GIFT OF Dean Frank H. Probert D. B. Huntlev THE ECONOMICS OF MINING BY T. A. RICKARD H. C. HOOVER W. R. INGALLS R. OILMAN BROWN And other Specialists EDITED BY T. A. RICKARD FIRST EDITION 1905 THE ENGINEERING AND MINING JOURNAL 505 Pearl Street, New Yorl 20 Bucklersbury, London, E. C. DEAN ttlftlftG DEPL '; Tki feFCiN^ik/ i A r '; - ^ CONTENTS PAGE. Causes of Failure in Mining (Percy Williams) 1 The Valuation of Mines (Editorial) 5 Ore Sorting (Editorial) 8 Sorting at Johannesburg (T. Lane Carter) 10 Cost of Shaft Sinking by Hand 15 Gold Mining as an Investment (Editorial) 17 Mining Risks (Editorial) 20 Mining Methods at Johannesburg (T. Lane Carter) 22 Notes on Zinc Mining ( W. Geo. Waring) 28 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 (Cnas. V. Jenkins) 50 Mine Valuation by Government (Editorial) 53 Cost per Ton as a Basis of Mine Valuation (R. Gilman Brown) 56 Mine Accounts (Theo. B. Comstock) 62 Ore-Breaking and Sorting on the Rand (H. S. Denny) 68 Mining Investment (Editorial) 77 A Card System for Mine Accounts (F. W. Den ton) 80 Investment in Mines (Editorial) 87 Gold Mine Accounts (R. Gilman Brown) 91 Card Systems for Mine Accounts (Theo. B. Comstock) 94 Appraising Futures (Editorial) 98 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 129 Resuing in Underground Work (F. C. Roberts) 131 M1S7168 iv CONTENTS. PAGE. Gold Mining in Rhodesia (F. C. Roberts) 135 Mine Labor and Costs on the Witwatersrand (T. Lane Carter) 150 Mining Costs at Cripple Creek (H. Foster Bain) 154 Mining and Milling in the Mojave Desert (Eugene H. Barton) 157 Cost of Mining Zinc Ore in the Joplin District (W. Spencer Hutchinson) 160 Mining in Rhodesia (Wallace Broad) 167 The Economic Ratio of Treatment Capacity to Ore- Reserves (H. C. Hoover) 173 Equipment and Ore-Reserves I (Editorial) 180 Equipment and Ore-Reserves II (Editorial) 182 Equipment and Ore-Reserves III (Editorial) 185 Mine Equipment and Ore-Reserves (E. Gybbon Spilsbury) . . 187 Mine Equipment and Ore-Reserves (Benj. B. Lawrence)... 189 Another Aspect of Mining Finance 190 The Economic Ratio of Treatment Capacity to Ore- Reserves (W. R. Ingalls) 194 Mining in Rhodesia (F. C. Roberts) 200 Secret Reserves (Editorial) 205 Secret Reserves (F. H. Bathurst) 206 The Valuation of Gold Mines (H. c! Hoover) . . 211 Treatment Capacity and Ore-Reserves (R. Gilman Brown). 217 Amortization (F. Hobart) 221 Valuation of Gold Mines (Robert Stevenson) 225 Mine Equipment and Ore-Reserves (Geo. J. Bancroft) 227 The Economic Ratio of Treatment Capacity to Ore- Reserves (G. A. Denny) 232 Equipment and Ore-Reserves IV (Editorial) 244 Equipment, and Ore-Reserves V (Editorial) 246 Ore-Reserves in Gold Mines ( J. H. Curie) 249 The Personal Equation (Editorial) 253 Ore-Reserves (H. C. Hoover) 255 No-Liability Companies (C. S. Herzig) 260 Engineers' Estimates of Costs (W. R. Ingalls) 264 Gold Dredging in California (Chas. G. Yale) 268 Mining in Missouri (W. R. Ingalls) 271 Secret Reserves (Editorial) 275 Equipment and Ore-Reserves V (Editorial) 278 Secret Reserves 281 Mine Equipment and Ore-Reserves (R. Gilman Brown) . . 285 Gold Dredging at Oroville (H. D. Smith, E. W. Stebbins) . . 289 CONTENTS. v PAGE. The Basis of Value (Editorial) 300 Equipment and Ore-Reserves (C. S. Palmer) 302 Leasing at Cripple Creek (J. R. Finlay) 305 Secrecy in Mining (Editorial) 309 Mine Valuation (Editorial) 311 Mine Valuation (E. H. W.) 313 Gravel-Mining Costs in Alaska and Northwest Canada (Chester W. Purington) 317 The Cost of Mining (Editorial) 323 The Cost of Mining I ( W. R. Ingalls) 324 The Cost of Mining ( J. R. Finlay) 333 Mine Reserves (F. H. Bathurst) 339 The Cost of Mining (Philip Argall) ^ 342 The Cost of Mining (R. Gilman Brown) 347 The Cost of Mining (F. C. Roberts) 350 Cost of Chlorinating Cripple Creek Ores (Philip Argall) . . . 356 Cost of Mining and Milling (R. J. Grant) 359 Hoist by His Own Petard (Editorial) 364 Dredging at Oroville (L. J. Hohl) 367 The Cost of Mining (E. A. H. Tays) 372 Some Pumping Data (R. Gilman Brown) 378 The Cost of Mining (James Humes) 384 The Cost of Mining (Editorial) 387 Deep Mining (Editorial) 390 Notes on Mine Reports (Chester F. Lee) 392 Mine Reports (Editorial) 398 The Interval between Levels (Editorial) 400 The Cost of Mining II ( W, R. Ingalls) 403 PREFACE THE pages of this book furnish a reprint of a number of articles, bearing upon the cost of mining, which have appeared in THE ENGINEERING AND MINING JOURNAL between January, 1903, and June, 1905, a period of two and a half years. As affecting the economic aspect of a world-wide problem, I have included a number of articles dealing with those ethical and financial considerations which are no less important to the industry than the scientific principles underlying the actual breaking and milling of ore at the mine. For 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 any alteration would involve a recasting of the material detrimental to its value as a record of professional dis- cussion during the period mentioned. T. A. RICKARD. 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 unprofitable. 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, with their increased attendant hazards of endless competition constantly accelerated and intensified by cheaper processes of manufacture and various trade 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 shown 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 the development of the mineral re- sources of various parts of our country is thereby much retarded. A discussion of these conditions, their causes, f. 2 THE ECONOMICS OF MINING and their ultimate elimination would be timely, and it might show many unsuccessful investors the proper way to try again. After a good many years of activity in the mining and metallurgical field, I feel that I can mention a few causes of failure of mining enterprises and suggest a few reme- dies. If by writing this introductory letter and inviting the consideration 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. STARTING WRONG. Don't invest money on the strength of a printed pros- pectus or the advice of an ''interested friend" without preliminary investigation by a reliable engineer. Don't "take a flyer" in mining, but invest your money with the same care and discretion you would use in buy- ing bank stocks, real estate or a silk factory. 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 something to say about that. Don't invest in a mining company that is selling treas- ury stock and paying dividends at the same time. If the mine is earning dividends the company owning it seldom has a legitimate interest in selling more stock. II. INVESTIGATION AND MANAGEMENT. Unless you have had sufficient experience as a mining engineer and metallurgist, and if the amount of your con- templated investment is considerable, employ a reliable, experienced engineer to report on the property. Don't do this yourself unless you are born eternally lucky. Every man to his trade. Once you have invested in a mining enterprise, insist CAUSES OF FAILURE IN MINING 3 on frequent and complete reports covering operations of the mine. Employ a competent superintendent. Don't take your son or your nephew or your clerk out of your store or business house and send him to Arizona or Colorado to "run things" for you at the mine. Sell out first. Once you are assured of their qualifications, put every reasonable confidence in your manager and superinten- dent. Give them a fair show to make a dividend payer of your mining investment. If you are a director in a mining company, do not force the manager or superintendent to find a job for all of your unsuccessful friends and relatives. Let him hire his own men. Don't convert your mining property into an asylum for ne'er-do-wells. III. OPERATION OF MINES. Don't spend all of your capital on top of the ground. Do some digging. Don't buy too much territory. Mining claims are cheap. Concentrate your operations and your capital at the points where your orebodies have been found. Additional surface territory means nothing unless it contains ore. Don't expect your ore to grow richer with depth. It may gain in quantity, but seldom in quality. Don't build a mill or a smelter or reduction works until you are certain you have enough ore available to keep the mill in steady operation until at least its initial cost is recovered. This advice is ancient and