Hoisting iOi Milling 100 Pumping 'oo Redemption lo<> Charges i«> Tot.il expenses f ir Value of gold recovers Profit $IJ4 Example D.— Stripping 12-in reef. V.iUic. 30 dwt.; 75 V^'^ "'"' coverv. is 22.5 dwt., or $2i.0o Value of t'ol' in too tons at recovery, is 22.5 $2I.tK) Is $2,100. Ti.ns. 250 at 100 " 100 " 2.1 ■• 100 " Mining waste Mining reef 1 landling waste llaiulling reef 1 loisting waste Hoisting reef Milling 100 Pumping Redemption Charges Total expenses for 100 tons $1,461 18 Value of gold recovered ■ -■"'"■°° Profit ^-^^ Cost. ^K.'T'"^'- $2.40 $fi0O fK) 360 liO 11 . 04 .V) ■ 00 '. 414 18.00 192.00 72.00 96.00 72.00 .V'lO 0.4S. o ^6 . o.iS. o 18. 1.02. 0.72. 0.96. 0.72. 134 run luoxoMics on mi\i.\g l".\.iini)lc 1^ -Widtli '4 rill, ij in , v.jIiu', .fo dut per Inn Stuping riif ,111(1 vvasli- tdKitlur. .io in. vvuli', and tlicn sorlini; JO pir cent of till' ri)ck niiiud Value of rock before sorting, u dwt ; after sorting. 15 dwt. ; 75 per cent extractinn )iive> 1 1 -'.■, dwt. recovery; 100 ton> at 11 J5 ilwt at $09() etpiaU $l,oSo Expenses. Mining Ij.i tons at $,! t« $-150 "" I riniiiniiiK Ij.s tons .it $0 .}6 45 O" lloiMin^; IJ5 "tons at $0 iH 2J 51' .SMrliiiK' -'.S ions at $0(/) 24 (Xi Milling' 100 tons at $1 44 ' U "<' Piiiiipini; 100 tons at $of>o (lO.OO Redciiiplion 100 tons at $0 72 7.' 00 Char^jcs [(X) tons at $o(i<> <><)"<> lilted cxi)cii-c- for KX) tons $883-50 Value ol Kold recovered I.oSo.OO Protii IkX' 50 Thcsf fioiircs ret1i-ct tin- iiniMirtaiicc of cari'tttlly wciph- itti,' tlu' nn'rits of the two niethods of stopiiit; wlicii ikal- iiij; with narrow veins. I'. I . RoiUiRTS. lUihivsayo, Khodebia, Oct. 27, 1903. GOLD MINING IN RHODESIA. By F. C. koiiKKi.i. (Drcci.:'jer lo. 19113) Introductory. — i->in^ lietwcm latitmles 16" and 23" south, and lon^ntudts 25" and 30 i'a>t, Rhodesia, winch, a few years ajj;i), was almost wholly inhabited by native tribes, can now luiisl of a while j)opulation of about ten thousand. I'he country derives its name from the jjreat founder. Cecil John Rhodes. In its phy.-.ical aspects Rhodesia ditTers from most of the Western mining Stales of America, in that few really high mountain ranges traverse the country. The mining districts emiirace nu- merous small hills which gradually fade away mto large areas of, first, undulating and then almost flat, plains. In the granite belts an independent tyjje of scenery is pre- sented, consisting of wide, slightly undulating plains, dot- ted with countless small conical hills (kopjes) varying in height from 50 to ^(X) feet. In but one instance in the whole of Rhodesia has it been found advantageous to attack the ore-bodies and veins through adits; practically every mine in the country has been opened up through shafts. The gold mining in- dustry at the present time is the only industrial source of revenue, and presents certain aspects difficult to com- pare with those existing in other countries. The vicissi- tudes to which Rhodesia has been subjected have been numerous, unique and costly ; they have militated against the energy and enterprise which have been thrown into the country, the progress of which has been sadly re- tarded in consequence. The internal system of railways, whicli is now being extended over the country, will bring within easy access of the centers, Rulawavo in Matabeleland and Salisbury 1= 136 lllL LlO.\UMIlS Ul- MI.MMj in Mashonaland, every mininf; (li.-lria nf importance, and thereby rem. ive the hindrance dne to iiruhil)iiive prices and scarcity of wa^on transport. An independent hne. 200 miles inny, winch is practically the tirst lap in the Cape to Cairo railway, from Unlaw ayo via \ iciorii 1-alls, will tap the Wankie coal-tield hy tiie end oi November. The Wankie cual will then be available for use in jjracti- cally every minint^ dist.ict of l\hode.->ia. c't-o/oi^v.— (ieolo.^ically. tho-e parts of Rhodesia which have been at all explore' present much the same features as other ^\\v,\nv. countries. In two instances, however, we are favored with s;eoU.!,Mcal problems which promise to be of especia] interest and impchists, varyins;- in extent from a fevv hundred yards wide by half a dozen miles in len.i^th, t.. 15 miles wide by i,o miles in len.i;th. These metamor- phic rocks are traversed hy nr.nierous dikes, consisting nf tlu' nianv v.irieties of di. ,nte. In tl.e valle_\s, or small ^niK hes, oi the lull country, the dlnvinin is of very limited extent. su,L;,s;esting a lack of tho-e e-treine climatic con- ditions necessary to produce rapid ero>ion. The i[uartz veins include ^e\eral distinct types: the most common are the iiiterlaminated veiii>. which are found abundantlv in the fcjliated rork~. tlmn-h nuinenius segre- gated veins also exist. Tb.e ([uart.-^ "ccnr< generally in leniicul.ar bodies, sometimes di>iiiictl\ isolated, but more n-nalK 'n naralM series, exhibiting i.;reat v.ariations in m GOLD MIMXG IX RIIODP.SI.l 137 width and vertical persistence. On tlic wlifilc. the veins are narrow and tlieir lateral extent is ratlier limited. At the Ayrshire mine in Mashonaland an auriferous diorite is under exploitation, but as yet little is known of the genesis of this most intercstinir occurrence. .\ large amount of \v>irk has been accomplished laterally, and the vertical depth reached is over 600 ft. The irregularity of the gold contents of the dike and various .ither char- acteristics would seem to support the lateral secretion theory." The writer has lately discovered an auriferous horn- blende porphyrite. This rock is most interesting petro graphically, and is (luite uncommon in this country. It consists, as seen under the micro.'icope, "of large crystals of feldspar (chiefly plagioelase ), jrassibly with some orthoclase and smaller calcareous pseudomorphs after hornblende, retaining good crystal outline, imbedded in a fine-graineil feklspathic ground-mass. The feld- spars are somewhat crushed and the alteration of the hornblende iniplies a certain amount of water action." This body has recently undergone exploitation, and ap- pears to predominate in the moulding of a small range of hills rising 3CX) ft. above the surrounding country. In close proximity to tiie porpb\riie are the crystalline schists. .\ superficial examination shows considerable variation in width, the maximum being about 150 ft., while the lateral extent will probably reach i.coo ft. tiiiaiice the work; hence it is clear iliat the s;iil(l-niinin.-- ciiiiiiiany mu.st asMune hiLT resjx.n- -ihililies, and therein lies the key to many failures. The prohlenis with which the parent company is faced are as follows : la) Capital and shares involved in purchase of prop- erty. (h) Capital involved in i)rospecting and development 'vork. (c) Capital involved i;i installation of temporary sur- face eciuijjnienl. (d) Intirvst accunntlatinj; iipon capital invested. The chief ci niMilcrations of the L^old-minint; company are as follows ; (i) Capita! involved in purchase of property from tl'.e parent comnany. (.2) Capit;d involved in developnient work. 13) Ca])ilal or shares involved in conmiutatioii of Chartered Company's ri.trhts. (4) Capital involved in purchase and erection of plant. ( 3) Capital or shares involved in making provision for possible extension of ])lant. Assiniting a width of vein of 30 in., with tlic ore-bodies not too scattered, it becomes necessary to make jirovision for an ex])enditure of no less than $360,000. in order to bring a. pro])erty to a milling stage and e()ui]) it with a jo-stamp mill. c_\;inide jjlant. etc. This should, under ordinary circuni>lances, gi\e 18 to 20 months' nni of pay-ore. As a matter of fact, no mine in this countr\- should cotiimence the reductitju of ore with less than three year^' ore in .such a state of exposure as to be rea- sonably CMunteil upon to return a margin o'er and above the estini;iUil working ex])enses : for it i- next to impos- '-^^^ GOLD M/XIXG IX RHUDLSI.l II! I >ii)lc to kiop the (K'vcl'i]imt.iU wiirk as far ahead of th'.' reduction plant as the constantly tliictuatinj; and inetli- cient lahor-sujiply demands. .Iss,iy I'ltiiis. — At nK'sl <>i those tnines, which have reached an advanced staij^c of development, surface and assay plans, as well a- section and stopin^^ j^lans, are kept ; while the data inih. idied in the plans \ar_\ somewhat for different mine>, the fundamental principles are adliered to. The development assays as well as the stope-assays are taken at intervals of 5 ft., and i)lotte(l weekly. The ])enn\ weiglns are shown in red and the width in inches in l)lack. .Ml sam])les are taken over the actual reef- wid.th, which fi.i,nires a' adjusted to an assumed stoping- width in the assa\-ho(jk. I;-, the opinion of the writer, the methods (often used when the widih of reef is undiT an assimied stopiiiLj- widtli) of sam])hnu; over the stoi)in.L;-w idtli, emhracing both reef and country matter, are lialile to ])roduce in- accurate results. It api)ears clear that where the char- acter, hardness of the rock, etc., show a marked differ- ence, it is almost impossible to obtain such a correct ])ro- portion of each section as to insure reliable results. These remarks are ])articularly a])i)lic;ible to this retrion, where so manv small but rich veins occur, wiiich, in many cases, have lent themselves more readily tt Work. — Generally speakinj^, the quartz veins in this country may he r.aid to he narrow. The lateral continuity varies greatly, and rarely exceeds the full lenf,nh of a block (1.500 ft.) ; the prade (when the widths are adjusted to a common basis and suitable areas are used in calculations) ranges between 8 dwt. and 22 dwt. per ton. At the \\'an. tl.Tof.,r. .-rnti:,l that lircrc footn-c^ be ob- tamc.l M, Uial a vcax.nablc ,li.lril.utiMn may W uv.uU- of ih. Tnnsiant^.- An analvsi^ nf tb. owt. nf clcv.lnpincnt lip. .11 a Rbndcsian mine i-^ uu^n burrwillr. Mine D.':r!»r'ncnt. ...,,,„,. Milk-.l, :l>;i- of Tntril Cost t-i"!"- *"'■'' '^"''• Salaries $l.W)2.28 444 -'47 Whue wages -'.<;'' ^^ .',' ^ ,' o Contractors 21.S8...-4 57..0 .^- ".^ Xal.vc wages ,?.'7".40 «-34 4 15 Xat.vc food ><>^«' :-^ -^ Maititenance 75')?° |~ \\\ Workshop- '."40.80 2.,4 ' -■^.^, Xanve ho-pital -'87.14 0.74 o- N-at.ve lal.or supply 74-40 O.lS O-^o Putnpmu 4.439.52 1 .06 O-.o Conipoun.l ^"4.08 -.20 I.-, f„n,.r.~-or.an,lr..ck-ar,!l~, I0..VK*.74 43-08 -4.00 Win.lnig '."o--'^' i-':^ -i^ rmlcrgnninil tramming.... -'.7,U.S0 / ■ ^\ ■■< ^ .\ssav acoomit 0'>0. ' Surviving and .^amplmg.... ;i-'-/0 -N 1.04 Rock-drilN and >liarpcning. 5.579.28 I4.0<' _»_^ Xyl;il $08,300.12 i7'ji 30 99.45^ The fontat^t' cxcciitcil ihirinc; the pcrin.l covered by this expenditure amounted to 2.O77. repre^'iitin- a cost of $26.50 per foot. With haiKl labor, drivin.ir in fairly hard nrmund, 40 ft. per month is considered -o,,d uork. while with machine- drills So ft. is an avera-e. On the Rand, anytliit^tj: up to 200 ft. per month is made in driving: in shafl-sinkinti also this rate is attained. TpMi one property with which the writer was coniiecied in t!ie Tran-va.il about^ six years asro. no less than 2r« ft. of sinkin-' wa.^ accomphshed^dur- iniLjone month, i. .-.. from the 1.027-ft. level to the 1,287-ft. level. The smaller amount of work accomplished m this coun- try is due lar-clv i-. tlu inferior eipiipment. both nnder- t:rounta.Mly lUictuaiint; jirices of mininj^ materials and ,sup])lie> make it essential that constaiU (imitations of these articles he ijhtained and tiled for daily reference, with the hope of et'ectinj,' econ- onu in operating; exjienses, as well as tor the pur|)ose of i^e'tinj,' i-iut estimate- which can he treatetl with con- lideiice. 'Ihis also snt^.tjests the iinpe)rlance of correctly mea.-nr- ini,' the lonn;i!j;es handled. The methods in vogue are not conducive to accurate results; it is customary to count the cars of certain calculated capacity as they are deliv- ered to the mill or crusher-station: this, less the mimlier of cars discarded as waste (in all cases estimatin-,' _'o cu. ft. of broken rock = i ton), is taken as the tonnage crushed. It is ai)parent that greater care is required he- fore a comprehensive comparison can he made of theoreti- cal and actual results. The almve methods would be all riL;ht, if, after determining the lumiher of cubic feet to the ton in individual cases, each car delivered to the mill was of exactlv the same capacity and tilled to the same point, and moisture samples taken. This, however, is not prac- ticable. The stojie measurements, in some cases, are used as a check, but it is hardlv -leccssary to state that only ;m approximation is arrivt-d at. This matter is of great im- portance, both as regards relative working costs as well as relative stamp-duty : therefore, it is imperative that a uniform svstem be adopted, at least in cases wiierc the tl;.;nres are to be hied for reconl ;ind general information. Scales should be used for automatically weighing and registering the cars delivered. Then, if each car is tared and periodic moisture-samples are taken of the ore, as delivered, a correct idea of the tonnage will be obtained. 14tl TIIL LCuXOMIlS UI- MIXIMI }!illi„^.—l'hv imnHhiction of heavy stamps witli tl^c ,,l,jcct ni securing a lar-c >taiiii.-cluty >.cciiis tn liavc rtaclicd its i)ractKal limits, thai is, at 1,45" "'• '" -^""'^"^ llu' mill is used mnrc as a crushing' machine than with the idea (if effci-liiiK iKifcct amal^'amaiinii. and so Inn^ as the ores lend themselves readily m sul.MMpuiit treatment hv cyanide in the state of tiiieiiess pnuluced hy the use of a low dischartje and a coarse screen (20 In 25-incsh), a hi-h duty is well enough. The prevaihntr meth..d of operating' a stamp-mill, in so far as the mechanical end of the work is concerned, is as f.illows: Order of Mli--'S Ol- MIMX^i fluxes iise.l. .ir llu' prdn.nn.:is x\ulh"d "1 mMtmnu : it is ,pnto pn,Ml)K. .iM.l n-t rxpniMNc. tn pi.HhKX' K- iM a. t.uc fiusol hnnix, Ju m .,5; nuin;;:iiK^c .liuxwU'. -'o n. 4" •■ -""I- 15 t,. 40 iKirts. Till- i> a moditkalion nf uh.it ui c;illr,l Crosse's llux at |nlu,uK-.burK. Tlu> cxa.i pP .i.-rtmn m bnrax, niatiKaiu-r .lioxi.lc and .and i.> 1)> M dcU-nnnu'd liy prai-tical U'st> ; >.iiiuamu> ihmr.par lalmui 3 part. I is Tlic addition <>f a cyanide plant in a country nt •••■.- nulling; nrc> mav lie qucMinncd, hut il i> cnntcndci lh..> it the j;rade nf tailing; in tiie lirst ca.e will pay fnr treal- nieiil. 11 i> a ilistinct a natcre is made, ddie same form is reipiested hy the local t hamher ol Mines, the latter or-anizatioii puhlishin- the return^. rnf,.rttmately the unit used i~ the hullioi. ounce, sshich luav varv fnnn 700 to 930 fine. It is (.•hvious, theretore. that to make an\ comparisons without heint,' in po.sessi.'U nf the hu'ures i;i\in- the exact fineness of the .^old is a waste of'time. In cvanide -nld the discrepancies are even m-eater. the fineness varvin- irnm J30 to 730. 1 he elas- Ticitv attendin.i; this method, nf deahn- with -■ Id is verv ureal, and cnuhl he utilized tnr intr))nses of much graver rmport.mcc than appears on the face of il. It would he far l.ett.r to olililirate the tn-v measure alto-ether, suli- stitutin- shi!!in-s and decimals ,,f shiUinij;.. rather than to continue the use of a metlmd so devoid of nlcaniIl^^ GOi.n i//\7.\7; /.v h'lioni-s-i.i 1 10 Tlu R miuilhlv ]ir( (hut '(111 (it ii( \liii(k'>ia iKis n-aclK-'il J3.570 oz. 1 (or litillionl from liL-n- art- two or tliric iiTidi ■^triictiim. wliidi will add to the pro- duction of luxt \iar. With this iiicri'asi- and the intro- duction of a coiwtant supply of A-iatic lahor, the jirolia- hiliti arc that an (iut]ir* of 40, (xx) oz. will he rcac ichcd witiiin a vcar or so. MINE LABOR AND COSTS ON THE WITWATERSRAND Bv T. Lane Carter. (Ucctmber 31, 1903.) The scarcity of Kaffir lal-)r on tlic Rand has made for efficiency in its use, so that today the native workers are handled ninre skillfully dian in ante-bellum days. At one time too many Kaffirs were allowed for a job. whereas now the number is cut to the lowest point. For instance, in 1899 machine drillmen were allowed six natives to run two rock drills. Now the work is done by five Kaffirs. The limit of efficiency with Kaffirs is soon reached because of their refusal to respond to the contract system. The following figures from a lar, gold mine, of work- ing costs during a month before the war, and of a month after war, are of interest : In May, 1899- '" J""^' ">"} Totnl mimher of K.iffir^ at work . 2,304 l.I.s6 AvfraKCMiumbtr of sick and idle. 4'i- "^'' Co>t of recruiting a Kalhr £2 lOs. 4d, £2 125. 3d, Average wages earned per na- o ^ , , tive per shift io is. 8 70ld. £o Is. 8.6qid. Average cost per ton of ore broken in slopes by machines. £0 7s. 10 f&Sd. £0 ()> g.02d. .Average cost by hand sloping (Kaffirdriliers) 20s. (about) £0 lis. I .71 Jd. .'\veracc number of tons shov- eled per native per shift 2.164 2,246 .•\verage number of tons or' o a ■ lirokrn per machine per shift, i<.i't> H.6A) Width of slopes in inclies 55 '" ?5 '"■ U'orkinp Costs Inclusive of Dc:\-loti>ic>il and llccid-Oificc Cliargi-s, /rr Ton .V" i. Mining (including all develop- iiKiU or (levelopinent-redcnp- 1,011 charged io •:-. 7.8541 £0 lis ,,2J4, Snrf.-ice transportation d 5551 , 3.'2.s»> Sorting and crnshiiig ■* ",-^-'' 2171' Milling -- -^■^''■\- ^"rVi CN,u.iding ^^ "■■;^4l.. jv 0.380,. General _^^j^84 1 d, I s^J_03od. Total cost per ton ii 3S- i.45ind labor entirely for ma- chine drills. In stopes of 5 ft. or more, machines are preferable. The proposition is different when the reef is, say. 12 in. wide, and it is desired to keep the stoping width narrow. P>v hand drilling a stope can be carried 20 in. wide. Tut a rock drill in the stope, and in most cases the width will go up to 40 in. With hammers, the cost of breaking ore in the 20-in. stope would be higher than in the 40-in. stope, but in the narrow stojie the assay value o- the ore trammed to the shaft would be nearly twice as high as in the 40-in. stope. This question of 'hand drillers versus machine drills" in stopes is a vital one for every mine on the Rand. F.ach stope should be made a separate study, before deciding to work it with hammers or machines. It will be seen that the greatest reduction in costs has been under the head of mining. This is due principallv to two causes: (i) Cheaper dynamite; (2) labor-saving devices underground. -As regards the efficiency and cost of white labor, there l.-,L' ////: /:CO.\O.W/c'.S- (;/■ MI.\'L\C ;s little iliaiit;c. .\> far as divclnpiiKiit work i;- '-■nn- i-t.TiR(l, ihc standard is imt as lii^h as it was previous to the war. llic iinprission lias i^'aiiicd i^round that in dc- vi'ldpnu'Ht wnrk thiTc i> more dan^aT from miners' phthisis, and the men are, therefore, shy of the work. A sloper ean earn as mueh as a driver, and has less risks; hence the hiil for the stupes. It may become necessary to arran,!,^' pi .ees so tliat the man who drives, raises or sinks ean earn more money than the man in the stope. The eniplovment of white unskilled labor on these fields on a iar^c scale is now iiraetically abandoned. The ex- periment was a failure. Take these figures from a big mine : Kate per -hi ft to iin-killed wliito labor, e.xclmlitig food 5s. 8,;i?. 7,02-'d. Average miniber of natives (li--iilaced by one wliite man ( for thi.- nnne only, wliicli is above tlic avor- aRc) ...... 1V4 Total increase in working costs and capital expendi- ture in period (a few month-) if all* natives had been replaced by unskilled white labor £30.046 It is said that there are at present 2,000 men out of cm- plovment on the Rand. To hel]) tliis bod\ of men, the ^(ivernmcnt, which runs the railroads, is otTering to take on unskilled, whites at ^2 per day. Ouite a number of the unskilled whites were employed as helpers on rock drills. After a few months' experience they obiained blasting certificates, and as far as the min- ing regulations are concerned, were the cijuals of men who had been mining for years. These men went to other mines, showed their blasting certificates, and were set at work on rock drills. Needless to say, they were not ex- pert. A first-class rock-drill man does not learn his trade in two months. ( M' the large number of unemployed, it is safe to say that 'in'v a small pereeiUage are really skilled men. '1 he I)ig majority are either wit'nout a trade, or 'wasters.' 'this is the crudest place on earth for both classes. First-class WITlV.VrP.RSRAXD LABOR AXD COSTS l."):? rock-drill men are hard to j^et. Eighteen niontiis apo it was riiade known in America and England that 200 skilled rock-ilrill men were wanted at 1 minimum wa_q;e of ii per day. For that f,aiarantee 70 or iSo men only have been obtained. Quite recently, arranj^ements were made to pet out 70 Italian tniners from the Simplon tunnel. Some of these have already arrived. It will be seen that something; will have to be done to meet any bijj demand for skilled rock-drill men in the future. It is m\ opinion that the outside world can onlv partially supply the demand. Therefore a percentage will have to be trained on the Rand. This has been, and is being, tried; but it is difficult. As intimated above, the learner gets a blasting certificate in two months' time, and passes as a skilled driller. He is a machine man. possibly, but a very inefficient one, expensive to the company at any price. A possible way out of the difficulty would be to have different grades of certificates, making it compulson.- for a learner to serve at least a year on machine drills before he is passed as a skilled driller. MINING COSTS AT CRIPPLE CREEK. 1 he Editor: ..I.inuar> ,-,. .g..4.l SiK — Mr. Finlay's interesting comnninication (in tlie Joi-RNAI. of Xovember 21 ) calls attention to an important and mucli neglected tield of discussion. If detailed fig- ures of mining costs were more generally available there would be less misdirected efifort in mining. It is often assumed tliat such figures are of interest only to the min- ing engineer, to enable him to check his own work against that of others. Their most important value is, however, to the investing public. If >uch figures were more gen- erally published, it would be less easy for an unscrupu- lous promoter to impose on the inex[X'rienced ; and there would be a better apportioning of credit to deserving mine managers. Probably all visitors to mining regions have been impressed with the number of idle properties which, on inquiry, arc found to be idle because of lack of working capital. It is the old story of costs under-esti- mated, of a scale of work unsuited to the character or size of the orebody, and of waste and fruitless effort. The projectors of the various enterprises have usually had utterly erroneous ideas of the cost of the work, and disaster has been the lesult. Again, it has, unfortunately, happened to many mining engineers that their best efforts were thwarted by lack of appreciation of the significance of figures presented, on the part of their own board of directors. In the case cited by Mr. Finlay the fact that low mining costs an not the only desiderata is excel- lently shown. It is easy on the other h.uid to call to mind dividi-nds paid !)v reason of tlu' richness of the ore-body, e\en despite the absence of an, skill in actual manage- ment. It should be t!ie puri)i)se of all iiUerested in the mineral industries to promote tlie economical and efticient ilevel- oijment of our natural resources, and certainl) the frank discussion of ci^sts is ;is ersential U> this, as discussion of MIXIXG COSTS AT CRIPPLE CREF.K i.<>.i iiu'lhods of uork. IIo\vc%-cr desirable it niav be io have cciiiiplete cost records, and I heartily endorse Mr. I'inlay's position in the matter, it is not always practicable to do so; and many engineers hesitate to give out incomplete information for fear of its being misleading. This is a real danger projjcrly to be guarded against ; but even incomplete figures, carefully stated and analy7.ed, may carry their lesson without promoting misconceptions. These considerations shall be my excuse for presenting tiie following partial figures of the cost of mining 7.087 tons of average Crij)ple Creek ore. The cost i^er ton was $14.73,01 which $9.06 was for labor anil S5. 67 for su])plies aii(l all other costs. In mining the ore 388,7^5 cu. ft of stoping was done, e(|uivalent to 54.8 cu. ft. per ton of ore sold. The deveioj)ment work consisted of i,4if) ft. of drifting and 100 ft. of sinking. .\t the beginning and end of the campaign the ore-reserves were approximately equal, if not somewhat increase 1. This accordingly rep- resents roughly the amount of development work neces- sary to keep the mine alive. If this development work be figured in cubic feet, then 56,208 cu. ft. of crude ore aiul waste must be added to that taken from the stopcs ; or, for every ton of ore sold, 54.8 cu. ft. was stoped and 7.9 cu. ft. removed in development. The work was done with small machine drills, the average of sto])ing being in the ratio of uo cu. ft. per machine per shift. This ore was all screened and hand-sorted, so that the 7,087 tons sold were really concentrated from the 34.759 tons broken and handled. If the costs be figured on the bc^sis of this crude ore instead of the concentrated ore, as is customary in other districts, the cost figures become: Labor cost, $1.84; sup- plies and general, $r.i<); total, $3. Of the total cost, ap (JiO-ximately $2.rKj was mining cost and 40c. was for development. This method of figuring the development cost back to the ton> sold is unusual, but has advantages ir.o 77//: l:C(>.\()MICS Ul- MIMXG wUvw. as in the pi\M.-m case, it Ijccuuks i>u>-ibli.-. If in a i^iven canipai.^n the (irc-re>ervi's were imtahly dc- pk'tetl i)r iiicrea>eil. it would Ir- ilil'tk-uU. if not inipossihlc. h'.vcii wluii tlk- costs arc rcchiccd to terms of crude ore and waste broken, C'ri|)ple Creek co-ts are lii,L;h \n coni- liarison with those clscwliere. Tins is (hie n part to hi,s;h hihor and ni (lart to the snialhiess of the orehodit -, whicli necessitates the liandhni; of much waste. In tlie present case the a\eraL;e ihiily w aj^^e was $.V37 l' "" •'" ciiihtdiour shift, less Jo minutes for lunch and ahout lO minutes at chan,L,Mn.u' time. The ti<,nires are his;her than Mr. linlav's averat;e. presuinalily because a laruer ]iro- porlion of machine-men were em])loyed. C >al also aver- aged liisher than in the case cited hy him. thoui,di timber was ahout the same. An effort was made to decrease costs hv increasiiiij the capacity, and it was found that this decreased the item of lahnr. but not the supplies. The record of two separate montlis is triven below: Laliiir .sJurplifs aii.'04 Not much reliance is to be placed on these figures. however, in view of the .small tonnage and the consider- able diti'erence in costs resultint: from variation in the amount of development work carried on. The particular months given were chosen with a view to eliminating these factors as far as possible. Comparisons made be- tween these figures and the costs, at a number of still smaller mines under the s.une management, indicate that the labor co.st ])er ton is not influenced much by the scale of operations u]) to a monthly ontinit of i.ooo tons. Com- parisons with costs at plants having still larger outputs indicate roughly that the cost iier ton shipped is influ- enced more by the character of the ore-body than the scale of operations. jj Poster r..\iN. Washiimton, D. C. Dec. i8, 1903. MINING AND MILLING IN THE MOJAVE DESERT (January ^S. igu4.) riic liditor: SiK — riu' Dt sort Rtjinn. from an (.cononiic stand- point, in n-^ard ti) mininLr. '''is a miinlxT of disadvantages tliat iiiilitaif a.^ainst tlu- pr .titahk' (.-xiractii >n and rrduc- tum (if low-^radc orr. as ciiin])arfd with nuirc favorchur-. Kern coum\ . Tahforma. In the accompanx'- ini^- tal)le from tlie niontidy re])ort . !] l.-.s THE ECO\(hMICS or .UIMXC §^ ;10 n c £ s ' - O ij z ~ ~ ^ k- l- D* '•J V- 'X 5 ^ '*" X ^ X; u E.i o 5 r -' 0^ "3 Is H / ^X (J S 5 ^ i i 3 i^i ir. ~l - C r-ii s :rv°5' ^ ^' 5 C -1 -^ -r -j- -T i Scocooo- ccccood' — w '/ V — f^ ^ w 6 K u g tJ s (/T u c. ^ _ i 6 (J X ^ g"^ Xt tj ^ s „ tt- y 2 y £ - = O c -^ — ~ (J5 C- *! C- I"-. 5. C VT' 11? n r^ T- ". - C c 'I 04 i-i c o c c c -T ^ ^1 oococc^c^^ B c c T- ;i t^ "- O O O O "I c c o o c 6 "4 O ' :^ -r ; r^ C C Qi Jii r^ - 'i? >< i i £-1 o - - -J =0 i i— res - -, & ^J^ Z a c „ . .:i,uJ2: — — — ^.^-jaixas - 0^ -.?; gSi^gg.' — ^ «- ^ — zr -* _i- -i/ra— - — ;:: rz ■• zi -> — re^-.- = «•-,:?, ^-- = a. _i :£: -r ai ^. M c ci MIMXC IX Tllfi MOJ.irr. DllSP.RT ir.!» $3 ; imickcrs, <) lumr,;. $2.50 : car-nu'ti, i) hours, $3 ; tim- ber tiuMi. () hours. $3.50: aiiialf^Miiiators, u Ivmrs. $4; Stationary (M^'iiu'crs, u hours, $4: hoisting; cn;,MiK'ers, 8 hours, $3.50: iJuinii-nH'ii, u liours, $,^.50. KidENE H. Barton. F?ani!shnr{^, Cal.. Dec. 15, il the J :,lin district :i ymir is»iics ui JauuarN 7 ..iid 14. and tlik di .u^'Mis m iiinre recent i>siK'>. have aiiiaeicd iii> atluiii'in. 1 he vkw> expri -.miI as t" ilii.- in.-,! of inin- in.i; ;:iiK- (in in the Jo|)lin district recall a iir(ii)leni uincli pre-ented it>elf h> \\k iliunt a \iar aLju. Xa'.urallx cn..u-h. it i> p.iimlar ainmi^ the nniu npi.T- atiTs \n relei the cost nf mininj^ {u unit> ct iht- iirnduct sold. A statement like the fulluwin^' is very sim;,!,- and easily iindrrst,..id ; /jiu- ,irc sells for $^^4. tlu' cn-t of niui- inj,' and r.^valf- amounts to $_'S. ami tin.' \t\->'\'- is, iliere- lore, $ ' ni uiiif"rm ru'me--, hut it ; readil\ slmun that to j^emralizi.- witli siicli istimatcs ^f cost ina\ in vt.r_\ inisleadin.^. It costs practically ti:c sanie to mine and mill niatiria! \irldin- 5 per cent of clean /inc ore as it di'cs if the mine- run oir \itld^ 10 ])cr cent, i -it the operating; cost referreil to a ton of product in tlu' former case is aliont double, iiie royalty chari^as. on the otlar hand, are a delinitc per- centage of the receipts from ore s.iles. and are, therefore, proportional to iIk- srllui- ijrice a:.d amount of clean zinc ore produced. The determination of the cost ,,1 jimduc- lion of a ton of zinc ore may lie further complicated when a considerahle part of tl,. ])ro, Ci ■^ IS '■n r*^ '.1 a; L3 li: ^ i; 1") o ^ u. <^ O • Ul g as o « ~i X O 5 ^ -i X 5 'l ""• 1^ y — f^. ir, 1^ C — ". "■. 1^ ?< obbobo------ -- ««• y; Z ?. ?. ~ »< xS 5 c c o Qodoood---- ■^, tr, 1^ C — ^, ^r. 1^^ (^ O C rx l^X "* C C — "I "I r^. -t -♦ "■ C I^ ( xX ^ CT ■N -r 5 5C 5 -1 -r 1^ J — ". "■. 1^ cy — ". " 1^ r - " "■. .7. o o o o o o o _ _ 'I *i r^, -r -*■ f. w 1^ i^x :? ^1 .r, 1-. I - :'. ir. - - -- - ^ n ^4 ^ "^ ^ .^. r. I - -. .r; !>. r - " ..; i.v; - -. X^C 300000 '% ! ^~?r-^- " - " o o o c c O O O o ". C C l^X X ~ O O - -I -I „ vi l> l^X xxxx ~c^~^^i■oc c cc ty o -1 w t^X « ~ C - - -I "■. '^. -T •>-, ■/-. c r^x -4 :■ O 5 '/f 1 , n. 1-,-^ X X X -it c- c c- r 5 o c c c i QOOOCOOOOOOCC '» i,i,.T;,i^xxMxx:r~c^cC-ccccS-- cooocdodoccccc --- O 1^ In. 1^ ^ C^ O « — "I ^. r^, -t ir. ir.\C t^x X C^ Q C , ' C -1 — i X - ". 10 1^ r- — ". ir, 1^ J - ". ". I^ O 'Nl • 1^ 1^ W 1^ I^X XXXXC-C^OC.COCO-- T3>''"' gooocoooocccccc C3 -_; u //>- J, u • >o\a r^x z. O — ll- ;///: l:L().\(.K\IU>> Ui .\ll.\l.\i. .1 iliMj) ni" a ii.\\ clnllar> in llic ]>ri' i| iitluT Uad i t /iiu' i.rc. 1 lie nuiH'-nm ^lu'Wcil a \ii. uiiilnrin \ul.l t.l _■ ,^ piT cent /itici'Ti- aiui i.i )nT iiiit Iiail 'If, laliulaiiil in mi the results (if iiiilliiiL; i-'.-77 t.ai-. Altli. m-h \\\v mcM varird I'racti' •nails I'l'iii ila_\ ti.(la\. llu- averam' I'lr aii> 111, , nth (hil n-i var> in. .re than n.\ \nr eeiit li. .in that adi.pti-d in llu |ire|Kiraii(iii ..f the laliK ; the ti.i;ures reine- sent the eakulaleil net cash Mel. I jier t.n ' f inme-rnii afier the ])a\inent ..f the n.\all>. (Hit of these ani.niii;-. the cnst .'t mining: ami millini,' is to he iiaid. The use ..f the tahle may he illlustra'ed hy an example: A-Minie tliat /itie <.re is sellinj,^ an a $j8 basis fur <>o per eetit ere; that the ore eontains some iron, and must pay a |Hiialty of $_• per ton, fetehin^'. therefore, $J(> per ton m llu- hin; and that lead ore sells for $.'5 per th.iusand ]ioiin ])er ton. and the mine would -how a small loss. Since the cost of inininj; is .tjiven hy our Inioks. a reference to this tahle affords, at once, tlie data for an accurate estimate of jirospective pains or losses under ruling current prices for lead and zinc ores, and makes prompt action certain, if changes in prices demand it. The tahle is useful (Mily for the particf.lar combination of vield and royalty a>sumed. but a similar tahle may he prepared to repirestnt any other combination of con<'.- tions. When a mine produces zinc ore alone, or lead ore alone, the problem of determining costs is simpler and lends itself very nic'lv to representation by a (lia,i,'ram. Such a diaijram for zinc ore is presented herewith. Th.e sellintr price per ton of ore is represented on the vertical scale at the left of the diagram, the rates of roy- COST Ol- .l//.\7.\(, Z/.Vc ')Rr •a 30 15 10 „ Oprralore Nft RfCfiiiti pt-r To/i uf Zinc Ore afUr DtHJu.-tiliK Kojaltifs. Cost Diaok.\.\i fok Joili.n Zinc Ores. 164 THli liCOXOMICS Of MIMXG alty arc represented by one set nt peratiir>' net reeeipts per ton from the sale of the zinc ore, afur (ledncting royalty, and the vertieal scale at the right ex- presses the operators' net receipts per ton of mine nm lor any combination of prices, royalty and rate of yield, t Hit of these amounts, the ..peratnr is to pay his working co>t> and make his pmtil. The use of the diagram is e.xplainei! l)y two exanii>les. nne wherein the net re :ii)ls per ton of mine-run are determined for an as>uried combination of price, royalty and yield: anil tlie other in which the working c^ _-ls. royalty and '.ield being assumed. the selling pric is determined at which costs and receii)t> would just balance. If the mine yields bmli lead and zinc, the net recei])ts per dii of mine-run may be deter- mined for each separately, preferably for convenience, by ditVcrent diagrams, the sum of tlie two being the t'ltal receipts per ton. \alues lor lead I'res may be shown nii the same diagram, if desired: but since the relative v ield of lead ores is often small, a different scale fur the >ield diagonals makes a more convenient and usefid diagram. Another use of the diagram is illustrated by the follow- ing example- .\ssume the selling i)rice of zinc ore at $30, royalty 20 per ceiU. yield 5 l)er cent, operating costs $1 ix-r ton of mine-run. 'i'ake $30 on the scale of selling prices at the left, and follow the horizontal line to the _>i) per cei.i royalty-diagonal, then follow the intersecting vertical l.ne to the bottom of the diagram, uii wlncli we read $J4, which represents the ii]Krators' net receiiits per tnii i.f clean zinc ore .sold, after deducting royalties. Xmv take Si. on the vertical scale at tl;e right of the diagr.un. f .IImw the horizontal line to the 3 per cent \uld diagi>ii;il. then icillnw the interse. ting vrrlical line to the bottom line, on which we read ^Ju. Tins represents the working f! C'O.ST Of MIMXC /.IXC ORE 10.