worn from constant repetition, yet there are innumerable mills and smelters dotting our Western landscapes to-day which hardly turned a wheel because the supply of ore was insufficient or unsuitable. Don't build your reduction works until you have as- sured yourself beyond all doubt as to what kind of a pro- cess your ore requires to yield up its values. You can 4 THE ECONOMICS OF MINING adapt the mill 'to the requirements of the ore, but you cannot manufacture an ore to run through any particular mill or smelter. Spend time and money in rinding out, first' what process is peculiarly adapted to your ore, then you will leave behind you no silent enduring monument to folly. Employ a competent, experienced metallurgist to practically test your ores before building a mill. Most any process works all right on most any ore in a chemical laboratory, but in actual work on a commercial scale there are other conditions to contend with. It is well to find out what these conditions are before spending money on reduction works. I realize that the suggestions I have made and the rem- edies I have advanced with a view to insuring greater safety in mining investments, are ridiculously simple and self-evident to the veriest tenderfoot ; but this being the case, I will leave it to someone else to state why business men continue year after year to make the same mistakes in their mining investments instead of proceeding along these lines of greater safety. They do not seem to learn by experience, why I do not know. However, I would like to see these gentlemen have a better "run for their money." Can we not help them ? PERCY WILLIAMS. Prescott, Arizona, January 6, 1903. THE VALUATION OF MINES (Editorial, January 31, 1903.) In this issue a correspondent brings forward a per- tinent query concerning the unprofitable result of a large percentage of mining investments. It is a broad ques- tion, which may be answered humorously, cynically or straightforwardly, according to the mood of the person interrogated. We can only reply in all seriousness, for it is a subject fundamental to 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 inquiry 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 for 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 profitably worked under the given conditions of time and place, and then ask: What can make it 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 THE ECONOMICS OF MINING sum as profit from operations covering a term of years, plus the interest on the investment during the period consumed in the return of the stated price. When this is translated into a share capital the conditions are the same, although the amount of interest which should be returned in the form of dividends will vary in percentage according to the hazard of different kinds of mining. Apart from specific causes, there are several general influences which militate against true values. There is that expectation of better things, that resolute hopeful- ness which is necessary to all exploratory work. We cannot do without it, but it should 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- rectly or indirectly; therefore, all the more reason for taking care that the valuation of the mine be intrusted to those whose judgment is in no wise vitiated either by sanguine sentiment or that disturbing influence which is covered by the term participation. To summarize, mines are often over-valued because the valuation is usually done by people who are interested in getting a maximum appraisement. There is another far-reaching factor; mines are fre- quently bought to sell. It is a cynical truth that more money is made by selling mines than by buying them because they are so often sold for more than they are worth. Therefore it happens that although a property may be recognized as worth a stated sum, nevertheless shrewd persons will be willing to pay a larger amount because they have a reasonable expectation of selling it subsequently for still more. If this is brought about by further intelligent development, by solving knotty prob- lems of ore treatment, by a new equipment which minim- izes working costs, that is, by engineering talent of the best kind, then assuredly the enhancement in price is both THE VALUATION OF MINES 1 warranted and deserved; but when it merely presumes upon the ignorance of individuals or of shareholders it partakes of the practices which slide imperceptibly into acts that are dishonest. The result of these tendencies is that it is hard to pur- chase mines at a fair valuation that is, we repeat, a valuation such as is likely to give a return of the pur- chase price, plus a reasonable interest on the capital in- vested. The supply of good mines is far below the de- mand; in addition to those who are shrewd enough to recognize that gold mining, if properly safeguarded, is the safest industry extant, there are a larger number who see the advantage of trading upon the sanguine tempera- me.nt of human kind, and there is also another class of people who rush in where experienced men fear to com- mit themselves. Thus, if a mine is worth a certain sum, as nearly as the fact can be determined by skillful and trained specialists, then the first group described will pay that much for it, while the second will pay more accord- ing to the popularity of the locality and the attractive- ness of the scheme, and the third group, of innocents, will be deluded into parting with a price which, humanly speaking, promises a loss with deadly certainty. These are some of the reasons why mining ventures prove unprofitable; they are such as time alone can re- move time and the education of the public to a realiza- tion of the fact that while no industry affords such rapid and remunerative returns as legitimate mining, none affords so readily the facilis descensus Averno which awaits the greedy or the foolish in the financial arena. ORE SORTING (Editorial, February 7, 1903.) The article on ore sorting which we publish in this issue deals with a subject of very practical importance. Ignorance concerning the proper proportion of poor rock which it is desirable to take out of the veinstuff has made failures of good enterprises, and the overlooking of this factor in mining has been at the bottom of many inexplicable over-valuations of property. Whether to sort or not, is a question vital to the economics 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 stoping widths which are determined by actual measurement should have 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 to be done, either by judicious blasting, which removes the maximum of clean ore and the minimum of wall-rock, or by eliminating the large pieces of waste which are always serviceable for loading the stulls. All sorting at surface is made more difficult by the mixing which the particles of ore and waste under- go in subsequent handling, either while being loaded into ORE SORTING 9 the cars or dumped into the ore-house. The Cornishman who 'resues,' that is, strips the lode by shooting down the adjoining waste-rock previous to breaking down his ore, separately and clean, presents one extreme of the methods possible underground ; while the man who need- lessly blasts a narrow and clean streak of high-grade ore together with several feet of adjoining barren country, only to give employment to a number of men at sur- face who separate what could have been kept apart in the stope, illustrates the other extreme. It is not a mathema- tical or scientific question, and on that account it is insuf- ficiently appreciated, but, like many other problems aris- ing in daily work, it demands that fundamental science which Huxley defined as organized common sense. SORTING AT JOHANNESBURG BY T. LANE CARTER. (February 7, 1903-) The question of raising the grade of the ore by sorting out the barren quartzite is one that has received great at- tention on the Witwatersrand, so that a well-equipped sort- ing house is now looked upon as one of the necessary features of a complete plant. Sorting by hand is the method pursued, it being out of the question to use such contrivances as jigs for this purpose. Formerly, the waste rock was considered quite barren, and therefore of no value. A different opinion prevails now. It has been the custom, of course, to take samples of the rock which is thrown out, but such sampling is almost useless for practical purposes. It is, in fact, im- possible to determine in the ordinary way how much the waste rock is worth, for it consists of pieces ranging from the size of an egg up to 30 or 40 pounds. One method is to take a handful from each carload of waste before it is sent to the dump, and throw this sample into a box. When the box is full the man in charge of the sorting plant takes a sample of a few pounds in weight, and sends it to the assay office to be assayed. Now, it is curious how the value of this sample varies, according to the man who is responsible for it. It is pos- sible to obtain a reliable return from the assayer if the rock is properly crushed and quartered, but the question is : Does this sample give a true indication of the value of the rock which goes over the dump ? The only possible way of getting at the value of the waste is to crush everything to a uniform small size, and then quarter down carefully. This is a cumbersome oper- ation, and is not practicable. The writer has known of SORTING AT JOHANNESBURG 11 cases where an assay of the waste, which was put down as 4^ dwt., had a red ink line drawn through it by those high in authority, with the remark that "it was impossible for the rock to be so rich," and that "the sample must have been wrong." But it is just possible that in some cases such a high value was actually in the rock. On one mine, known to the writer, the management took the latter view, and let out a contract to an experienced man to re- sort the whole dump. The contractor was given about $4 per ton for every ton of clean ore he picked out, and it was a surprise how many tons of pay-ore were obtained. A rather practical test is being tried on two of the big mines here. No attempt is made to sort out the waste; everything that comes from the mine goes to the mill, ex- cept, of course, the rock from cross-cuts. The value per ton crushed has fallen, but the management believes that under the circumstances more profit will be made by not sorting. The way they look at it is this : A calculation is made of the cost of handling the ore after leaving the sorting table ; suppose it is determined that having mined and hoisted the ore and brought it to the mill it pays to crush anything over 1.9 dwt., and the waste-heap goes 2.\ dwt. ; then it is better to run through this 2\ dwt. stuff, even if only i shilling per ton profit is made, rather than hang up a number of stamps for lack of ore. It is not held that sorting does not pay, but under some conditions it might be preferable not to sort. Take, for instance, a battery of 200 stamps. On account of the scarcity of labor, only about 70 of these stamps can be supplied with sorted ore at the present time. Under these conditions it is advisable to put through every ton of material on which even a small profit can be made. To put the matter in a nutshell, the managers make profits the basis of calculation; rather than yield per ton of ore crushed. If labor were plentiful, and a mine with 200 stamps had a superabundance of ore, the better policy 12 THE ECONOMICS OF MINING would be to raise the grade as much as possible, even if by so doing the dump assayed rather high. But it will be many months before a mine with 200 stamps will have a superabundance of ore for the mill. The enthusiasts on sorting look rather askance at aban- donment of sorting, but it is an experiment, and as such is interesting. It will be noticed that 2^ dwt. was put down as the value of the waste rock. This might seem high", but on some mines it is the correct value. An in- vestigation has shown the cause of it. The quartzite coun- try is barren, if sampled a foot from the reef or vein, but sometimes in the immediate neighborhood of the reefs careful sampling will show that the supposedly barren rock carries gold, assaying in one case as high as i oz. per ton. The underground manager of one of the Rand mines told me that in his mine there was a tiny pyrite seam, some distance from the regular leader, which as- sayed 5 oz. to the ton. In the ordinary course of events this country rock would be thrown out. The foregoing must not be taken as disparaging the scheme of sorting, for there is no doubt that sorting, if carefully watched, and done by skilled men, can play a still greater part in the future of the Rand than it has done in the past. Like everything else, however, it needs careful watching ; if it is not done properly, an actual loss might be the result, as has been already indicated. In the future it is possible that better sorters than Kaffirs will be employed. An earnest attempt will be made to get at the actual value of the waste rock, either by occasional trials in the mill or by careful sampling. On some mines an attempt at rough sorting is made underground, the larger pieces of waste being put in pack walls. In the sorting houses one of two schemes is adopted. Either an endless belt, such as the Robins belt- conveyor, moves past the sorters, who throw out the waste, or a revolving table, ring-shaped, about 35 to 40 ft. SORTING AT JOHANNESBURG 13 in diameter, with a periphery 5^ to 6 ft. wide. The sort- ers throw the waste into bins below the table. Water for washing the ore is, of course, used plentifully. It may be of interest to give an example of how the question of sorting affects the valuation of a block of ore in the mine. Suppose we have a block of ground 300 ft. long by 120 ft. on the dip of the reef. It is desired to form an estimate of the number of tons, and the value per ton in this block. The assay-plan is spread out and the assays taken, as they are marked, all around the perime- ter of the block. On the assay-plans of many mines the assay value of the seams of gold-bearing material and the width in inches are bracketed thus : 15 in. at 19 dwt. 4 in. at 75 dwt. All these values are taken down and the average found. Suppose the result comes out thus : 20 in. at 10 dwt. 6 in. at 90 dwt., which we call 26 in. at 28 dwt., the average value of the block. The stoping width can, for example, be assumed as 42 in. Since we have 26 in. at 28 dwt., then for a width of 42 in. we have 42 in. at 17.3 dwt. To find the number of tons in the block 300 X 120 X 3 c - =9,692 tons ; 9,692 X 17.3= 167,671 dwt., the gold contents of the block.* We will assume that 35 per cent of the ore will be broken as unsortable fines, and that 20 per cent will be sorted out. The block can then be valued as follows : dwt. dwt. 3,392 tons fines at 17-3 = 58,685 (i) 1,938 tons of waste rock at 1.5 = 2,907 (2) 4,362 tons of sorted rock at 24.2 = 106,079 (3) 9,692 tons. 167,671 * The figure 13 is assumed as the number of cubic feet of ore in place equivalent to one ton. Editor. 14 THE ECONOMICS OF MINING By combining (i) and (3) we can reckon that from this block of ground there will be sent to the mill 7,754 tons at 21.2 dwt. Notice that the waste rock is not considered barren, but is put down at ij dwt., which is a normal value. COST OF SHAFT SINKING BY HAND (February 28, 1903.) Mr. Edward H. Benjamin contributes to the Pacific Coast Miner an interesting statement regarding the cost of shaft sinking by hand in California. The table below gives the record of work in the last 150 ft. of the vertical shaft at the Golden Eagle mine, Lassen County, Cal. the property of the Lassen Mining Company. Wages or Cost Shifts. Price. Totals. per ft. Miners (9) 423 $3.00 p'r s'ft $1,269.00 $8.460 Topmen (2) 94 2.50 p'r s'ft. 235.00 1.566 Engineers (2) 94 3.00 p'r s'ft. 282.00 1.880 Blacksmith (i) 47 3.50 p'r s'ft. 164.50 1.006 Foreman (i) 47 loop'rmo. 172.30 1.149 Total labor 705 $2,122.80 $14.151 Quantity. Timber 10,976 ft. $13 per M. $142.69 $0.951 Lagging 2,520 ft. 350. a piece 88.20 0.588 Lining boards 2,270 ft. $14 per M. 31.78 0.212 Cordwood (blocking).... 