-) cost on clean zinc ore, and the ])rofit must be. tlierefore, the difference lietween $24 and $20. namely, $4 i)er tnn of zinc ore sold. This will he seen to correspond with the calculations in the first exami)le on the diatjrain. As- suming that HX3 tons of mine-run are handled daily, the ]jroduct will he 3 tons of clean zinc ore. and the jjrofit hy the first method is fiL,nired on 100 tons of mine-run at 20c., nameb', $20. and hy the method just explained, the profii is on I tons of zinc ore at $4. or $20, as hefore. The cost of mining atul milling; in the Joplin district varies from 80c. to $' per ton of mine-run. This fi.i^ure does not include any char<;e for redeemiuf^ the capital spent in o])enin,t^ up the mine and e(|uipi5ing it. When the ore-bodies are of considirable size, the mills of mod- ern construction, and the operator has little or no pump- ing; to do, these fifjures need seldom be exceeded, and in some cases costs may fall somewhat below the lesser fif;^- ure. Between these limits, costs vary accordini:; to physical conditions, being high in li.ird sheet-ground. where air-drills nnist be employed, and the ])owder bills are large, and in soft ground, where the saving in the powder bills is off.set by the cost (.. timber. Occasionally an operator is fortunate enough to have soft ore and a hard roof, and under such conditions the cost of mining and milling has been (|uoted as low as 75c. per ton. Large areas of sheet-ground are now known in the Carterville W'ebi) City district. Most mines in this sheet- ground vary in vield of zinc ore froni 2.5 to 3 per cent, although, in some cases, Uiev are very tnuch richer .\dopting $1 per ton as a frir estimate of the cost of the mining and milling in this kind of ground, and referring to tb.e diagram, we get the prices ; 45 per cent will pay, when the zinc ore sells at $24.70 to $20 70 Ore yitldinK' 4 per cent will pay, when the zinc ore sells at $2780 to $.13 40 Ore yieldnii; ,^ 5 per cent will pay, when the zinc ore sells at $.31 80 to .v'^JO Ore yielding ,? per cent will pay. when the zinc on. sells at $37 40 to $44.40. Ore viclding 25 percent will pa/, wlu-n the zinc ore sells at $44.50 tn $53 (X)'. " Ore yielding' 2 per eent will pay. when the zinc ore sells at $5S0O to $<')7 Of)'. The foregoi.Tg data serve to cni])hasizc the fallacy whicli inav devclnp 1)\ basing costs on the tonnage of zinc ore sold. The richer mines } ielding " to 10 per cent and upward are exceptions among the general run of Jo])lin mines, and those uhicli arc nnnnng on ore leaner than 5 per cent doubtless constitute tiie majority. When ore prices advance beyond $25, the 4.5 per cent and 4 per cent nn'ncs start up ; when prices go to $32 the 3.5 per cent mines begin to produce, and at $^7 the 3 per cent mines are worked. Fach successive class offers to the market more ex- pensive ore. and conseipienily the average cost of pro- duction for the entire district, referred to the cleaned zinc ore, seems to advance iiearK in proportion to the ad- vancing ore prices. The cost of mining per ton of mine- run rem.'iins. however, pra'-ticdlv u.nchanged, evi-ept for the effect of changing prices of l;ibor and ^np])!ies. W. ."-^I'l-.Xn R Ih CHINSON. Boston, F • . • 1004. ' F.'-timated because lieyund the limits mT the ili,i:jrain. It MINING IN RHODESIA CMartli 10. igu4.) I he Editor: SiK — hi your issue of L)cccnil)(.T lo, 1903 (Vol. LXX\'I, ])p. 885-888), appears a very interesting and timely article on 'Gold Minin^j in Rhodesia,' by Mr. F. C. Roberts. It has an especial interest for m<', for many of the data u]X)n whicli the article is based liave been fur- nished by a mine in whicli I am a shareholder, and of which the earlier development was carried on under my direction. Mr. Roberts was for a short time the mine manaLTcr, and later succeeded me as engineer. Having rpent nearly six years in Rhodesia, and having had exceptional opportunities of studying, a large portion of that section of it known as Matabeleiand — and it is to this section that Mr. Rol)erts more particularly, though not exclusively, refers — I would like tlie opportunity of offering a little friendly criticism on the article referred to. In mv remarks 1 shall keejj in mind the fact that an article which attempts in sucii small com]>ass to treat of everv feature of the gold-mining industry in Rhodesia must necessarily be incomplete. The first statement upon whicli 1 would comment is : "In but one instatice in tlie whole of Rl.odesia has it been found advantageous to attack the orelwdies and veins tlirough adits." If this means that only one adit has been driven in Rhodesia it is ver\ wide of the truth. I have seen adits on no fewer than seven different jirop- crties, and there arc others in the country: and I iiave every reason to believe tlint it will be found advantageous to win tiie ore from more tlian one of tiiese. Physical and Gcoloi^ical f-cafurcs. —\\h\k- it is a fact that "few really hi^li mountain rriULces traverse the conn- trv" it must be borne in mind iliat the geiier. ' elevation ICiS 7"/;7: /:'c OXoMltS Ol- Ml' 'XC i> liij^h, HulawuNo l)t.'iiiLr 4,4(x^ tl. alr.ivc sca-lcvcl, and tlu' siiinnii'< of l!ic lii^'lK'sl hills rcaili an I'lcvaiimi ui marly 0,(xxj 11. \ iowcil I'roni i1r- plaui- ami vailcNs tht- liril> certainly d" nut ap])iar liit:h. ! :iad no: (ihsiTvcd the uati ■ of "conical liill^" in the j^ranitc holts, th ^h 1 haw trawrscd the country from its eastern houmlary as far west as JJ'' 20' E. lonj:;., and from its Southern i)oundary as far north as ij' 40' .^. hit. ' he wea'herin^ of tlu granite hills 111 Rhodesia is the s.iine ■ in other parts of the world, the ])revailini,' ty{)es beini; eitlur domes or boulder-strewn ridj;es with ca tellated escar])nieiits. The conical hill- (more cor- reciiy, ])\ramidal) arc; ra'iier liaracten>tic of the schis- tose areas. It i> true th.'it "no j.jeolo;.;ical survey has yit been made in 'vhodesia" (though in no other country in the world is one more lucdidi. and tlii- .-'Seral --o-called '^eo- lopical' niajK of it ■, hicli have been nui)lished have no scientific \alMe wL.itever ; but the "generalized descri])- tion" of the i.;eol())j;y j.;iven !i\ .\li. Ruberts is not ve:'\ accurate, if not actually mi^leadini;. i'jTouj::h is kno.vn of the subject to afford a better account than has b.i'U presented by .Mr. Kol)erts ; biit of i .urse it must be 1111- (k'r tood that be w riti^ a> a miner rather than as a geolo}.jist. We are told that "\'>\ far the i;rt.'ater portion of tlu conntrv consists of j^ramle rocks, in wide l)elts, havin^L,^ a strike somewhat west of north and 1 i^t of souih." b'.veii if in the term ":.;raniie rocks" we 1 vliide t\pical ij;ranile. syenite. ^niei-.s. and all .u;r:mitoid variitii> of rocks, 1 lllink .Mr. Iv'berl^' c-timate 'if the extent of their occur- rence is ,111 cxrissiMh hiiL;li one. i --hould say tliat very much less ih.in onedialf the total ;irea of the conntrx i-. f^ranitic. The >tnke of these rocks is not accurately ^ive;i, iniKti! no '.^eiier.'il sirike prevails. Some of the iarsrer .i^iamte belts have ,1 trend almost diu e.ist-and- MIMXi, l\ k'HODIiSI.-l IGl) west, some siiialler oiks trend north-aiul-south ; and some in fact trend in alnidst every embrace the areas cliaracterized. by shites and schists, " it is also trne tiiat so.iie of the jjoUl mines are well within the granite areas. Thi.. is the i,use of a t\pical mine descibed.' the imme- diate coinitry-rock beinij j^^ranitoid. and it lies on the northern side of an extensive f^rar.ite belt, trendinj;' nearly east-and-west. and bouniled on the north and south b\ hills of metamorf)hic rocks. We are told that "In the val!e\s, or small <:;ulehes of *be Iiill country, the alluvium is of very limited extent. su,:^.i.;estinjj; a lack of those extreme climatic c(Midition> necessarv to produce rajiid ero>ion.'" Hut even if it werk- true^whicb I take leave to doubt — that the alluvium i> so limited, surely the fact sufj^ests somethini; else than tliat stated. Do not the torrential smn..ier rains account for the removal of the alluvium from the hill country? In the broad valleys the thickness of the alluvimu is often verv f^reat, and every one who has visited the country is familiar with the deep rifts by which the river-fords are usually apjiroached. The description of the (|uartz veins miijht liave been extended b\ a reference to a number (if lari,a' (5nes which are not only wide, but may be traced ahnost continuously for several miles. Reference is made to the .auriferon- (liorite o* the Avrshire mine. bui. ;is \i)u jxiint out in a footnote, this h;is been jireviously described in the jofi;- NAI. at LTreater length. ! am irieath interested iii Mr, i^oberts" accouiU of bis discovery of ;m auriferous liorn- blende por]ih\rite ; id i wonder if it occurs in a ])art of the cotuitry which 1 visitt'd. .Indent ll'oikin^^s. — Some of those who liave devoted much time to the stiuh of the (luestion of the ancient race. "hk l",N'iii\FFHi\i; .\Ni> Minim, Ihiknm p !*^5. Dec lo. irjo,'^. 170 77//; l.LOXO.MICS OF MIXfXG or races, wlio foniKrly fxploitiil the RlnKlcsiaii ^old- fields, will liardly iVel tlattcrcd nn l)cini,' wM that "no satisfactory expl.iiiation h,i> lucii advanced tuuchin<:j tlieir (the anrients") idi.ntil\," iintw ith.staniHnL: that i-thuD- j,'ra|)hical invesiis^ators liave written vohinies on the snh- ject. i'.ut 1 am prejjared to ^o all the way with Mr. Roh- iTts when he >|ieaks of the estimates that ha\e been made of the jj^old recovered by the ancients as "iiypothetic" — I think tliey are ridicnlons; hut I cannot believe wah him that lo dwt. of LTold jier ton of ore was the mininunn vaLie of that treated by the ancients— 1 think 'they nnisl have, in manv cases, treated ore as low as, if not lower than, 5 dwt. of L;i>ld tc the tun. l-'inaiuial i'liusulcriilidiis. — We ha\e here a brief bnt fair account of the tinanciiij; of Rhodesian mines, many of which, it may be empliasized, are very !arL,'ely over- ca])itali/ed. in referriuL,' to the Mineral ( )rdinance. .Mr. Roberts omitted to mention that a new one has been drawn up and is e\i)ected sewn to be promulejated, and from which the objectionable feature of the 'law of the apex' is to be eliminated. Mr. John Hays Hammond has been larj.^ely blamecl — 1 know not with what truth — for the adoi)tion of this indrtensible feature of the orij^- inal ordinance. I'.ut as the new ordinance can liardly be made retroactive, it is likely that the lawyers may yet rea[) a f^olden harvest from the obnoxious law. .•J.s\?(iv Plans. — .Mr. Roberts" de^cri])tion of these as in use in Rhodesia is correct a> far as it L;oes ; anil it is satisfactory to learn that while slii^ht dilTerences of method of constructing,^ the jilans m;i\- be found in the several mines, "tlie fuiidameiUal princi])les are a.lhered to." This ijeneral uniformitv ot p-inciple may be larLjeiy attributable to .Mr. J-'.. 11. i .arthw aite. the ^dvernnieut eni,Mneer, who has made a s])ecial study of sami)linfj and mine-valuation, and has been in a position to imjiress his views on the comi/.inies' ens^ineiTs. 1 he ass.ay diai^ram ■ai MIMXG l.\ RHODFSIA 171 fif^urcd by Mt. RdlnTis'' so'jtns to iiio id Ikuc bi'i'ii unfdrtimati'ly s<.'h--cli.'il aiul iiiaccuratt.-ly ikscrihnl. I i!i> n. ! think iIk' use nf i,'rapliic iliai^ranis has yet ho- coiiie };i.-iRTal in RhcHk"-ia; nor is tiic oni- illustratcil a "stojjinfj^ ev ton the fij^ure scenes too low. Put- tins' 'f'l-' (■"'■'St of ini!liii<; — which i^ not iriven — at one-half that of mininij, whicli is fair, the total cost per ton would only be $.m")8. a fii^ure that is too luw for Mr. Roberts or anyone else to reacli i'l Rhoile-.ia. Then the *wo ituus "("om]iressors and rock-drills" and "R'Jck-driUs and sharpening;" toq;ether amount to S21,- " Tnt; Fnoinef.rin'g and Mininc, Joirnai,. p AS6. Dec. 3, ltx)3. ITli I III: I:l(>.\().\iils or Mi.\i.\(; ')J'-). mil of a tnial of ^iS.^oo, or o\i.r ,^J (iir iint. Ami lierc I iiiii^lil say tliat lln> >ct'ins to cuiitinu iii\ i'.\|irr^siil M|)nni'ii ihal al tlu- nunc in i|iK'sliiin, i>\\iiis,' to tin- scarnts' anil lii^^li fosl of fiul. llic iii.-tallati"ii I'f a ci inijiiussor plant \\a> iii't .I'lvisalik- until cltiMper lurl cnuM lii- oh- tainril. l'os>il)lv soim- |iart. nr tlu' whole, nf tlu- fust of till' coni|ircssor plant is ini'ludcil it: tlu' itiin $iO,^i)i); if XI. a poniim at lea-~t "1 the eosi ci' all the nihir jilant sliotlld In- nuluilrcl a> well. It is nut worth while tn ilis- eii>s thest' timires further until aiMitional li,L;ht i-. thrnwii upon iheni h\ their author. MilHir^. — We are niformed that " 1 he iiUroductinu of heavv >tanip> with the lihjeet of securiuy a lartje stanip- ilut\ has nciw reached its iiraclical hunts, that is, at 1.45O Ih." 1 )(ie> n"t this weight exceed the liniit"'' I fear so, ,ind the fiar is |i,irtl\' inspired l)\ what Mr. i\(ilnrts says further un the stihirct. When I drew up the first S]);cih- cations f'lr the mill under review I calle he questioned, as he pninis iiut. whel!;i.r it is advisal/le to instal a c_\anide lilanl in Rhodesia so lonj;- as the ore continues free-niill- iiii.:. There would he no(|uestion of its advisahility when- ever the sulphide ore is reached. It is all a (juestion of testing,' for e.ich particular mine. I'erh.ips 1 feel ail exce])tioual interest in .Mr. Rol)erts' ar'ii^de. dealini;' as it does with a mine of which the first di'velii])iiieut was done under m\ diri'Ction ; hut it sliould have ,-1 L;eiiei;il interest as wi'll, and it 's only to he re- ^'relted tluii 11 was iii.t liiui^er and iiior'' detailed. .•1 1 • T ,- . „ . W ALL \( I'. 1 Iko \i I- THE ECONOMIC RATIO OF rKHAriWH.M CAPACITY TO ORE-KESERVES \'\ III I |.in\l U. (March J4, ly >4 J Altlioiigh every metal miiu' i>a iiiciliKin pii-uliarto itself t(i >ucli an extent as to up.sei iii">t f;eiieralizatiuii>, it \sill lie nnt wholly useless to coiitein]ilale certain pmhlcnis in tlie abstract. In varmus f they confront every engi- neer, sooner or later, and althnugh (li>cussion involves innch reiter.ition of eleinentarv jirinciples, yet there an so main' mines in which eviii elenuntary matters of j;(>i developiuent ;it their lowest levels remains speculative and gives a zest such as an asstnued persistence can never afford. 'riial the most economical ..nd pnilitahle treatiuent- capacity is the maxinnun capacity which can he emjiloyed, is not difficidt to demonstrate; that the maximum must depend, hnw'^ver. upon tlii.' speed of devel' '|)nuni, and that devclo]inient must he jnished as fast as the limitations of nature will iiermit. is hut to st.ate a corollar\ , \\\. curious as it seems, the numher nf mines which h;i\e heen op- crated ujKin the iirinciiile that the mil! is the hxed (]u;in- tity and the mine the \;iri;ihle. exceeiK the r.umher con- ducted upon the reverse jilan. 'The oljjective of develop- Ill / ///. /:co.vn.i;/t .s oi .mimxg iiuiit m till- [lU |i' iihUratnL; miiiilKi' i- i" inil :lu- null. 'I'iiis ,i>>fnii 11 1- \iriiK mif^lit. (.•Mil ill till- (.niiiparatively sliiirt prriiiil have attaiiK'il a ikjitli of 3,CKXi ft. jia-l tlu-y |)iir-.tu-il iliv pnljcy ni (k-vcldpnu'iit hikKt lii^'hfs! pii'ssuro and till' iTi'ctiiiti nf iriatimiil tiiiit> siuli as would keep the i)re-e.\traetiiiii elo>e tn such develi ipinent. It will he j,M-anted that tlie true (ihjective nf luiiiitijj; is tD ^am the j.;reate>t prntit in 'in a .L;iven hndy nf nre. The luaxiiiinm mitpiit i> iint mily iieeessar_\ i"nr the cheapest ])rnihutinn, htit money Ineked up in nre luider^rniind is idle nmney. and the prntits from mining; ean he increased ill iin mean de_i,'ree h_\' reuderinj,^ it lii|uid. 'There are, however, limitations ituposed iipoti the investment of lars.;^e sums of inonev in e(|uipmeiit to secure the maximum out- put, in view of the uncertainty of cnntimiity in depth, wiiich need to he consiilcred, in considering:: these limi- tations, and a method by which the economic ratio may he arrived at, it will he necessary to demonstrate the fj;en- eraliy accepted proposal already laid down. The problem mav l)e reduced to the (|uestion of conductini,^ operations uiion a ^iven output as aj^ainst a fjrealer output, because few well niana.s.;ed mines of the character under discus- sion are, in their initial statjes, eciuijiped to tiieir maxi- mum possibilities — and certainly the .^^reat majority, as shown above, are not yet so ecpiipped ; therefore, the iimh- iem in actual jiractice presents itself either in the form of increasiii!.:: the output, or determining;; iiri<.rinally some vol- ume of output to be provided for, as aL^ainst some smaller volume. We may call the initial treatment-capacity the primary equipment, and the increased plant the secondary ei|ui])ment. The factors in this jirobleiu are: (i) The cost of production as aftccted by increased output. U'.h I I )■ .l.\n ()A'/;-/v'/;.S7:A'/7 .S 1' (J) I lie lull lll|itli III (,|' i,;i|iU,i! MUrstid III M'ldlldarv • •i|iii[imrnt. { }) l.imitatiniis illl])l'^(■(l li\ tlu' niuiTtainly nf contin- lli!_\ ill ili|ltll. (i) Ilk' I'lalii iraiinii -f ai'inmit^ diinn;,' tlu- jia^t lias intrii(liu-i'(l t(' till- iiij;iiu'(r niaiiv cnm|iln-atiiiiis ot ininiii^; linatu'c wliicli .lid not Irmihk our forcfatiuTs. W'c now ilividi' the v.'lrillU^ ehar.L;e-- af,Minst uurkinj^ expense^; into, ("list, those chari,'es variable \\ith toniiaj^e ( siicli as devel- opiiU'iU, haulaj^e, treatment, eti- I ; and second, those chart^es, nsiially referred to as lixed," whieh deiiend ])ar- tially upon the element of time as well as tomiajj;e, and imlude, jiartiy or u holly, piimpiiij^, management, amor- tization' of capital invested, etc. Moreover, there is a factor of no naan importance arisiii!,' from t!ie loss of interest tliroiif,di idle profits locked up in ore staiidiiifj^ in the mine; this also must he taken into account. I'Vom the standpoint of such fixed charj^es" as depend partially upon the element of time, obviously the shorter the ])eriod involved in the extraction of tlie ore the bet- ter. The introduction of increased ef|uipmeiit necessarily sliortcns tile time of extraction, and the savinjjf (and tiierefore increased profits), which can he thus effected, amounts nearly to the whole of the fixed charf^es over the increased toiinaj:je. There are certain inevitable co- ordinate reductions in working; expen.ses, other than fixe;! ciiarq-es, as tlie result of a larger volume of output. What these amounts will a^'gre^^ate, in increased profits on the increased tonnage, depends somewhat on the pro- portion of the increased volume to the vohime previously treated, but the total saving on the increased tonnape may be taken in mininnim as equal to tlie fixed charges. Also the profits will be increased by liie interest earnings Ry 'amortization' is meant the recovery of capiial invested with accinmilatcd interest thereon. MICROCOPY RESOLUTION TEST CHART ANSI ond ISO TEST CHART No 2 I.I '-IM IIIIM III 2.2 t ^ IIIIM mil 1.8 1.25 1.4 1.6 ^ APPLIED I^A>^GE '653 Ea5t Mom Street 'Rochester, N»w York U609 USA .■''6) 4fl2 - 030Q - Phone !7!6) 288 - 5969 - Fa. 17.; ////•; /■.cO.\().l//c .s Ol- .U/.V/.V('' ,,; ,1k. cNira I'l-Mln takr,, nut, as iKtweu, ihc oariur tunc- it vsnuM iKuc !-on ,.ul nu , ^.rvuv l.y the secondary o|uiim,cnt, a.ul il,. later tni,. U unuMh. rdoasc,! hy the ,„.niarv u|Uii.i,um. If tin. he lalan at a i.xcl rat.'. >a>_ 4 iRT cent o.nipnuti.l iiuvrosi, it then lu-cni.- a factn,- r,i ,lu. prnm ,HT inn ..f nrc. A innuT a.Mitinn al^- an^cs fr,„n thr in.-iva.r.l inlcrc.st-varnin- nu the ^''^ter pr-t.t .ccurol lA the menace .-f r-mtil ariMn- fmni the savin- ,,f .^„ ,„„:„„„ ,,n,al 1.. hxe.l ehaf.^e>. We may eonsnii- ,].„,. all these a^hhtimis to prnlU. as the result nf ex- pan.led otitput mf onu-e nnt mehidin- the ordinary jm.ht ,,„ the ore), int.. tne ..ne phrasr ■iner.nient ..t pr.'hts. ll(.\\ iniijortant tins •iiiereiiient oi \ .rntits' nia\ hoe<'nie uil! he seen hv taking a leu examples. On a Inw-^ra-le ,I,.p..sn. vieUhn^^ a profit of $_> per t..n, iimler C ah- (,,rnia eoiuUtions of t.xe.l eliar.L;es ol. sa> . .^nc. per ton, ,„, an iiKrea.sed n-nna^e ..f i5.oed tonna-e would a-gre-ate over $()5.ooo. The rapidity with wliieli tin s iueremenl of protits aceu- mulates i, a more deta.le.l ,iemonstrati..n oi the advauta.ge ,,f the maximum om,int, and it is also a demonstration of the neeessitv f.ir a maximum speed of devel..pment. The v..hnue (.f these savin-.s is ^.) lar-e as to render the .|iiesti..ii of nistitie-atiou of iuereased capital expeu- .limic f..r their reahzati..u a matter oi eas> appn-aeli. (2) Reduction works, and subsi.liary plant, thereto, represent lar-e sums ..f capital, and such plant, are either uc.rn ..nt or h.o.me valueless throuuh exliausti..n ot the niu-.e Ihe In p. thesis that the cLulnni;- oi dead mines is xaluahle vsas'l.-if^- .nice exploded, allhoti-h, tlu' public se.metime. s,,,,,. n..l t.. have heanl of the explo>i,.u. in anv eAeiit. the capital mn.st he recvered li-m the mnie, CAPACITY AM) ORE-RESERVES 177 with conipnuiul iiitcroi. (luring; tlic lii'c nf thf iiiinu Tl >t (it installatKni vanes with the locahtv, character of (irc, etc. "'■1(1 mi hut \\i- niav take tl le exai link n| a Cahf ornian le mi the (jiie iiaiid, where e(|iuijnient to hariiile an iiutpul "if i5,(;<)(i tons per amiiini wouhl cost, say. $|S,- ooo, amh on the oilier haiul, a \\ est Australian K"''' mine, if ore hanclled would involve an with more complex treatment lie (.'aliforniaii plant, with 4 where the same vi exjienditure o a. id 1 thei f $:;o ume 000. causes involved per cent compound interest, at the end of three years, would stand in at ahout $20,000; antl the West Australian plant at .ahnut $57,000. es, less than three vears' accumulation of In t nese cas the nicreiiient nf prohts i> ri.(|uireil U> amortize the entire capital involved. Viiven an in>tance of a low-<:;ra(lo ore and a iiisih construction C(!>1. the necessarv time wouh he lonj^'er, jjut in a particular case which has come under my oliservatioii, of very lii^h profits i)er ton of ore and mod 18 months was sufficient to amortize the expenditure. (3) .\t the time of jiroposed c(|uipnient the life of a erate installation costs, the increment of ])rofits over mine o f tl lis class I'- .111 1111 kiK fa'-tor. Despite this, however, as shown above, the increment of profit so over- takes amortization as to make it nec(>ssar\- ti> have hut short lif e 111 s ij;"ht to justify the capital expenditure. A certain jjart of the life of the mine is tan,i;il)lv visi hie in Its ore-reserves. I'lik ual accuniulatidn ni orc-roscrvi-s ; in must cases it will he imt iimrc than a three vi'ars' supi)ly. Thus it hecimus (xissihle tn ileteriniite ah^'lutely the vdiuiie "f troainient-capacitv without any sj)eculatiiin as U> cnntin- uity in (k'lith. That it is an ohlii^atinn of ^"'"1 i.iaiiaiji.'- meiit, lo set up ak, thert' is one matter of L;ener,al polie\ in the coi^duet of a mine which affects the case; it m;i\- be expressed thus : Kvery deposit of the character U'^der discussion is sure to tjet ])oorer eventually and fail at some point in depth. On a paviuij;' mine, failure at ;my |.^iven level docs not mean the abandonment of the mine at that point. To what f the claims, affords a more definitive termination to the winning; of ore. Ilavin As Vft there lias lui'ii i)iit little iliscussicni of tlie iitter- estiii.LT artiele by Mr. II. ('. Hoover on tlie subject of the jJHiper ratio of mine ei|iiipiiieiit to ore-reserves. Mr. ]' . (',. S;iilsbiirv, in our issue of Marcli 31. and Mr. 1'.. P>. Lawrence, in this issue, a!.;ree in their opinion that Amer- ican iiiinins,' rarelv atTonls conditions warrantiiiLj sucli a nice adjustment between the abihty of the mine to pro- (hice ore and the capacity of tlie mill to consume it. ()\v- iniT to the uncertainties of the one and the positiveness of the other, it seems, from their point of view, best to err on the safe side and erect treatment plants which are well under the probable production. A manager, of course, likes to liave somethinj^ ap his sleeve; it is bet- ter from his standpoint to have an accumulating ore-re- serve underground than to hang up ten or twenty stamps: he would ratiier have ore lying broken in the stopes than shut down a part of the cyanide plant for lack of an ade(|uate supply, i'.ut. as a matter of fact, the capacity of the initial plant is usually ahead of the rate of tlevelop- nient ; and as soon as there is evidence that the two ap- proach each other, the owners call for an increase in the reduction works, because they want to rush the output. The American idea is to secure certain and immediate profits at the expense of ultimate ]iossible economy. While the engineers mav appreciate the benefit of plans which pur])ose the amortization of capital, and though they may be fullv awake to the economy of a jirtiper balance be- tween the capacities of the mine and mill, they are brought abru])tlv against conditions which completely uj)set any logical solution of the problem. The owners refuse to take a far-sighted view, and ])refer a jilan of operation which results in immediate profits: therefore the man- ager has to adjust his point of view to theirs: he is con- Il(jUIPMi:\T .l.\n ()Rli-RliSI:Hll-.S is;! fnnitcd l)v a condition, nnt a tlu-nry. and ailoi)ts a i)i>!ic\ which is practical, tliouj^h short-si^lited, wliich liuj;s the brutalities of fact wliile it disrejj^ards the attractions of svstcni; it is the inevitable consequence of a short-lived ownersiiip of mines. I'or, l)ehin(i all the arguments for and against an en- lari^ed mill-capacity or au increase in mine develi>i)ment. there stands, frank and unashamed, the essentially Amer- ican idea, that it is a p«K)r business to work for posterity. •'What has [xisterity done for us?" the cynic asks. "Let us take short view.s of life— and of mining; why inaugurate a policy the benefit of which it requires years to work out while the expense of it burdens the present?" In this connection 'posterity' means successors in any form, whether they be shareholders, who five years hence may have acquired the holdings of the present j)roi)rietary. or wliether it be the engineering staff— general manager, mine superintendent and shift bosses — who, likely enough, will in the course of time, or with change of control, suc- ceed the existing management. Mines get bigger or smaller; people make as much money by selling out of them as by buying into them ; there is a healthy growth or a steady decadence ; in an intensely active and jnishing comnnuiity. such as an American metal-mining district, nothing stands still. In the coal regions it is differr-n ; fixity of ownership is more prevalent and a consistent policy has an opportunity to justify itself. But in the West, it is a fact that the control of mines passes, as a rule, in less than five years, and the manager is changed on an average about every two years, either because a i)etter jHisition is ofTered to him, or because a better man is found for the position, or for any one of the several reasons which bring about new af)pointments to such posts of responsibility. Tangible profit is the aim of the .Xmerican system, or the excuse for the want of any system ; sometimes that I>l ////: lAOxOMiiS 01 mix/m; nic;m.s a mill uilli ;i caiJ.icitx per .inmnn ciinal !■> tlic ti'tal ore-rcstTVCs : smmtinirs ii nicaii-, im mi'l at all. hiii tlir disposal lit the .uitpiit t.. nisiMui mills aii.l sm.liirs ; sdmctiiiiis It iiicaiis IK. mill and no jirc idiictinii. Imi nn ial\' a laapaiatiMii ,.f tin- imiir t'nr a sale: m i.uli caM- the nlijcc-t I'l vi(\\ Is llu- making; k\ tlu' lllnst n|,,iu\ I, lit of tlir piiipirt\ 111 the sliciTtist time. Tlu' iiu'tliDd has tlu- faults (,i its \ inn, .. \\ hill' tlir tnr.odiiij.,' is hcliovcd In ri'iircsciit ctirrcnt practici- in this hranch of mininur vc-i .iicmiics. wc realize fully that there is a lari^^e numl)er n\' ua'll-urs^'ani/ed min- ing' i)ropriet .Mr. \\ . R. In^alls uill lif rr.ul uith irtvriM. f. t it i,. an alilc arKiuiuiit in la\..r ,,| tlic l.ij^ical iicatniint nf tik prMi.Kiii, l.a>t wxxk ur .nii.lia->i/(.'niinil. • lia>i>. hm tliat i» is tlie >■llaracton.^tic .\nuruan -tan(l|ini,a uo arc cumpi'llcd to e-onfuss. 'llu' Inni.Ntnck inTiM.l (aillion,L;li aci-diiii.anu-d l)y manifcstaiiciis nf ^rcat t.tRT-y, iiiccliaiiical rcsuiirce- fnlness and tlir nunuinn nf in,L;vninn> tnacliiiKTy tn meet nvw (.■(>iiditinii> ) ua- nmrc partuularly remarkable for the rapid exhaustion of hij; bonanzas; and tlie uastcful- ne>s (if tliat jrreat exploitation afifected injiiriouslv the methods of an entire t;(.nerati(jn nf minini^ men west of the Rocky Monntains. it represented an Ainericaii type, just as the conservative, unprn^rnssive ways of h>eiber^\ for example, ts pitied luiropean ideas of workinjj out a mine. Hoth extremes are wasteful and illn,-,rical ; as any serious consideration of amortization of capital and pos- sible increment of [)rof^t will abundantly prove. In Xew "^ork. no less than in Ltjiidon, new ideas are dcvelopintr ; the introduction nf business acumen into the erstwhile .yfamblinp of minini,^ tends happilv tn elucidate the neces- sity for treatinj:^ mininjT undcrtakin.cfs as financial enter- prises surrounded by conditions invnlvinsj some of the same logical reasoning as manufacturing. The time was, not long ago, when English investors in mines bought shares in properties the value of which was based chiefly on their past production, and if bv chance they got an annual sixpenny dividend, accompanied by S(K. thing exiilanations of future betterment, they went home content with their venture; and the shares would I Si; nil: LLUSOMlLS Ul- Ml.MSC .Slav i-lnsc to till ir par vahu' nf £i until cvciimally. hut iu- i.'vital)lv. tlu' I. ■iiipaii) uiiit nil.i lii|uiilatinu, afuT the >liar( hiildti- liail ii..t ..iil\ !■ i-i tliiir lapual. Inu liad also rriiivi'd a >iiialki raic "i mtiri.>t tliaii tluy mii;lit have ohtaiiifd ilsi'wlkTi'. I )ri-ir«iTvt.'s, i'(|iiivaUiit In a year's pf xhu'tic '11. ut'i'i >i)rt'ai| (i\ir tiwnr six yiars DptTaliniis, tilt iiiaiiaj^iT and staff j^m tluir salaries, tlie direct' >rs <.;(it tluir fees, and in tl:e end tlie sharehnldiTs 'held tlio lialiv,' wlun tliiise uliii were res|»iTisil)le |nr it had cleared out witlinut apiilnos. '\\i that era sncceeded the tl ilatioti nf rich mines with lar^^e av.iilahle reserves, their rapid ilei>letiiin accnmiianied hy a Imhiiu in the shares, the accu- ninlatiiiii nt fnrtnnes hv clever insiders, the speedy ruin nf tlinse who Ixiui^ht at top prices, a enllapse, a nmral, and fiiiallv a resuscitatinn nf the inininj,^ cniiqiany under new niana,t,'enient. It is nhvinus that it the ]iiihlic are wiriinj,^ tn he edu' led, indirectly thrnu.i,di tlu' professinnal men whnui tliev einplny, tn realize the fundamental nrinciples (if finance, tlie\- will nhject ;is nnudi tn the IniiLj life nf a mine which means the swallnwini; nf (jml'its in general expenses and salaries, as tins will jjmtest against a reck- less pouring nut nf its wealth in a hrief spi'll of inflated returns which is accnmj)anie' n.'M.r\c' ni hit. anil i)n ilialily iiu'tn"n,'il ihc (lis>ali.--i'actii in uf all the -li 'cklii iliUi>, il luci imc'^ ik'ccs- sar\- to Imilil ^ucli an adililion tn the trtatnu'iH plant as will ])v rc(|i!i>ilc tn lakr farr i>\ tlii'- iiKTi.a-i.il priJiluc- linn. I'fiitit> ha\inL; Ikiii latcn np li\ tlii- prrvinn- extra ikAH'liipnu'nt. the patient sti ickln iIiKt is I'itluT reiinirnl tn >iil)scril)t' aililitinnal capital fnr llu- increase nt tlie plant, nr >ee the \alne ni hi-- linMinL;- reihieeil hy the issue ni' nmre stuck. In nlT,-et this, he is tnlil tliat the iiicri'ase n|' ca])acitv will ii'>nlt in Inwerin;.;- the cn>t ni" ]irn(hictinn. This is. of cnurr>e. a fact : hnt will nnt that saviiiL; in i.;eneral exjuiises hi.' n\er-halaiuH-i! I)\ the heavy charJ.;^'^ which nnist. in justice, he ni.are- •■eser\e>, whicli al'Mie h.ax'e instilieil its i.i\-ctinn.' 1 think it is selt-e\iilent that the sti ickhnlder nf such a prnpert\ wnnkl. at tile eiiil nl" the \ears, when the ;is- siimeil riser\es nf ore hail hecn exhausteil. hi' in a much better tinancial cnmliiinn with the nriL,Hn.al reiluctinn wnrks nnl\ tli.ui he wmikl hi.' at the etui nf three year.s with the e.\])an(le(l capacity anil forceil iinnluctinii. In nearly forty years' experience I ha\e knnwii iiianv mine failures due In a tnn threat development of treat- ment ca])acity. hut ne\er one due to jirepnuder.ance of mine caiiacitx n\er th.'U nf the reiluctinn works. W i- are ,ill too prone to discount the ])ossihiIities of a mine's resources, and i)rep;ire our surface works to meet the ni|uirements of tlu"-e po>.vihi!itics ; and while, theo- reticalU. the expansion of the treatment plant >-h, mid keep p.aci.' with tlu- mine development, it is m'nerallv in ]ir;ielice tuore protuahle to the invistor wiien the opposite "'^"'t^'"*- E. GvDUux Si']Lsi;t.-KV. MINE EQUIPMENT ANL. ORE-RESERVES (AlTil ;i, ii)i>4,i The liditur: Sir — Mr. 1 Idovc-r's papiT (.11 "'I'he I'A-nnomic Ratio of 'lix'atiiK'iit L'viijacity ic.i ( )rc-Kis(.'rvcs' upcii which you ]i:i\c iiuitc'd rruici^m, ha> ri'ct.i\ rd ni\ carcl'ul cniisidcra- tinn. 1 iiavc also road with inlcrest ynur cditurial ui)oii ihi' suhji.ci ni ■ [■".iniipiiR'nt and ( )rc-i';csi'rv^.' In ni\ c-xpcriiiuT in prc-cious metal iniiiinL;" in tlic I'nitcd Stales it i> llu' exccptinn In tind a mine which >h('\\> anything; hke the 1 ire-reserve> nece^>ar\ Id earrv lint any sucli plan as sii,i;'.L,n'sled li\ Mr. Ilotiver. [ inii:;ht venture to say tliat tiiere are verv few mines, unless thev are for sale (or fixed up for a sale) which ha\e au\' suh- stantial nre-r(.'ser\is ahead to luaMe nne to think of 'amortization' or 'nurement of p.ofits.' These term>, it seems to me, are all rii:;-ht in the manufacturiuL; husi- uess, hut I doiil)t very much tlie wisdom nf usiny^ them in regard to jirecinus metal niiniui.,''. I land-to-nn lUth methods are the rule, and we must uufortunaleK adapt ourselves, our plans, etc., tn cnnditious as thev exist. I noiic' th.at ynu are cihli^'d in a footnote ti/ ex])lain to ynur readers the meaniuL; nf ';imc:niz;uii)u.' This in my case — I hltish to c mfess it— was nmst nece>sar\ , as I ha\e ne\er had nc .ision to use this term in the everv-dav l)usiness uf mining;. .Mr llnover sa\s that "the incre- ment iif jirotit^ f(ir iS miiuths was sufficient to amortize till- exiienditun." \\ hv nut -.-iv 'nff-et' the expenditure' < 'f cmirsi' [ sli,ill hriuLT tratt.' tin- lati."^t l'.n_uli>h ilfvi'ldimu'iit nf the suhjci't. < )ut nf till- chaiis 111' mine prnnidters. titiance ami explnratinii c(ini]ianiis there has recently a])i)earetlier lars;er mines, st.iff positions ;uid ultiniatelv partnership, are steps directly > ipen to a capal)le man. 4. Firms I'i thi'^ characiir lia\e a name to maintain. !!):; 77//: I:C().\()M1CS ()!■ Mf.M.W: f'lr nil tlu-ir u 1 naiiir din-s ilu'ir al)ilit\ i1i'[h'i1(1 to si'ciirc 'he vast Miius of iii«iiK-y which thoy (.■iiiplny, ami thcv arc iK'Vor jj;uihv nf undrrtakiiiL; 'wn nu' \rn!iiri.>. At tiiiir^ I'vcn, whi'ii till' failnrr of iiiino in ikptli precipitates a loss, thev ha\e supplie(| a new mine at their nwii cost — not for charit\. hut to keep alive the necessary contiiletice in their aliility and intei;rit_\. The irrespoiisihle promoter, who puts up a dunini\ hoard of pompous dii;nitaries until iiis sliares are dis- ]josed of, is having' .^reat dilticulty to j^i't the inihlic ear, and must disajipear. 'I'hese same jionipoi's di.u^nitaries .are a sore trial to the honest inan;iu;er. who slaves at the mine o\er working; costs, ami periodicallv meets their in(|uiries wliv he does not increase iirofits by raisinij the ;niiount of ijold jier ton. instead of tr\ in:.; to reduce costs. .\ feature of this form of orL;;iiii/:ation whicli is niakiiiL; itself felt is the continuit} of the tirm. its senior partners retire and \ounL;er nun are hrouL^ht from administrative posiiioiis in the ticid. and the Ihni .t;ocs on. Transitory traiisaciii Ills for min;cdiati' pri lit. at the ri~k of L;(iod name, are not iiidtilL;ed in. for the name must he sus- tained. 