5 cords $3 per cord 15.00 o.ioo Wedges 3,ooo ic. a pieqe 30.00 0.200 Total timber $307.67 $2.051 Wood (fuel) 25 cords $3 per cord $75.oo $0.500 Oil and incidentals 15.00 o.ioo Total power cost $90.00 $0.600 Coal oil 6 cases $4.15 case $24.90 $0.560 Candles 6 cases $6.40 case 38.40 0.256 Total illumination $63.30 $0.422 Powder . : 600 Ib. I4c. per Ib. $84.00 $0.560 Fuse 2,500 ft. $3.70 per M. 9.25 0.061 Caps 550 6.25 per M. 3.44 0.023 Total explosives $96.69 $0.644 Total cost of 150 feet of shaft $2,680.46 $17.868 Mr. Benjamin adds the following details : "Work was commenced at a point 7 ft. below the 400 level and the shaft was sunk 150 ft. below that point. The work was 16 THE ECONOMICS OF MINING done by hand drilling, working three 8-hour shifts, with three men on a shift. The ground was taken out 7 by 12 ft. in the clear for a double-compartment shaft. Hoisting was done with a bucket. The country rock was hard andesite. No water was encountered. The shaft was timbered with 10 by loin, sawed timbers, end-plates and centre-braces dovetailed in, and centre and corner posts gained in. The sets were placed 5 ft. between cen- tres, rilled and lagged solid behind timbers and each com- partment was lined with I by 12-in. lining boards set 3 in. apart. The work was completed in 47 shifts, making an average of 3.2 ft. per shift, hoisting 20 tons of material per shift, besides putting in timbers. The timbers were framed by hand by the foreman, who directed the work. Eighteen holes were drilled for each round. No. 2 Giant powder was used. The ground drilled hard, but broke well. The outside holes were kept high and the centre broke first. I do not know of any work done by hand where a better record has been made." GOLD MINING AS AN INVESTMENT (Editorial, March 21, 1903.) We note that our London contemporary, The Econo- mist, which represents the best traditions of financial journalism, has finished the publication of a series of articles by its "Special Mining Commissioner," under which title we have easily recognized the trenchant style and fearless expression of opinions which characterize our friend, Mr. J. H. Curie. The concluding article of this series, an abstract of which will be found on another page, winds up with a few home truths and that under- current of depressing frankness which we have learned to associate with Mr. Curie's writings. The burden of these recent contributions to the pages of The Economist has been : Gold mines are, with 'rare exceptions, much overvalued; shareholders do not realize the risk and are satisfied with a rate of interest which is too small, considering that risk; they are careless re- garding questions of ore reserves; they end inevitably by over-rating their mines and, in consequence, they speculate foolishly. As a corollary, it is suggested by Mr. Curie that a certain rate of dividend, a certain pro- portion of ore reserves and a healthy condition of de- velopment are essential to any mining enterprise which is to be regarded as an investment. While we appreciate the service done to the public and, no less, to the industry by advice of this kind, we consider that it tells only half the story, and is calculated to create a wrong impression concerning gold mining. Legitimate gold mining is not necessarily an invest- ment, nor indeed does even so conservative an industry as farming come always under this label. There are types in both industries which proceed along such well 18 THE ECONOMICS OF MINING ordered lines and with such consecutive regularity of production that their earning capacity can be safely pre- dicted; but each exhibits variations of procedure which are both profitable and risky in a proportionate degree. In this country gold mining is not ranked with railroad bonds, save by the unthinking. It is true that there are a few properties which have become developed to such an extent that, like the mines on the Rand, they are, humanly speaking, certain to return a stated sum in capital plus a definite interest during the period of ex- traction, but they are so few that the fingers of a man's hand suffice to count those which he can quote im- promptu. The moneyed man who goes into mining to make more money knows this. He does not expect to find a Homestake or an Alaska-Treadwell, and if you cross-examine him you will probably discover that he does not want that type of mine so much as he seeks for a Little Pittsburg, a Chrysolite, a Yankee Girl, a Granite Mountain, an Independence, a Tonopah that is, the superlatively rich ore deposit which makes as much money in a month as the steady producer earns in five years. In other words, the speculative side of mining has an attractiveness which is at the bottom of the energy with which it is prosecuted, and when you bring it to the dead level of a steady investment you will find that the man of ordinary shrewdness will save time by going straight to his broker and buying bonds or con- sols. The Rand presenting an unsual type of gold min- ing, minimizing risks and at the same time limiting pos- sibilities has run away with our cautious advisor. Ordi- nary gold mining can never come to a strictly investment basis; from the time of the Argonauts to that of Cape Nome it has been, and will continue to be, an adventur- ous pursuit, attractive to the bold and avoided by the timorous. ' GOLD MINING AS AN INVESTMENT 19 Strike out the mines which are not sound investments from the undertakings into which a sensible man should put his money, and you shrivel legitimate mining into a dry business, which would soon wither from want of life. Before the investment basis is reached, the best mining undertaking must as surely pass through several stages of comparative speculativeness as a child must run the dangers of measles and mumps. The biggest fortunes are made during the earlier stages of development; more money is made by selling than by buying mines, simply because the final or investment stage of a first-class mine brings less profit, while it never can quite eliminate the essential hazard. Mining undertakings come to grief so often, not so much on account of failure to attain an investment basis, but because they are not put on a business basis. People play the fool and expect miracles to happen. The same procedure would ruin a grocery establishment. Because the occurrence of ore in nature is uncertain, and mining as a consequence must necessarily be speculative, there is no reason for piling human foolishness on the top of nature's niggardliness. Of well-conducted mining enter- prises it can be said that they meet with a percentage of success as large, if not larger, than any ordinary manu- facturing undertaking. The smashes are more spectacu- lar and the successes are more magnificent in the former case, but the average result does not, as a rule, favor the apparently safer form of industry. We are glad to be able to believe, with The Economist, that mining meth- ods are becoming more sane; and we recognize that this consummation is quickened by the good sense contained in such contributions as those to which we have been referring. MINING RISKS (Editorial, April 4, 1903.) Actuarial calculations have been successfully adopted in estimating the value of the mines on the Rand. Such a method of appraising mining property may not be applica- ble to the palpitating uncertainties of ordinary gold veins, which, while they miss the comparative uniformity of the great 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 ago, and it carries with it a certain suggestiveness which can be expressed 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, leaving no record, not even a name. A prospect resembles a young child, rich in possibilities, but hedged around with all the uncertainties of imma- turity. The promising prospect may succumb to the measles of bad management, or the whooping-cough of inexperience. In spite of care and equipment neither child nor prospect may survive long enough to make a mark, or, on the other hand, they may outlive the dangers of adolescence and, by reason of inherent quality, they may develop into a mine and a man which outdistance the expectations of their best friends. Again, a child grows to manhood ; a prospect develops into a mine. The young man reaches the threshold of a career full of promise and distinction, or, he already manifests the evidence of an early decadence of great natural powers; so, too, the prospect, having passed through the changes of early development, may afford proof of opening up into a property of im- MINING RISKS 21 portance, or, on the contrary, it may have been deep- ened to the water level only to disclose the fact that either the sulphide ores are less rich than the oxidized product near the surface, or that the material, hitherto docile to simple milling, has become too refractory for profitable treatment. Another stage of development brings the man to full maturity, with a past of fair achievement and a future of continued usefulness, or