'Idle investini; ]uililic is fast recoL;iiizini; this, ami the universal preliminary amoiii;' investors is a statement re^ardini; .a mine, that is, that it is a 1\. (i. \' P.. niiiu'. and not ih.at Admiral Sir IXimfunny is chairinan. There is a marked tendency .amoiii;" thcsC tirnis to ter- ritorialize, that is, to conline tlieniseK>.'s to specilic re- L,Moiis. In m;in\ instances the\ are interesled in concerns which they do not control, ddiere are in l.ondiMi seven or ei-lit siich llriiis cif proiiiinenct'. Souih Africa fur- nishing: the tleld for most, ddie leadinj; tirnis in the four ])riiicipal mining; regions in which h".nL;lishmen are mostly concerned .in- iiuiiiioucd heiow, with ;ni .ipproxiniation of the iioininal capital and market \-,ilue of tlu- enter- prises tliex control or manaLje. The memhers oi these MIX/XG J-IX,1XCE VY.\ firms are often, as said, iiitorosted in other concerns ; onh tliMse identified with the firms are included: Rtgion of N,.inin,il Markit rriiici|.al Activity. Ca|iu;il. \';ilm- UltiiIrt, B.'it & Co South Afric;i. $85,500x00 $,UJ,oixi,ooo Bewick, M(.ri'ni>; & Co. . . .-Xiistrali.!. 4.',ioo,oon ;o. 5:0, 000 John l.-iylor iS.- Son, huli.i. cto 30.500,000 ()5.50o,ooo rarbut, Sof. & JaiiM'ii..,, Wost Africa iiui Kiio(lc>ia. 55.500.000 ^5. 100.000 rile market price for these enterjirises, as compared with their nominal capital, gives food for thought. There are in London, as set out in your articles, sev- eral exploration and nuance coiupanies which are not controlled by such firms. .\t one time they predominated in the mining finance of London. Some have been man- aged with consideration for the public, and many not so. in all cases, practically, they are tlotatit)n comi)anies [Hire and simple. When a mine is fioated. so long as thev maintain in it a considerable interest, thev continue to look after the mine and guide its management, but as soon as the mine is in the liaiids of the public, they promptly forget it for other matters, and the administra- tion goes to the dogs. Hence the investor has begun to consider somewhat, not only the character of investments otYereil him, but also whether he will need to 'carry the baby' all alone or not. ;Ti general, in the finance-company arrangement, set out so mucli in detail in your columns, the ultimate ten- dency is even worse than with the individual jiromoter. for the latter has at least some mora! responsibilitv. and a corporation has none, '{"be general result is that the 'firm' is rapidly becoming the main source of mine finance — and so much the better for the industr\ . There is no finance comi^auv in London the ventures of which in the aggre.gate stand on the market at an amount ef|ua! to their nominal capital — itself a usetul indication of pre- \iiiiis career. „ Observer. London. ,\pri! 13, 1004. THE ECONOMIC RATiO OF TREATMENT CAPACITY TO ORE-RESERVES The Editor: (^'•^>- 5. "'.m.) SiK — Mr. Hoover is apiiaroiitly tlie firs': to express in the form of a scientific );eneralizalion a princijile tliat has heen well recoj^niized 1)\ engineers as soinid in theory ; also as true and praiseworthy in practice, subject to limi- tations, which it seems to me Mr. Hoover clearly referred to, and thus (Hsarmed the criticisms of Mr. .Spilsbury and Mr. Lawrence. The princii>le is briefly: The more quickly the values of a mine can he realized, tlie lartjer will be the net profit. .V practical limitation of this prin- ciple is the uncertainty as to the ultimate resources of the mine, involving hazard in the provi.sion of ore-treat- ment capacity. Mr. Hoover's purpose is simply to for- mulate general rules indicating when there is no hazard, buL, on the contrary, the probability ot increased profit in the investment in additional plant. Tliere is, however, another limitation in many cases, which Mr. Hoover has not considered, because I c >nceive he has gold mines especially in mind : that is, the limitation of the markets. In opposition to Messrs. Spilsbury and Lawrence, I fail to see, Mr. Lditor, wherein .American conditions differ from those of other countries in so far as the ore dei)osits are concerned. All have ore deposits of various kinds; some small, pockety and uncertain; others large, regular and persistent. Uur .American conditions differ perhaps from tho.se of some other countries in affording better public markets for the ores, relieving the miner from providing any treatiiunt capacity, permitting him to sell as much ore as he can extract, and enabling the intense operation of his property, doing in fact the very thing that Mr. Hoover advises; hence the short life uf manv of our mines. There are, however, many mines in America which require individual plants of one kind or C.U'.IC/TV .l\D UA'/:-A7:.S7:A'/7:-.V liC) aiKitlier. That soiiio of tlicsc, nay ^•\■i^u many, liavc hwu provided with an nnprofitahle excess of treatment capac- ity (of whicli we all Jsnow a multitnde of instances, and doniitlcss 'here are pniportiiinatelv as many in Australia anrl elsewhere) does not disjjpove the correct- ness of the principle that Mr. Ih.over formulates. How can it be said that this is a i)rinciple that is true eiiout,di m theory, I)ut of little practical application in a country which pos.sesses copjier mines showin.t; the ore-reserves of Lake .^u()erior, Ihitte. I!inj,diam. and the various erves of tlie Geur d'.Meiie, lioime Terre, Flat River and I'ark City: zinc mints like tho.se at Stirlinjj: Hill and I'ranklin Furnace; and j.;()ld mines 'ike the Hoiuestake and the proup on Dou.q-Ias Island, .Alaska? I have seen mines which have had an excess of treatment capacity; I liave also seen tliose which have had a deficiency. Take for example a very wet mine, i)roducin,s^ 150,000 tons of ore per annum, the cost of pumpinj,^ water heinjr $.:io.ooo per annum. The estimated life of the mine is in excess of 10 years. Tiie extra cost of plant to permit the production of 300,000 tons per annum wt)uld he $100,- 000. The savin.q: in cost of liftini,' water per ton of ore would alone re-imhurse the cost of addition at jjjant in ahout four years, at compound interest, not to speak of other savin, has probably purchased the mine on ton- nage, assays and prosiKCti, and ha> paid for the low as well as 'the higli-grade ore. When money is invested in the purchase of a mine it has P't ''^ «-'^rn a .livi.lend commensurate with the risk, and it also must he re- funded, else there is no prey.. The more (piickly the principal can be refunded, the greater will be the proht, because $10,000,000 in value that can be realized in 10 years is worth more as a purchase than $io,cxx),ooo that can onlv be realized in 40 years. .Amortization of the principal is therefore a very important consideration. Amortization, which is a term more used by I'.ritish and French engineers than .\nierican, is a very good word; there is no other single word which precisely conveys tlie same meaning. Let us take the case of a mine sol^^ ^on of ore), which would have been nearly 27 per cent on the investment. Instead of this, the mine was eiiuiiiped to mill only one-third as much ore, though it was already developed to twice as much capacitv, the total cost of development and eciuip- ment being about $100,000. The profit per annum was about $5(>._'50 (56.25c. per ton), which was only lo per cent on" the investment, or only sufficient to rc-imburse the latter in 10 \ears. without interest. I'y selecting a better grade of ore than the average, which ihc mine was opened sufticiently 'o permit, there was a gross im.fit of about $100,000 per annum, or a little less than 18 per 111 1,1*-, _„.,;,] .1 V- ii-i ii..t !( Ill CAPACITY AXn ORR-RI'.SEh'rES 197 ol the iiiiiH', leaving sicat bodies of ore too low in parade to be mined, with tlie prospect of doin.i: no more than rcturninp the money invested, without interest. Opera- tion of tlie mine on the basis of l.( -o tons per day prom- ised in lo years a profit of $j,i37,500, whicli would have refunded the original investment al the rate of lO per cent, with interest at 6 per cent, and would have left a surplus of $1,07.^500, or an average of nearly 13.5 per cent per aniunn as profit on tlie investment. Can there be anv doubt that this mine, if originally opened in a small showing of rich ore, and provided with small equip- ment, should, when development indicated the true con- dition, have promptly been provided with increased fa- cilities? Another case in the same line occurs In the handling of deposits of rich ore in connection with large deposits of poor ore. .\ certain mine was producing 100 tons per day of smelting ore at a cost of $_> per ton. of which ^00. per ton was for pumping water and general ex- pt_.,)sc— administration, supervision, assaying, surveying, taxes, insurance, etc. ; and 100 tons per day of low-grade ore, which was concentrated in a mill— cost about $25,- 000— to 10 tons of product netting about 37.5c. per ton of crude ore, the latter being charged only with its di- rect expenses. The high-grade and low-grade ores were known to exist in the ratio of 1:3. but were being ex- tracted in the ratio of only I :i. Obviously, the result of this policy was to leave 50 per cent of the ore, all low grade, in the mine in a form wherein it could not be ex- tracted at any profit at all. a contingency that was pointed out by tlie engineers. These examples are from practice, hut as they refer to the private business of close corporations, the details have not been entered into and the figures have been generalized, the object being simpl> to illustrate the prin- ciple which Mr, Hoover argues; that when the incre- HIS ■////■. liCOXOMK S Of MIMX(- iiK'iil ni" proiit ■xcfi'il'- till' cost of aiMitiniial plant, I'X- tciisKui 111 tlic laltiT -li'iiild ho mailc. 1 havt' jiruviously rvmarkcd ihv liiiiitaticin that may 1)-. \]\c<\ hv market cniiditidns. l'''ir i'xami>l'.', if tlu- entire iiiarkfl for a cniunn "lit> W ^upiihnl hv a sini^lo urc (K-- l)(»it. no matter how extensive the deposit mav he known to he, its exploitation is limited l)y the capacity of the market This is not at all a supiMisitilious example. I fancv this consideration enters into the calculation of tlie manaj,,'ers of some of our ^rcat mines, and it is vveii,dify, else win- the agreements to limit prodnction tliat m one wav or another, ;it one time or another, have been made in almost all of the .!;reat met.al indnstries, pold and silver exrei)te OFr.-Rr.Sr.RJTS 100 aii'l tnat tlic ores from ntlur iiime-;. The olTcct of tins i^ to accomplish all that Mr. Hoover ari^iies for, ami uith(>iit so miu-h risk to the individual mine. In fact, the ore-rednciion hii-iness may i,'o on, and the wnrks still have value as a m.-nnifactiirint: plant, after the mine for which they were primarily erected has hecn entirely exhausted. \V. R. I.n-(;.\lls. I'.oston, Mass., .April J5. i')04. H ♦ MINING IN RHODESIA OIji>1] -'4. 1904.) VVu' i-.ditor: SiK— In M'Vir i>MR' dl Manli 10 lliiri' ;i|)|Hars a Kutr liiiipi ■nni;,' In lii' a 'irn'iiilly rntii.i>iii" li\ Mr. Wallace llruad upciii an arlick' i.iiiilrilnili.(l liy nif Liititlcd 'GuUl Mniiii!; ni RhiMK--ia/ It i~ uiiinrtuiiatc that tlii' i;c'ni.ral toiu' III Mr. r,rciair> i' intnliutinii i> nut (aif uliuli inn- (lucts tipwani Irii'iulh (li.~cu.>>ii lu. Ill till' main, tlu- i.iitK'i>iii> arc sn va^iulv \nn as scari'iU til warrant ^nnmunt I lure arc. In lUiA ir. snnu' viiu.s ratlu r liircii)ly f.\i)ri'.-.M.'(l liv Mr. Ilruacl, wl'.uli aiiiKur til int- tn he iiarrnw iiiiiii;^h tn invite hrii f rijily Mr. I'.rnad Minis tn he eiinl'n-~e(l uiiii rej^anl tn the ajiplieatiiin nt nian\ nf the reiii.irk.s ecinlained in my arti- cle, in that he asMniates tliein whnlly with a [iroperty tipnn wliiih he did si iiiie prns]iectiii^ wcrk. .As a matter "f t;ict. I utilized the inipreN^i, m^ ;ind I'ls^ures nhtained frmn fmir (litYereiit iiiiniiij,^ com])anies with wliich I have been prcifcs>iiinall\- eniinected for sciiiie years, 'lakiiii,^ hi-- par- aj^r.iph^ seriatim : I. The I'lnhaldiif^ha mine, situated in Mashnnaland. is til"' diiK' mine in sfuithern Rhodesia which it has heeti fiiund advaniai.;e(iiis' tn npeii witli adits or cmss-cuts. rnfnrtimatelv . tn date, this class of wdrk has imt heen whnlly cnnhncd tn this prnperty. There are many miius in Rhndesia, the earl\ develn]imcnt of wlilch was at- tciii|ited thrnuij;li adits; indeed, at hnth the lionsnr and Teliekwe mines, a pnnd ileal of this class of wnrk was started, liut it was fnund later that vertical nr inclined shafts would he necessary (hy reason of the limitnl amount of ore ohtainahle ahove the lowest adit level); so that under adverse conditions and at great expense, in which temporary and [lartial suspension of milling played en impirtatU p t. these properties were permanently cipcned through shafts. MIXIXC l\ RHODESIA •Jtil I lure ari' m.iiu ivlliMik-i:in jirnspcets uliu'i (niit.iin ailit-. Inn 1 kimw ni no iii^taiux' wIuTt.' ilii^ v nrk lias lucii "I iniifc than itni]inrary inipurtanri' Iiidi-c!. I Vw'W '<{ "lu piMpiTtv ill |iailiinlar wluTc iin K -■- ilian 2.~i^'> ft- lit wiirk \va> carrii'il "'it > n "W \\\\\A\ I'litrrdpiud less lliaii ()(> It. aliiivc llic Icvrl cf ilir adit 2. 'I'lu' ilcvatiiiii (if the |ilati'au iipmi wliiili I'.ulawavo is siliiati'd, is as stated, naiiuly. aljoiil 4.450 ft. ali. ivc M.a level, hilt the individual liilK and kopics randy reach an elevation of nion ili.ni ,V>( ,nie of the deposits contain fair i^old-values. ver\- little attention has been s'ven to this branch of mininjj, for the reasons already stated. One would hardly expect tlie same dcizrce of erosion to obtain in a tropical climate as in a climate where ex- treme cold obtains. 202 Tim licoxoMics or mimxg I). I was not aware that any (Icfiiiile statcnR'nt lia expended thereon are redeemed through deiireciation account, as it is presumed that the shafts will be of use just as bnig as anv of the surface eciuiimient. It is necessarv to establish a basis in dealing with the de- ! MIMXG IX RlfODf.SIA 20:! vclopmcnt rodciiiption account, tliat is, in rcdceminj;^ tht- nioiifvs expended in developing' the ore which it is expected to mill, and as all other distrihutions are made on the basis of the tnnnaL;e milled, it is lisnal to treat development account in the same manner; the cross-section of the driv- ing or \vinzin<; has absolutely nothinsj; to do with the mat- ter, nor is the small aniuunt of clean payal)le ore, taken from this work, of signiticance ; much less the total cubical contents in waste rock and ore, which Mr. P.road has, xdthout ha:iug li.ul any zciit zcidths. taken so much trouble to compute at 4.500 tons. As a matter of fact, in the case cited it was found advantageous to extend the development work into the foot-wall of the vein. The calcni.-uion was ([uite correctly given by me, and was ar- rived at by dividing the total cost of development for a certain period by the number of tons milled during the same period. The cost per foot, for the wdrk, was. as explained, above the average, because a comparatively small fi-iotage was obtained during that particular j.eriod ; but, as stated, individual months could have been chosen which would have shown a great improvement. The object, however, was to show the distribution of the moneys expended tipon the work rather than to p-isent a lot of flattering figures. Development work, liiat is, drifts, when extended with machine drills, in hard rock and on a comprehensive scale, seldom costs less than $20 l)er foot in Rhodesia. This of course includes all ex- penses not onlv at the mine, but in London and at the local offices and engineers' charges. It is quite clear that an excessively small fixitage, where a full staff is being emploved and other constants are evident, reflects un- favorably in the cost per foot. Perhaps Mr. P.road had in mind the bare contract price, wdiich in Rhodesia ranges from Sf) per foot in oxidized gmtmd to Si 5 per foot in hard rock. The facilities offered in individual cases is also an important factor. . 204 /'//£ ECOXOMItS or MIMXG 13. The idea o.\i)rcssL'(i by Mr. llri'ad that it vould he advisable to exclude the air-compressor I'runi the eciiiip- m-jnt of a mine, and in ctmsefiuence ( h\ reason of tlie ir- regular supply of native labor) operate the mill irre.mi- larlv. as has been the experience of more than one mine, cannot be taken seriously. Tliere is not one mine in the whole of Rhodesia which has been able to run contin- uouslv on ore furnished by hand iaboi . It is not usual to charfr anv part of the machinery and plant to develop- ment aLCount. 14 u referring to the weight of stamps I had no par- ticuL. plant m view. I have myself erected three milbs in Rhodesia, using ditlferent weights, namely, 1.050 lb., 1.150 lb., 1.258 lb, : while as far back as 1898 I erected a mill in the Transvaal of 1,385 lb. stainps. I subjoin the weights of the individual parts of the heaviest stamps yet made; Stem. 604 lb.; head. 437 lb., shoe, 289 lb.; tappet. 135 lb. : total. 1.405 lb. The die weighed 165 lb. The evolution of the mining industry, while probably not so marked in Rhodesia during the ]iast three or four vears as in other countries, has brought about great changes in ideas, imiiressions and methods. I hope that Mr. Hroad, who, as indicated by his re- marks, is a geologist of liigh standing, will favor the readers of the Joiun.m. with his impressions of the geologv of those parts of Rhodesia in which he has spent so nianv vears. and I am ^ure that such an article from him would prove of great interest to professional men. I'ersonallv. I can onlv concede a dit'fe.ence oi opinion upon those subjects which in my original paper were too gcnerallv stated, or in Mr, Hroad's criticism too vaguely, to afford ground tor either criticism or reply. F. C. RoiiKKPS. SECRET RESERVES (Kditorial. May 12, 1904.) 'I'lic article on this subject, apinariiiij in litis issue, by a writer so well known in Australia as Mr. F. H. I'athurst is sure to be read with ii 'erest. Apart from its local in- terest, the (luestion discussed involves many of the nice points of com])any inanas^ement and the responsibility which is inseparable from such nianaj^ement. When secrecy of any sort becomes a lever oijeninii; the way for successful share speculations on the part of those in a position of trust it is bad — unqualifiedly bad — because it means not only that investors are left in is^jnorance of essential facts, but it involves a positive dan.irer to the morale of the statT in control of operations at the mine. A directorate which practices deception toward its share- holders must expect like treatment from its manaijer, and he in turn must not be surprised if members of his staff pursue similar tactics. "T^on't monkey with a buzz-saw." To plav witii a code of honorable conduct is to under- mme the very basis of business, and more particularly is it essential that above-board procedure should be the constant aim of those who wish to establish confidences in the speculative industry of mining. SECRET RESERVES IJV !•". I 1. I'.Al UL Ksr. Tlu' fiucstinn nf tlu" linur in \'ictoria, Australia, is the ri.L;lit (if a miiu' nnnaijfr to kit']) a secret reserve nf l^oM for the purpii.-j of a\eraj;iii,<; the yield. .Vlteiition has heeii directed to the sul)jcct through the discovery by one of the directors of a dee[)-lead aihivial mine, th;it the ni.in- ager kept a reserve whicli he used for averasin.tj pur- poses. The auditors, on seeing tlie fact announced in the .Melhounie .Ir^^iis that such a reser\e existed, called on the mine manager to ]iroduce his 'gold-lwoks." The manager thereupon forwarded tn them two hooks: X". i showed the gold sent hy him to the h.ank. which corre- spo:ided with the yields as reportehown in the week!;, yields. p.. »!,„ \;pt,..;^„ (• ;.,„• \. Sr.CRIlT RBSERl T.S 2ir, ])iil>lisli a full 'itatcnu'iit of assets and liabilities each lialf- \ear, and in additiDH the sharelmlders and the creditors liave tiic right tu demand (and must he supplied with, on payment of a small fee) three months' acemnits nf a min- iii.t^ conipan}-. It is easy to see that the first f)f these oblicfations — that of i)resentin<; a true statement of assets and liabilities — cannot be fulfilled if a vital portion of the assets is kejit secret at the mine. In the satue way it is evident that if a sharehokler, in the exercise of his statutory rij;ht. demanded a com[)lete statement of ac- coimts, he woidd not get it if the directors and legal man- ager did lint include tlii'- reser\e. The object of the legislature in allowing this privilege to creditors and; shareholders was to prevent secrecy, so that the mining investor might be on the same footing as the director or any other officials of the company. Parliament held to tlie o])inion that it was necessary for the well-being of the industry tliat its affairs sliould be open and above board as far as was possible, and very few directors have had the temerity to offer opposition to its determination in that respect. Now it is the practice of certain directors, after they have appointed the manager, to make no inquiry whether he has a gold reserve. "We have confidence in our mine manager and we trust him to work the mine to the best advantage," they say. "if he thinks it is desirable to keep a gold reserve to equalize yiehls. let him do so. We do not want to know, and if we do not know we do not tell a lis when we say to shareholders that we are not aware if a reserve is kept." It is clear that this view involves a shirking of responsibilit}-. In .\ustralia. whatever he may be elsewhere, the director is a trustee. The whole spirit of legislation is that he nuist fulfil! his trust or be re- sponsible for his dereliction of dut\-. Indeed, in one case it was decided that a director was compelled to make ui) the loss in value of shares, where he had t(Jd a share- 208 Tim liCOXOMICS OF MJMXG holder wlio had asked his advice oti the subject to liold on to his scrip. Tiiereforo. as (hrectors arc entrusted ■ ith the control of a mine, they have no rijjht to let their mine niana^'er re,i;nlate the yield un'css they are fully coi^nizant of the fact. In this connection it must be ex- plained that the practice in X'ictoria is to publish yields weekly, and the market eljbs and tlows as the returns vary. Hence an additional reason is afforded certain directors for not inciuirinLT about the f^old reserve, be- cause they do not wish to be ojien to the charge of having secret information that would advantage them in stock and share dealing as against the ordinary shareholder. It will be seen that in this (juestion of the gold reserve two factors operate with mining directors ; first, that of trust reposed in the mine manager, and, second, that of keeping the market steady by [)resenting average yields. When a short time ago Mr. Herbert J. Daly, writing in London on the subject of the gutting of the Iwnanza ore in the Lake \"iew Consols, justified the action of the management in that matter, he came in for criticism in Australia. The argument used in antagcjuism to his was that the rushing out of rich ore should not be done, un- K ss the mine is well developed aheatl, and the company is financially so strong that it can see its way to mine in that fashion so as to give shareholders a return in the (|uickest possible time. Concurrently also, it is claimed that notification ought to be made to the shareholders that they must not e.xpect their \ield to keep up at a bonanza rate. Now, if the opposite policy of keeping a bank in the mine is pursued, then there will be just the same scope for manipulating yields by averaging them that there is when a manager keeps a secret reserve at the surface. Yet, in that case, the directors can be kept in ignorance miless constant sampling is done and assay- f)lans are regul.'irly fmnished to them to show how the slopes ,'ire advancing and how the rich ore is being en- SECRlir KRSIiRlllS 2()'.t croachcd upon or left alone. But the law would not, as it stands, reach a mine nianaj^er who did this, and it could not touch directors who niij;ht not know anythinj^ of the true position of affairs. Of course, in Victo'-'an quartz mines, where it would he almost fatal to a com- pany from a share-market point of view to refuse- to allow a weekly or fortni.ululy insjjection of the property t(. shareholders or their experts, it would not l>c possible loni^ to conceal any de])letion of the rich reserves, or for the matter of that, any hoardiui^ up of them. In West Australia, however, there are mines which are not open to inspection, and where the directors put themselves absolutely in the hands of the mine managers. In such cases it is evident that, if the franlcness commanded by the law in X'ictoria in respect to reports and accounts is not practiced, }:;freat fraud is ])ossihle. Yields can, if a manager is dishonest, be manij/alated so that if shares are wanted to he bought, n.lurns can l)e made low, and kept low until scrip is boutrht in small lots, when the re- turn can he gradually increased ; i!:e result being a sharp advance in market values. Then, if a bank is in exist- ence, but the average ore is losing its richness, shares can be sold short and yields maintamed until the crash is wanted. Thus it is a case of "Heads I win, tails you lose." The same position exists exactly with alluvial mines, where a secret reserve is kejit. Th.e company is in the hands of the men who know of it. \n opening for fraud exists, and it is undoubted that more than one mine man- ager has succumbed to the temptation put in his way to co-operate on the Stock l'"\change with hrt^-ers who knew how to turn to account the secret information furnished them. Thus it will be seen that wherever reserves of any kind exist at mines tlie ])ersonai e(|uatioK must rule, lu^t with the mine manager; and, if he is lutnest. next with the directors to whom he reports the true position of affairs. dfe' !10 77//; i.coxoMics or Mfx/xc; 'I'lu' tVi'liiiL,'- III \ ntnria ti.ilay i> that tlurc (Hi-Iit to he no inTscMial i.(|iiatiiMi. What invi'.stors want is tliat they sliall know thr worst (ir tlif ht-st (if miiiiii}^ an rirh, it i>U!.'!u to 1)0 fairlv miiu'd and tlir fact R'lioitiil that tin- \K-h\ is hi^h because of the excep tioiial (Hiaiit\ of the ore or the };ravel. ( )r if the <,T')U!id becomes poor, tliey do not want the tnana.LTer to have his eye on the ^hare Hsl to try to keep (|iiotations at a tic- titiou> price h\ averai^int,' yields at a fii,nire whicli the con(htion of tlie mine does not jiistif\. 'I'hey want thi' (hrcclors to isiahhsh cash reserves (which will ap])ear in till' balance sheet I uht'n times are L^ood. and to equalize dividends from that reserve, or to use it to keep the mine piinj,'. And above all. they ask that the truth shall be toli'fi)ri', tliis (liscussinn is limitt'il to tliat class (jf L;nl(l niiiu's tlie continuity of wliicli in depth is uncertain. If a broad survey be made of tbe method of valuation (jf mines in ditTerent countries, by dirterent peoples or by different individuals, there will be seen to be tlie widest diver^^iice in the jioint of view. The pendulum of valua- tion swings between a mniinnmi (as represented in tlie demands of the American engineer for a jmrchasc price to exceed but little, if any. the actual exposed profit in sight) and an extreme maximum allowed by some tv\>- reseiitatives of the ICnglish mining investor, who find the value by capitalizing the possible dividends at a some- what higher rate of interest than Government bonds. The whole of this wide variation in theory and practice results from a difterent attitude toward that portion of tbe value of a mine which nnist be assessed to extension in de])th. The one extreme allows but a few feet, whik' the other practically ignores tbe essential characteristic of mining investments — the necessity of recovering capital coincidently with an interest which compensates for the risks taken. Were we to stick .strictly to the mi;ii:num figure, but little business would take place, and but few funds would be available for expansion of the industry. There is an inherent speculation in mining, and it is this speculation which attracts : without speculation for large returns but little gold mining would be done. I think it is certainly true that mine-, on the average, yield a much greater profit than the minimum stated. On the other hand, it is ob- vious that the maxinuitn value, which one finds only too I Jl-' rill: i.C()\(>MlLS Ol- M!.\L\(; often as,->i>.st.-(l ' 1 ^tock markets hy a jjroccs.s of multi- plication of ilividiiuls, is siinplv ^anililiii^. \ arinii^ ]iri>p(i.sals have Ihcii luailc to meet this ili- verj;ence of \u\\ : u^uall\ lhe\ are attetnids Xu Ljive a rule to llie >])eenlator or investor i)y wliicli lie ma; on tile aserai^e mea-nre iii> mme. i-".\'ery mine i> so niueli a ()roi)lem in itself that all ^generalization is (iifticiill. hut any sound methoil whieh calls the attention of the in- vestor to the real !)a>ic facts of \alualion anelunie of valuation of ex- tension in (kptli, liaxd u]ion ratio nf ore-rescrvcs or i)rntit in sif;lit. is ulmllv wmn^. 'ihr (Hiaiitity of ore in re- serve is a !tntt<-r nf nianai^fnieiit iupt necessarily de- |ienili'iit on the -i/e of the mine. A mine ma\ have a reserve so larire as to impK' an extensimi in ilepth be- yond all reason, or. on the ntlur h.inii. a mine m,i\ he extreinelv valiiahle. with no protit m ^it^ht :it all. No mine starts out \\itli an ore-reserve, and ni)on this h.isis (jf mine vahi.ation the whole of prospectini,' ventures would he eliminated from le.!,''itimate mining;. This hasis of \alu.-Uion aI>o fails to t.ake into .accoimt the .Lrreat v.iri- ahilit)' in j;eolo,i,Mc;il character between ditterent mines and different districts in relation to i)rob.abilities of ex- tension in deiith. Morecner. if 1 am rij,dit in the 'eco- nomic limit' .if ore-reserves, as stated in a previous article, to be in the most cases from two to three years' output, then, owing to the limit reserves thus permissible, if we estimate the value at. say. 50 jier cent more than such reserve, the m.ijority of mines would yield, on above footinp^s, from 20 i)er cent to 40 per cent per annum. Ina.imuch as the value of the mine is dependent (out- siile of the reserve profit) upon the distance that the deposit will extend in depth (or. in rare cases, laterally) bevond the region of vision, the most logical basis for estimation would be a computation of how far such ex- tension is necessary to justif\ a given value, or to what deinh the particular deposit may be risked to so extend ; in other words, the depth of extension should be con- sidered instead of a iiroi)ortion of the profit in sight. By such a method not only would broad generalizations be avoided. biU a sort of geological basis would be found. The general character and experience of the district for continuitv ; the special conditions of each particular de- Jll ////• /iCoxoM/cs or MiM.w; p)sit as to M/i- Ml i.iiImiiIics ; tlu kiiouii lacliirs, mhIi as Ijorc-liolf, ; till- ik'Vi.'lii|)im'iit on adjomini; iinius, and tin- l)()^sll)llltn•s outsiilf of iiniiicdiak' oicbudic-,, etc.. uoiiM all loiiic iii[., |,lav in the ptoljahilitios assessed. 1 Ik-si- factors arc ^ln.-,Md over on an\ -\'-ttiii of propor- tional vahiis. An examiik- of the working,' of these niethids of esti- mation nia\ he t.iken. it,: instance, In f^'rimpmu: the lead- iii.L,' mines in West Australia. .\ j^'ronp of i :; niine> in tiiat >tate is at this date valued on the London market at i 14,500.000. riie\ have profit m si^dit of £ 1 0,500,0CX). l'|)on a basis of addin;,' (>i> per cent to the jirotit in sirrht, these mines are about cornctly valued. To recover the c;i|)ital sum represented ahov. . the\ will have to extend something' like J30 ft. helou the present bottoms, and to repay cajiital. and. say. per cent iiiter.'st duriiii; the whole pi-riod, lhe\ imist extend about 4X0 ft. below their present lM)ttoms. Tin. depth is not an unreasonable risk, takin;,' all matters inti> consideration. ( )n a7'i-ni:u- over tile whole Kri'i'l'. ''"-■ two bases of valu.Uion a-ree fairlv well, but, taking W mine, for iiist.iiice. with ,111 ore- pipe ,V) ^>y '"5 't.. ai; v'xtensioii e.i 4S0 ft. i., vrv jirob- lematical iiiet in 'C mine, with two jiaralkl ore-shoots, each ].imm ft. lon^'- ami i_' ft. wide, with the adjoiiiinir mine jiroved already Ckjo ft. deei)er, even a longer life could be gr.inted. Taking a leading mine in the Kolar district in India, valued by the market .at i;v''0(),'K)(), in which ])rotit in sight is roughly £■)_>( ),(xjo, the jmjportioiial value would assess it to be worth aboiit £i,45o,fxx). This sum of i:i.45o,(jtl' than siuli a valuation would ^;raiit. in 'Ik- ilftailc'l juilj^iiifut as to tlu' prohahility of ox- tin-ioii in iliptli. as stated above, other con(liii(,us iKini' ei|ual. the si/e of the ore-Ixiily becomes the },'reatest fac- tor. .\-i ored)ody i.ooo ft. loni,' is iniieti more likely to extend tlian one lo ft. loni;. That such ixtei.si.iii is absolute! v ji-oportii iial. 1 -h-aild, of course, not contend. An old I Ornish sa>in.t; uas that an orebody would ex- tend in depth a distance i'(|ual to its leiitrth. This, al- tlioui,d: i'. shows an ai)prec.iation of the iii.ittcr from ex- perience, does not meet the case in ore-shoots, whose j,'eneral character implies greater dei)th than length, nor does it meet the case for p.irtiallv exhausted mines. In depth. dei)osits seldom terminate .abruiitly. The lenlieularilv of ore-shoot- i- i;ener.all> recos^Miized. ami that ore-shoots usually, in their terminals, display len- ticular ehar.ieter is, I think, i^enerally accei)ted. It this were established as ai avera.i,'e — ;i worthy prob- lem for miniiii: i^eoloijists — it would be possible to state roui^hlv that the minimum extension of an orebody or ore-shoot in dejjlh would be a factor of a radius not less than one-half its len.mh. I'.v lent^th is not necessarily meant horizontal lenu^th but a section i)eri>endicular to the downward axis, lly stud.y of jj mines with whose orebodies I havi- been able to familiarize m\-elf. I find this rule of minimum to apply in all cases but two, by takint,' a number of points from top to bottom of the workinj^'-s. Sul.>ject to wider ex])ression of experience, I believe that an amount of ore thus rej resented can be about as safely assumed as cm the continuity of value throuf^di ore-reserves blocked out. I do not propose this as a method of determination, either of maximum or minimum value, but as a yard-stick iiossibly useful in formiiif^ a judL,Mnent. b'or instance in the 'C mine, cited above, having an orebody i.cjo ft. long, by such a I 21 r. TIIR liCOXCMICS Of MIXIXG calciilatiini. if wc a.v^min,- mat {hv (iribocK is about to die out, and that tlic Ijnttoni \\cjrkiiit;s represent a cross- section of the lens, the mininuiin depth would he 500 ft., or ;iii avera,L,'-e of the whole ,Nteti(Hi of the oreljods ahout 2/^ ft. This distance (when conijiared with the necessity of orehiiily to extend only 200 ft. to return the present market price, and ciily 4i<(> ft. to relurn the price and in- terest) would indicate that the present ()rice is fairly sound. In .i^^'iieral, the j)roposal is that this class of mine .should be valued at, (a ) ;lie i)ri )n in depth of the orcbody (in volume and value as disclosed at its lowest section) for .-i di-taiice based uj-on the probabilities in each par- tictdar mine, instead of the rous,,di anfl ready method of a proportion of profit in sight. TREATMENT CAPACITY AND ORE- RESERVES (May Jt). 19U4 ) The Editor: Siu — I ctuifess to a pnod ,loal of disappointment at the mcaj^er discussion that Mr. H. C. Hofu'cr's article on this subject has ehcited. To ni\- mind, u i;-, from its form of treatnuiit. the most im])ortant on the peiierrdities of min- inpf ensincerinf; that \vc iiave seen for some tinx' ])ast. It caiiiiot be douJJted that the clear understanding of any problem in the abstract assists materially in the mas- tery of each example in the concrete ; and. though such abstract understanding may not be tlu- sine qua uon of grasping the concnte, those with the clearest understand- ing of the abstract usually err the least in the concrete. Notwithstanding the examples cited, Mr. Hoover's pa- per is one of generalities, and his broad generalizations, which crystallize into words, and perhaps in a somewhat novel form, the practice of more than one engineer, can be handled with safety only under expert advice, being in this resjiect decidedly dang'. rous in lay hands. As an instance, the temptation is almost irresistible for the superintendent, when his costs are cut down by the addition of a secondar\ plant, to lower the grade of his ore as well, by the inclusion of rock that would have been, but for the secondary plant. ' 'ow treatment grade. This, however, upsets all the c ie;-' ^ns upon which the secondary plant was authorize!;, i ,)e sure, the condi- tion of the mine may actuall\ justify it. but imless that were recognized as among the factors of the problem, and allowed for when additions were made, ihc propertw with the increased outpiU .uid with the increased capital outlay, due to the secondary plant, to pay interest upon, will actually be giving a less, return per centum. -•18 Tllli 1 OXOMICS or MIMXC Wliili- till.' t'xact form of ^tateiTK-nt ni;uk- In Mr. Hoo- ver of till' fundainciuals of tlu' i)rol)lcrn is most strikin . " I 1046 II !;«)S •' ,','"" i.ii.=;7 12 6S2.<; .1 -^''","lis 1 ,j(« i.v8og< ^ " ■ I 'jHr 14.9474 c.ip.ic:Ty .1X0 orh rilsi'.rjt.s. -jik Gain. Quarterly. T.-tal 6 Months I i4')5 i6 og6q 4 y't'iirs I i6io 172579 ,^ Months I i7.'6 184,^05 <) " I ll^4.^ l(> 6148 9 " I iryu 20 8iog 5 )',,i/-.t l.jnXi 220100 3 Months 1.2202 23.2302 (> " I 2324 244716 'i " 1-2447 257163 6 Vrurs ',i>7^ 26.9735 The i)ractical use of this is illustrated below for two extreme cases : Primary I'lant Ca.se 1 l\T;e 2. TonnaRc per quarter 7,500 7.500 Pnilit per tnn $1.00 $!,oo Quarterly pmlit (PI) $7,500.00 $7,50000 lixed charges .30 ' I 00 I'ruuary and S,\.>)iiiiiiy !'!iinls. I'oniia.nc per qnarlcr io,o to call for the carefiil sepfrc.s^ation of all such iien:^ in mine accotintinjj, so that the ratio of plant to reserves may he readilv and constantly canvassed, witliont the necessitv of a sp.ccial and lahorioiis investij,'-ali(jn. Air. lloover'> separate items of ' reserve blocked out. Such would he the case of a i^ine with many small veins and heavy ground, where llie additional charge fnr repairs an-i for interest on development would seriouslv ini])air the prof- its. V\'ith such particular cases in mind, the minimmn proposition quoted does not api)ear so inevitable as the maximum, though it can be granted tli.it in the majoru\ of in-lances it aitords a safe rule fnr practice. San Francisco, Mav 12. 1904. R. (jn..M AN Hkow.v, AMORTIZATION (.June .', i'j'ji The Editor: Sii4 — Tlio Mihjtct of "Mine Equipment and Ore Re- serves' has been so well treated by experts in the JoiR- .N Ai, that I hardlv leel competent to join in the discussion from the scientific side. I wcmld like, however, to say a few words on the (|i-.estinn of amortizatiim. which iuirdly seems to be understood by some of your currespondents. 1 feel further dibi)osed to do so as some of my friends have asked for a little instruction on this point. The word amortization is French, but it is a ^ood one to take over into English speech, as we have nn single word which exjircsses the idea. .Sii;king fund does not covei it. for that is applied only U> some sp>cial provision for tile pavnient of boi'ded debt or debentures. As nearly as 1 can express it, amortizatici is the provision from earnings of a fund, in(le])endent of dividends, which will, in a given period, repay the original investment. To provide such a fund is not usual in this country, though it is frequently done in Ivarope ; and in France, at least, it is required by the law governing the operations of in- corporated companies. .\ mining investment, in tlie great majority of cases, is a terminable investment, not a permanent one. That is. it will end and b'jcome unproductive after a time, shorter or longer, according; to the nature of the mijie. It is not a permanent uivestment. like a railri^ad, which may be expected to last and to return profits for an in- definite period. .A mining investment, t'v.'refore, 'o be good, should return not only ordinary interest on the capital, but a further sum, sufiticient tf~ repav the orig- inal capital during the life of the mine. .\ railroad, for instance, with proi)er allowance for repairs and renewals, will probably be earning profits and be worth, at least as 2-' Tim r.coxoMics of mixlxg nuu-li as now, fwcmy t)r lurty years lu'iicc; and its cuiurs will still liavf tiK' security. But twenty or fortv vears from n.)vv the nwners of a mine now profitable ma v have nothiny but some extensive e.\cavnti(Mis and a lot of ma- chinery, which is likely, at the best, to be worth r.nlv its sellm- value as scrap. So with all minint,^ investments; they run with the life of the mine, and the return .should be lar-e en,m-h to c(iua] the capital, phis interest, durin,^- that life, whatever it mav bo. In IVance the nsual custom, I believe, is to divide the amortization fund among the stockholders when the com- pany has to -o out of business. In Germanv verv little amorti;^ation is done, for the German custom' is to nurse a mine and carry it along forever l,v taking as little out ol It as possible each year. The exception is found in a few of the big coal comi)anies, and thev have amortiza- tion funds, which are usuallv apj^lied to the purchase of more coal lan.ls. In lu.gland they do not say amortiza- tion, f,.r y,,nr l-.nglishman has a strong propensitv to call things i«y names that mean sometl'iing else. 'l!ut they have depreciation funds, surphis funds and what- not, which amount to the same thing. There are various ways ni using these fu, ds. Thai most approved seems to be the purchase of new i.roperty. so that the companv may be hept alive. ( )ccasionally the funds, whatever thev may be calle.l, are returned to stockholders; i'-.s is often ears ago. a companv which had been mining m Idaho gave up its exhausted jmipertv and bought a nune in Western .\ustralia, still retaining its old name, ."^uch instances might be multiplied. ■IMORri/.ATlUX L'i':{ Except in FraiKH', tlurr sc'tiii> tn !)(.■ no nniforni rnlc as to the manner in uliicli pasnicnls are made to aniorli- zation fnnds. The fairest and most unitorni method seems to he a tixeil ehar^e on ore miiiecl. hased eitlier on (jiiantity or on vahie, aeconhiif^ to the nature of tile mine. In this conntr\- amortization funds are not usuah Tiie ,ij;eneral practice is to jtay out snrphis in di\iilends. leav- ing:; cacli stoc' holder to maice liis own amortization, if he is disposed d > s(j — usuaUy he is not. This is hased on the continua. .ifting of stock ownership. W ith few exceptions the .American investor does not huy mining stocks to keep, lie sells them when he has a chance to make somethint^. it has been said tliat the ownersliip in an American niininj.;^ company chanijes. on an avera^'e. every five years: and. <|uite prohahiy, this is nf)l far from the truth. L'nder these circmnstances. it is quite natural tiiat a stockholiier should prefer to j^a't all that lie can out of his sliares while he holds them, without looking to the future. An exception is foimd in some coal ruid iron comjia- nies. Thus the Delaware & Hudson Company includes in its expenses a fixed sum per ton of coal mined, which goes into a fund which has been, up to date, used to pa\ off the company's mortgage bonds. These are now nearly all retired. The Reading Comi)any has done the same thing since its last reorganization. The Pittshnrg Coal Comjiany has a similar ch:irge on earnings, the sU'ii thus set aside being used chielly to buy !iew coal lamls. In the last-named case the amoinit has been calculated on such a basis that tiie fmid will rei)lace the co;d l.inds mined out each year, and so keep the coni|)any going as long as there are new lands to he bought. Among iron compa:iies. severa' of the larger Snutlu-rn companies .ilso make a charge to earnings hased on the iron ore ani'r Inm Cmnpanv. wliicli is the iron niinint,-- liranch nl the I'mtcd States Siirl Corporation. Iia> a s\>upiily of ore, or r.aw materi.il. should he kept up. idle retirement, or reiiaynie'U, of capital i> not consid- ered in the matter. t >n the whole. [ do not think that .\merican hu\irs of mining- !,tock will take kindl\- to amortization funds, iiti- der present conditions. Thex- prefer to trust to them- selves, and to the eh.ance of selliui^ their stock, to allow- ins,' the company to look after the rep.i\inent of their capital at setme indetiii'te future (Lite. .\s Ions; as thi- fc'linqf lasts the practice of amortization can hardly ex- tend. Some day we may take time to think a little about it. and then I believe the justice and reason of the plan will be realized. .\nd it ma\- do somethint^ also to jiromote permanence and stability in mine ownershi]) — which is a thiiiij nuich to be desire F. Ilnn.vRT. .\ew York, Mav lo, 1904. VALUATION OF GOLD MINES The Editor: SiK — 1 af,'rcc with Mr. Hnnvtr in liis interesting ar- ticle of May 19, that every mine is a prolilein in itself; there are no fixed |)rinci[)les l)y which the appraiser may he fjiiided to a definite and correct value by the rules of mathematics. I'.ecause if he deals with averaf,'es, or laws of probability, as to the life and profit of such gold mines in general, or even of the mines in a special dis- trict, he will as a rule arrive at very erroneous results. It is one of those cases in engineering ])ractice where experience, >kill and judgment are of the utmost im- (xirtaiice to get even an api^roximate solution. The metl od which I have found most satisfactory is about as follows: Having correctly valued tiie ore in sight, the size, shape and relative positions of the ore- bodies should be mapped to scale, and compared with those of the exhausted orebodies for at least three years pre- vious. Then, by comparison, try to find the law of contin- uity and value. Xext, by that law, t(igether with a study of the history of the most developed mines in the dis- trict, decide on a definite figure for the undeveloped por- tion of the mine. Having thus arrived at a definite value for the whole mine, the next question to consider is the econon.ic ratio of development to milling capacity. Then the gross profits in the mine and the tiiue necessary to exhaust the same. Lastly, an estimate should be made of the extra capital tiecessary fully to e(|uip and develop, to reach the economic ratio. Having found all these, the extra capital should be subtracted from the gross profit, and the balance cafMtalized, so as to yield 10 per cent [)er anmim during the time necessary for exhaustion, and at the same time redeem the iirincipal. \\\ I tcf ration lof 11c tiL-o tli^ W'ocfroi; ////: ECO.\UMJlS Ul' MIXIXG wliiili Mr. llnoviT '-av > haw a .l,M•<>•^- jirnl'it in sii^'ht of a!)'iiii i i(i.(HHi.i)iHi ; ami su])])o.sc tlie appraiser aiMs an- i>tlur tiu.txjo.iM-X) inr prutil in un(lcvi-l>'i)i'il grdinid. Now, if lir considers £_'.()oo,ock) nfccssary to jint those mines on an iconoinii.- ratio, so tlial tlu\ wnild he cxhaustc(l in ^\o \i-ars. then his vahiatioii would W- £4.5(x).ono. instead of £i4.5(Xj.tx>), as Mr. Hoover makes it. I'.ecause £jo,- OOO.OOO — £j,CXX),000 = i 1 8,000,000. .\nd ilS,(X)(),000 c;ipit;di/ed at 10 per cent i)er :inmnii for 30 years, with the principal redeemed durin}^ that time, is re])resented ' \ £430,000 X 30 + £4,300,000 = £18,000,000. the total ,,11 ouiit of profit in the proi)ertics mentioned. .Mr. ih)over thinks that '1 per cent is snfficient interest to ]);iy oii mininL,"" iiivestiiunts, hut i ihiid\ most enjj^inecrs will ;n.;ree with Mr. (nrle that 10 pi r cent is a fair fi;.;ure, (jver and aho\e the redi-mption of the principal. There is ;mother cniestion in the \ahiation of mines of eviTy kind whiili is of sut'licient ini[)ortance to he men- tioned here. And when the time '-onies that I'rof. Church says otiyht to come if investors wish to be pro- tected, when the president of every miniiiL': company is a (lualitied minintj eiiLjineer, then every mine will be valued aniutally by an indejiendent enpineer, just as the books are audited b\- an indepeiiiknt accountant. 1 trust the Institute of Minintr I'-usj^ineers will take this matter up. and havi' a law passed compellincf mininpf companies to have tluii- inventories and valuations tried hv ;m in- dependent eni^ineer before the auditor will accept them. RoHEKT Stevenson. New York. May 23. 11)04. MINE EQUIPMENT AND ORE-RESERVES (June JJ, ly('4.) I he I Alitor. • Sir — 'I'lu' artii-lf on <>rr-rcserves and i.iinc niuipnicnt by Mr. II. ('. llcinviT covits tlu particular IrM dis- cussed liy liiiii with such skill that it scciiis m mv tlurc is lint iiiucli iiKiri' tn say. I 'iilnrtuuatcly most of us do not haw the opportunity (.1 nnravclini; the problems \k-t- tainini,' to the exploitation of .such niaL,Miificent mines as those wliicli Mr. l|o(i\er direct-, nor do we operate with tlie reserve capital of such stronj.^ ccjmpanies as those with which he is connected. The mininj::: future of this coiiniry ilepends to an ever-iiicreasintj extent on the jirotit- ahle expluitation of relatively small, erratic and |()w-;L^rade depfisits; in other words, in inakini,^ Iianl |)ropnsitions pay. The West has iieen iirrtty wdl run over, and it is jirohalile that most of the Iul; tiiinf;s are already under process of development; and while, of course, some of us will he workin;,' lionan;^as for seviTal generations, the vast majority of mining; etii^ineers will he continuallv up aijainsl a hard ijaine. It is the problems jicrtainint^ to the successful o]HTation of such deposits which more vitally concern the majority. To m\ mind there is more credit due to those who take up the hard propositions and make them pay than to those who exploit bonanzas alon,cr finely scientific lines; the first usually re(|uire energy, satjacity. perseverance and. very often, iltiring; while the other need chiefly cool calculation. Tlie acquirinpf and early development of the Ivinanza is a flitTerent matter; in this achievement much the same c|ualities are called fir as in the operation of a hard proposition. But onlv a few of Us, as already stated, will ever have the opportunity to acf|uire a bonanza for ourselves or clients, so we may just '_'L'S ////■. /:cu.\o.V/i .s (;/• Ml.\/\(, as well liKik llir tact-- m tlk- liu c anil cnnsi.kT tlii.- i)Pih- k-tus inciiknt u- tliu ciHralinn (.f tliai larjje class of de- posits uitli uliii.li most of Us arc more or less directly associati'il. In stioli cases tlk aiiiortization nf the eriiiip- iiu'iii iiecnmes an even more serious pioliKiii than mi the nistanees discusseil by Mr. Hoover, for it Ih'couks doubt- fnl ulietlier the expenditure will ever be amortized at all, rather than a qiu -non of how niaiiv months will be re- ipiired to j^et even. And yet onditions of operation, as they e.xist, often force an expenditure for eiiuipment be- fore one can lii^Mire the ore reser\e to iustif\ it. It niav be neces.sary to e(Hiip .and be^'in production, or cpm alto- ^'ether. In such cases 1 think .i man is jnstifi<(l in usin:,' the most temporary expedients, r.ither than m jirovidm;.,' such an e(|uiprnent as would be ealled for if a loiij,^ eam- l)aiL:;n were ;utti.illy assured. It has been my observation that more mines are killed by too much e(iuipnient, and ill-advised ecjuipment, than fmm errors in the opposite direction. Tiie tendency to make lar tlicv adopted to overcome them is sure to be of practical service sooner or later: and in the hope that I may Ik- able to start the liall .a-rolhntr in thi- direction. I will mention tiirce in- stances out of my personal experience. The estate of W. .S. .Stratton. deceased, included some ;i3 acres of territory in the Cripple Creek district of Col- orado. There is litile of this territory from which there has been no shipment of ore. and some parts of it have made a larpc production. The pay ore is found in iso- lated bodies scattered throuoh a perfect network of veins, contacts, and mineralized dikes. The prade of the ore at ( rifiple Creek is comparatively high, so that a relativelv -mall oreliody may he of considerable economic impfir- tance. As a ionsco. The working charge per ton milled would, therefore, be debited with an amount of 5 shillings per ton— the cost to develop- -in order to gradually redeem the development at cost. The question of amortization of capital in a mining undertaking is a very difficult one, and I cannot follow Mr. Hoover in his view that it should be made a fixed charge against working costs. Amortization can only be fixed on a definite knowledge ot the profitable term of an undertaking. If a mine be figured to have a life of ten vears, and it ultimately proves to have twenty, or vice versa, the charge for amortization will in the first in- stance have been too heavy, and in the latter too light. The best principle is that the company should not, as a com- panv, attempt to amortize. The value of its shares on a given earning, on the basis of amortization of capital or otherwise, can be readily computed by the investor. If the companv puts aside an annual amount as amortization, it naturally reduces the distributable profits, and these might possibly, if distributed in full to the shareholder, be reinvested by him with immediate benefit. Moreover, if investors, who bought interests in the earlier stages of the mine, sold out at a later date, the profits which they should have received would accumulate to tb.e advantage of the investor who bought during the later stages of the com- pany's caicr, and thus tlie former would be at a disad- vantage, unless the market appreciation of the company's policy of amortization were fullv reflected in the share value throughout. It should be the business of the share- i.»;!s I lir. liCOXOMICS ()!■ MIX IXC Imlik-r in lli^ iii(livi resiTVf a-ain three year.. I'.ut supi^nMiii; that n., nmre pavahle ore were (Hsenvered. then it seetn^ on hi^ own sliuwinj,' that, saving the aspect nf tlie increased pre-uit vahie of the profits, there is no special advaiita-e in the scheme. Suppose, for instance, we have a loo-stanip nnU which crushes i6S.r)00 tons iier annnm. A reserve of six years for sticli a mill ^vnul(l he i.ooS.ooo tons. Now. if we hnild another too stamps an we get a result somewhat as fcjllows : Cost of lOO stamps, 'secondary equipment,' and all accessories, including power, etc £100,000 .Additional water supply, pumps, etc 10,000 Additional buildings, quarters, etc j 'Q'""" Total ■^•'°'°^ Assume profit on the 100-stamp basis to be 10 shillings per ton. Assume profit on the joo-stamp basis to be 12| shillings per ton. the increment of profit due to adding 100 stamps is ; Total profit earned on 100-stamp basis in six years, 1 ,oof<.ooo tons at 10s. per ton £504,000 Total profit earned on 200-stamp basis in three years, 1,008,000 tons at i2^s . 630,000 Total increment of profit £126,000 Total cost of secondary equipment 120^000 ■n 1 „,^Cf • . £6,000 Balance, profit Tf interest be added to the capital outlay incurred for tlK. sccondarv eriuipment, the balance shown will dis- appear. In mines of uncertain continuity in (iui|iiiu'nt to ori'-ri'MTVc than that nu'iitiniicd liy Mr. Ihovtr. It, a-. 1 haw siiL;j^(.'>t<.'(l, the pavaljlu ore were Miildeiily to ^ive out when Mitticteiit reserves to provide an increment of i)rotit that would just amortize the capital outlay iti additional jilant had heen secured, then the inme uould pil)ly he prejudiced in the lollow- xujr way. All mines are found in jjractice to contain the ore in shoots, streaks, pockets or patches. As the wurk- i'l.i^s pro<,'ress it becomes clear that a jirocess of selection lias hicn in practice, hy which ore falling below a certain standard in j.;raile is allowed to remain in the mine. The lon.i^^er the mine is workul the f^reater becomes the a).jf;re- .t,'ate tonnaj,'e of more or less developed ore of a fjrade fall- iiii,' helonj^- the arbitrary limit of payabilitv. It is a truism, however, that in every mining field the costs of production vary directly with the ape of the tiold : in other words, there is a practically continuous reduction in costs year hy year. In the instance I have previously assumed of a nunc havinp; a final reserve of six \ears' payable ore on a 'primary' basis, it is probable that large (luantities of ore left in the mine which are unpayable during the tirst of the final six years would, through decreasing costs of liroduction, imiirovcd methods, whether mining or metal- lurgical, fall within the limits of profitable working before the tirst \i'ar's work, and therefore the mine would, under these conditions, secure a new lease of life, on ore of a grade which, if worked out in a three vcars" period would still be tmpayable, despite the lower operating costs of an increased installation. There should, therefore, be a big margin of increment of [irotit allowed over and above thv- amortization of plant amount, and even then I doubt if the scheme is a satisfactory one, notwithstanding that the objects aimed at arc undoubtedly desirable, It appears to me obvious that in mines of uncertain continuity in depth there can be a definite and satisfactory basis of ratio of enuiiMnenr to ore-reserves est.Thli«li..d i ORl:RliSEliMe area, the grade of the ore developed, in order that steady outputs may be niaintanied I'urther, by such a scheiii' it is possible to include a larjj;e tonnage of ore near— but just below — the arbitrarv limit of payability, which w'iuld inevitably be mitouched if the ninies were worked on narrow margins of development. After all, the whole matter under discussion rests upon the courage and resources of those who control the finances of the company, {"very engineer has experienced a difiliculty at some time or other in ])ersuading the finan- cial heads of a mining business to carry devehipment even one year ahead of the mill, owing generally to shortness of funds. If they can be persuaded to follow the advice of the engineer 1 In icve the right policy to be the fol- lowing, which 1 submit with all deference: It is assumed that preliminary prospecting has been ' finished and a scheme for permanent work is to be pro- vided. First Step. — The mine to be opened out for examina- tion, to such an extent that data for a sound development policy can be forimilated. Second Step. — .\ development policy framed, including estimates of cost; time to carry it out: and probable ton- nage and value of ore that will be opened up. Third Step. — bVoni the information to be gained as the development nroceeds, a justifiable limit for ore-re- serves to be fixed, taking into account all the variables of width of reef, percentage of jiayable ore per ICX3 ft. driven, and facilities for attack. Fourth Step. — A mill of a capacity fixed by the limit of ore reserves to be erected, which reserves should not Ill: L'Jl' J III: i:c().\(KMics oi- .\//.\7.vc; bi' K'-'> than ilu' tiital ulucli tin.- null wculil i.ru>li if wurkdl C(iiitiiitii iu^ly fur two u-ar>. 1- If lit Sti-p. — Di-vcldiiiiii'iit t>i hi' i-niitiinii'il, at K'ait at tlk- iiiilliiii,' rate, (in payahk' (jrc l'(ir till' tiiiic hi'iiij^ thi'^i' ail' all tin- ^tl•|)- whii-li in a sdund ])iilic\ can hi' I'l irimilatnl. 1 hi' iiiim- now \\(iri%> sti'adilv alicail for a couiilc of yiars (niori- or k's.s, a^ the ciri'urn^tanci'S (k'ciilc ) provo ii> ahility to make a j)ri)fit on ilii> ha-i>. ami ilii' (|iii>tinn of lurtlu'r additions is Mi^'Kotc'd hy the cnj^incir. ilcforc tlii-M' additions can he a,i;Tei'd upon hy the tinancial heads they nnist settle the details of the M-heiiie hy which they iirojiose tt/ finance, which will lie one of the following,': A. Diversion of current profits. !!. Temijorarv kian to he paid liut of profits, over an extended period. I'. Increase of capital of the conii>any. I). Issue of already existinjx reserve shares. < )f these, the last named is in my f)pinion undonhtedly the soundest and most e(iuiiahle to all shareholders, for reasons which I have explained luany times in other writinujs. Sixth .V/i'/-. — The cnpneer, havinpj gained by experi- ence a full knowledge of the mine and it- capabilities, suggests that develo[imeiit sbouk' be advanced at such a rate that the excess tonnage of payable ore (over and abo\c tiiat re(|uired to maintain a .stipulated reserve for the ])riniai >• e(iuipmein ) should at the end of a given period allow for a hheral margin — say six years — on an addi- tional unit of reduction and treatment plant. Assume that the primary unit i> 50 st;mip> with a three years' reserve of 252.000 tons of ori', aiul assume the first addition to be 10 stamps, re(|uirir,g a reserve on a six years' basis of 100.000 tons, then when the Go stamps begin working the reserve would .-tand at .^32.000 tons, eipiivalent to .V5 \-,-ire. n.'ii'intinii'iir u'oidd ac.iin lie nnslied — lirovidcd Oh'l:-l'ii of ore-reserves. ( )ne lias to admit that the industry of mining can be conducted o;i widely vary- ing principles, and expediency will often ride rough-shod over svstems : bm mining business which is conduct 'd upon the method of expedients, although perhaps it is a necessary stage of such a business, cannot be regarded as either safe or substatuial. and if tb.e principles which th''s article is intended to elucidate do not apply in any given case, then T think so much the worse for that case Tn1,atinpsl-.,,r,-T Tune fs Tnni ^- A. DeNNY U IH '1 -ii EQUIPMENT AND ORE-RESERVES.— IV. (Eduorial, Ju)y Ji, i9"4) The discussion upon this important subject has been r>.vived by the vahiable contribution from Mr. G. A. Denny, which we pubhshed last week. (Jur readers will join with us in appreciation of so earnest and thorough a presentation of his views. Such discussion fulfills one of the highest purposes of technical journalism. Many aspects of the inquiry were touched upon in the letter referred to. One of them calls for present notice. Mr. Denny demurs to Mr. Hoover's suggestion that the bank* 'f the Hand is so uniform in [jcrsisten and in the gi ^.; of ore that mining finance in South .ifrica is shorn of ail the br: 'Hng dangers ar-sing from the vaga- ries of ore deposit!. II elsewhere. Both of these experi- enced engineers are right, relatively ; for it is altogether a matter of comparison. The reefs of the Rand, in their uniform tcncir and continuity, do somewhat resemble coal seams — more than they do 'gash-veins,' for example, lenses in schist, or "pockets' in liinestonc. As compared with these tyjies of uncertainty in ore occurrence, they arc strikingly regular and calculable; and yet when judged by such a standard of uniformity as a coal seam, the gold- bearing lodes of the Rand vary within margins wide enough sometimes to try the nerves of cautious financiers. Recent events have emphasized this. The sliares of the Bonanza company fell from £6] to £2, because ih ,rade of the ore (opened up declined so much that the '-s. lated life of the mine was reduced from over four years lO about 20 months. This is one of the shares which have been authoritatively considered as certainties, outside the limits of ordinary speculation. On the other hand, the life of Crown Reef has been extcmled iti estimates from seven years' supply of ore for 120 stamp-, to 14 years' supply for 240 stamjis, simply because previous calcula- EQCIPMBXT AXU ORB-RESERVES 1245 tioiis had onlv included the maicrial U> he ublf'-icd from the South Reef and the Main Reef Leader, while later developments have demonstrated that the wider Main Reef itself can he reckoned upon for an exceedingly big tonnage of payable ore. 1-acts such as these indicate that plans for c(iuipnient are likely to be disturbed by the un- foreseen even at Johannesburg. Indeed, we doubt very much if gold mining would have half the zest to the m- vestor if the element of speculation were entirely elimi- nated, and it is well at all times to emphasize the essential distinction between even the best mining venture and the securities, such as t^rst-class Ijonds, the safety of which is, humanly speaking, guaranteed. L5onds give absolute safety and a very low rate of interest ; mines yield a high return with an inevitable risk ; in some cases the risk is small and the return is large ; in others, otherwise. Both arc equally legitimate as investments. As mining be- comes freed from foolishness and develops on a sound basis, mining shares tend increasingly to attract shrewd men because the proportion of risk to return becomes lessened, while in the case of bonds, that relation becomes less attractive because the safety remains no greater, and no less, while the plethora of trust funds slowly brings about a fall in the rate of interest receivable. EQUIPMENT AND ORE-RESERVES.— V. (E(liti>rial, August 4, 1904.) Ill a recent (liscussii^ni of this subject, reference was made to the (liniiiuuion in "orkinj; costs as a mining region grows older. Aii_\cne inaugurating a mining enter- prise may well afford to consider this factor, before plan- ning for a lessening of expenses on the basis of a large and costly equipment. It is not always realized how great is the drop in costs which follows upon the improved conditions conse([uent upon the growth of a goldfield. In 1894 the average cost of realizing upon the gold per ton of ore shipped from Crifijile Creek must have been fully $40. At that time the smelters charged Si 5 per ton for treatment, the railway took $5 per ton, and these de- ductions, with the higher cost of supplies and machinery. made a fearful inroad into profits. Only high-grade ore could be handled, .sorting was necessary, anfl this multi- plied the original expense of mining. Within five years the smelter rate went down to $6.50 and the railwa}' charge to ?3 ; and in later years the erection of large, cen- trri'ly situated chlorination and cyanide mills, competing in the ore market with the smelters, brought the total charge for both transjxjrt and treatment to a mininnmi, on low-grade ores, of $5 jut ton. In \\'estern Australia, in 1897, the costs in the outlying goldfic'ds averaged mere than the value of an ounce of gok'. The scarcity of water, the dearth of timber and its transport from elsewhere by camels, the distance from ;. Within ;i eoii])le of vc.-irs the ex- tension of the r.iilways, arrangements for securing water from idle iiiiiKs and the skill put into the milling metli- EQUIPMBXT .IXD ORE-RESERVES -'47 ods, reduced c()>ts by 30 to 50 per cent. Tliis was done without ar.v increase of equipment. The minimum figures of recent years are, of course, the result, ir large part, of better equipment and a larger scale of operations: but, quite Pside from this factor, tlie general conditions existing during the earlier years of mining in Western Australia anc' in the Cripple Creek region changed for the better so : uch, that, on the same tonnage and the same equipment at the same mine, the expenses went down within five years to the extent of fullv 50 per cent. That is, to put it plainly, at Cripple Creek costs averaged $40 in 1894 and $23 in 1899: in the outlving districts of Western Australia they averaged $22 in 1897 and $10 in 1902. Tt is obvious that the incre- ment of profit to be gained from a larger output would have been exceeded during this period by the economies due to the rapid improvement in local conditions, and that a management which deferred the enlargement of its equipment would have won a larger final profit than one which wasted its ore-reserves in meeting the heavy ex- penses inci-dental to the youth of a mining district. The subject is one to which we will return. It is well to udd that the high costs at Cripple Creek were due to the fact that of the ore mined not more than one-third underwent shipment; even in rich mii;es one.-half was .sorted out, in others as much as three-quarters or even more. Thus the cost was high per ton of ore rcali/ed This was due to the nature of the ore occurrence. Costs are now about $14 pcr ton as compared to %2}, in 1899, not so much because general conditions have gone on improving, but by reason of tlie larger capacity of the custom mills and the bigger proportion of those low-grade ores on which treatment charge; are relatively low. In Western .Xustralia. similarly, since M)nj the beneficent rcstilts of the CcKilgarlie water scheiTie. the extension of the railways, the improvements in ore reduction and the IP! I 248 77//: /:(-(),V0.1//C".V or MIXIXG sinsc of stability ilue to tlu' (ipciiiiii; up of lar,L;o n.>LTVL's of ore have warranted estimates of an increment of profit due to larger eiiuipmenl, and t(ulay even an outlvinj^ mine like the L'ljsmiipuliian exhibits workin;^ co>ts as low as $544 per ton, inclusive of development and taxes. Considerations such as these prove that the solution of the problem — the ratio of e(|iiipment to ore-reserves — must be determined by the local conditions of each case, and not upon general theory, however w- 11 founded. But a workinc: theory is quite necessary, in order to start with intelligent ideas upon the subject. ORE-RESERVES IN GOLD MINES Tlic Editor: Sir— 1 liavc ju>t ticcn ru-rcadmLC Mr. Hoover's articles of March 24 aiul May Kj, and, if nut luo late in the ticld, I will make a lew remarks on some ]>(uiits raised liy him. Mr. Hoover says that "the maximum profit from any (gold) mine can only be obtained by the most rapid ex- haustion of the mine, and that most rapid exhaustion is to be secured only by the most vigorous prosecution of development and 'he maximum equipment that can be employed." He then goes on to show — as a result of carrying out this system — that an economic limit to a mine's ore reserves intrudes itself as a factor, and that this economic limit works out at abiuit three years. From the technical point of view I feel sure that Air. Hoover's arguments are correct. They are unanswerable, and can- not but be endorsed by technical men. Now let us look at ore reserves from the point of view of those who buy the shares. What do they say? It is a true saying that "those who pay the piper call the tune,' and as the investors in gold mines furnish the capital wherewith the industry is kept going, it is only right that their side of the argument should carry weight. I will .issume that these people know as much about sound finance as Mr. Hoover does about economic mining — in- deed, you will find H. C. Hoover, Esq., the capitalist, among their number. The argument of one 01 this investors' class would be as follows: "I have money to invest and intend to put it in gold mines. I have a sound knowledge of finance, and believe that, besides the value of any capital in the mining industry, my personality will have a sound and steadying influence on a class of securities hitherto held by many people in disrepute. But if I come in, and find money, I brin^' in with me my knowledge of sound ^1 1 1 TIIR liCOXOMICS OF MIXIXG finance, and I insist that the investments placed before nie shall conform tu a certain degree of safety, which de- force I, not you, .shall decide. 