it may exhibit the ex- hausted energies of a waning career ; similarly, the mine, having achieved celebrity by means of a prolific output, gives assurance of continued productiveness, or, it may be, already shows signs of approaching impoverishment.. Finally, both become old, the man and the mine; and r whether it be long in years or deep in feet, we predict with certainty the eventual exhaustion of splendid powers. Men think all men mortal but themselves ; they also realize that all mines must give out at last all save their own. Thus does the melancholy actuary drive home his sad philosophy, MINING METHODS AT JOHANNESBURG BY T. LANE CARTER. (April 18, 1903.) The greatest expenditure of labor in the mines of the Rand is in getting the rock from the stopes to the cars at the level. The amount of work required to shovel a ton of rock from a stope into the cars depends upon the conditions obtaining in different mines. The outcrop gold mines, where the dip is as great as 70, have a great advantage over the deep-level companies, where the stopes frequently flatten out to 25. This flattening, taken with the broken foot-wall, makes it necessary to shovel, over and over again, every bit of rock, before it finally gets into the car. In the deep-level mines, a good many incline-planes have been installed in the flat stopes, so as to facilitate the handling of the ore. The cars are loaded at any point in the stope, and are then lowered to the level below. They are then detached from the rope and pushed to the chute at the landing station, where the rock is dumped. The installation of an incline-plane is 'by no means as easy as the same undertaking would be in a coal mine. The road-bed has to be blasted out, and the whole con- trivance must be protected against violent blasting. How- ever, so much shoveling is saved by instituting these contrivances that it pays to put them in most stopes of 25, in spite of the initial heavy cost. In these days of labor scarcity it is doubly imperative. It may be of interest, seeing that so much has been said lately concerning labor conditions, to mention the methods of managing the workmen. Since the skilled white man receives so high a rate of wage, it is necessary to get as much work out of him as possible. Most of MINING METHODS AT JOHANNESBURG 23 the work underground is done by the contract system, although a few of the leading mines operate entirely on "day's pay," and seem satisfied with their results. When the day's pay system is in vogue, the character of under- ground operations depends, to a large extent, on the mine captain and the shift bosses. If they are inferior or inactive men, the amount of loafing which goes on is surprising. If, however, a mine is fortunate enough to have a thoroughly capable mine captain, who has, the gift of managing men, and the shift bosses under him are also alert, the day's-pay system makes a very good showing. The contract system, however, seems the better of the two. The company never appears to lose by it, although some of the miners receive nearly twice as big wages as they would at day's pay. One advantage arises from the fact that the mine employing the contract system at- tracts the best workmen, who realize that by this method they are thrown entirely on their own resources, with the chance of earning big wages, if they work both with their hands and their heads. The modifications of the contract system are of prac- tical importance. Some managers, for instance, employ it throughout the mine, except, of course, for timbermen, trackmen, pumpmen, etc. In such a case every piece of rock is broken by contract. Then there are mines using a combination of day's pay and the contract system ; those, for instance, which are traversed by dikes and broken country, rendering it difficult to work the ground on contract. There is, of course, a limit to the amount a contractor is allowed to make, and this limit varies in different mines, and at different periods in the history of the same mine. Before milling operations commence, for instance, when there is great eagerness to push the development in all directions as rapidly as possible, the contractor is 24 THE ECONOMICS OF MINING allowed to make a handsome sum, month after month, without fear of a cut. On one big mine here, before the war, a thoroughly competent miner could make from $375 to $500 per month during the development stage, but when the mill commenced operations this fell a great deal, so that on this property $250 per month is now about the high-water mark. Even after the mill starts crushing it is considered no more than fair that contractors in drifts and shafts should be paid higher than men engaged in stoping. It requires considerable skill and experience to manage the contractors to the best advantage. The mine captain should be an expert judge of ground, and be careful to have the price neither too high nor too low. He must be just. The writer once worked with a contractor in a drive. It was noticed that for three weeks in the month he worked like a Trojan, but did very little in the latter part of the month. Upon being pressed for an explana- tion, it was found that he calculated he would be out if he worked strenuously all the month, so he took it easy after being sure he had done enough to get a good wage. In this case the price was evidently too high. Nor should the price be too low, for if too great a cut is made an efficient man is liable to leave for another mine, where he can make more money. One basis of calculation is that a contractor who works hard every day, and man- ages to drill 40 to 45 ft. a day, and to blast successfully all the holes, should be allowed to make about $250 per month. With such terms a man must work diligently. If he neglects his work, or is not intelligent about it, he runs the risk of being in debt at the end of the month. There are times, however, when the mine captain recom- mends that the pay of a contractor who has done poorly be brought up to day's pay, and in such cases the man receives more than he has really earned. Discretion has to be used, for if the contractor thinks he is always sure MINING METHODS AT JOHANNESBURG 25 of at least day's pay he is apt to hang back with his work. In stope contracts the usual method is to pay so much per square fathom. I do not know of any mines here where the method of paying so much per ton broken is employed. In mines that are run on the contract sys- tem, much of the responsibility is taken from the shoul- ders of the mine captain and put upon the survey depart- ment, which is responsible for the measuring of the ground. This is not the place to enter into a discussion of stope measuring, but I trust I shall be able to write a description of the methods used at some future date. The prices paid for stoping vary, of course, in the differ- ent parts of the mine, and depend upon the character of the rock, whether the stope is underhand or overhand The biggest range I know of, in any one mine, is from $14.50 to $17.50 per square fathom. In other proper- ties these prices differ, although there is probably not a stope in the district, at least in the deep level mines, that is being worked for less than $12.50 per square fathom. On the average $16 can be considered the prevailing price along the Rand, at the present time. Contractors are provided with Kaffir labor, for which they pay 75c. per day per man. They are charged for the stores they use, such as dynamite, fuse, candles, etc., and at some properties they even pay for the sharp- ening of the drills. What is a good month's work for a contractor? The number of square fathoms stoped out with two air drills (and it is almost the universal practice for each contractor to run two drills except in the drifts) varies as much as the prices paid per square fathom. From 28 to 46 square fathoms gives ^an idea of the range. About 36 square fathoms, with two machines working a single shift, may be considered good work. The stopes average 4.75 ft. in width. In drifting there is considerable variation also. 26 ' THE ECONOMICS OF MINING In some drifts a round of twelve 5i~ft. holes is made, while others require 16 holes. A man working with one machine in unfavorable ground, one shift per day, is doing good work if he makes 40 ft. per month. Under favorable conditions he may manage 50 ft. per month. The prices for drifting