1 see that from the technical point of view Mr. Hoover's claim for an ore-reserve of only three \ears is sound; but I, who am asked as a con- se(|uence to risk the sjjreater ])art of my capital on the chance of tindin<,^ ore that is not yet exposed, and know- ing the risks of mining, decline to go in on such terms. .\s a sound financier I wish to insure my capital, and I can do so to a great extent by insisting that there shall he ore-reserves for considerably more than three years ahead. I know that this is not the most economical way of handling the mine, and that there is a loss of interest 1)11 the mt)ney locked up in these extra reserves; but I look on this loss as the price I pay for insuring my capi- tal, and am satisfied to incur it. If my terms don't suit you, I will withdraw from gold mining, and the gamblers and charlatans who have in the past made this industry their hunting groiu.d can return." Under itieal conditions of investment a three years' ore-reserve, as recjuired by Mr. Hoover, would really be enough, for the shares would be capitalized only at such a price as to } ield 30 per cent to the investor, who would tiien, on his three _\ears" reserves, have the respectable proportion of yo per cent of the mine's market capitaliza- tions in sight as net profit. I>ut in a mine that is located in a gond district, with big orebodies, and looking well in the Iwttorn, such a yield as 30 ])er cent is now impossi- ble to secure. If such a min'e can be bought into, to yield 15 per cent, it is as much as the investor can look for; but more often the yield of interest on the price of stand- ard gold mines is found to be no more than 12, 10 or even as lthird more than the net value of the current ore-rcser\-cs, would alter the status of mining investments out of all recognition. In other words, to produce a paradox on one of Mr. 252 Tlir. ECOXOMICS 01- MIMXG Hoovvr's favDriie cxprcssicjiis — amortizati' .ii would set in, and tin- invcstini,' body, instead of dying, would be on the higli road to recovery London, July 20, il)l:tt'raf' <1 : a cr. -tai.nu- ,ni!i\ idiial brcniiU' an anior- pliuus aggregate. \ou cannot sji.dicate character. ORE-RESERVES ^AuKUil I ;04.) Tin- lid it or: SiK — 1 may be pardomd lor rtturning to the char^u , as tlic iiiaiur has privcd uf soiiii.' ii.tcrtst. In the JuUKNAL oi April 21, Mr. Lawrence seems t ' object to the use of the word amortization,' and before his onslauf,dit 1 hasten to enireiicli myself behind prece dent. My assistant, at my rceiiiest, has scanned the pages of two well-known standard works on mining, and finds that the word amorti/ation' appears in those pages im less than 162 times. As to the exact Mieaniiig of the word, •Investor,' in your issue of June 2'. has truly exi)lainiil the origin ■ f the word and its most proper Use. I do not wish, iKHvever, to be taken as claiming amortization as a common feature "i mining finance. Amortization, a.^ used here, is a factor necessarv to consider in tinancia! calculations, yet it is a thing not often actually set out i>f dividends. In other words, the recovery of capital from a wasting enterprise within a given period is a necessary factor in the calculation of \hc pros and cons of that en- terprise. Having served for tiie purpo-t. of calculation, it is quite inimater' il whether the $j received from this enterprise should be separated and each stamped indi- vidnallv — one as amortization and the other as dividend — (^r not. In the JofRN.\L of March 31, Mr. Spilsbury says: "In the first place, from my own experience, I can safely say that the ore-treatment plant, whether milling, concentrat- ing, smelting, or other reduction means, of over 75 per cent of the mines I have know.i. is from initial erection well in excess of the output of the mine under all ordinary conditions- of development." I sympathize most deeply with Mr. Spilsbury that in 75 per cent of his experience Sice article 'Aniorti^ntion.' by F. Ilohart. p J_'I. ::.,() Till-. liCOXOMICS OV MIXIXC I ai\(l practice his l^t lias bi-i'ii ca-t aiiK'tii: niiMiiai.aKfd mines. I carefully excluded tliis class in fcnuidinK' my ar- munent, an.l 1 cannot accept llie aliove -tatcnuiit a., any iifutation of my ^i-ncralizatidii. Mr. Siidsliury j^ivcs an example "f a mine whicli. I d-erve, has the fnllouinK' characteristics : 1. I'nder ordinary conditions of devel i)ment, it re- turns a fair profit and an ■■amortization fund oi 5 jier cent." 2. With mine development of a viyor which I propose, I ohserve that the hauling' engine will not handle the waste dirt, and that the profit- will all be eaten up hy doint:; this increased development. 3. I ohserve that. t;iven thi.- development done, the mine is not likely, with its jirimary plant, to earn enonj^h protii to build the secondary plant. 4. Supposing tl'.at tiie seccjiidary plant be built, the profit derived from the combined plants will possibly be less than it would from the primary plain. The case seems to me al)snlutely hopeless. I must again extend my sympathy to Mr. Spilsbury in having a mine of sucli truly w. etched character, in that the margin of profit is too narrow to stand such a campaign, and that dispersion of the orebodies seems so great, and tiie waste dirt is of such enormous proportions, that neither the excavations for ore give room enoiigh to stow it away, nor is the hauling engine good enougli to cojx' with it. It is a most trying case, and I feel like admitting at once that this instance is like those emanations of the human brain called nightmares, entirely out of the reach of sound kigic. My heart especially gix-s out to Mr. Spilsbury when I notice that in this particular instance an amortiza- tion fund of 5 per cent is considered sufficient, and there- fore that the life of tins wretched mine is bound to be at least 16 years. If Mr. Spilsbury, however, will give us the figures as to the size of the orebodies, the distance ORi:-Riis!:h'ri:s 257 between them, the ijnifit jht tmi. the totn.l workinp cnsts and the fixed l•har^,'e^, I will .'ii^ree to try to mn'-e my plan fit or show that hopes of nniortiz-.-ion before death should he abandoned. for Mr. Itipalls' letter in the Joirn-.m. of May 5, and Mr. I'.rown's letter of May 26, I have to than': l)Oth Mr. int,'alls and Mr. ilniwii for the kindly trouMv they have taken to nnderstand tli'' poinis whiih I desired to make clear and the support they havi i,'ivt'n I how to Mr. Infjalls' suggestion that in Muh nutal mines as have a product of variable price tlu' iiu^'stion may, ui certain conditions, be very much modi'iid. Mr. liruwn has pre- pared a useful tal>!e. which I trust Mr. Spilsbury will avail himself of. -s it very much simplifies the application of the mati^r and might assist him in his troublous practice. As to Mr. Brown's .iiiggestion cf the temptation of superintendents to treat rock rendered profitable by the lowermg of costs, due to increased equipment, and thus lowering the avcidge profit of the mine, so as to even lower the total profit and to upset the calculations on which the extend'^ 1 plant was authorized, I believe Mr. Brown should carry his argument somewhat further — althoup;h, aside fror,. the immediate question, 1 might observe that superintendents should no^ yield to the temptation to do wrong. If there exists in a mine such an amount of ore of a lower grade which can be profitably worked by a reduction of costs, to be secured by larger equipment, as will affect the total output, then this ore forms a problem by itself, entirely aside from the ore which was within the scope of the pr-mary plant. Either this secondary ore warrants an increase in equipment to work it, upon its merits alone, or it does not. If it does so warrant, and the primary ore also warrants an exien- sion of plant for reasons set out in my programme, then there should be two extci.sions of the plant and not one. 258 TUB ECOXOMICS OF MIXING In your issue nf April 21, yuu, in effect, say tliat tlic unashamed and essential American idea is that it is pcKir business to mine for jxisterity, and I assume from the context that \ou otYer this as a criticism on my plan. 'Ihe proposal 1 have laid down will, if followed, exhaust a mine far more ([uickly than is common in American prac- tice. It is my helief that it is possible to extend the de- velopment in the average mine by the depth to which the shaft can be sunk, say 350 to 450 ft. per annum, and if my plan were followed, mines would be exhausted with this rapidity. Instead of most of the American mines being more than 10 years old and few of them excavated to a depth of 1.500 ft., they would, had my plan been followed, been excavated J a depth of over 3,000 ft.; in fact, amon<; the most serious objections which I see to the proposal which I have made, is r'-t that it works the mines too slowly, but that it works them too fast. It has been suggested to me that from the broad standpoint of public good it will exhaust the mines too rapidly. As Mr. Ingalls points out in — say, copper mines — this pro- gramme would Hood the market with metal. In your issue of April ji you raise the question of the occasional desire on the part of a mine-owner to devote himself to development work with a view to increasing his ore-reserves and profit in sight to a figure desirable from the standpoint of .sale of the mine. This, of course, is a matter of policy entirely outside the discussion of a method to get the great. ^ ultimate profit on the ore itself —this involves the gre:.t science of getting the most money out of some other human being. In your issue of June 23, Mr. Bancroft raises an im- porta. t subject in a discussion of the care and nurture of infant mines. I wholly agree that tlie problems which surround the installation of the primary plant may often be far different from those of the secondary plant. Mr. Bancroft's article I must jwint out to one critic as my ORE-RF.SILRl'RS L'no justification for statint^ the case in the manner in which I did — that the real proMem of ratio hcs for its solution in expansion, not in original installation. If I were poinp to generalize on the subject of nrhnary plants 1 should probably fall back upon the principle of a friend whose occupation i the operation of mines through their nursery stapes; tha. is, "In common business pru- dence do not erect a treatment plant at all until there is enough profit in sight to repay the cost of it." H. C. Hoover. Johannesburg, July 15, 1904, NO-LIABILITY COMPANIES (^eptcInl)e^ 8, 1904-) The Editor: 5iK__ln your ma\ be re((uired 'Aitli the >ub-Lriptii)ii. and then 3d. pir month per sliari .s ealleil ; this l)rings in £125 per n nth. All wnrk will be earried out in the most sliji lod niannei to inak the money iri' as lar as possible at the partieu, ^r m lent, with the hi;pe tiiat the mi'ie wilt soon be able to pay its way. It is true, many pc( iile have p; t money into mines nn this sort of a basis who won' not on anv other, miners inakinL'' £2 per week owninp and paving' ealls on small blm-ks of shares. These small hM!dinij;s, no d'>ulil. atj^reL^ate eonsiderable --nms and constitute an i.nportant pereent;n,'e of the total capi- tal nivested in mitu- in this part of the world, and, too, tliey materially supi)ort the industry ; \ et \\ ith a proper workini:; capital in the beL^inninu,^ at t!u disposal of a con".- petcnt man, a .threat deal more could be done with the same cash, and therefore with the greater chance of success. Another great objection to the ncKliability companv is the ease with which it lends itself to the ends 01 the dis- honest company pr;. ii>ter. In the limitid-liability com- pany the larger sums ri quired are a])t to cause a closer invest 'Ration into the merits nf a property , whereas in the nodiability conipany, as the payments arc intermittent, smaller ami not a> much felt by the investor, he is willing to take a bigger risk, because, lu- argues, he can drop out at any time, and he often goe^ mto a company much as he would put u|) money on a hor.^e race. ( )nce in, glowing rejxirts frfim the mine keep him [laxing calls, until often he has a consiilerable sum invested, and then continues, because he has alreadv so nuuii at stake. Taking advan- tage f>f this weaknes.- of iuiman nature, the dishonest promoter gets one or more exceeding!) favorable rejx^'rts from a certain class of mining quack and, w ith these as a NO-LI. iBILITV COM P. IMES 203 l.;isi>;, be snlicits sul)srri])tinns. Tlu' owner is to he paid, pi rliaps, a certain amount of cash, in cast' of flotation ; tile promoter reserves for himself a sufficient numher of siiares, issued as fully paid, and .he rest are offered to the puhlic. Xaturally, attenii)ts are made to create an artificial value in the shares, by issuing ojlowing reports from the mine, and hy whatever other means are at hand. < )nce a demand for shares is created, out j.;oes the pro- tin iter, although, as his shares are fully paid up. he may find it to his advanias:je to hold on for a considerable lcnf:fth of time as the mrre moiiey paid in calls, other thinj^s beini^ equal, the more valuable his own holdings become. Despite all its handicaps, the noliabilily company con- tinues, and will continue, to exist in Australia, as it af- fords the working miner and small capitalist an oppor- tunity of niaki'ig a stake, and in many other wnys suits the conditions of the country. It must be borne in mind that, to a very large extent, the ores are free milling, and can be treated in comparat:^'ely inexpensive plants, so that, as soon as the pay-shoot is encountered, the property can begin to pay its way without the necessity of having to plan a special metallurgical plant. C. S. Herzig. Melbourne, July 25, 1904. i ' ENGINEERS* ESTIMATES OF COSTS By \V. R. l.NGALLS. (September ^-;, 1^04.) Mr. Wliinery, in an able paper in a recent issue of Tlic E>igiiiccniig Nczcs, discusses the prevalent distrust of ens^incerinj; estimates ; he admits this distrust to be nut without excuse, unless tlie estimates are reliable. lie therefore analyses the causes that seem to discredit tin- more carefully prepared e>tiniates. Into every complete estimate t be performed; 3, best metlind of execution ; 4, unit cost of the various items ; 5, general expense; 6, market fluctuations; 7, ability and skill of execution; 8, integrity and honesty in execution; o, for- tuitous incidents; 10, assumption that plan and scope of work will not be altered. Mr. W hinery considers that only items i to 5 are properly within the scope of the engineer, ai, 1 argues that he is no better able to forescf the contingencies that may ari>e under items O to 10 than the man of business, and therefore should disclaim responsibility for prophecy co'icerning them. All of this should be distinctly understood, however, and a state- ment to accompany an estimate, something like the fol- lowing, is therefore proposed : "The survevs and examinations for the proposed im- provement have been made with unusual care and thor- oughness, and plans and outline specifications have been worked out and considered, with great care; the quanti- ties and the character of the work involved have been asccrtaine rk bavin- been i;iven full consideration. L'nder the In ad of Ljeneral expenses we have added such sums for e!i,£,dneeriiiir superintendence, clerical work, and interest and depreciation upoi. plant as in our opinion should fullv cover these items of cost. The estimate assumes that the \Nork will be conducted witli the average skill and efficiency. It makes no allowance for possible changes in the plan or scope of the improvement we have outlined, nor for changes in the market value of material and labor. No allowance is ma ie in the estimate for pos- sible inii)roi)er f)r dishonest administration; nor for cas- ualties and conlinccencie:, which can'iot now be foreseen, but which, judfjini,' from our expi'rience on work of simi- lar character, -luuild not exceed per cent upon the total we have rep Tted." I do not a<,'ree with Mr. Whinery that the ent^incer is no Iietter able to forecast the imcert:iin contin}:;encies than the lawyer, financier or man of business. He should know better iliaii they as to the ranges in the prices of the labor and materi.il that he has to do with, better a?- to the limits, ability and skill in the execution of this kind of work, better as to the t::cneral nature (>f tlie fortuitous accidents that may liajiijcn and the ways of puardiiiL;' a^^'iinst them, and Iietter ns to the prob.ahie losses lhrou).;;h dishonesty, liecau -e al! of tiiit is |)art of the experience that he has fjained in '!.e execution of similar work. If he has not done similar work he canno; be expected tn make a trustworthy estimate; but if b.- has. he is naturally belter able to forecast the chances than the lawyer, finan- I'OG 7/7/; ECOXOMICS Of MISISG i-RT nr mail of Iuimirss who has had im Mich cxpcrii'iici; at all. Ill i a husiness man in eni^ineenii!; matters is when lie is something' of an engineer himself, which in fact many modern husiness men are. 1 think that no hlamc will he attached either to the engineer or husiness man for a cost in excess of estimate which is due to a de- fakatioti of funds, or a change in the plan and scope of the work after the estimate was made, although the en- gineer may even foresee the possible advisability, or nccessitv, for making certain changes from the original plans and can also estimate in advance their probable cost. I think that Mr. \\ hinery rather hedged from his original position when he presented his proposed e.><- planatorv note to acconij)any an estimate, which is in my opinion fairly well expresses!, except it does not go (luite far enough, because the engineers can say : "We have based our figures u,)'>n the p.-cseiit market value of materials and labor in the region where the work is to be done. These values are — per cent alwve (or below) the average of the previous 5 (or lo") years. The general trend of the market has recently been upward (or downward). The jjroportion of lal)or in the total estimate of cost is — per cent; of materials, — per c it, etc." Une of the questions that is frequently asked the en- gineer is, What would lie the effect of a reduction in the prices for labor and material? Plans and estimates for a certain work have been prepared. The work has been deferred. A year later, the engineer is asked what \\ill be the cost of the work then. A large work, to run through a series of years, is to be undertaken. The prices for labor and material are bound to change during /r.Vr7/.V/r/:A\V r.STlM.ITliS Ol- costs L'f.7 that piriud. At the Ijc^iniiinj,' tluy may Ik at tlu- li.uot uii rii'oril, cli)>e Id licd-mck. witli cvcrv jii'isiJi-ct (jf an upward trend in the markets. The cnj,nniiT sIkhiM know this; it is his Inisincss to know it; and if he l)asc> an estimate on the minimmn prices he is as niiicii to blame as if lie were at error in iiis qnantities. Mr. W'hinery's su.t,'L:estion to di>tinH:iiish clearlv be- tween the mure and tlie less certain jiarts of an estimate is praisesvurtiiy. It is anaI<>j,'ons to the discriminalinn of 'iKisitive ore,' 'prolialile ore' and possible ore" b\- the en- gineer vakiitii,' a mine. I-'.ither in estimating the co,t of a works or the vahu' of a mine, it is the engmeer's bnsi- iiess to e.\[)re>> an expert ojiinion: and in renderinjj onl\- a partial opinion, leavin;; someone else to draw the final conckision in order to shield himself fnnn responsibilitv, he is derelict in his diUy. A deliberate overstiniatc is as reprehensible as an underestimate. The commercial pur- pose of an engineer's estimate is not merely to indicate how much money is i:;oinc: to be required, but also to serve as a basis for calculation of the probable return on the money. There are plenty of enpincers in practice who are altle to estimate closely what work will actually cost, as proved by experience. They command la -pc fees, and properlv, for their work involves technical and l)usiness knowledge of the highest order. The financier slionid see that he gets this kind of engineer, and when he is sure that he has. he should be careful not to obtrude liis own less expert knowl- edge. Fair industrial projects are not infrequently re- jected as not good enough, because a .soimd engineering estimate of cost is increased 25 per cnt, _^3 1-3 per cent, or more "on general principles" by the business man whose previous experience has been gained at the ex- pense of defective engineering advice." GOLD DREDGING IN CALIFORNIA By Chas. G. Yalk (September 15, I'.KH ) The following; data relative to costs of a drcd.LCc operat- ing at ( )rovilK . I al., are tlie averat;es coverini,' three years' work, and are taken from the books of a company: Size of In-ckets, 5 cu. ft.; average speed of bucket., 12 per minute; avera^a- bank measure per month, 4'>,(M'^ cu. vd. ; avera',a' hours running per montli, 535 : average kw. lionrs per month, 23,995; average cost of power per montli, ^35').93; average cost of oil, grease and sundries, $13. ji); average co-t of repairs, $1,212.0); average ofilice anil general expenses, $177.40: average labor cost, •>4,5S7 i)er annum, or over 30 per cent interest on the ca[)ital invested. I'nilahly the best showing that can be made as to low costs i> in another instance at < )roville, where a monthly statement shows that 50.760 cu. yd. were dredged, or an average of 1.^)92 en. yd. for each working day, at a total cost, with all expenses, of i.(>(>c. per cu. yd. The average yield of the ground per cu. yd. was 18.9c., and the net profit for the month was $7,744- This was done with a 5-ft. continuous bucket dredge. M GOLD DREDGING (October ti, I'.KH ) The Editor: SiK — In your issue of Septet. ibtr 15 we note an erii- torial j^'ivin^; costs of f,oItl dred^iii)^ ,it ( )rovillo. Having recently had occasion to invcst:jj;atc this matter, we take tiie hberty of (luesiioning tlie accuracy of the fgures given. 'I lie cost per yard, 4..SHC., is below the general experi- ence of this ('i trict. Seven cents per yard would he nnich nearer he actual operatinij expense of the 5-ft. dredj;cs now in use. The last company to invatle this field, guided by the previous results obtained, has al- lowed 8c. per yard to cover operating expense and depre- ciation, the latter item being estimated at about ic. per yard. The statement of 23.0 per month is also much below the best results so far obtained. There are several instances where dredges have been operated for a month or more at a cost of less than 4c. per yard, but estimates of costs, yardage, etc., from periods of one month arc entirely mis- leading. Repair exi)enses range from one-ouarter to one-half the total cost of operations, and for many months they may be comparatively small. This, of course, will give a large yardage and low monthly expense. Conse- quently the cost per yard will be much below the normal. On the other hand, a month when much- repairing and renewal of dredge parts took place will give a low yard- age and a high monthly operating expense, giving costs per yard much above the average. One dredge at Oroville ran continuously for eight months, making a sjilcndid lecord, and then shut down 39 (lavs for repairs. The fact, tiicrefore, is obvious that MICROCOPY RESOIUTION TEST CHART ANSI a.id ISO TEST CHART No 2 1.0 I.I Jii in III 2.5 150 ""^"^ 11111 = ■32 36 I- am 140 2.2 1:11= 2.0 1.8 1.25 1.4 ^ APP LIED IM/^GE Jnc =^ : I Mom Stfe#t \^ ■■■'. New To'h U609 uSA = ,ai - 03OO - Phiin* :7o Tin-- r.COXOMICS Of MI.MXC costs per van! are reliable only when periods of a year or more are cnisidereil. The present tendeney is to increase the size of the buckets and the stren};tli of the wearin.; |)arts. This in- creases tile yardat;e. with ])ractically the same labor charge, and a less than proportional increase in the ex- pense for jiower and repairs. It is expected that the im- proved dredj;es ca])able of handlintj $80,000 cu. yd. ant! upward per month will reduce the costs to 5c., and lower, ])er yard, but this cannot be done with dredges having; a capacity of only 46,000 yards per month. Yours respectfully, Stebbins & Smith. San Francisco, September 22, 1(^4. [Tliis criticism is made fairly and with some reason. Wc can quote average costs and yield for a well-known dredging company at Oroville, which has been in opera- tion for 5 years The average cost for each year has ranged between 4.92c. and 7.47c., averaging 6c. for the whole period ; the yield has averaged 13c. per yard. — Editor.] MINING IN MISSOURI (November 3, ia04 ) The Editor: Sir— In Missouri there are two important mining dis- tricts. The Joplin district, in the soutiuvest, is the iarpest producer of zinc in the United States. The mines of St. Francois county, in the southeast, rank that district as the second lar<,a'st producer of lead. The JopHn district is also a considerable producer of lead froin ore concen- trated, as a by-product, in the milling of the zinc or^- Such comparisons as are to be made in this letter are not for the purpose of pointing out the relative merits of the two districts as fields for mining operations, but merelv to show in a striking way the baneful results of the labor union policy as applied to mining. Everyone knows what the results have been in Colorado, but— fortunately, lack- ing the gloomy record of outrage and bloodshed— Mis- souri presents the more instructive industrial picture of "before and after," which it can show contemporaneously. The ore mined at Joplin yields on the average about 4.5 per cent of blende, worth, say, $35 per ton, under the normal conditions of the present time, and 0.5 per cent galena, worth, say, $50, or an aggregate of 5 per cent of mineral worth about $36.50. The ore mined at Bonne Terrc and Flat River yields about 5 per cent of galena, worth about $37.25 per ton f.o.b. mines, when lead is at 4c. St. Louis. At Joplin there is great and general prosperity. In St. Francois county the mining companies are struggling along at little or no profit, hoping vainly for an amelioration in the conditions. It is strange that ore of the same grade and value can be worked profitably at one place and cannot be worked profitably at another place m the same State, especially when the physical conditions are all apparently in favor of the unprofitable mines. At Joplin there are comparatively small lenses of ore 27:: Till-. liCUXOMICS 01- ML\'L\'G an.l .-licet deposits, avcrat;ing uiily about ramshackle mills of comparatively small capacity, the entire cost of opening a mine and equipping it with plant to treat lo tons per hour being only about $i5,cxjo. At I'.onne Terre and llat River there are immense shoots of nre, affording stopes of 20 ft. to 80 ft. in height, and width almost to suit; the ore an easily mined dolomite, -round of character reiiuiring no timbering, depth of mines only slightly greater than at Joplin, and no greater inllu.\ of water, except in two or three instances; the mines opened by line large shafts, cMiuipped with nearly the most modern facilities; the ore dressed in complete and costly mills of 500 to 1,500 tons daily capacity. Surely St. Francois county has all the advantages of physical condition, and theorelically ought to .surpass foi>lin in operating costs. The explanation of why it does not, involves some technical factors, but the chief cause is to be found in the character of the miners and their work. The mines of St. Francois county used to make money. The mininuim price of lead in the history of that metal did not Slop them, and they have shown go(,d jjrofits when lead was considerably less than 4c. per lb. This, however, was before the labor union was organized m the district. I'he mines of St. Francois county are operated by large companies. The cost of opening and equipping a mine there is so large that a company with abundant capital is rcciuired. I'or that reason there is no leasing nor any in- dividual operations. The condition of the miners was good: they were paid high wages, as compared with the scale for other trades in that part of the country; the il//.\7.\(; /.\- MISSOURI 27.] (lay's work of lo hours was no lonj^cr tlian was required of other artisans; the mines were sanitary and in no way especially dangerous; the men were well cared for i'v the • iipanies. The entire niininj; district is pleas- antly situated, far more pleasantly than the averajje. The climate is pood; all the conditions of livinp are pood. The men were well satisfied, and - peneral air of prosperity pervaded the entire district. This was before the diseases of iniionism and socialism were contracted. In 'he struggle which ensued, the unions were vic- torious. The companies made no fight in line, shoulder to shoulder. Some of them made no fight at all, and sur- rendered without a shot. The others fought alone, one by one, and were overwhelmed one after the other. The unions won an increase in wages, a reduction in working time to 8 hours per day, and the victor's right to despise the conquered, which in successful labor wars takes the form of cheating the employer in the work that he pays for. The amount of work done per hour at Flat River is materially less than before the advent of the union. This is the chief reason why the mines of southeastern Missouri are not making money. Joplin has never been tainted with unionism. It has always been the great camp of the small miner. The capi- tal required to oi)en and operate a mine there is not large, and the operators themselves to a large extent take hoM and work with their men. Every hired man wears on his !uad the hat of a future operator. He saves his money, anplin ,ind Flat River show'^ at lirst sight tliat the Jojili,, man has the more fun. The 274 THE I-.COSUMICS Ol' MIXING man who lias dune a good .s(|uarc da_v"s wurk is better calcidated to enjoy himself, anyway, than the man who has listlessly loafed ihrongh his task. And the Juplin men certainly work. A pair of men break more to the drill in their iiard, lliniy .i^nmnd. with no very high breasts to stope on, than the b'lat River man breaks in hi.s niag- niheeut chambers in limestone; and when it comes to slioveling and tramming, there is no comparison at all. Xor has the former any kind company to provide him with lavatories and lockers, look out for his safety, and pay him damages for unavoidable accidents. The Joplin man simply takes his chances — often they are big chances — ])uts in an honest day's work, and gets on in the world if ther; is anything in him at all. Hut Joplin has no union. Joplin has tb.e liest American spirit, and, conse- quentlv, Jnplin is iirospcriius, and can mine 5 per cent ore with little tubs and ramshackle mills, and make money ; while the far greater deposits of an equally valuable ore in St. I'rancois county cannot be made to pay a reasonable return on the capital rccpiired to work them. \V. R. IXG.XLI.S. New York, October 18, 1904. SECRET RESERVES (Eilitorial, November 24. 1904.) London and Kalgoorlit- arc perturbed at the present time over the riglu and wrong of a practice which in dif- ferrnt forms is familiar to mine managers elsewhere ; we refer to the mamtenance of a reserve intended to e.iualizc a variable output. This question was discussed in our issue of May 12, 1904, by Mr. F. H. Bathurst, of the Melbourne Ar;:us; but that well-known authority on min- ing matters dealt with the problem in its more local as- pects, as exemplified by companies operating in Victoria However, the principle involved is the same. The im- portance of it from a financial standpoint has been em- phasized by the Boulder Perseverance fiasco, an inquiry into which has elicited the fact that a reserve of 20000 oz. of gold-say, $40o,ooo-was held at the mine; from this store of unreported bullion, it was the custom to take three or four thousand ounces at a time in order to in- crease the monthly returns when these fell off. In loon the actual output of the mine was 209,206 oz., but the output declared was 219.923 oz. In January, 1904. the actual output was 12.426 oz. ; hut ,7,471 oz. was sVated to be the production of the mine for that month. In the first three months the secret reserve of bullion was depleted to the extent of 10,000 oz. During the first six months of the current year it became.manifest that the mine coul.l not maintain a rate of output based upon a certain esti- mate of ore reserves: but the gradual falling off was ob- sctired by doctoring the returns in the manner described iintil finally, the secret reserve being exhausted, the facts had to come out, and there was a collapse, as injurious to the professional men connected with the management as It was distressing to shareholders who had bought stock at a price based upon a fictitious production. In the course of an official inquiry, the statement was made that '_'7t; nil'- lA'OXO.MICS ()!■ M!\'I\'(- Ihc Drnva-r.rowiihill, a i;nai irnl.l mine, tli.irmighly well mana«,n-(l. gave out niomhlv returns sc uniform in thetr amount that the services of a secret reserve were mani- fest. It was also stated that this practice was usual m Western Australia. Before proceeding further, let it be emphasized tliat Western .\ustralia is not the one corrupt spot in the mul- ing world ; it has had several unsavory scandals, and U ha'^s been the victim of a number of unscrupulous cam- paigns, waged both on the i)ear and the bull side of the market. This is '-le not to anv inherent Westralian de- pravitv, but, as is obvious to men of experience, to the unusual richness of the orebodies, a richness which .n nature is concomitant with irregularity of tjccnrrcnce. As against these troubles, so hurtful to the advance of mining as a legitimate business, must be place.l a big credit for honest management, technical skill and unre- mitting energy, on the part of a handful of technical men. both English and American, without whom the Westra- lian mining conii)anies would have been in a bad way indeed. In brief, human nature being the same the world over, mines characterized by rich and erratic orebod.es afford the ma.ximum of temptatir:-. to wrong-doing. A iUictuating output and a secret reserve represent a state of e(iuilibriuin comparable to a powder magazine enclosing a small boy armed with fireworks. We are aware that the gold is not necessarily luhl in a vault : it is the custom to realize upon it and to carry a balance at the bank, transfers from which effect the purpose of reg- ulating the returns as reported ; but even though burglary of bullion is noi involved, a theft no less vital is always on the cards— the loss oi one man's reputation or an- other's propertv as expressed in share values. Take the case in point; the absentee manager of the Boulder Ter- severance has had to suffer from statements of output which— explain it as you will— were false. To go fur- s/:ch'i:r i the fullest publicity, is the onlv cure for the present condition of affairs at Kalgoorlie ; it is as necessary as fresh air to an invalid. EQUIPMENT AND ORE-RESERVES— V. 1 lie discussion on the prnpcr ratio t)t.iuci.'n nunc cquipnuiu ami orc-n. servos is taken up ay;ain in this issro hy an L'nj:,Mnccr whose experience f;ives special value to liis o!)servations. Previous contriijutions on this suhjcct have !)rouj;ht out two poiius of view, which, natu/ally enou^'h, are held to re[iresent tlie opposite standpoints of fuiancia! surety and practical niinin^^; the quo a>ks lor the niaxiimnn security consistent with a reasonable rate of interc-t ; the other demands the larpest pain in the least time. .Mr. Curie's now famous requirement of a r«-per- cent reserve represents the investment view; while Mr. Hoover's insistence on the increment of profit due to rapidity of extraction expresses the intention to get the largest amount of money out of a given body of ore. As a matter of fact, any discussion of these di (Terences of opinion will continue to be at cross purposes until it is realized that only one form of ownership is coiUemplatcd, namely, that of a limited liability company, organized and conducted under certain recognized conditions. If the mine i;-, owned by an individual who has no intention of selling it, tite problem is simplitled; tliere is no share quotation to maintain, no diversity of interests to please, no directors to educate, and no financial press to consider. It becomes simply a question of logical method, striving to make the most money out of the ore deposit ; the aim will be to avoi, you decrease tlie uncertaiiity : hut the ri>.k remains — it is the essence of minint;. 