vary from $9 to $10.50 per foot. Owing to the scarcity of cheap labor there are few stopes being worked by hand-drillers. It would be advan- tageous in most stopes to substitute drilling by hand for machines, and whenever it is possible it is done. A white miner is given charge of a number of Kaffirs, 30 to 40, and works the stope on contract. The contract system, which I have tried to describe, is certainly not the doctrine of trades-unionism, which preaches that every man doing the same class of work should receive the same wages per day. But there is a certain amount of trades-union feeling even among the contractors. It is generally understood that a day's work consists of putting in 4 holes, 5^ ft. deep, per machine. When the men are on contract they stick to this stand- ard, and only in a few cases do they try to drill more than four holes for each machine. It has often been tried to persuade them to drill more, but they argue in the usual way, and do not change. What, then, is the advantage of using the contract system, if the men do not drill more holes than they would on the day's pay? In the first place, the men use their heads more. To see the care with which a successful contractor pitches his holes, so as to break the maximum amount of rock, makes one realize the difference between a contractor and a wage miner. Then, too, the contractor is much more careful with his stores, dynamite, candles, etc., and waste is thus reduced to a minimum. And again, the contractor does not loaf. He attends strictly to business. Many a manager has been surprised to find how early some of the contractors finish their drilling for the day. MINING METHODS AT JOHANNESBURG 27 It is not an unfrequent occurrence to find a contractor, making good pay, finish drilling operations by 2.30 o'clock every day. Blasting is not allowed before 5 o'clock, and except the preparation of the charges, the contractor does nothing from 2.30 until blasting time. It is natural that a manager should try to devise a scheme whereby the company may get the advantage of these idle hours. At first the men were asked to drill an extra hole, whenever possible, the promise being given that the rate per square fathom stoped should not be reduced. They fought shy of the scheme, and preferred to make less, rather than overstep the bounds of the recognized day's work. Then the scheme was tried, and is still being tried on a small scale, of paying the contractors so much per foot drilled, in order that each man may drill the maximum number of feet per shift. By this arrangement the con- tractor is used as a driller. If the plan works well, no doubt regular blasters will be employed, the contractor having nothing to do with the blasting operations. This method of working contracts seems to have met with con- siderable success in other parts of the world. So far little success has attended it here. In the first place, by adopt- ing this arrangement, the responsibility for the contracts is shifted from the survey department to the shift bosses, and this is undesirable. Then, again, the miners oppose the scheme as being an innovation. It looks as if in the future, as in the past, the general way of carrying on contracts in the Witwatersrand gold mines will be on the basis of area stoped out, without any reference to the amount of drilling, or the thickness of the stopes. NOTES ON ZINC MINING BY W. GEO. WARING. (July 4, 1903.) Valuation of Zinc Ores. The value of any zinc ore depends, ( I ) upon its percentage content of metallic zinc ; (2) upon whether the residuum left after smelting for spelter or for zinc oxide can be profitably treated for gold, silver or copper, or, as in the case of franklinite, for man- ganese; (3) upon its percentage content of deleterious elements which either deteriorate the product or increase the expense of reduction. Thus, lead and iron in con- siderable amount detract from the value of ore for the latter reason. Zinc-blende is deducted as an objectionable element in calamine ores, and calamine when found in blende ore is not paid for. Cadmium is deleterious for certain purposes, also antimony and arsenic. Sulphur, which composes about one-third of the weight of pure 'jack' or zinc-blende, is not considered as an element of value, because the cost of converting it into sulphuric acid (a necessity at some works) leaves little, if any, profit. The price paid to the ore producer per unit of metal (a unit here meaning 20 Ib. or i per cent of 2,000 lb.), therefore, varies with the quality of the ore. Thus in Missouri, where the "assay basis" is $30 per ton for blende concentrate containing 60 per cent metallic zinc, concentrates containing only 20 per cent zinc are abso- lutely unmarketable; when they contain 40 per cent zinc with little or no iron they are worth 25c. per unit of metal, or $10 per ton ; with 60 per cent zinc the unit price is 5oc., and when they assay 64 per cent zinc the value per unit is 53|c., or $34 per ton. It follows that the miner who fails to clean his zinc ore up to the economic limit, which for zinc-blende ore is held NOTES ON ZINC MINING 29 to mean that from 2 to 6 per cent of sand or earthy matter may remain in the concentrate, is throwing away value when he sells the insufficiently cleaned material. For ex- ample, i ton of the 40 per cent ore above cited is worth but $10; if it can be cleaned to assay 60 per cent, even allowing a reasonable waste of 10 per cent in the opera- tion, it will produce 1,200 Ib. of 60 per cent ore, worth $18, a gain of $8. If cleaned to assay 64 per cent, the product would weigh 1,125 tt>., an d would be worth $19.12. The only fair and equitable method yet discovered for ascertaining the value of any metallic ore is by assay. Buyer and seller are alike protected by this means, even against direct fraud, provided the usual precautions are taken. These precautions are : ( i ) That the sampling be thoroughly done as the ore is delivered, and in the pres- ence of both buyer and seller or their responsible agents ; (2) that an umpire sample be sealed at the time of sam- pling; (3) that the percentage of moisture in the ore as delivered be ascertained immediately after the weight is determined. The last proviso is necessary because the assay can only be made upon the dried sample, and there- fore represents the percentage content of the ore minus its moisture. Obviously, in settling, it is immaterial whether the deduction for moisture be applied to the gross weight of the ore, or to the price to be paid per ton, or to the product of the weight by the price per ton, but it cannot be applied to reduce the assay value. Weight and Volume of Zinc Concentrate. The dry weight of a bin of ore or concentrate may be estimated very closely, if the space occupied by the ore be meas- ured and the weight of the ore per cubic foot is known. The following data relative to the specific gravity and weight per cubic foot of zinc-blende concentrates and two or three other common constituents of Missouri and Kentucky zinc ores, were obtained from careful tests 30 THE ECONOMICS OF MINING made in the laboratory of Waring & Son, at Webb City, Mo., and are now for the first time made public. The minerals tested were pure massive blende from Prosperity, Mo., containing 66 per cent zinc, with about I per cent of sulphides of cadmium, copper and iron, and having a specific gravity of 4.05 ; marcasite (cockscomb pyrite) from the same place; galena from Webb City, Mo. ; clean flint from the same place, and average fluor- spar from Livingston county, Ky. The samples were crushed to 5-mm. size (1-5 in.) and finer, then assorted by sifting into 4 sizes, namely, 5 mm. to 2 mm. (1-5 in. to 1-12 in.) ; 2 mm. to I mm. (1-12 in. to 1-25 in.) ; I mm. to 0.25 mm. (1-25 in. to i-ioo in.) ; lastly, under 0.25 mm., or o.oi in. The weight in pounds of a cubic foot of each sized material, closely packed and shaken down, was then ascertained, and lastly the weight of a cubic foot of equal parts of the various sizes, mixed, was determined. The specific gravity of each mineral was then ascertained, as given in column 6, below. Since the weight of a cubic foot of water is very nearly 62.5 lb., the weight of i cu. ft. of each mineral in the solid state was found by multiplying the specific gravity by 62.5, giving the figures of column 7. The increase in volume brought about by crushing each mineral to the above fineness is shown in column 8, the figures of which are found by dividing those of column 7 by those of column 5. Material. o m ^ . 