'I herefore, the increased eiimpmeiu and the taster extraction — with the concurrent advance of ileveiopment. a lari,^^T (Hvidend and a smaller ore-re-erve — represent tile MiumUst kuid of ininini,'. Under coni- panv nianayement. that rate of extraction in which, as Mr. Hoover claims, the increment of profit due to en- lar_i;ed e(iuipment halances the amortization of the addi- tional capital invested in the e(|tiipnient. .L;ives the lluctu- atiiif,' ownership the hest return. It thi> is accompanied hv accurate peril xlical estimates of res.rves, hy a frank and freipient record of pro<.;re>>. and li>' a manat,'ement which does not huv or sell the shares of the mine under it-; di- rection, there is achieved the most prolitable form of busi- ness known to the modern world. SECRET RESERVES ( l)ttcii;(icr I, tyo4.) Ill rij^ard to thiij rnatttr, wliich was discussed in our editorial columns last week, it us interesting; tu not- tli- views of four kadint; mine managers at Ka'g inrlie, as elicited by a Royal Cumnimisaion which is [)rubmg the Boulder i'erseverance scandal. In cours. ■>! his evidence, Mr. Richard Hamilton, man- ager of the Great lioulder Proprietary, depused on ojth : "It is the custom of most of the mines here to have a bul- lion reserve. I think it is very a'lvisai)le to have one to kee[) the returns even; it prevents lluctuations in the mar- ket, and enables you to work tlie mine cheaper. If you had to keep the returns even by taking the ore out of the mine, you would not be able to do straightforward stop- ing. The amount of the bullion reserve should depend upon the character of the mine, but half a month's return would be a fair thing. Our reserve is kept locally. If you did not keep a reseive you might have a 25 per cent or 30 per cent variation ; such a fluctuation would affect the market pro!)al)ly to the detriment of the shareholders. I am in favor of limiting the reserve to half the month's output. The bullion reserve does not show in the yearly balance-sheet in every case ; the control of the bullion reserve is generally left to the manager. I have not had any definite instructions to keep up a normal output. The directors do not always know of the bullion reserve. The Chamber of Mines has rcconur.ended that bullion re- serves be kept, but with no limitations as to the amount. I am in favor of giving every opportunity to shareholders of acquiring information about the mines: I would not let them know what the bullion reserve was. I think de- velopments should be announced here simultaneousiv with London : I wouUl also give publicity to the assay plans. nr^A 11 '/M il/1 iin'tl->VinI*-4 r> r\*- Vt « r K,tf ti,^ K,,n:^ 282 JUL liCOXOMJCS Ul- MIMXo nut see that it is iKCissary to have local directors; tlioic who suliscribc the capital naturally want control of the mine. There lines not seem to be a \ery lart;e body of investors in Western Australia; W estralia would derive greater benefit by having:; the mine offices where the capi- tal is available. 1 do not think }ou recjuire any more legis- lation than you liave at present to prevent mining scan- dals ; Royal connnissions, such as the present, would act as a greater deterrent than in enacting fresh legislation." Mr. Hamilton gave a description of his sampling meth- ods, saying he generally took samples not more than to ft. apart. Mr. Robert D. Nicholson, the manager of the Ivanhoe, in the course of iiis statement, said; "1 am in favor of a bullion reserve. In a nune like the Jvanhoe it is (juite possi- ble! to have a variation of 25 per cent in the ouii)ut, and that would be detrimental to investing shareholders. In a mine like the Ivanhoe, where we get slides, the fluctua- tions are considerable. I thiik 75 per cent of the month's output is a fair thing for a bullion reserve. The directors know exactly what the output is ; it is not desirable to let the shareholders know the actual figures. The bullion reserve is merely to regulate the monthly output. Two of the officials on the mine beside myself know what the reserve is. The holding of the reserve makes the costs of mining chea]xr ; for instance, you would leave a lot of low-grade stuti' behind you if you had no bullion reserve to work on." Mr. Xicholson, in tlescribing the sampling practice on his nunc, said he took assays every 3 ft., cut- ting everything above 5 oz. down to that figure m calcu- lating averages. He continued: 'T tlnnk the public gen- erally shiiuld ha\e access to the mine. Tliev luue access to the Ivanhoe; we will show them the assay plans up to the dale the) are receiveii in London; we publish all iniorma- lion here simultaneou-ly with London. 1 do not think it wouli! be wise tlea(ling in our case, and it is a difficult mine t' reckon up the ore reserves. 1 would U'A make evn a iireliminary report on samples taken 50 ft. ai'art; it would he useless. 1 would like to sample at least every 10 ft., and then compare my results with the mine assays: if I were buying a mine 1 would sample every 3 ft. I am in favor of a mine being worked cnienly ; our mine has been open to the public ever since I tex)k charge. 1 consider the keeping of a bullion reserve as- sists us in cheap mining." MINE EQUIPMENT AND ORE-RESERVES (December i. 1904.) 'I'lie Editor: Sir — If a tew vvurds, rather late in the day, can be granted mc, 1 would like to submit a consideration of the dit^'erence between the policy advocated by Mr. Hoover and that urged by Mr. Curie. This difference is partly fundamental, and, in part, one of premises. Mr. Hoover says: "It will be granted that the true objective of min- ing is to gain the greatest profit from a given body of ore." Mr. Curie, using mining as a generic term, em- bracing finance as well as practical management, answers "that the greatest technical economy is one thing and financial security another, that high-pressure development and the economic limit of reserves, while satisfying the one, arc in contravention of basal principles of the other," and further, that capital being the first essential of opera- tions, "those who pay the piper must call the tune." This assumption of the opposition of practical mining and finance is so much of a facer for those engineers who are trying to reach the most economical basis of operations that it is worth our while to examine the mat- ter with some closeness. There is no dispute in this case about the economy to be effected by Mr. Hoover's policy of forced development and unit-plant additions. The financial argimient against it is thpt. while increasing profits, it decreases ore-re- serves, and tends to keep them at about a three years' limit. The investor looks upon ore-reserves as the secur- ity for his investment, and feels that he has little enough of that if he allows tw.o-fifths of his capital (Mr. Curie's ratio) to stand witliout that security. In other words, under normal conditions of bottom development he asks that for every $ioo of stock valuation there should be $60 of actual profit in reserve ; then, if the mine be paying i'>r, I llli 1:CU.\(>MUS Ol- MIMXC lo per CL-iit on that valiiatinii, there wnuKl be six year>' dividends assured in the reserves. The addition of further treatment units may, through tile increment of protits. increase the n.t value of the re- serves by 20 per cent and the annua' dividends I)\- kk) per cent. The increased dividend rate, moreover, has the effect of raising the stock valuation as well, hv per- hajis lao per cent, while the ori'-reserves, in point of time, are diminished by half. I think this states the ar- gument fairly. For the original investors, those who bought on the $iO(5 basis, nti which the property was paying its 10 per cent dividend, there seems to be no question that the sec- ondary ecpiipment has been a financial gain, rcgardleriS of the increased stock valuation, and it is iiard to see what in the condition of the mine should tempt them to sell evei^. at the enhanced price : by so doing they would be sacrificing ;i high-return iiivesimeni. and one that actually exceetled the three-fifths profit in ore-reserves, and could scarcely hope to reinvest their increased capital on as good terms as that. This in itself would tend to strengthen the investment view of mines, and weaken the sjieculative. It may be granted, liowe\er, that some Vv'ould sell, ami the new holders would have a 10 per cent investment, as tile original holders had, but through th- sliort life of the mine they might, by failure of subsequent development, lose part of their capital. The question is whether this ought to be considered in deciding on the secondary plant. Should the present stockholders l)e sacrificed in pocket because of some possible people who may buy the shares later? Stated in this way, the (picstion implies its answer, and I can see no reason why citlicr tlie management or the directory, who ;ire expressly chosen bv the present stock- holders to look after their interests, should have any EQ[-fr.}fl:XT .IXD ORI:-Ri;Si:Rr!:S 287 (loiihts in tlio mattiT. We may all Ik- snrry f(ir excitable and short-si>,rhti-il investors, and Innk forward to the time when a clearer view of what constitutes vahie in a mine will ohtain— may even exert ourselves, a. Mr. I'urle so successfully has done, to brinp the tii le nearer ; hut this is entirely irrespective of present pohc, . In short, it seems to me ah.surd to hesitate about li^ditiiif:: a fire in A's stove because 11 may burn his fingers at it ; rather the clear-seeing economist should argue that some time P. nuist learn all about fires, and the sooner he is scotched the sooner will he become enlightened. Perhaps Mr. Curie would argue the hopelessness of expecting people to sell a share yielding an annual $jo for $ioo, even though, on Mr. Curie's basis, it lacks security. This may he true, but ilocs not this simply indicate that the la\inan does not accept that formula of chances.^ In the absence of the geological and historical data that would give the be.-t evidence obtainable of the future of the mine. or. perlnps. because of inability to under- stand them, he believes he can have no safer guide than his experience in other investments, and, according to what that b;is been, he capitalizes the particular profit. This is not saying that, as an expression of averages. Mr. Curie's formula is not sound; we are considering it as applicable to particular cases, and for such, statements of averages are of d.nibtfi.l value— MlCS Oi MIMSG to ,^c. [iir Ml. [iri'\i.> Id lie i;uu(J prui-'ticc uii'lcr the cir- cunistaiKcs. Tlic j;ravL'l is of a dv-inli siiilctl to (lrcil};iii^, licing from 20 to 6u ft., with a LI iii|)aiati\cly even Miriacc. I'or a gravel deposit, the ^mM is evenly (lislriliuud, ran!;ing, in large tracts, Inun 10 to 33e. per yd. The wlmle Oro- villc tlistrict probably averages about idc. per _\ 1. The gold is all tine, screens with 3/iS-iii. luile-' being u.-^ed. Winters are mild, and im difficulties from freezing are eii- cnuntereil. Water is conveyed by an excellent ditch system to all jiarts nf the district, the expense averaging about $IJ5 per ininith per ivc leiij^nhs of a hole i> treated seiiarately, and the res])eetive aini.unts of ,>;ol(l estimated. Such estimates are cheeked uitii the \\eii;ht of the f.;iiid recovered from the entire liorin.LT. With iiraetiee this otimation l)eeomes fairly accurate. Shafts are preferred where it is possible to sink them, as they ^ive more com- plete and accur.ite information ; hut if water is i)resent in any (|nantity, they become tix) exijensive, and drillini,^ must be resorted to. Owinj; to the avadabilily of Chiiie-e labor, shafts arc cheaper to sink in dry jj^round than drill- holes. About one hole per 5 or 10 acres will serve to sample a larj,'-c tract; but jirospect holes are put down much more frequently in the immediate vicinity of the dr-d,Lre. both before construction and duritij.^ operation. If care is not exercised in prospecting; with drillings; machines, the sample may easily prove misleadiiij,'-. Errors frecjuently occur fn.im the s(|Ueezinj;- of material into the bottom of the casinij, thus sivinp;- a iarL;er sample than is called for by the size of the lu)le. Sliminp and consequent loss of f,'old will sometimes result when too lon|j^ a period of chnrninq- transpires before pumpint; the hole. The casint; should be kejit driven bekjw the point of drillinsj when- ever possible. The practice is to drill and pump the hole in i-ft. sections, the material from each foot bein.s,' panned separately. Where preat care is required, sections of only 6 in. are driile'. and pumped at a time. Frcciuently the whole f(K)t can be pumped with but little drillinj,'-. The drill crew consists of one man in charge, one sand-pump man, one drill-man, one fireman anil one or two laborers. i':»j nil: Li.U.\OMlCS Oi Ml.MSG 'IIk' iiuiii in cluirj^c .-lumld Ikivc a kiiowlcil^c of the i)nn- riljk> nf .^aiiipliii);, U il"<.'.> llit.' paniiini; limiMlt. Where cil i^ used mr fuel, i samiihng with ehurn-drills. under favorable circu!ii>taiiLes, is $J to iiij.30, with $3.50 [)er foot as a iiiaxiinuin. (iold dredges are sinnlar in general tvpe and operati )n ; Init details of design are of great iinporlance. In fact, suc- cessful dredge-building depends upon working out the details, and a dredge properly built for one locality, with given conditions, may i)e totally unlit for another. If a dredge is not suitably constructed for its particular work, the cost of re[)airs is certain to be kirge. Ihe importance of this consideration is shown when it is understood that this item of expense ranges fri.m i)ne-((uarter to one-hall tile total cost of operation. Several types have been tried, l)Ut the li! ket-liiK dredge has now superseded all others. LUickets with a capacity of 3 cu. it. were hrst used; later, dredges were built with 5-ft. buckets, while near Folsoni a 7. 5-ft. bucket has been used with a fair mea-nre of success, and a new dredge, of the same capacity, irect- ing the faults of the first, is now in process of construc- tion. Dredges of 11 and i2-ft. bucket capacity are used in other districts, bu: it is impossible to compare results without data covering a'l tl'e local conditions. Two 5-ft. bucket dredges, built to handle grave! to a depth of 60 tt. below the water level, are now undergoing the severe test of actual operation on the Yuba river. The advantages of a large bucket are increased yard- age with practically the same labor, the pcjssibility of handling i)igger boulders, a less than proportional in- crease of power and general expense, and probably a less than proportional increase in the cost of repairs. 'Ihe clisadvantaues are — a greater first cost, the necessity for special facilities for handling the heavy dredge-parts (,('/./' /'A7 /'(,7,V(, .//' oh'orn.i.r. •j'.i;: 'A 111 II ni.ik;iiL niiaiis i T ixiKual^, ami llic iin n\i>i >l ilitVl- i-iilty ''1 wa-lmi- llu' lar-i' and lu-lil) irn^ular aiUMun'. (if iiialirial dcIiviTi-d l>\ llu- Imcktls Id tlu' scncti. ll >.i'iiiis prcLalik- that tin.- 7.3-lt.. and i»)>sil)ly larger, luickc; will ])ruw i1k iih-t (lt'>iralik' uiukr ocnditidns existing at ( ii-nvilk'. (i,.ld is lost in siviTal ways. A ciTla-n amnuiit ^''^'^ i.tT in till" tailiiiL; t'nmi tlio shiicis ; and. il the .L;r;ivt.l is net ilinn.nL;lil\ ^s.i^luiK tlu- ..•iiar>i.' niali'rial will carry sonu" np till' >lackir. Sonic is left , in no ca-e as much as 20. per \d. With .uoo(l management it is proh.ahle that an extraction of ahont (p per cent i> ohtained. Both cocoa-niattiii},' .nul anj^le-iron rittles have jirovcil excellent devices, most of the ^(M heinj^ caught directly under the screens. While it is not advisable here to f^o into the subject of dredge-building, it is well to mention one or two points. The bucketdine and tumblers are subject to enormous strain and we.ar; their maintenance constitutes the larj;er part of the repairs. .\iiy improvements which increase •he strenj^tli and life of the various wearini,' parts, witii- out excessive increa.-^e in co.st. are sure to be welcomed. The operators have been constantly iir,c;in,i,'- manufactur- ers to make stronger machines, so that the expense in lost time and in repairs will be diminished. The tendency toward increased strength, power and capacity is still in evidence. The 7.5-tt. machine, in prtx-ess of building at F-'olsom, has bucket-pins of 6-in. diani., and other parts in proportion. .\ capacity of 110,000 yd. per month is expected. There is a valuable device for increasing the pitch of the tumbler faces to correspond with increased •2\n THE I^CU.\UMICS Ol- MIMXG pitili ut llii- liiKkcl-iliaiii links, uli'cli results linm the ui-armg (jf the \n\\>. I he rcvulvnig .screen is irahlc ft»r clayey, stiiks f;ra\el. a> it luljis disintej;rati>iii more than the tlat sireeii ; where j;n.iiiul is not stieky, however, the Hat >ereen i> ]ire!\'ral)le, .siiue it co>ts less, is easier to rej)air and reiuw, ami ii>e> U» power. Ii i~ iinportaiu that the power whie'.i drives the hiicket-hiie and that which raises the ladder should ctnne irom ditVereiit mo- tors. There is thus reserve i)ower in ca>e tlu hank caves, so as to cover the ladiler and buckets. \\ lun dreil.i;ini; an overliurdeii ol' harreii >.>il, si'ine convkiiunt method of disposing' <>i it, without pa»in^' it o\er the tables and fouling' the litiles, is desirahle. I'or tlii^, and other pur- po.ses, the iiopper should he made to diM-h.-irj^e into the well, or to one side I'i the dredj;e, when doired. r.oth intermittent and c'lose-coniiected hucket-lines are in use, hut the close-connected type, as a rule, linds more favor amonj; ojK'rators. It is claimed — and it is undouht- edlv true — that the intiTiiiittciil line can lie run faster and tliat the huckets till better; but, as there are only half as mativ buckets tor the same number of links, the (lred,t;- ing capacity is less. An iiiteriiutlcnl biickci-line will han- dle larger boulders than a close-connected one, and it is to be preferred in some cases for this rcaMHi. 'l\) hold the boat against the liank and move ahead, either .spuds or a head-line are u>ed. I'.ach method has advantages and advocates. .\ little tinu- is lo.-,i in walking ahead with spuds, but the labor of l)ur_\ing 'tlead men' for the head-line ;ind moving the latter by hand along a high bank is obviated ; w ider cuts can be dug, hut they are ordinarily of no particular advantage. Spuds hold the dredge steadily against the bank .-iiid obviate the roll- ing and pitching, which are a disadv.antage when the head-line is u.-^ed. It costs more to equip a dredge with .s]iuds, but they ;ire generally preferred in ( )rovillc when dredLMUir in imnds. When working in swiftlv running uuin DKi.ncisc at oix'^rii.i.r. •J'.C) u.itrr, a ilml.^i- nihiiJiml uilli l"illi ln-.nMiia- and ^jiiuts wunM he ir,ililc. < If mining; costs in ^HtKTal, ami of (lrf(!f,'iiii,' costs in particular, it may he said that har.' ti^,n?ri's, withmit de- tails (if the items considered and "f tiie I'lcai ennditions, convey no detiiiite infornialion and are iiractieally value- less. By a little iiookkeepiiit,' dred;,Miii: costs may he made as desired, if the fij^nires iiuluded all expenses iiieurreil during the vear, and an anmniit for the dejjreeiation of the dredj^e. a inueii niore satisfaetory hasis for coinpari- >. ill u-i'Uld he availahle. Amortisation oi the price of the t^'mund ni.inife>tly varies with each case considered, and comparisons are useless. Owiii^' to tiie slack metluMls of measurement fre(|nently employed, the yardapc quoted may easily vary 20 ])er cent. The following; talile of co>ts applies to a 3-5-ft- close- connected, hncket-line dredij;c workini; in the hip;li-\vater eh;innel "i tlie heatiii 1 river, or adjacent thereto; -C.i^t I'tT CnTiic \at'l — Percent' ij I^inlc -ik'e nf ■« c Measure- time in , Kep.iii ^ «; ment. .1.. .ipera- a"'' ^"I" '.i'.i<-r.nl (- :? 1903. yd. dug. ti.m. Lah'-r. Pumt. plies. Kxpense. u; Dec... 3S.0O0 68 ;8 $. since been found advisable to obtain water from a ditch at about $75 per month. ( 'ne new stacker-liclt was boui;lu diu-iiij; the \e.ir and a 4odi. p. innt.;r f.ir the pump>. to repla e one of ,^5 h. p. which pn.ned !nade([uate. While the bucket- line ke[)t in ^ood conditinn. there was no j;eneral replace- ment of parts, the bucket-backs beini^ still in use in < )ctober, 1904- Stacker-bell >.o. 3 u;is purchased in January, i()04. and is now about worn out with 8 months' use, altliou.L;b .guaranteed for one \car. This, with the expense of an entire new bucket-line stacker-belt recently purcba^ed. and other jiarts. has kejjt the costs for I«j04 soniewhat above fij;ures for 11/J3, altliouj^di an in- creased yardat^e averatjint,^ over 40.00(1 cu. \(1. jier month has lieen ilui;'. I he table inchides .ill expen>e incurred ti'r whate\er reason, but does not include interest nor a Sinn lur amortization of the capital invested in land and dredi^e. Above is a summary of tiie opertitim; expense of :i 5-ft. intermittent bucket-dredfjje for the calendar )ear 1903. This dredi^e C(..-.t ^43,000, which is much lower than that of the better class of dred.ms ikjw lieiii^ iiislallid. .Most of the ground was fairly easy dii;^in},^ but little ti,i;ht gravel beint,' encoimlert-d. I'ropdrtion of time in opera- tion. f)<).4: b;mk me.isurement. 474.O10 cu. yd. The aver- age cost was :is folldws: ( )]x'r;itive 1,'ibor. 1.S5C,. jiower. (/n/./) /'A7:7'(;/.\(/ .//• Oh'Oi'lLLi: JUT 1.15c.; rcjiairs ami .NUi)i)lics. ,5.40c.; j^icncral expenses, 1.J5C.; total, 7.71c. per c.i. yd. 'Operative labor' includes superintendent's salary per cubic yard; 'rejiairs and supplies' includes the labor of repairs, as well as the materials; 'general expense' covers i;eiural exjiense at Oroville and at San Francisco, taxes, insurance, and bullion charges, beside tlie expenses of prospect ini,'. To the above should be added interest on the inonev invested, includint;- the dredging; plant and land, which ni.ay be as.^umed as ai)proxiniateIy 0.75c. per yd., and anout $4,500 for yearly depreciation of the dredge, sav ic. per yd. This brings the total expense close to ().5c. per yd. Out of the jjrofits there .still has to be written off another amount to cover loss in the value of the land dredged. The following figures for the month of September. 1904, were made by a new 5-ft., close-connected, bucket- line dredge, digging on a spuil in soft ground 40 ft. dee]), tnider ver\ favorable ( iroville conditions: 'l\ital excava- tion, 96.1 I-' cu. yd. 'idle cost of l.ibnr was 0.957c.; power, o.()()i)c.; supplies, o.<;35c. : sundry. 0.4300c.; taxes and insurance proportion for ttu- month, 0.1075c.; total. .V4JiS5c. jier cu. vd. There was no charge for mainte- nance ancl repairs during the month. All repairing necessary wa> done by the regular crew, no shut-down for that purpose of any moment taking jd.ice, thus accounting for the large yardage and the in- sigiiitlcant expense for repairs. ( ^n the other hand, costs for one company have run for several months togetlier over 20c. per cu. yd., which shows the amount of varia- tion encountered, and the erroneous imiiression given by costs which cover but a short jierind of time. Figures recently (|Uoted.' with no details as to iteni'^ included, give yearly averages of from 4.92 to 7.47c. per cu. yd., the gener.d average fr.r a luimbcr of years bcitig 'Tlii.'- TouKN.M.. OitolKT (>. 1004, p. 541. L".I8 illE JiCU.XUMiCS Ul- AJlMXi, 6c. These figures may contain ;>M legitimate charges against operating costs, notwithstanunig the fact that the intermittent bucket-hne type of dredge is u>ed, as this particular coni])any works under very favorable condi- tiims, namely, dredging alni(i>t exclusively in the present liver chaiiiK-1, thereby saving the ciist of water and en- countering only loo>e and easily dug gravel, and having a well-equipi)ed machine-simp devoted to tlredge-repairs and operating hve dredges in the same vicinity. The manager nf this company, in common with others equally well infnrnied, h.ilds that the average of operating costs fur ihe ( )ni\iile district is certainly not less than "c per cu. yd. at this time. It is evident ihat with more than one dredge, items such as superintentlence. repairs, (jffice expense, etc., may be mati -ially reduced. What the future may Imld forth to operators iif large and improved dredges is hazardous to say, but predictions are freely made of a cost of from 4 to 5c. per yd. under f.avorable circtnnstances. I'onditions favorable to dredging at a low cost must apprr.ximate those found comnmuly at Oroville, namely, a soft and nut uneven bedrock, few boulders over 500 lb. in weight, gravel banks from 20 to 60 ft. deep and not sufticieiuly indurated to re(|uire blasting, a plentiful supply of water, cheap power, machine-^hdp facilities, nearness to supplies and means of transportation, mild winters and mtelligent labor at reasonalde wages. Gold cnnrcntrnted on a h;ird. rdugh bedrock cannot be dredged. \"ery large boulders have to be left with con- siderable gravel surrounle conditions stated above, the expense and difficulty of operation increases, lucessitating a higher grade of ground for pn'iit. The conditions bearing on the cust "i operation are such that eac'n tract nf gmund Ijecomo a prdblem in itself, and aOI.u I>RliD(iI.\G AT OROniJ.T L"J1> any attempt to use the costs obtained under one set of conditions, to predict those which would hold under otliers. without a thorough knowledge of the various elements which enter the problem, will lead to large dis- crepancies between the results predicted and those ac- tually obtained, with a possible consequent failure of the enterprise. Much remains to be learned abnut gold dredging; but, in the future, as well as in the past, progress will no doubt result fmni the helpful professional spirit prevalent in the Oroville district, tiood dredging conditions are not generally found with gravel deposits; but no form of minnig gives r re certain results, pro- vided the average content of the deposit and the ojjeraiing facilities have been found favorable by competent investi- gators, and a suitable dredge be installed. THE BASIS OF VALUE (Editorial, Ueccmbtr 15, iyu4.) The recent break in the share (luotations of the Amal- gamated Copper Cumpany ami the Greene Consolidated L'opper Company tloiihiless illustrates several of the va garies of human nature and some of the eeeentrieities of speculation ; but unlike as these two undertakinj^s un- doubtedly are in many respects, they bear one resemblance in the lack of proper information given to sharehold- ers. It is manifest that when either the financial condi- tions or the metal markets aii'ect adversely the ([uoted value of mining shares, those will sulVer most winch are rendered vulnerable by alisence of reliable information. The ilaily press may very ,.riiperl\ sneer at Mr. '1. \\ . La'vsi>n and attempt to ileu\ him his harti-bmight notoriety bv refirring to him as a ISoston operator"; but the fact is that luither he nor any other adventurer could depress a security such as Amalgamated if it published proper reports and balance sheets. As it is, the hel[)less speculator knows nothing of the assets or of the intrinsic value of the property represmted by his share certiticates ; it may be a South Sea bubble of iridescent air, and he might as \vi '1 throw his money on the roulette table. W'e venture to s.iy, however, that if a proper accounting of the business were given, accompanied by reports on the pin sical condition of the mines by the techn.ical chiefs, such men as Mr. Benjamin B. Thayer or Mr L'harles W. Goodale, the value of Amalg;miated shares would rest on a solid basis of fact. Similarly, in regard to Greene Con- solidated, splendid, mine as it is, nothing definite or sat- isfactory is given in the reports issued to shareholders. Vague and flamboyant statements are issued by the presi- dent and a handsome production is undoubtedly being mad>., but none of the usual ;ind proprr estimates of ore-reserves are given to the shareholders — .md THE BASIS OP r.U.UF. •.w\ uitliont those, tlie rate ')t dividend, cost ot cop- per, and so forth, are illusive. Here af::;ain. we vcn- Uire to sav that it smh menilicrs of the manasenHut as Mr. .\rthnr S. Dwi-ht or Mr. W. P,. Dcvcrenx were to make a rejjort on the ore-reserves and future prospects, there would be tjiven a stability to the investment in this copper mine such as it can never possess under existing circumstances. Whether people buy as pamblcrs or as investors, sooner or later they nuist face the facts, and the fundamental fact in a mining enterprise is the known quantity of ore in the mine. EQUIPMENT AND ORE-RESERVES The Lditor: SiK — 1 have \:w\\ greatly interested in foll(nving the (hscnssion on '(Jre-Reservo,' tci.:,H'llKr with vuur impar- tial treatment of the snbjeel. It is an excellent illustra- tion of the tiimiy fruitlulness of devt-lnping a suhject in this way. Indeed, 1 know of no greater service that the leading mining journal of the world can perform than to thrc-h out such pu/zling (juestions by public discussion. Here is something [iraclical. The faulting of the strata of the -lock market may confuse many a wise and honest director or sui)crintendcnt, who wishes to follow l!;e pay-streak of honesty, and the vein of business. I'irstly, I would cordially agree with you in the wis- dom of dealing frankly with the public. If ore-reserves arc to be hoarded, let tlv knowledge of the fact of re- serves be as open as is the e.xistencc of the mine itself. Indeed, tin-re is no more sign.al mark of ethical progress. in civilization at large, and in the cor'rol cjf business in particular, than the growing demand by the people for a free, open statement of the respective facts. The people may not alwa_\ s get this, but they have learned tt) ask for it ; and in this I presume that lox popnli is lox Dei. But secondly, assuming, to be sjjecitic, that the con- trasted views of Mr. Hoover and Mr. Curie re[)resent the opposite opinions of the speculator and of the investor respectively, is it fair to formulate the questions at issue from the stand[)oint of either, or. for that matter, from a standpoint intermediate between both ? That is, may there not be other and more powerful considerations of ijusiness, to the demands of which the private interests of both investor and speculator must conform? It may be trie, for the present — as the speculator is furnishing most of tlic money necessary to develop mines — that his P.nUIPMI-.XT ASD ORI-.-KRSPRVP.S HO:? iim-rc'-ts must I'c lon-ultid ; tlu> may hv a present lui-i- nc'ss necessity. lUit is it ptissihlc to educate tlie specu- lator to the more rational views of the investor? And is it possible, in turn, u) (piicken the investor with the spec- ulator's practical keenness for results?' And to do lidth so that business jiractice niav attain that nu'tliod of mine nianaijement which is best for all Cducerni'd in the Vavz run ? Then, thirdly, what will best serve the real purpose of capital invested? If the applicatidU of actuary mathe- matics to such prMJiKnis were hi-hlv developed, it would he necessary onlv m refer ti> a manual of dividend accu- mulation, anidrtization nf investment, sinkin.y; fur 1 reduc- tion, etc.. to know .at once what arc the financi;il forces that are competint,' fi .' control as this complex of interests seeks its natural e(|uilibrium. Now a mine, even a lar.t^e one, with large, well-defined veins carrvini; a -generous supply of ore, even this is not like a farm wlii^li may sci "" indefinitely producing from tlie same 'ground year afur year. .An exhausted mine is sint])lv an empty, worthless hole in the ground; and this may be the destiny of all mines. This view would seem to argue distinctly for the speculator. The mine is hound to be exhausted sooner or later; working it is like the threshing of this year's wheat crop- let it be done and done as ([uickly as possible, so as to r-loase the capital for employment in other fields. The illustration is good; but it is not an argutnent. It is at best only an analogy which can be applied to certain mines, namely, those which can be quickly exhausted. .As for the other class of mines, those like the Treadwell. the Homestake, or better still, some imaginary reef or mountain — as the gold in the ocean, for instance — which .night be practically inex- haustible, in such cases would not the policy of counting on long supplies for the long investor be the better? This, then, is the suggestion that I would make, and I 1-1 au4 JUL LlU.\UM1lS OI' MIMXG ui.nIi _\(iU wi.ulil M) (HmUss il. Is iiol llic inUTcst of the transient .spcciilatur, ri.]) resented by .Mr. llt><)ver. ju^ul'ied Ly tlic cniiditicMis ot snine niii\es? And, on the other hand, is not the interest "t tiie loii},' investor, represented by Mr. Curie, ei[iially well jiistitied by the conditions of other mines? Do not both views represent some truth — but only as applied to special cases? Will it not be uell to continue the discussion till we may see clearly brou^dit out the particular kind of mine to which applies, re- spectively, the interest ui the investor and of the specu- ''^""•' C. S. r.\L.MKR. New York. December 5. 1904. LEASING AT CRIPPLE CREEK The Ldiior: Sir— Mure lias Ikcii a c()n>i(kTaljlc imprnvLinciU lately in the (nitput of the Cripple Creek district, both in (iiian- tity and -nudity of (^re. MmukaneiiUsly there has been a decided extension of the leaMn- system both in practice and in jiopnlar favor. Cndcnibtedly a portit.!i of the un- proved results are due lo the success of many leases— especially on Stralton's Independence. It occurs to me that a discussion of the merits and province of the lessee as compared with those of the company's miner and nnn- ing en-meer may intere^t a pnrtion of the minin.i: public. Manv suppose that the reason why lessees oitcn do marked'lv better than companies is that they k"-' """■<-' work out of their men and do a good deal of the work themselves. I'ndoubtedly m general this is true, but the importance of this point is much less than many imagine, and there is no reason why a mine superintendent cannot make his men work just as hard as a lease superintendent can. In fact, it is possible fnr a mine superintendent to accomplish just as gwd results for his company as a lessee can for himself. Many leases of importance m the Cripple Creek district are managed by hired superinten- dents, just as mining cnmpanies are. In mv ,.pinion the snperioritv of the lessee comes from the fact that his train- ing quahf.es him to find ore and mine it to the best ad- vantage. He is 0i:en aided by the fact that he has n professional record to make. He is not worried abr . costs per ton. His sole object is to make money, and he makes it by shipping clean ore. Nobodv hears of leases in any mines except those where (i) the ore is a concentrating one, or (2) the find- ing of the ore is the principal part of the work. Tt i^ cunous to note how little there is in mining literature on •It • If ;;(m; I /ll: ECO.\uM/lS Ul- MJ.\L\(i tlic .siiljji.ct of nmiiii- cuiKciur.-itini,' ores. V.v concen- trating ure I mean an ..re in which tlie metal '.sou^Iit is ii'>t nminrmly distributed through ilir ni.i>s: in ..tliu uurds, an ore cuiisisting in larye part ..1 unrtlikss rock which must ni sonic uay he separated from tlie vahiahle mineral. Mo.st .,f the uunv. in ilu- Koekv Mountain ref^ion are of this chanirter. Tlie han.llniK' ''i Mich oa- bodies afTords a much .t,aeater scope for intelligence and Inisiness judgment than ,1,-e. the extraction of a hodv of uniform ore. In the latter case, one's efficiency can he nieasurert in cost per ton of ore mined. In the' former, one's efficiency nm-t he measured hv the o-t ,,f metals produced. It is not fair even to ,„;,ke a comparison of the cost of concentrates: in the case of lead ores, for example, r>ne ni.in niav take a 50 per cent concentrate and another a 70 i.er cent. Obviouslv in a concentrating proposition the main efTort is to get rid ,.f the worthless gaiigue and .save the Nahiahle metal. Whether this gangue can hest he reniovr.l in the process 01 mining or in a concentrating mill, or partlv in hoth, is often a ques- tion iiiK.n the solution of which depends the success of a mining venture. In Cripple Creek the ores arc almost universallv of the nnxed type. They will ,„,t uel.l to ordinary metiiods of water concentration. Alter the ore is hrr.ken it can onlv be separated crudely by means of screening, snppleniented by hand-ptckmg: but the cncentrating can be be.ain at the moment the .irilling be.:;ins umlerground l.-v u.kin- care to brenk nothing except what will pav TIktc i" plenty of room for skill an.l experience in' determining such ,iu,s,„„, ;,s the following: (.) what ground to break and what to leave; (j) u here to put tlie hoj^s and how much powder to use in breaking in order to leave the rock m the best con.lition for elTectivc sortin- (:,) whether it IS best to sort un.lerground, or on the Surface or both; (4) whether to use hand-drills or machines; (5) /-/:./.s7.\(, .;/ ( A7/77./-. CKI l:K ;;(i7 ^^1';" ai.ph.uu-.s ,,, u.r n, th. >l,.q.r .„ ua.iaTs. .>,,rtn,.^- l.ililis, pu-kiii',' liilts. etc.. ftc. ^ I.ich of tlu'.sc (iik'stions (if liatKlIin-,' tlir < t,- ni i\ in.! -I;h-. vitally afT.ct tl.c lessee's i>nck.th.,.,k lie mu.t .lo IM- nnmnt; snUIy ui,l, a view ,u nukuiLT profits, for I'n.t.ts Ik- nntst have ..r ,|„it. A ,ni.,c n,ar.ai;er n,av .-o thrnn^.h iIr. motions of .nitiinj,. i„ apparentlv ^'o,,.l mvIo II'' n.a\ have nue tnadimery, jjood p„mps, elab., rate 're- ports, aeciirate cost-sluets— and ,„, pr.^Ci. He nriv "">u- larjre oreho.lies at s,„all cost. He >nav r.oint with pn.le to the very ihinu^ thai on,^hl to eo„.le,nn hini .is Ii-IHlessly ineontpetent. 1 le may he minin.t: t"o mneh an-l nninnf: ton eheap. In savin- at the s,,i^.ot he may he losmf:^ at the htuii,'. The les.see rarely enmniits such blunders He thinks solely of .Inllars a„.l cents. He tnakes no reports and seldnn, hntluTs al.,:nt indicator cards, lu.t he watches h.s ore like a hawk ,n,d ,„ines it ri.^dit. He i^mores the frills and attacks the siil,stance of his business. So far s,, .^nnd. I hit the lessee's linntations are also co.ispK-nons. ( )rd,nar,ly his mterest m the pn-perty d(,es not exten.l bey„„d the hope of makinjr some money out of a lunued block of ^^round. His development work ,s apt to be d,,ne .L^rudoin^ly and with little attention to its sub.se.inent utility. In mmes that have been partiallv ;iil ii.iius. Ill li.i-. ti' l.iki.' ili.iiu I.'', .iiui 111 t.ikiii;^ tliclll he is n.\sar(lf(l liy a i.\riam i)iri.i.iita^;f ni .successes. IK- takes cIk'-hcs that a tlioroii^'iily .(ii^ipctciit mining ciigi- lU'iT iiiij^iit III it 1)1- willins^ til .iiivi.si' I liorc is imicli that the average lessee knows whieli shniilil he e--Miiti,il tn the >iK\ess of every milling;: operator, hut uliieh is strai;i;el\ nej^leeted hy many. I iiere are some mine managers who appear to forget tl'at tlieir hnsi ness is >itiinii^, ami who neglect the problem of handling the ore to ^pelul their lime mi retineinents wliuli ni.iv he of iniportaiiee, Imt uIik-1i "-iglit to he K tt to oilurs i believe it to l)e rare that any amount of leclinii-al know I edge is of siitlhcient value to cover up a defn leiicy in tin knowledge of plain, straight mining. Wlun the lessee demonstrates hy hi> snccess that such deliciency has ex- isted elsewhere, he is doing the husiness and the profes- sion a great, luit pirli;i])s nnconsrious. service. J. R. FrNi..\Y. Colorado Springs, Xovembcr 14, 1904, SECRECY IN MINING (Kihtorial, December ^9. i904-> 1 lie Wf-t Australian Ldiiimissidii, ciiiik wcrcd to bold ..II iiiijUir\ iiitn till' ti.iM."o arisinij finm tlv maTiipulaMoii of bliarcs ill ilu' KmiUlir l)n]i LiacIs at Kalj^'norln.', has ()risi'iitL ii-port to till- Slate i,n)vrrim;_n.. It is ni.iiiiv imndi-d : "(I) Tliat all niiiK'S sliall liv open to inspcctmi) by sliarflii:)klcrs at convenient hours. ( j) I'hat the Minister of Minis sliall he empowered to authorize an i fticial to take samples from any property, iiisiiect the working, and (J,) i.'oiii]iel tile i'i'ni])anies to keep assay plan.s, also jilans of till' under;;ronii(l \vorkin<;s where they will he avail- .ihle for iiis[)eotinn hy shareholders. (4) It is further reeoninun ud that tiiisrepresentatioi: or concealnieiit of faets shall he punishable hy itie or imprisonment, and (5) that managers' reports shall i>e published locally coincidently with tin r reacliin<,' the iuad office. Tiie C'onimission says that the enforcement of tiiese recom- mendations will put an end to secrecy adopted by some mines." The intention of tlicsc recommendations, in so far as they signify the lifting of secrecv from the operations of mining companies, is well enough. Wrong-doing grows in the dark; the opening of doors and the admission of light will do much to check the rascality from which mining investments sufifer. Admission to mines sliould be regulated so as not to impede operations, and it should include the experts engaged by shareholders, as well as the shareholders themselves. ,\ limit as to the number of inspections permitted during a given period would be a reasonable check upon a practice which might degenerate into a nuisance. Tf the Minister for Mines is to be em- |)owered to send an official to inspect, then the Minister himselt, no less tiian his deputy, must on no account be :{lo I HE LlOXOMICS Ol- MIMXG thf i>.,.s,c,sor, i.i.vcT, ,„■ >dkT <.l ilK' sliarcs ..f atu mine in the region uvcr wliicli he lu.kLs this autlu.nty \s,av- plans and maps are iKxx,^sary to all iiniies. whether large or small; and this rccuinniendation should meet with unquahhed approval. W, presume that, in order to punish misrepresentation and concealment of facts the intention to defraud would have to be proved; this' is a k'gal matter, the settlement of which is unimportant for If secrecy is eliminated, misrepresentation will be unsuc- cessful. The publication of reports locally, as well as in London. ,s reasonable; it will work no hardship on the siiareholders in luirope or elsewhere, and it will be a I'n.per concession to Australian shareholders. If the \\fstern Australian government imposes such a condi- tion, we do not see why the I-iiLdishman should object Ihis also will serve as an obstacle to tiie manipulation of the local stock market, by encouraging the diffusion of official information simultaneouslv at l«th ends the head office in London an,l the place where the mine is situated Kverything that tends to give shareholders full informa- tion, works for the investment aspect of mining; changes in tne physical condition of a mine are frequent, but these account for only (Mie-quarter of the fluctuations in share. A straishtforward pnlicv give, security, and without that a mine becomes merely the sport of gamblers. MINE VALUATION (Editorial, January 19, 1905.) Un another page vvc reply to a correspondent in Mex- ico, who asks for an explanation of the use of annuity tables in the appraisal of mine sliares, and we have taken the opijurtunity to publish Inwood's tables, which are used by investors in South African mines. To some of our readers, it will seem ajjsurd to apply sucli methods to the cheerful gamble of a mining venture ; and to these same readers, the vagaries oi gentlemen from Arizona and prophets from Boston are fit and proper adjuncts to an industry the importance of which to us, on the other hand, can be gauged not only in terms of money, but also by the education and character of the profession which tries to serve it faithfully, despite the careless dis- regard of an ignorant public. To many speculators, the talk of amortization of capital, return of investment, life of mine, and other financial terms indicative of serious business, is only an irritation ; and, when yon speak to them of the necessity of a mine paying back the market valuation, plus interest on the investment, they grow weary. But it does not need a long lifetime to appreciate the fact that mining is slowly emerging from the muddy shallows of spurious finance to a dignified busmess ; and, if our insistence on certain fundamental principles can contrib"fe to that end, one of the purposes of this Jock- N.A' . ' le fulfilled. It is pitiful to notice how the daily pre. s conmient on the Montreal & Boston impos- ture, appea.s to accept a low standard of morality as in- herent in mining affairs, without so much as a side glance at disgraceful messes such as that of the Shipbuilding Company, and other industrial undertakings whose spon- sors sit in high places. Those who buy shares to sell them at a higher price usually have little regard fcir niceties of valuation, and 312 TIIR ECOXDMICS Ol'- M/XIXG consider, pn^pcrly vu.^u-h. tiiat market cmuliti.ins arc a nir.rc iniii,.rtant factor ihan any academic ratiocinations; luK. even for those scnticmcn who dahhle on the danger- ous margin of the fniancial rajnds, it uill l,j f.^ind weU to have an idea <<{ that which, is the funchiniental hasis of their speculations. Sooner nr later, they must face the facts: every si)eciilat.)r eventually fails to find one more reckless than him>elf. ( )re-re~.erves. anure related to the deerea.-ed oust attainetl by such additional machinery has lieen disciissetl in this Joikxal by several writers, notably .Mr. II. C. Ibniver. in our issue of Marcli -4- i'/J4- A discussion ensued, and to this inir corre- sjiondent is referred. Amortization is the recovery of cajmal uivoted. at the end of a certain term. Xtunber of years' purchase niean> the luunbcr of annual profits which tiii^ether represent a return of the capital; a mine sold for $100,000 is bought at live years' purcha.se if it yields $20,000 profit per amuun. 'I'he iim-stion of life and return of capital on the basis of an annuilv is a more com] Heated question. In 1X1 1 Inwood's tables were first publ'.died ; they K'\e the pre.M'iit value of an annuity at duferent rates per cent for any munber oi years and replacement of principal on termination of the annuitv. What immediate lump ^imi must one pav to receive $Jt annuity and have the money paid for the ainuiitv replaced at the end of 25 years? The tables in (|uestion tjive the answer in the form -f the number of years' purchase of the annuity. At 5 per cent, the present price to be paid for a 25 years' annuity is 14 years' purchase oi antuiity. These annuity tables can Ix' applied to the valuation of mine shares, and they have been so ajiplied by the in- vestors in_ South African mines. We applied the methoil recently, as ipKUed above by our correspondent. Of course, as a nile, mining enterprises do not ler.d tlu'in- selves to such logical Ireatnient, as investors rarelv lock- up their scrip for five or ten years, either actuallv in q safe or mentally, by their way of re.gardi-ig their com- mitments. lUit the mine which has ceased to l)e a ])ros- pect— essentially a .gamble— and has developed even l)e- .vond the early stages. v.Ikii it is a highly speculative risk, 10 that sta.ge of assured productiveness wliich war- rants the application of the term 'investment'— such a mine can be valued in a logical manner or else it should MINE VAIA' Xumhcr of years' Purchase of Di:id, Income and ReJem/^lion of Prin, Interest). I.lfe. Cent. Crnt. Cent. ■ 05 04 .03 2 1..% 1 Xt, i.8i 3 2.72 2. by 2.(t2 ■♦ .3-54 .3.46 },.T,o 5 4-3.3 4--'i 4.10 6 5 or 4 r)_. ., ;6 7 .'^•"X .T J^-' :; 40 ° 0.46 f) ji r ,,7 9 7-II ('.So f, i^i 'o 7".2 - .^() 702 " S.,^0 7 Sf) 7.^0 l^ «.«() S.,?,S 7.„4 '3 0.,!'? «.8s 8 ;6 '4 900 030 874 IS 10. .38 071 0.,, '6 10 84 10. in Q _;[; '7 11. J7 10 48 0.76 '•' "60 io,8,i 10.06 19 12 08 II 16 to ^1, 20 12.46 11.47 10 50 2' I -'82 II 76 10 Si 22 '3- "' 12 04 M.of) 23 I.V40 12.30 II J7 24 1,1 8S 2^ 14 00 t.V4i 12 u 29 15- 14 1,3.59 12.28 ^° IS 37 13 76 12.41 ^' '.=^50 1,3 03 T2 =3 ^2 15.80 14.08 12.65 ^i 16.00 14.2,3 12.75 •^4 If' fO 14. ,37 1285; •^S 16. .37 IJ..50 T2 05 ^^ 16.54 1462 F3.0.3 ^l '^ "I M 74 1,3 12 •^« it^X? .485 13,10 ■'9 1702 14. (,5 ,, j„ 40 17.16 15 O) ! ) -5^ -tS 17.77 '5 46 i,i fo 5° '«-25 15.76 13,80 IT I ox 315 ■mi ^> ]'irltl h to 10 Prr Cent ■ital ($ Per Cent Cmnf^ound M 8 Per .■\t IVr .M 10 I Cent, C.-nt C.-nt 03 .92 .91 1.78 I 76 I 74 2.. 58 ^53 2 40 3 31 3.24 3 17 3. 09 3 «•! 3 79 4.62 4 10 4, 56 5 21 5 0.3 4.87 5.75 5 . 53 5 34 tl.2-^ 6.00 5 76 671 6 ,2 f' 14 7 14 6 81 6 ;o 7 54 7 16 6 81 7.90 7-49 7 10 iH 7.79 7 ,39 «.56 8.06 7.61 8.8s 831 7 82 0. 12 8 54 8.02 0.37 8 76 8. 20 O.fK) 8.05 8 ,37 9.82 9 13 8 51 10. 02 9.29 8.65 10.20 9.44 8 77 10., 37 0-58 8 88 10 53 9 71 8.r)<) 10 ()7 9 82 9 08 10 Si 9 93 16 10.04 10.0.3 9 24 r I o.i 10 12 9 .31 ir.i6 TO 20 9.37 11.26 10.27 9.43 I ' 35 '0 .34 9.4S II ;3 10.41 9.53 '•51 10 46 9 57 II 50 10 !:2 0.61 1 1 . 65 'O.57 9.64 11 7-' 10.61 9.f)8 1 1 . 78 10 65 9. 71 11.8? 10.69 9 7.3 11.88 10.73 9 76 "03 10.76 9.78 I 12 tl 12.23 10.88 10.96 9.86 9.92 .•:i(; ////: licoxoMics or mim.w; he k't aliHK'. l-'ipr tin.' emu i. nieiici' of nur rraiKrs w c add tlic annuity taMcs referred u<. as tliey apjiear m Tiie Mines of the Transvaal." ])nl)lislied liy Tin- Sidlist. a London tinruiL'ial journal wliieh lia,^ done piod work in this deitarinieut of nnniuL; business ^I'-nrruu.] GRAVEL-MINING COSTS IN ALASKA AND NORTHWEST CANADA* By lhestkk W. I'l'kingkin. (Ii'liruary q, 1905.) Tlic (laia in tlic tahlr on pa^c 318 ha\c btcn compikit from statistics CdlU'ctcil durinj;' a recent inspection of the placer fields in Alaska, Yukon 'I'erritory and nortlicni llrilish (."()hinil)ia. Of the statements ti'mished by opf ra- ters, only those which are considered lelialile have been used. The \vt)rk attempted had no relation to the sani- plinj^ or valuing; of mining properties, and time did not permit, usitally, of the measuring of the ground. Owing to the varying contlitions governing the cost of mining in the \orth, the territory has been divided into three provinces. The South Coa.st province includes the Juneau, Porcupine and Sunrise districts of Alaska. The Interior province includes the Atlin district of British Columbia, the Klondike district of Yukon Territory, and the b'ortymile. Eagle, Birch Creek, b'airbanks and Ram- part distiicts of .\laska. The Seward Peninsula province includes the Nome, Council and Solomon districts of Alaska. The Xizina district of the South Coast province, and the Port Clarence, Fairhaven. and Kugrok districts of the Seward Peninsula are separately considered. In preparing the sheet, the working costs of 1 18 differ- ent operations were first tabulated with reference tc the method employed and to situation. A second table was then prepared, in which the working cost was augmented * The fiiiurcs that nro pivcn hore arc ■ "'ictpd frnm a re- port nil tlu' 'Costs .111(1 Methods (.f dravcl and Placer Mitiing ill Alaska.' and here pnhlished liy permission of the Director of the I'nited States Genlojiical Survey. The data furnish as near approximations as the nature of the work permits. The cr. -.t of .nil supplies, rates of transportation, cost of Inhnr, and dfsrription of water, timhor and fuel resources in all important parts of the territory, as well as full descriptions of all the methods of min- ing employed, will he civen in the final report .•?is /■///:■ /:C0.vr).i//c-.v or M/.\/\, I'v an amount [kt cul.:, vanl Ium.I ,in alluuamv in,- rcciatinn ,,t i,la„t. A j^naTal li.^urc ,,i mx vcars wa. taken as tiu- avrra.^c Iiu- ,,i an individual prnp'^riy and rxccpt in llu. ca.c .,1 wniirr dnltin^ -iHTaiinn., I j,, ,la^ s as the workinjj season. 1, ,va. Hun a.M.nud that live annnal payments are mad. ,,, a deprecatinn fund. The fund .s equivalent .„ ,heo.>t .,f plant an,! n.aintenance of same dnnn^ the hfe .f , he pn.penv. pht. s>x years' ;lil Ch'.lllL-MLMXC COSTS .•?l!l >ini|ili intiTiNt nil tlu' ii)\c-munt at 5 ;Hr cent. Facli annual pavnuiit u.;^ dividrd hy tin- stasnn's outptit in ciiliic yard^;. and tlir animnit llnis ohtaincd added to tin- daily workint,' cxikiims. to <^<.i the tntal nniput c^t pir yard, as far as possible. Prices paid for niininj,' ])ropertv arc taken no accr-uit of, as tlicy represent an imknown factor. In cases where expensive plants have hcen in- stalled the ainnrtizatinn was separately fit;nred for each case. In cases of shoveliiiLr-in and small mechanical Jilants, the installation and maintenance cost was taki'ti at an avcra,i,'e amomit for a ^jronj) of operations in eacli district. Where th'.' operatiin implies an addition.a! .stri]) pint,' of overlmrden. which is always separately charcrcd. the cost was distrihntcd and added to the gravel extrac- tion cost. I'roni the second table, where the costs were r;.r American camps of I'drty- niile and l'aiil)aiik>. wluri. the i.d>t is $4.03 and ?3.5<) re- spectively. The hijjli cost of liydrauliekiii); uiili use of hydraulic lift, in tile Seward Peninsula, i> caused by the ditticnlty of moving: the gravel to the bedrock sluice,' and the ex- pense of the ditches and installations. liydr.-iiilukm- by means of wati.r undtr natural head without the u.^e of the hydraulic lift, (jr ^^ me otliei means nf elevating; the material, was not seen in the Seward IVninsula. it is known that a hydraulic plant is in successful operation at Bluff. 50 miles to the east of Nome, hut no data an. available. In the interior, only bench j^ravels are liy- draulicked. Steeper grades for sluices can be obtained, and the gravel is more easily moved. The lii,L;h duty of the miners' inch in the Klondike is a large factor in bringing down the co-t of .\d. 1 and Xo. 16. It should he distinctly understood, if h\ draulicking costs in the interior appear attractively l^w, that the water supply is exceeihnglv variable, and that nn nlijible estimate can be made beforehand of the ontput of a given season's operations. I'urtherniore. while much of the bench gravel was originally rich, the ])a\-streaks have been largely drifted out. and the gold is not disseminated through the upper portion of the gravel to the extent that it is in California. With regard to the pumping of water for hydraulicking, the practice cannot be too strongly condemned. He is a bold man who attmipts it. and a singularly fortunate one who makes a tinanci.al success (if it. Mr. Stephen Birch, operating in the Xizina district of ' This ilitliculty is due. not only to the exceedingly gentle grades of the streams, but also to the shingly character of the iiKitcri.'il haiidlf'l. (ll^irr.I. MIXING COSTS •.\2\ Alaska, has courteously funii>lu'.l. tor iliis npdrt, a sinn- in.iry of tlio costs of workiiij^r jilaccr f^nnitid mi Dan creek. 'I'lusc tij,'iircs are given hcrewitli, as they imply a total ciiari;e nf invested capital, in addition to working costs against one season's o[uTations. By pronnd sluicing through 20-in. Iluiiie, 6..S0.? cu. yd.. $8,781.44, or $1.14 per cuhic yard. i'.y use of S in cotton-pressure hose and nozzle, flirough 20-in. Hume, i ,6(X) cu. yd., $i.457.(>j. or $091 per culiic yard. I so of pick and shovel only, through lo-in sluice-box, 2,320 cu. yd., .$5,100, or $i.,S7 per cuhic yard. 27,vft. luimel. 6 hy 6 ft., tinihered. $1,017.00, or .S,V72 lur running t'oot. ( )r 407 cu. \.l. of grav< 1 removed. \\lii>h co^t $-'.50 i)cr cuhic yard. -Mr. IJirch adds: •■\\hilc the cost ma> seem high, it is hecausc of tile i.u-t that u iiKhi.Ks the to(il-> and material now on hand, which were necessary to remove this gravel. Now. if this work is continued for a number of years, the nla reaches to ,$5 per en. yd.. and even higher. Some drifting ojierations have been carried on in the Kugrok and l"airhaven districts, on which figures are not at hand. Dredging estimates furnished hy reliable interior oper- ators place the cost at Hoc. per cu. yd., where gravel must be thawed by points ahead of the dredge. In the Seward ll'iiinsula it is estimated that if the [)roperty is sutficipntly large for a lo-year life to bi. allowed, a dredge can be oi)erated at the cost of 30c. per \(1. The field for dredges in i>l.icer mining in .Vlaska is extremely limited. In ■Si^ a I THE ECOXOMlL .s ui- MJMXC the Siward IVniiisiila it is not impossible tliat some of tlie wide, shallow creek deposits will be worked success- lull} b_v means of the steam scraper. The cost of an experimental oiieration uu ( ipliir creek was said to be under 20c. per yd. The costs of operating by two mechanical systems, in the Seward Peninsula (involving the labor of men in shoveling into cars and iramminj,'. in the one case to the bottom of an incline, and in the other to a bedrock sluice leading to hydraulic ek\atnr throat), are unfurtunatcly not available for i)ublicati(!n. The derricking system. X<). ", however, both in the interior and the Seward Peninsula, apjuars tn be superior in pnint of cost to either I 'I the above nientioncil, for the Wdrkiiig of the average .Alaska open-cuts. Frozen ^rmnid cannot be att.icked with success by the steam-shovel. Kven where it dig> the gravel successfully, if men follow it clean to bedmck bv hand, the cost of operating is sometimes dnubkd. Tin.' i-team-shovel has. however, a i'n\i\ in northern placer nuniiiL;, Regarding niechanical o[)eralion^ in general, the nn- poriaiu principle shnuld be eiiiphasi/.e(! that the main e.K- pense is getlinj; the material into the receptacle which conveys it to the sluice or washuig jjlani. Tramming, even for a long distance and to a considerable elevation, adils a very -mail [)roportioiiate anUiUni ti. thu tutal cost of working. The establishment of a permanent washing plant, economically situated, as regard> water supply ami diHiip, slii'uld lie cimsidered by every .\Iaskan mnier who proposes working tlu' shallow creek deposits which char- acterize that country. The isolation of the washing oper- ations, together with the adoption of the most economical system of traniniing {)ossible, will go far towaril attaining the ends of adei|uate grade and re in for tailing, which are the sine qua nun accompaniments of successful gravel mining. •!? it THE COST OF MIMNG (hUitiirlal. February lO. 1905.) On another pa,!,H uc pi.hlish a suRnrcstivc contribution by Mr. W. k. Inj,Mll.N on tiu' a>s\ of mmin),', a Mihjcet of the mm,, St iinpnrtance. Wiutlirr regarded in its l.road econnniic aspect as implyinp^ the wlioie process of winning,' the metals, or in the narrower sense as covering only the actual hreakin- ni an-, the question is one which must appeal to the readers of this Joiknai. i,, a uu^-i practical way. Just as in ordinary life it is a proverl, that niMricy is easier to make than to keep, so in mining it is not too much to say that the finding of ore re 5 ) Tlicrc is perlmps no .>ul)jcct more difticult to gcneralizi'. 'I'lic cost of iiiiiiiiiij^ varies according; to coiiilitions in a nianncr so obvious as lo rc(iuiri' no antitlit'tical citations. TlicTL' can be no (|uest.on as to what constitutes tlie ulti- mate cost of mining, but opinions ditYer as to wiiat enters into the cost during a limited or arbitrary period, sucli as the fiscal year; in other words, accounts are kept in vari- <.ur \va_\ s. .\lan\ other diUiculties may be mentioned. Xotwithstanding all these, it is \M'ttli while to attempt some generalizations, making due allowance for the vari- ables, since it is onl\- through siicii deductions that we obtain standards for comparison. The determination of standards would be useful in at least three ways: ( i ) They would enal)Ie the mine super- intendent to know if his work were being done as cheaply as it ought to be by comparison with the cost of similar work elsewhere; (2) they would stimulate efforts to re- duce ex])enses, since a knowledge of the cost of each part of the work indicates the n where economy can be effected, and ( _0 they would furnish die engineer who has to value nunes, especially r"w mines, with improved means of tstunatmg the probable i.h the desired t^uidance to the ei'gineer. It is a fre(|iient practice to estimate that be- cause a certain orebody is being mined in one place at a c.Ttaui cost, a supposedly similar orebody niav be mined at another place at approximately the same cost. Such comparisons are useful as checks, but constitute an un- trustworthy basis for estimates, unless the analogies are thoroughly demonstrated, since in the outcome it often happens that the actual cost of mining proves to be widely different from what was forecast, bec;nise of peculiarities m the particular orebody an.l its occurrence that had not been taken into account. I have recently had occasion to examine several reports on a large deposit of low-grade ore occurring in a locality where there \.'as not much mining precedent. The grade of the ore was low, and the successful exploitation of it depended upon a large tonnage being handled at a close margin of profit. It was a case where the probable cost of mining should have been estimated with the utmost precision, and by the application of engineering principles It could have been done. The mine was examined by three well known professional men, of whom two at least had wide experience in such work. The cost of mining wa:. estimated by one of them by a rather far-fetched analogy ; the other two simply expressed the .opinion that It would |)robablv be a certain amount per ton. no reasons being given, and no references to the conditions alTecting the cost. The estimates of mining and treating the ore were certainly at fault somewhere, since the mine prove«l unsuccessful. If, in estitnating the cost of mining, as in estimating the cost of smelting and other engineering processes, the esti- mate be divided imo its elements— the probable cost of the various parts of the work that go to make up the total —peculiarities affecting the total cost are much more like- !!'() THE liCOXOMICS 01- MIMXG ly to riceivo critical attention than wlicn a Ininp estimate is made witliont an_\- analysis. The |)reseiUatii)n oi a detailed estimate in a report on a ininini,' pr()])ositioii is a i,^(jod deal more convincing, espe- cially to consulting engineers, to whom the report may be submitted, than the statement of a single figure for the total, which furnishes uo evidence as to its accnracy, and ill many cases can be prcmoiinced no more than "prob- able" or "improbable" or some other uncertain character- ization. It may he .^ugge^te(l that (in view of the numer- ous reports that are circulated without any information as to the cost of mining, cost of plant, etc., wb'ich it is nec- essary to know .-ibout, leavii,"' it to tlie investigator to de termine those factors) we should be grateful for what little is sometimes otTered, and so we are, but it is not that class of mining report to which I am referring in thi.-^ article. In venturing the suggestion that it is possible to fore- cast the probable cost of mining in a more ratit:uial man- ner, I feel sure of my ground, through the knowledge that there are many engineers who are not content to express inferential opinions, but analyze tiie various conditions that atTect the cost of stoping, traiuming. hoisting, timber- ing, pumping, etc., and that there are such technical pa- per.s as that of Kiuzie on the mining ami milling methods at Douglas Island, and that of MacHonald on the method and cost of mine timbering :it Kossl.uid, and manv others of the same class, which go thonnighly and lucidly into the engineering conditions. We need more |)apers of tiiat eliaracter wh.icli will gue inlnrmatinn as to the unit costs under nnnieri'U'- and \ariiius conditions, aiul es[)e cially the unit re(|uiremcnts of labor, in hours of work, and material, in pounds, tons and other measures. In making ;m;ily>es of costs for purposes of compari- son, it IS essential that the basis for itemization sliall be as nearly uniform as poi-^ible. Some recently pul'isiied THE COST OF MINING 327 statements have permitted the following tabulation, wliich, thougli admittedly imperfect, will certainly prove suggestive : Item. A< B* C I. Miner, and helpers $o.j5 $o.4.?5 $0.4-"; -■I rammers, shovelors. etc 0.41 o.,i(i5 o.-ijo J. Urill sliarpeiiing and repairs.. 0.15 o ijo o 'Oi 4. Compressed air „. ijo ooSi 5. Alamtenance of cars 0,01 o.(X)0 o o<,S " '■-.^■''"-'^'•■^ 0.1,? 0..45 0.0.').. I '.'"'^er o.j.S 0,110 o -'OS «. limbermen o.j,, o. „;o o.o. Hoistnis 0.23 0100 !o. Pumping o 0,5 II. Supplies, n.c.s.' 0.04 0.040 010= \2. Supervision 0.J3 0.JJ5 > "Tota' $-'.07 $2,065 $-'.070 ^Cripple Creek. Co!, (reported hv J. R Fiiilay). ^Centre Star Mine, f^ossland. H.'C. (otiicial report) liuiiker Hill and Sullivan. Ginr d'.Mene (official report) ^ Including all supplies not else^^ here specilied. 'Including bosses, assaying, surveying. Tlie above clas.sification appears to me quite useful, al- though for thorough comparison we ought to know the rates of wages, c-onsumi)tion of certain material (esixrcially coal) and prices of the principal materials. Items i, ^, 4 and 6 give substantially the cost of breaking down the ore : items 2 and 5 the cost of loading the ore and delivering to the shaft: item <) the cost of hoi.sting and delivering at the surface : items 7 and 8 the cost of supporting th.- .grotind, and item 10 the cost of kee|)ing the mine drv. Each of the.se steps in the work is likely to vary rather widely in difTerent mines. Tiie ups and downs mav offset each other and make the totals abotit the same, as, for ex- ample, in the three cares given above, but they may not. There are comparativelv few mining companies which report their costs with the above d-tail. \umerons com- panies, liowever, report co.sts iten.ized as follows: i, la- bor: 2. coal: 3. timber: 4. explosives: 5. other supplies; .!L'S rill: LCUXUMICS UP MIXIXG 0, -suiKTv i,-i(in : 7, adiiiini.-iratKiii and i^etKral (.'Npcnsc. Siicli a j-tatiimnt is usclul, hut it is more usffiil if tlie ittnis arc subdivided according to the various hrancJKs df tile work. Ill considering the comparative cost of mining, the fol- lowing are some of the essential conditions determining the result which it - neC(S,-ar\- to take into account: 1. Size and character of the ore deposit. 2. Method of mining, (a) ojien cast, (b) underground. If the latter, whether rdom-and-pillar system, caving, till- ing, timbering, or a C(inibin;iliiin i)f two (ir more. The projjortion of the orelxidv extracted is an important con- sideration. The system nf breaking the gnnuul, the lay- out of the mine, the metlmd of handling the ore, t be lifted. 6. Quantity of coal, dynamite, timber, steel, ttc, con- sumed per ton of ore. 7. Wages of labor of \-arious kinds and its (jualitv. 8. Cost ])er ton of co.al and its ([ualit_\ . 9. t o^t per potmd of (i\tiaiiiite (various grades). 10. Cost of timber [kt i .ckx) ft., board measure. 11. Totis of ore mined per annum; tons of shipping product sorted out; tons of waste raised. 12. .Supervision and administration. The conditions which are most closely comparable are Till-. COS I ()!■ Ml.\l.\i; SLM) tliusc of larfjc orohodifs. cif which tlic uhnlc, or ncarlv tlic whole, is extracted and sent to the mill, as, for example, those of Diicktown, in Teiniessee ; Mat River, in Mis- souri ; Homestake, in South Dakota, and the copper mines of Lake Superior. In the case of narrower veins, like those of Cripple Creek, comparison can he made only h\- considerinpf as the ore all the material that has to be taken out ; hut inasmuch as it is seldom profitable to take out more than enough to atford workini:;^ room, the costs in such mines are necessarily his^dier than in those wherein larjje faces of ore can be worked in preat chambers. Thj lowest cost of miniuj,' iij.;ht theoretically to be experi- enced in larpfe deposits of ore that can be entirely extract- ed as suitable for milling; or smcltinj^, and can be opened by drifts of large size. Considered commercially — and. after all, mining is sim- ply a conunercial business — the true cost of mining is X — Y = A, in which A is the maximum profit realizable from the mine, X the market value of the ore, and Y the cost of mining, including all oiulay for plant and develop- ment woik; but it is only in rare cases that advance esti- mates can be reduced to these elements. However, the cost of getting to the ore and the co.st of plant tor its ex- traction are certainly faclors in the cost of mining; this leatls to the much-discussed (juestion as to how the ex- pense for new construction, and great developments, like new shafts or adits, should be charged in annual state- ments of mining costs. It should be recognized clearly that any useful comi)ari- son of costs can be made only in the light of analysis of all the (letei mining nuKlitions. The cost of mining at one place may be S3 [ler ton and at another place only $2. yet the better work may really l)e done at the former. In itemizing the various elements of cost, such as breaking ground, shoveling and tramiuing, explosives, timbering, pumping, etc., and comparing them, we shall arrive closer 330 run RcoxoMics op mixixg tn the actual rc>uli>, hut we .-hall fail to ^et al the truth unless \vi' cdtisider the ])ri)p(irtiijn of the orehndy ulti- mately won and the linal jirotit in its extraction. Mr. J. K. I"inla\' expres-es this principle so clearl\ in discussing; the cost of ininintx ^'t Cripple L'reek. L'ol.,' iliat it is useful to repeat some of his remarks, lie says: ".\ low cost per ton, either of crude rock hoisted or of sorteil ore shipped, dois not necessarily indicate I'ither good mining or good managi'inent, and is nearly as apt to indicate the contrar_\ . Two mines ma\' l)e working in exactly the same kind of ore. and one ma\' ship ore at more than twice the cost for mining that the other does, and yet be doing belter work and making larger profits. "At C'ri])ple (reek the ore occurs in a multitude of small wins, either single or in aggregates. In the small se.ams which constitute either the vein itself or a compo- nent \y.