22 -M c M <+ ys i .N . ^ P* _ . % ww C "H M 3 | S "^ .S M S N .2 rt S.2 o. *o *" S Lb. Lb. Lb. LbT Lb. Lb. Pure Galena. 258.8 238.3 251.2 261.2 319.6 7.38 461 1.442 Marcasite (mundic).. 119.5 H3-I 121.9 128.3 160.7 4-514 282 1.755 Pure Blende. 139.4 130.0 128.3 136.3 170.7 4.05 253 1.482 Fluorspar ... 100.6 97.8 98.3 100.7 127.9 3- 14 196 1.532 Clean Flint.. 77.9 75.4 71.0 75.1 91.2 2.57 161 1.765 NOTES ON ZINC MINING 31 The common statement that vein material occupies twice the space after breaking is, therefore, not quite true of rather finely comminuted minerals; and, as the above results show, the increase in volume varies according to the shape of the particles, since the flint and marcasite break into scales and elongated angular fragments, while the particles of the other minerals are nearly isometric. Pyrite and bornite would no doubt give very different re- sults from those obtained with marcasite. Specific Gravity and Composition of Zinc Minerals, Etc. In the following list of zinc minerals, and other minerals usually associated with ores of zinc, the order followed is that of their specific gravities, beginning with the heaviest. The specific gravities given are compiled from standard authorities. The percentage compositions are, however, specially computed, using the International Atomic Weights for 1903, and refer to the theoretically pure minerals. It must be borne in mind that some of the minerals named are very rarely found in a state of perfect purity. Thus blende nearly always contains from 0.2 to i per cent of other sulphides than that of zinc, while marmatite, pyrrhotite and chalcopyrite are very variable in composition. Assay Results as a Guide in Ore Dressing. The assay of a sample of zinc-ore concentrate, showing the per- centage of each metallic element, as zinc, iron, lead, etc., gives the mine manager a means of detecting defects in the mill work. If the character of the minerals compos- ing the ore be known, the percentage of each mineral, of which one element is determined by assay, may be com- puted from the data of the last column in the preceding table. Thus in a lot of concentrate consisting of blende, pyrite, galena and sand or earthy matter, the percentages of zinc, iron and lead being known by assay, the propor- tion of blende is found by multiplying the zinc by 100 and 32 THE ECONOMICS OF MINING (j CJ CJ c 5 I 6 00 c o I 'M d d . d g, u d d 5 o ? * d d 0\ S *$ &3 C f I $11 , : 1 : J D< fi cj VO CO d , d d M i?*O t 1 oo rv c^ 3 Ut> d 9 ro rt Tf N 0*3 c O M cj M bfi C HH Q ' 00 ^ d .& NO tT "S cj W 5 ^" ^ 4 " cj cj s^ ^ o *^ NO '5 d w " fl r x .2 & d t aT Q "* w C C N * H s I d T* -So .2 c" -3 Jsl if 3 JrS c ! .1 S' ^ ^ 2 c ^ -> c rg JH rt X! C3 -H B*2 ft w ? .? |_| c S M "S " ? is ^'d in U ra 1 ^ J Sd ^2 tx ca :. fluorine, magnesia, l d "I C3 G" " bo >> ^ o cj d i In i: ^ " d "'jf.n " O tO ^ *- \o f O- . 00 Os 2.^ o a -cd T>d 00 f*} ' XV ^ ^. ^ S o ^ O ON O " rG d ? ^ h9 o\ c^ E CO 11 dj (| ca ^ ^ ^ ^ N I to M 6^ 5^"^ o o S3 M 1*1 iiil |II| 1 j" 1 s ' 5 I N 'N- .ti u "- c a . ;; [?! I g2? P 1 - l-ll ~ C "^ M 5. Cj" 60 J 4 5 cj o o "" g" . yC - -c" dl- CO r^ U^ ^PO . bfi t d cj cj^ j C . O ij" " d^ dd iddd d do. ^o "^ O ^X c- . dc d Tf IU "ddSd^d^ S cxca 00 ON O CO Tj-00 11 OOn-^M to ON * o o 2'" 2 NO tx 00 Ji^ ^ {^ NO 10 d w * txOO >Q 10 06 d i 4 i- " d Jj ^J OVO to tx O O O ONOOVO to . 5 c< VO O 00 S ^ i i- 1 OO 00 tx txNO to to Tj- CO f 3 s ' C4 n ^ tx\d ^xd to to to 4 44 4 t ? ^.oo 4 <^ CO t ~ V ^ Tt Jv X NO 1 ? VO ^44 > ^oob vi i,- > -* ^ 4 4 to ^ i ^ ' co o 1 cj vN N ci c^ ^NO to 4 NO <* 4 4 * CO C) i! |f iilgi: :| :-g 'gLsl ^ >^ g c cS^^ w |J . 8||| -c^g | ^S 2^ rt Sa 1 K lip J u's a^4f ^ o> ^ " c-.ti ca J=o S(3 ^ Siderite (iron carbonate) . . . Hydrozincite (zinc bloom, m ralaminp') ca Q. M ,M C "S. E" u J3 1 1 05 Silicious calamine (ordinary / $. ( C y fc C c 4 I c t i 'i ^ a ."tn 1 Calcite (calc-spar, lime-spar, Quartz (flint, etc.) Selenite (gypsum) ca J IS o "o ca M M CO rf- " >NO IxOO ON M N t5 THO \0 tx 00 ONO M N COt to NO tx ON NOTES ON ZINC MINING 33 dividing by the percentage of zinc in blende (67.10), and similarly for pyrite and galena. The sum of the per- centages so found, deducted from 100, shows about the proportion of sand or earthy matter in the material, a fact often very desirable to know. Another method is to multiply the percentage of each element found by assay, by a factor obtained for each mineral by dividing its molecular weight into the atomic weight of the element. The following incomplete list of such factors, also spe- cially computed from the International Atomic Weights for 1903, will be found of use to mill managers as well as assayers : = Zinc blende. = Silicious calamine. Smithsonite (car- bonate). = Willemite. = Hydrozincite. = Zincite (zinc oxide). Franklinite. = Pyrite. Galena. = Anglesite. = Cerussite (lead car- bonate). Chalcopyrite. = Zinc blende. = Pyrite. = Galena. = Calcite. = Fluorite (fluorspar). = Selenite (gypsum). Metallic zinc X 1.49 Metallic zinc X 1.844 Metallic zinc X 1.9174 Metallic zinc X 1.7064 Metallic zinc X 1.6526 Metallic zinc X 1.2446 Metallic zinc x 5.385 Metallic iron X 2.144 (or 2Vr)- Metallic lead X 1.155 Metallic lead X 1.464 Metallic lead X 1.29 Metallic copper X 2.887 Sulphur X 3-04 Sulphur X 1.8718 Sulphur X 74535 Lime X 1.7856 (or 10 % 6 ) Lime X 1.3945 Lime X 3.072 GOLD MINE ACCOUNTS (July u, 1903.) The Editor: SIR I am glad to accept your invitation to make some remarks on the subject of gold-mine accounts. All effi- ciently managed mines these days have systematized ac- counts showing in result the working cost per ton of ore. But there is a most harassing lack of uniformity in the method by which the last result is arrived at, and in this, some discussion in your esteemed JOURNAL could be most useful. First and foremost, mine accounts should be systema- tized in such a manner as to prevent fraud, and should be so presented as to carry conviction of honesty to the owners. Second, the accounts should be prepared in such a way as to show the expenditure in various de- partments on some unit basis, so as to enable the manager and his staff to compare results of various departments and various periods within his own mine and also to compare results with his neighbors, that he may be as- sisted in his intermediate campaign for economy and im- provement. Third, to be presented in such a way that the owner, director, shareholder or what not may, for himself, by comparison, determine something of the effi- ciency of the manager. At the outset I do not want some half-baked person to rise and remind us that the varying conditions (under which mines of different countries work, or mines of the same country, for that matter, or even mines on the same vein, or even different parts of the same mine) may render comparisons misleading. We all know that the factors which govern working costs are labor, supplies, size of orebodies, character of the ore, volume of ore treat- ed, depth, etc., etc., and that these factors are never pre- GOLD MINE ACCOUNTS 35 cisely the same in any two mines, nor for any two months, and that pro-forma comparisons may give the best man a black eye and put an inefficient man on a high pedestal. But all this does not render comparisons valueless, for in the hands of the man who knows the conditions these same working costs enable the manager to determine very quickly the avenues for improving the efficiency of a de- partment, or permit the owner of the mine to determine the efficiency of the manager himself. The rivalry growing out of such comparisons in its incentive to economy and highest efficiency, when tempered with capacity, has been by no means the least factor in reducing gold mining from an absolute speculation to an industrial enterprise. In order that these valuable influences should have full play, there is a crying need for greater uniformity in the formulation of mine accounts into the ultimate results of working costs. This is not a new idea, but the useful- ness of it is more evident these later years, because of the constantly increasing publicity given to working results by reason of the large proportion of mine ownership by public stock companies. This publicity of accounts