\ri of it, the ore is rich, but the rock on the walls, or between the seams, is either whollv or partly waste. The ricii seams may vary in thickness from a mere crack to a foot or two; and for these uiilths, it may carry from one to several hundred ounces gold jxt ton. "There are no large orebodies in Crip]ile Creek. It is doubtful if any single orebody. or even any single vein, has produced 100,000 tons of sliijiping ore. The largest ani treatment. This cost is at present — and is likely to be always — so liipli tliat it becomes very essential to throw nut as much waste, or low-grade nre, as possible before shipping. Could tl.e ore be treated for a dollar or two a ton, the proposition wonld be entirely ditTerent." The ore shipped from Cripple Cretk is a concentrate- produced by hand sorting. .Numerous mines in other dis- tricts are operated tuider similar conditions. Even at Lake Superior a considerabK' ])ropnrtion of barren and lean rock is sorted out nf the rock h listed, in order to iffect a ]ireliminary concenlration of the ore before send- ing it to the stamp mills. This leads to a consideration of the point where mining leaves off and ore-dressing be- gins. Probably there will be no disagreement that sorting practiced on the surface is technically a process of ore- dressing, but .sorting is also done underground, and while that migli'. also Ik- technically considered a process of ore- dressing, it would be highly inijiracticable in booc. per ton, and in sotue other mines of the same district twice as much. .\iiother intere.NlinLT (Uiestion woidd n;itur.-d!v -irise as to :v.\'2 illli IC(>.\(>\IU'S ()!■ MISISC, whv mniiny: i-an \w cl<'iu' willi inML;nitu'ant cipuimuMil and >.i) iluaplv a- it lia> Int'ii in tiir jn]ilin ili-trict nf Mis- s( luri. It i^ Impfd iliat a discn'-sii in of tlu-c (|iution- ami (itlnTs i,f tlir >anK- iIiaractcT will Ik- taken uj) ni turtlur nnitrilniliuns. THE COST OF MINING The Editor: SiK — As Mr. liif,Mll> lK'^nn> I)> -annc; in lii ; rect nt arti- t-lr. till' uiattrr .it the i)rn]KT oust fur iiiiiiin}j; is i liard sul)- jtct to ,i,niKTalizf. hut 1 am of the imi)rfssinn that, if more I'ompaniis puhlislud their costs in i)r()pi-r detail, the ditTi- euitv of i^eiurahz.ition ■, onhl he nuicli less, hec.'use even in cases of wide difference of conditions, tliere would still he found operations in which the conditions weie more or less parallel. 1 have amused myself in comiKiriuL,' cer- tain items of cost at the Treadwcll mine in .\laska. as pnhlished hy Mr. Kin/ie, and those of the Portland mine at Cripple ("reek. At first ij;lancc one nus^dit say that in no tv o jilaces could the conditions he more dis- similar — the 'Ireadwell, with its immense hodies of uni- form ore, mined very rapidly with comparatively small outlay for exploration and development, and the Port- land, with its air,i,M-e,i;ate of more or less scattered and small orehodies re(iuirin^' for exploitation a large amount of development work, done to a considerahle extent at ran- dom. Nevertheless, 1 fmd that there are certain opera- tions at the Portland that find a parallel in the Tread- well, and in these cases it is worth noting how well the Cripple Creek property will compare. Mr. Kinzie gives the tonnage hroken per machine shift in underground st(3pes of the 'rreadwell at 34»/>- H^^' •'•^'■'■'^ ""' ^^^^^ whether this is toimage removed from the slopes or the actual tonnage hroken, it heing understood that in the underground part of the Treadwcll mine ahout one-half of the ore hroken is left in the slopes until they are worked through. In case the tonnage referred to is the actual hreakage record of th- machines, the performance is almost identical in cost with that in the wide slopes Xli mii l:C().\t)\lli. S Or M I .\ I .\ G at iIk' I'lTtlaiiil tiiiiif. I lu- talilr IhIhw !;ui.> tlic fnin- pari-' pti At liir I'' iitlaiul. Miiall luacliiiu -, _• [ in., ()])tTatril hv ■ itir mail ,ii $4.00, arc ti^od: at tlu' 'Iri-aiKMll. .^,'-iii. macliiiH's, usIhl; j 15 tmus a> imuli air at tlio >anK' ])is- ton spi'i'd as the I'orllaiul tiKU'liiiio. ami ■iprrati'l hy two iiK'n at S7.S7 ])iT (lav. I'lTtland. Trcatlwtll. 'I'ons per tii.icliiiK' in all ^topcs IJ.4 34-9'> Tons in wiilc stopi-s i7-7* ^.M-Q** Tons por machine in drifts 5.,? 9.6 Tons piT foot Ml drifts 2.5 7 Liihor cost per ton on ore broken in large Cents. Crnti. stopes JJ 6 jj . 5 Labor cost per ton broken in drifts . 75 Sj Labor cost per foot of drift for machine drilliiiK I S6 5 ^5 * One man niaolnncs ' Tvv.i nu'n iii.u'Iunes. In tile al)i>\c I'ascs tiic comiiari^i in i> not nnt'a\ urahK to till' triiijilc (reck |irii|Krt\. ilic ilcvcli ipmcin \\nrk l)i.'iiio; tmu-li I'lu'apcr at rri])pl(.' (.'reck than at the Trcail well, hilt 111 this jiariiciUar the cases arc not paralKh I'cvclopnRMit Work in the 'Ircaclwcll means k.r.i;c o|)cii- iiios designed for the cxtra'.iion uf hi'avv tonnaL^e. At L'ripple Cn'ck tlie ])riniar\ object ot' dcvclopnicnt work is to discover ore, and conscqiuntU the driftinsj and cross-ciittint^ arc desit^iu'd to I)e driven with tlic L^rcatest speed and the K-ast ex]Hn.se, rei;ardless uf the fiiliire iitiUtv of the W(ir!< for niiniiio pur])pi>t'S. 'i'lie result of this dilYereiice in desi,L;n of devclopiiient Work shows in the C(ist of trainniiiii;, which is lan in niininLC operation-. It is not ])rac- ticahlc t(j introdiici' haiilaoe s\stem> nndert;Tound on ac- count of tin -mall, scaltcrid oreliodies c -titVuuntly accoiiiiiid fir l)y tlic radical dilTiuiux' nf cniiditinns. AtiotlK-r i'\|K'nM- at tlu' I'drtlaixl is tiiuhcriiiji, wliich avrraj^td fnr ^ix iimntli^ alinnst ixaitly 51H-. per Imi. At the Trcadwill tlii- i \ikiim' i~ prai-tirailv /ath. 1 Iiis is a ]i()mt in wliu'li liir ii'-ai'tici- at llu' i'nrtlaiitl mine !iii<;lil 1)1- (ipcn td critK-i'-ni. Im-aiisr ullur luiiu-s in (._ rip- ple Creek succeed in ( xtiaeliiiL; tlnir nrv with alnuist as sirall exi)eiise fur tii:ilier as the Treadwrll. Xe\' rtlie- less. as I have atteiiii>ted ttitie(l by the conditidiis. Af^'ain. the Cd^t df (irc-sortinf^ at the Purtland is about three tiiues as much as that of milliii^ aiit is justified hv a ditYereiice of Cdiiditidiis sn obvinus as scarcely to merit discussion. '{"he cost of hdistini^j at the Portland is about 22c. per ton. as a^'ainst about iic. for the Ready lUillion and Alaska Mexican, which handle about the .-.aiiie tonnage. 'i'his difTercnce is one which should not exist, and is ac- counted for larj^el)- by the bad design of almost all Crip- ple C'reek hdistiiiLT plants. Tlure is no reason why ("niiple Creek ores should not bi' hoisted b\- skips and diiinjieil directly into ore-bins, as is done at the Triadwell. there- bv doini;- awav with the exjjense of toji-trammiiii.;, which in (ripple Creek is invariably a lary;e item. I am fi'^'"?^ ^'i*^' -'I'love comparisons larmlv because tluv are interesting in themselves, and partly to show that if the prd])iT ditails were fjiven, there is a lejjiti- matf Cdniparison that can be made between mines e\en ti 3.10 ////: liCOWMICS 0/ MlMXo I't .i;ri;ii .i|i|i;iri'iit ililVvrnn;".- m iliai.nlcr. 'I'lu.' [)iil)li lalicMi ,ii' t.-i)>i> waiilil he (if ;iilvantaj;i' to ui.iiiy. prdliahlv niii-t. ininiiijj coiii]iaiiK ■>, lui-aiive li', mi ilmnj^ ilu\ U'Uil'l Ijiin- ti) lii;iii nitain di lu-u ik U's in tlnir (r,\n ni.iiiaj^i nil tit. wliuh woulil, m cuiir.M' .if linn', he |,.iiii(l(1 I'lii 1.1 iluiii. Maii\ I omiiaiiio aii' arr ^(jod iiiiiiinj,' iiiiii, >iii:iil\ l)ri.-au-i.' llu_\ lia\f l)i.iii oil l!u propirts a loiii; IlllR'. lakrii III tlu- lar^r. ihc (liM.-tissinn of luiniiij; costs v 'U iiuii^c into that ])io\oki,il liy Mr. llo(j\ir'> .irti;-!!.' .)ii iiiiiK' i.iini|)iu(.iil and ore rcsi.TV(.-s. .\lo-i n .ini><.ti iit niiiK' iiiaiia,L;LTs will probably ai^rt-i' uiih Mr. Hoover that ibr luobleni i>. to i .xtraet ainl niarkrt 'In ■■ntirc ili-poMt i-(jn.siitntin^' a minr at tl'c L;ri.-aii.'^t proti; to tlu- stoi'klKjldir. '! luy will fnll_\ a,s;r.i' with liini on llir (.■i.-onoin\ . not onl^ of pid\idiii;,' abnndant (.-(inipii' nt for tJR- rallur -laidy working,' of vi,->iblc ore >upplK-s, but alsii oi workiii;; that M|nipnu.'nt to it.s itmost capacits. 'I he con>idi.ration of mkIi subjects i.- t,ic consideration of iiiiniii'; co.st- III ;lu' widv.^t ^ei,>e. ''he problem of deciding,' iii)on the be>t iiiethuds, tile jiroijcr scale of op- erations :ind (he iiuxt i/.-.vfruWt' cost to be aimed at, is one biu; eiioni^h I'or the best business intellii.;e!ice a niiii- iiij; engineer can mtistir. Unfortunately, tu(j maiiv engineers lonline their attention too niucii to technical subjects, -iiid the ow uer.s of la'i^e enter|)ri.-is ofien find it neces-ar\ to leave them out of con>ideration in tile decision of the broader as|)ecls of the bu.-iness. Ability to see ihiiins in their proper [)reipoitions and to lay strcjiij; hold of the essential features of an enter- prise are more vital to the .-uccess of a manager than all other iiu.ililii-s coinbiiud, and are more neces>ar\ at the begni'Mnj; (jf an enterprise than at any other tune. !t is, indeed, rare that a s^^ood mine i> abxilnteh .vpuiled, but nothing is nie)re coiiimon. than to ^ee mines worked Till-: COST 01- MIMXG 387 mil iiiicKr siu/li liaiiilir;ii)> >l 1ki 1 'iiaiKimiiu'iit tliat tlicv fall I iioriii. iii-l\ ^licirl of piixlncinjr tluir jii^t |)ri]tlt', 1 liis had ...a^ imiit is just as ajjt to !)(.■ tlu' ri>iilt of soi.:i.' mistake in j;i'iKral i)riiicipK s, siicli as iiutliixls of ininiii^'. ilfsij^ii and scope nf |)1;'; ', as from failure- to work out > ,i.r\day (ktails. Mistakis diii to failure to eoiniiriluMid tile .structure and capahililf's of the ore- liodies ari' extremely common, and 1 have seen mines Ijiouyht to the verj,'e of mill hy such mistakes. It is only when the salient features of an cntirprise Iia\e hem uoikid out and decided on. thai one is justi- lied in ti,i;nrin^ on the details of cost. h"or instance, one can scarct'ly estimate how much 't will co>t to hoist a Ion (jf rock until he knows what kind of an eiif^Miie he is goinj; to have, as well ;is the aj)])lianccs used in load- ing and dumijinf,', etc. If his tonnage is small and uii- :ertain, he will ])rohal)ly prefer not to put in skips w'th underground loadini^iiockits. hut will use li^-jit etiLjines. small cages or buckets. Tin rehy he will save a portion of lii.s ilant inv( *ment at the expense of a higher cost in daily manipulation. If you are able to hoist onlv 40 Ions a (lay, yon will still be compelled to employ two engineers at $4 a thei ])lace. The thoroughly com]>itent (.iigineer will see the folK of working on nnjnstiliahle economies. If ;i man really ex- pects to hoist only io,ooo tons altogether, he will he a better engineer to get all that rock out with a windlass at $1 a ton than to buy a ,Sio,. MIL'S Ul' MIXIW: .1 his cost nl nrc. \ n\ likily Iv.' mii^lil :n ]\\\\w praise fur his t;<)0(i ih-iftint;, iiisi. u! ul lilanic for hi- Inj^h cost per toll. It sums to inc. therefore, tliat the costs that affunl nuist iiitcresiini; coniiiansoiis ami are most easy to nh tain, are ihnse whicli apply to sncli tlniiLjs as driftini.;. shaft-sinkint;. s!ioveliiirkini,0, they hecoine valuahU. It woidd probably be aina/inn; to see the difference between n!ine> in the .-ame di' ict. workinjr under iden- tical conditidiis. These Cdst , tlierifiire. and not the total costs, are those tl'.it nii.t;Iit l)e L,dveii publicity, witli- oii, harm t" the mining'; companies, and iimre olten to their t;reat advantage. J. R. FlNL.W, Colorado Springs, Feb. nj, 1905. MINE RESFRVES (March 2, 1905.) The Editor: Siu— When 1 wrote vdu, early last year, asking for an expression uf 0()iiii()n as to the wisdom of the prac- tice of keeping a reserve (jf gold or I)ullion at a mine, it was because I had a premonition that the question would have to be settled in Western Australia soonc- or later. The Boulder Perseverance scandal has brought the matter to a head in that State, just as the matter had been fought out earlier in the smaller companies in Victoria. When writing to \ou, the point that was put was that the practice was bad, inherently bad, inasmuch as it gave great opening for fraud. Nothing has oc- curred to shake that opinion. If the evits, and still more is i; tlieir dntv to know how it is used. W'itl: this information in their haTids, they have no right to refuse to tell a partner- that is, a fellow shareholder — how the reserve stands. ( )nly under certain cmditions can a gold reserve at a mine owned by a company be justified, (i) T!iat it shall be ke])t with the fidl knowledge and consent of the shareholders. (2) That every monthlv yield shall be re- corded truthfully — say, 10.000 tons for S,25o nz.; taken from reserve. 1.750 oz.; total return. 10,000 oz., if the average to be kept up is an ounce. (3) That the extent of the reserve then started shall be disclosed; and (4) that every month the uithdrawais from it, or the addi- tions to it, shall be stated. Then the nrdinary shareholder will know lunv he stands, and as he is the backbone of the industry, it is to everyone's interest that he shall not he deceived, and so be led to withdraw his support from ''■ F. H I5ATHUKST. Melbourne, \'ictoria. Jan. 21. 1905. THE COST OF MINING (.Marcn g, iy'*5-t riic Editor: SiK — Mr. liipalls' tiiiuly article on the above subject calls attention, not only to the desiral)ility of uniforni methods of keei)iii,L,'^ mine costs, but also to the publica- tion of itemized statements of costs. On the latter point tluro is much ditTerence of opinion. There should be nu difference of opinion regarding which enters into tlie cost oi mining. Nothing short of the total cost can be correct, and anything less is, to say the least, misleading. No n'.atter how the costs may be divided up or distributed, the net profit per ton deducted from the market value equals the cost of mining, or, as Mr. Ingalls puts it, X — Y = A. The tabulated costs quoted by Mr. Ingalls, and ad- mitted imperfect, are simply ex parte statements. No charge is shown for maintenance of plant, taxes, insur- ance and many other items of substantial expense in- separable from ordinary mining operations. Here is a more complete statement, taken from the balance sheet of another Cripple Creek property (Mining Reporter, December 8, 1904 j. and which, 1 presume, rej)- resents English methutls ; Ccst for Year Ending June jo, 1904. RlockipR out ore. etc $4-1.31 Ore breakiiii; 5, 182 I inihcrinj,' 0744 riimpiiig o.y.i.i Hoisting and tramming I-4*>9 drc scirliMj; am! loading o.'X)8 (kMieral lighting o. II2 .Surveying o.oXo Mine saiiipliiiK O.oCK) W'aiies of foreman, etc O.265 Watchman o. 134 $13.7-34" Tim COST OF MIXIXG 343 R(•||,■ll^^ and iinprovcincnts Id huiIdiiiKs atid plants $o .280 Sliippiii>; and M'llin^ (irf. --anipliMK and assaying n i7i».< Salaries of i-nnsnltniK fiiginc-cr and manaj^cr o S<^_>3 Salaries cd clerks on.^',? Auditing fees and -xpenses " 0J44 Assay plans o o,?(>4 Travi'luiH expenses n.0050 I'.Nploitation expenses (i 0770 Insurance o. 14(14 Taxes (less adjustment) <> I'xM Compensation, etc., cage accidents o J50J Strike expenses 0.0S75 l.e^al expenses o.nj$j Loss on cottages o ni 10 Miscellaneous o.07.?o Total $J..?io Freight and Ire.alnient on 4,1,758 ton*; $7-74.< London otVice expenses, including $5,178.80 for a special report on the mine O.51J Total cost $24,290 A gddd sy.steni of co.st keeping^, not ncccs.sarily an elaborate one, is an essential requirement of any well- managed mine, nevertheless it is very often, throngh faulty methods or tediously minute classifications, a mat- ter of eonsiderahle expe-.se. When the ordinary shift bosses arc overloaded with cost keeping or cost dis- tribution methods the general work suffers, and the cost of breaking rock goes up, as it were, in an eflfort to keep it down. In other words, while the foremen or bosses are endeavoring^ to find out how many nails, caps and candles are consumed in breaking a ton of rock in one slope, the men may be idling in another. The minute elaboration of mine costs is largely acad- emic — the result, perhaps, of autocratic mine manage- ment with lledgelings itistead. of experienced birds in charge of the operations. The autocrat, seated in his nt^cc chair at some financial center, in his endeavor to direct the operation of some score or more mines, often , attaches undue importance to mere items of cost (which are seldom strictly comparable for any two mines') and 344 rill- ECOXOMICS (>/•• MIMXG pays litilc if any aitcnti. n w \hv practical minin.i,' ability of those ill cliaij;c ul the npcratums. Should not the ability to discover ore. or even not to lose it, when discovered, rank fully as hi,L,h as mere cost of prodr.-- tion? 'Idle most elaborate cost system ever devised u.d never successfully displace mining skill acfjuired by years of close, intelligent observation and experience in actual mining work. I have known mines where the cost of producing and milling or marketing a ton of ore was steadily lowered by one expedient (jr another; but somehow, before the total cost readied a miiuis quantity profits vanished, the stockholders kicked, or something else happened, a strike, like as nut, and the mine was eventually leased, with results entirely satis- factory to the stockholders. We have, here in Colorado, scores of cases where lessees (practical and experienced miners) have taken u\) unprofitable and practically abandoned mines, made them pay handsomely, and turned them over at the ex[)iration of their leases in condition where even the Rodomont autocrat could for some time work them profitably from his observation point, perhaps tliousands of miles distant from the field of operation. Xovv, lessees do not depend on any vlaboration of mining costs to secure these results, but rely almost entirelv on their ability as miners and on their practical experience, which has taught them that mining is the an of inakiiii^ iiioiwx from ore deposits; that the co>t per ton is only one factor; and that bi caking the ore as free as possible from waste, and properly sorting it. is often of more im- portance, for the reason that, while it increases the cost of raising a ton of ore, it also increases the net profit of the operation, which should be the oljjective point in mining. Therefore, I hold, the successful miner in anv given mine is he zclio returns the lor.;est f^ereeutcii^e of profit from the gross z'aliie of the ore, not necessarily THE COST OF MIMXG 343 the one who can shuw ilic lnwi-st mininfj cost. To reach this (lesira'le condiiinn, ihe cost ni minms^ or snieltin<; must he sti.ilii'd, tn<;ciher with the cost of the actual niin- intem of cost keepiny^. where the dis- tnt)ution of sU]iplies, etc.. is made (hreci from the mine store, on the orders of the superiiUeiident or shift bosses. and they are cliar.L;ed at oiue to tiie particuhir phice or work indie ;ted. The f^eniTal suhihvisions of mine costs that su!;i,'est themselves are: (I) Wiimin^ ( hlockini;: out ore). (2) stopin,cf the ore, ( .^ ) dressintj or luilliui^f or smelting the ore, the sum of these hein;,,' the entire cost of producin^j and disfiosin.q' of one ton of ore, provided alu.i\s. the amount won durinij the period under review e(iuals the amount of ore stoped, otherwise corrections mu-t he made for increased or ilecreased ore reserves; or, at least, the condition of the ore reserves should he clearlv stated. The averaj,'e stockholder is satisfied with the totals as above, together with the value of the ore and profit per ton, or the usual balance slieet and profit and loss state- ment. Then why bewilder him with itemized statements of costs? I'seful and indispensable thourrh they mav be to the management, tliey are as invariably useless to stockholders. The matter of piililishing itemized mining costs is one that mining companies do not. as a rule. apprn\c. As the president of a large conipnn\- once said to me. "ft is our private business, and why should we give it to the world to satisfy the curious, or help educate \oiing min- ing engineers who have not had jiractical experience along those lines, or to furnish ammunition for the stock- holders to make erroneous comparisons between two 346 TUL. LCUXOMICS 01- MISISC, mines of piihaps vci> ditfcrciit type?" ThrDUKlinut the Rocky Miiiiiitain rci^icm tlu' ;ivcTaj;c mining companies have mcss. r.ui iluTc is mure to Ik -aiiui ■. an these tij,^iircs diiiclly KHc: and. witli tlii> f.,, t in situ, it i- unrtli ci n>idcrint; wliat t i.s iMi wliicli till' ciii^incrr really lias use. As managfr. he ui.-hes in i-Miiipar> his acenunts. ni< nth hy niniiih .111.1 \ear hy _\ ear, lioiii with theni.sclvcs and al.-,o with thi >e ni dtl.^r n:nie>. as a i heek npnn operation and for siif;^'esti( n ni iinproveiiient : >m far a> this .i^oes, tlie items, as ^riv n lurewith, answer fairly, lint he uislus also to know hou ,(.sts will k' altered hy ehan^'e i:: ton- naf,'e. 1 hi> i- a matter of inipnrtanee. fur the mine nian- a!,aT a.s well ,is t,ir the examinrit; eii.^ineer; it is imper- fi. tly j,Mven 1>\ muI: a -ystetn, e.xeept for those divi-ions which are direct fnncti.ms of tonii tije. Som- aceonnts are not fiuu-tii ik of tonnaL;' at all. -ueli as superinten- deii-e, ottiee- and tax. -: Mtlurs are ndt pro[jortional fiine- lions, sncli a< pnmpinj,'. h.oistinj;; there is a long list of snch ace'iunts. 1 hen lioth the niana.q:er and the examining engineer need a di\i-ion: this -'i.iuld rec gni/<: aoeoinils: (A) that are iiidep< lulent m1, and ( 1', ) those that are dependent on. tonn;i-e ; that i>. ( .\ I w'lere the total- for a period do not alter with variation in tonnage, and (LI) where they do >o alter. I uriher, under ( .\ ) there are some (Ai) accounts that are practically con>'ant, such a.s superintendence and tuanageinent. and others (Aj) that, while uideiK-ndetit of •onnage, are variahle. such as those thai alter with chan,i;e of sea-"n_ travehn.g e.x])cnse, etc. In close estimates it will help to have these known sep- arately. (11) also has two natural suhdivisions : (i!i) where tot, , ,ire vir'.n.dly direci functions of tonnage, and (112) where totals are indirect functions of tonnage; that is, they alter with tonnage, hut not proportionatelv. i-'.xamples i.f (111) arc "stoping" and ■tramming'; (B2") includes development, which varies according to condi- tions of mill, and oreiuHlies ; also certain repairs. w THE COST or Ml \ ISC, %\'.\ TJicro is am villi r l.irpe class of accuuiits. iiaiin-ly. those aildiiions to pi.uil, f(|nipmciit ari'I ripaii- that will tiiakf.' thcni--olvcs flit (uiT (■.xtcti'K'il piTJi-ils; in ntluT words, 'capital t'X|Hiiilii n -.' Thf-o -hniilil Ik- ri'liiiiK-d hy • harj^i's against npiTaiiiii; expenses over varying; periods Whatever niav he the liusituss policy of chari^iti;,,' thesi nfT, there can he -iiuill i|iustioii that the accurate logical treatment for the en,L;ineer i-; tn coiisiiler theni as a part of his operatinijf expense, month hy month. Xo estimate of cost wliich nnt^hlv assnmes that such txpcnditures will e(inalize them-elves will i)e fair; if they are not put into 'wnrkinp co>t' there is always the dan^'er that they will he n\erl'^)keil entirely in makini:^ estimates. A division of expenditure on these lines can l)e carried out to any extent of itemization, and will ^ive a system of technical accounts that w dl furnish all the data desired. In ^tudyinp the prMhiem of a proper segregation, it will he seen that none of the adv.uitapes of the more coiiimon systems oi plain snhdivision will he lost : the basis IS applicahle to the smallest as well as to the largest mines; the degree of snhdivision can he extended, as easilv as in an\ other systein, to any degree of minute- ness demanded. In the foregoing T have aimed to outline a familiar principle ; it is so well estahlishcd that a large part of the recent discussion in this Jot'RN.M, on 'Mine Equipment and Ore Reser\-es' hinges upon it. TTowever, though the principle is not new in practice, so far as I know, hefore the fliscussion referred to. it had not been hrought out in r'"'"*- R. Gii.M.vN Brown. .'^an Francisco, March i, 1905. TUt COST OF ivVaING The Ldtior: Sjk_1„ proposing; tlii> miruatr sul.ici-t. Mr lu^M^ has pavi'tl tlic wmv h upon ar, imi"irtani, l)Ut lu-l.vtol. l.raiidi ni mm- iIlJ,^ .\> Mr. Imlas lias s,, uill put il, '■Hie p'oblciu nf tk'cidmt; uih.ii iIk- l.c-t nu't'uids, tlu' proper scale of opera tions aiul the ni.-l (k-irahle working cost to he iiiiied at. is one hiir eii.iUL;h for the he-^t business intelh^^enei that a mininjj: en:j;;iieer can iinister. The Mihjeet involves a phase of mining' coneirnin^ which not aloiu the newly t^radiiateil mining' eni;iiieer lacks knowledge: it inclndes pn.hleni> and coiiditioio whicli many enL;ineers of loiij,' experience have not had the K"'"l fortune to incounler. To obtain reliable a: d well sej;re«atetl ti^ures pertaining' to woikiu^' costs from the avera,^e mine, this is oue of the most ditVicult tasks which the en^Miuer can undertake; unlike the other fac- tors tliat contribute to mine valuation, the necessary data can be obtained only from written records. I cannot miderstand why so many mininp; companies continue to practice such wasteful brevity. It is a fact that, in most cases where such method is practiced, not only the officers of the company, but their servants also, unconsciously fail in possessing and preserving an ade- quate knowledge of their true conditions In estimating the value of a mine it i.^ impossible to separate this fac- tor of 'working cost'; nevertheless, we often read mining reports in which the author may have accurately applied every known principle in estimating the ore reserves, and yet, for want of projier data, he may decline to hazard an estimate of the working costs. The working cost is to mine valuation, what width is to the assay-value of a givin vein. ) itii T'li: COST Oh V/\7V(7 ",",1 It (l(..l in t..r trratinr.it of tlic ( re; I'nt to settle iii"'" a nni- f,,rin tnelliod of setjre.sjiatinf; the itenis eontnhntin- to tlusf aivonnts. and a eorrect distrilmfinn of tlie nio,ie\. (■x(H'ii(le(l. tills is a snlijrct which sliotiid elicit iiiforma- tidti Imtl- interestinir and instnictivc. l"or. no matter wh.it the svstein '>i time k.'eiiinL,' mav he (wlthii, ecnnninic limits K there are certain innnevs which must he (hs- trilniled uithont the assistance nf detailed record. ^ Workini: costs will contimie to show variations, in the same districts, midcr the same conditions of vein- width, capacitv. etc . hecanse engineers, like other in-ople. differ in their views oi application; hut. nevertheless, there are certain rtindamental jirinc'ples to he uhserved. Ff uni- formity : re<;arded in mine statements (which retlect the local conditions'), a desire to efTect lei^itimate ccnnomv will he created, and inferior methods will soon he elimi- nated. .As a concrete example, in illustration of the methods sometimes applied in the seprctration of accou, ts, where millini: and cvanidation onlv are omjiloved. the followinsj will serve; the final summarv is ijivcn first, in order to elucidate some points more clearlv . ,S'i()iii?!(irj' Tii-t Percent- Total C.St. r.r T,.ii. age. MiMitic; $I2S.787.W S,^.^8 45. 54 Tr;uisport ..f ore ^.^S7 1^ "■'" '••^^' =;ortiii« and cnisliiiit; 8.6.',:;, .U O.J2 .^.^"^ \h\\uvr .^8.06v87 1. 02 l-'.x. Cvaiiichtion .14..-^ U o .p r,n!,l re.ili'.itic.n 4."i.' ^■' " '" '■^- C'lier.il rli:,rccs 2J.0X7 8...6oi M $7.42 ::o2 Tim LCOXOMICS 01- ML\'L\G In order tu make the above suiiiniary valuable, and comparison possible, it is necessary to know what con- iribmes to the several accounts. This is shown, in case nf mining,' for example, u> be as follows: Mining. „ Coet Pcrcinl Tuial e..^I. IVt I"I1. aK>-. Salaries ;?4.4t>-'.f« $o.il() .?.4') Wants (skillc(l) IJ.01.S..S4 C)..5l5 9^4 Cmlractors io.i.p.S.S ().-'«) 7 ■>*) Want's (uii^killcd) J().-5' .^ 0.700 20. ,^ l\,o.l . O..!') Maintenance -',5 o.o(^ 2.0:1 Workshops .^i;.74 o.ojr o.U.l Tran-port -'.?5 'M "O^' " ''^ Hospital 5.W.7O 0.014 0,42 l.ahnr prtminms -'jo.l^ o.ooo 0.19 I'nnipmw 10.SO7.7O 0.-..S.S «.44 Conipoun.l expenses .y'20.'i,S o.cvjo 2..S Compressor charnes (>.'„?"« o 0'(> o^'> Mannfacturinn ;uui sharpening li.uul drills «.>-^J 17 o._'JO ()o'J Hoisting S7'>-Ml "■'4'^ 4 4-' UiulerKronn.l traniinini; I,?,040 ()5 o..?3« 10. Os AsaviiiK' '>^'■'-^ "■"-■'.; "'1 Snrveynm an. 1 sampling; ^2l.^i o OO^ " -3 Totals $128,787 'kS $.?..^8 .\ numb'-r of the accounts L;iven herewith, such as m;iiiuenai'ce, iiuinpiii.i;, uiule. ofouiul tranmiiii^j, manu- facturing and >har])eninK drills. rc(|uire aoai:' to be sub- divided, becaus" tluy in turn contain important factors; with all this ihe (|uestion arises: 'lo what extent does n pay to set, 1- 'gate mining accounts: The remaining items — sti'res, w.i^es. salaries, fuel, etc.— carry us liack to the tit"ekeeper\s and the stnreinairs records. It appears to me that with the details a^ -iveii herewith, when accoiripamed by a correct ilis.tribution and a knowledge of the local conditions, the engineer should be fortified with materi:d sutVicie'ii to direct the work ettectively and to compile reliable fi 'recasts. THE COST OF MIXING r?53 Prolialily one of llic iiinst irmilik'siiim' accounts to deal with, especially in cases where the shares are quoted on tlie market, is •developnieiit.' to which is charged the nienev expv'nded in openinsj; up the ore-hcarintj; ground, hefore and after the reduction of ore lias hcgun. The commnn interpretation of the term makes it include all operations (such as driving, cross-cutting, sinking — ex- clusive of V. ain shafts— raising, hauling, sampling, assay- ing, survcuig and handling the barren ground) which result in the opening up of ore. rp to the time when milling begins, we will assume that $50,000 has been expended ui)on development work, and it is estimated that 100,000 tons of ore have been developed, hence an obligation of o.^c. per ton has been created; but a part of this money has contributed toward the partial exjiosure of other tonnage, which, however, c;innot be accurately estimated. In order to arrive at the cost per ton of the developed ore, the measurements taken underground are used, while the monjv sjient is redeemetl upon the basis of the tons milled. These two figures seldom, if ever, agree; and, while the s --ted product will account for a part of the discrepancy, there are always large dilTereiices between the tonnages as measured un- derground and the combinetl total of tons milled and sorted. In addition to this consideration, there are ninnthly expenditures on account of devekipment work. 1 he cost of develoimient per ton over any period, as one month, depends upon the width of the vein encountered, the relative jiosition of orebodies. labor conditions, etc., during that period ; thus if devi lojuncnt costs are chargeil t() the current-month expense, wild thictuation will occur in the working costs. Such irregv'arities create a feeling of uncertaintv, which might he followed by forced sales of the shares and conse(]Uent depreciation, a 'csult not tolerated in sonic mining center.-.. jS 354 illL ECOXOMICS 01- MINING Ucl'iirc the rc'diK-tinii of urc has hct^un, the cost of dc- velupiiig a certain tuiiiia^e is far jjreater than at any other ixriod, liecause administration and other constant charges nnist he wliolly carried hy this account; lience it seems only fair that certain adjustments sliould he mad.- in rede •'■". ,^ this expencHture, otherwise the present shareiu.uiers hecome unduly taxed for the benefit of future hoUkrs. In some instances the expenditure, on ac- count of developineiU up to the time milling begins, is charged to 'capital account," and written off in the same manner as machiiujry, reservoirs, or other permanent e(iuipme-it ; in such a case only the current-month expense is charged to vorking costs. Another method of discharging this obligation is by creating a 'suspense account, ' by charging the develop- ment expenses to the reduction stage, and the excess de- vekjpment for each month thereafter to this account. Then a fixed charge is made monthly for development, and the 'suspense' account is wriiten off in annual suut^, which are measured by the work of the previous year. This method eenis to give satisfactory results. it is desirai)le that the methods of distribution be re- fl'H-ted in a statement of working costs, accompanied by the application of certain definite principles. 'Capital' account is generally elastic and often much abused. The items usually charged to this, such as machinery and plant, buildings, main shafts, etc., arc suppose(' to cover expcnd'tnres on |)ermanent work and eiiuipinent. If the conditions are such that the life of the enterprise can be calculated accurately, the treatment of this account is simple, and the '-apital can tx> amortized at a cert.iin com- puted rate of interest. If this account be not embodied in a statenT"*- "f working costs, nor referred to therein, effective '<' in mine equipnunt is not retlected. llem-e. for this anu for other less weighty reasons, it would seem important that a certain life be assumed, or other meas- TifR COST OF MIMXG 355 iircs t;'kcii uluTi'liy the nimuNS nii^lit l)i" rcilccnud upon a fixt'd basis, witlidiif iTcatintj .'in iniilul\ hiavv chrir^c. A (lisi-iission thai will cnmhict.' tmvanl standardization of mining; costs, as well as toward method in otluT dcpart- nunts, will prove of invaluable service, botli to the entji- neer and the investor. i'". C. KoBIiRT.S, Berkeley, Cal., March 7, 1905. COST OF CHLORINATING CRIPPLE CHEEK URES Bv I'liu."' Aiu..\i.L. (April -. . 1905.) The special report on ilif 1 ipiralions of the rortland nimij ami i.ull durin.i; the year 1904, reeeiitly issued IjV the president < i the I'ortlaiKl (jdlu Miiiinj; Loiiipaiiy. gives 11- for he tirsl time, an (ipportuiiity oi aiial_\zm.g and e>ti- iiiatm^ die total e-ost "f ehlnriiiating Cripple Creek (jre in a modern niill. During the year f.nd' r review, the I'c uland (.jokl Min- ing C oinpanv treated 111 its Cnlnrado City mill 88,997.44 tdiis of ore, averaging $-'4,257 pet tun. 1 he mill \.as creilited with earning a trealment charge cjf $M of (ire, including metal lo,s. is $5. -'745. 'I here is a heading doss by < .\iraction,' a 1 that must me, ill metal loss, $105.95141, which auKjUiits to •'^i'9"5 I"-''" '"'1 treated, Iroin winch it appears that the hook cnst "I chlorinating a tmi of ore during the past year was $4,084, exclusive of amortization and interest on the capital u.--ed in die i)U.siness. The method of keep- ing the accounts is somewhat peculiar, and evidently de- signed to compare the result of niUing the Portland ore in the I'nrtland mill, against selling tiu ore to the cus- Inm milU; thi-. at least. wtem 'if ;il!. luing the mill $7 per ton fc ." treating the ore, and 1 .~hall ir\ to make i\\\> CMinparison. 'rurning t" the treasurer's balance sliei.t, it is possible t'l trace nut ])rettv closeK die itein^ ^f the aliove cost, hut I niak.' it \erv nearly loc, ]iei- ton nn.re, which would be almost balanced by the 'treating concentrates' item, or COST or ciii.oRix.rrixc X tlu'.'c mav 111' scinu' credit ik t apprircnt nn thu balance sIkl! llial iiIImIs llii> ixli.' \o i:v\\\.>. Total Kxpt'iisc. nnllinn oxi)cti>ie $7.Ckx).W) IrcitiiiR Cdiu-fiitr.-it S..i().i.(jj i. )pcratiiiK accuiint I J5,()75 . -'7 Clicinic:ils ()). ,vS Repairs 44-'. 'X> Treating by-proilncts l(),4'),i.20 Cost IVr r..!,. $o.oJ<55 O.0<),?.S I .4!-I o 7S04 o . f/xi J o 41/37 o 4-'S5 O , ->Q<)6 0.1,5117 o 075J 01(H5 O.OOSO cS,S.()<)7 44 tiins^a $4. iSoj = $.37^.091 .48 or $4.1809 III audition in tlie fiircp;nin<;; amounts tlure is a charge (if $-'",079. 51; to Kitiipnitnt' atid S3 3 560.76 to 'construc- tion.' As tin- mill ha- liecn in operation several years it is difficult to understand the furtiier rliari^a- for etiuipmcnt. in addition to a hcavv construction char