ren- ders results available for comparative purposes. The first purpose of accounts requires no discussion here, for it is a matter of competent book-keeping, and deflections are matters for the police to look into. The usefulness of the second and third purposes depend for their greatest possibilities upon uniformity in the same mine and on neighboring mines, and still better, on all mines. As said, all well-managed mines show results of .expenditures in working costs on tonnage basis, but the variation in method of allocation of expenditures to vari- ous departments differs most harassingly. In the first in- stance, in America and South Africa the short ton is used,, while in Australia and India the long ton is used, and therefore the latter are 10 per cent different. In most English-owned mines expenditure is divided into 'Capi- 36 THE ECONOMICS OF MINING tar and 'Revenue/ development and construction being generally charged to the former, and written off the lat- ter and thus to working costs, by redemption or deprecia- tion, and a wide variation exists in both the character of the expenditure charged to capital in the first instance, and in the amount charged off afterwards. For instance, in development, some managers charge winzes and raises to development, and others to stoping. Some even charge repairs and renewals to capital, on the theory that they keep the plant up to a fixed state of efficiency. In writing development off by redemption or depreciation, some com- panies do it on the basis of the average cost per ton developed, others, to beat the income tax commissioner, write off all he will allow. Some companies write off depreciation of plant on a known life for the mine, others on a hoped-for life. Some companies distribute a part of the general charges over capital expenditure, others charge 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 source of mill water. In ore treatment, some companies give cost of treatment on one generalized figure, which is valueless for comparison, because one ore may involve one operation, while another may involve five. Most companies distribute treatment costs over the whole tonnage milled, yet the proportion of tailing treated by cyanide, for instance, may vary from 50 per cent on one mine to 100 per cent on another. Some companies 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 most it is merely difference in method and of opinion. Another feature worth discussion is how far expenditure for dissec- tion of costs is warranted by results to be attained, and how much detail can be used within the realm of accu- GOLD MINE ACCOUNTS 37 racy. It is on these matters where, if an agreement could be reached, discussion would be most valuable. It might be a work for the American Institute of Mining Engi- neers and the English Institution of Mining and Metal- lurgy to appoint a commission to formulate some plan of working cost statements, as a result of such discussions. I am sure the profession would loyally introduce and adhere to such a plan, and it would meet the approval of the mine owner at the same time, for the results could not but be beneficial to him in the end. H. C. HOOVER. London, June 16, 1903. THE PAYMENT OF EXTENSIONS OF MINING PLANT OUT OF REVENUE BY EDWARD WALKER. (July ii, 1903.) In a recent London letter I referred to the principle laid down by Mr. C. Algernon Moreing at the meeting of shareholders of Great Fingall Consolidated, that all expenditure on development of a mine and extension of metallurgical plant should be paid for whenever pos- sible out of revenue. The question before the share- holders was whether the new plant should be paid for by additional capital raised by the issue of new shares, or whether the large balance of divisible profit (some 100,- ooo) should be devoted to that purpose. The incident opens up the general question of the suitability of the ordinary methods of accounting to the special case of mining, and some discussion of the sub- ject would 'be opportune. The method of keeping accounts of mining companies as adopted in London, differs in no way from the stand- ard system for commercial and manufacturing enter- prises. All preliminary expenditure on property and plant, subsequent expenditure on extensions, and the cost of sinking shafts, are charged to capital ; and current expenditure on labor, supplies, maintenance, and renew- als are charged to revenue. This is the theoretical prin- ciple, but the method of carrying it out depends upon the circumstances of each individual case. It need hard- ly be said that the great desire of directors is to show that they can declare a dividend, and whenever extra expenditure becomes necessary for the purpose of sink- ing a new shaft, or providing additional or improved plant, there is always an inclination not to interfere with MINING PLANT EXTENSIONS 39 the dividends, but to issue new shares. If the mining market is brisk, and if the directors are held in good esteem, owing to their successful management of the property, there is very little difficulty in raising the ad- ditional capital. If, however, the market is depressed, and the directors do not, for one reason or another, care to ask for subscriptions to new shares, then the extra expense is met out of revenue if possible. In other cases, when it is impossible to issue new shares and when there is not sufficient accumulated profit to meet the required expenditure, temporary loans against the ore reserves or against the general assets of the company are made by directors, shareholders or others, and the loans afterwards paid out of revenue. Typical examples of the various methods of meeting extra expenditure may be given. The method of pro- viding for it by the issue of new capital is well exem- plified by the case of the various gold mining companies operating in the Kolar District of India, under the man- agement of Messrs. John Taylor & Sons. Whenever money has been required for increasing the plant it has been raised by issuing new shares, although the mines at the time may have been yielding profits larger than the amount required. For instance, the Mysore Gold Mining Company has paid over three million pounds in dividends, but during its dividend-paying life no less than 645,000 has been raised by the issue of new shares for the purpose of meeting expenditure on additional plant, on the general overhauling of property, and on sinking new shafts. The original capital of the company was 135,000, and at six different times new shares have been created of a nominal value of 122,500. As these shares were all issued at substantial premiums, the cash received amounted to 645,000, as above mentioned. In addition to these shares issued for cash, shares of a nominal value of 32,500 have been issued for the pur- 40 THE ECONOMICS OF MINING chase of adjoining properties, so that the nominal capi- tal of the company at the present time is 290,000. This policy has always been unanimously agreed to by shareholders in the Indian group, and as a matter of fact the new shares are usually absorbed by sharehold- ers pro rat a. An illustration of the second method of paying for extensions is to be met with in the case of the Great Fingall Consolidated, already referred to. Examples of this policy are also to be found in the companies con- trolled by the Exploration Company. The Tomboy Gold Mines, Limited, was floated by the Exploration Company in 1899, with a capital of 300,000. In 1902 additional plant, to the extent of 60 stamps and acces- sories, was erected and paid for entirely out of revenue. In addition to this, when the original Tomboy Mine showed signs of exhaustion, new properties adjoining were acquired out of revenue, without it being neces- sary to issue any more shares. El Oro Mining & Rail- way Company also presents another example of the policy of the Exploration Company. An addition of 100 stamps is now being provided from revenue. In this case, adjoining properties were acquired by the issue of new shares as purchase price. These new properties added to the capital value of the possessions of the com- pany. The original property was showing no signs of exhaustion, as was the case with the Tomboy, where a new property was acquired in place of the old one, rather than in addition to it. A good example of the third way of providing exten- sions is to be found in the Great Boulder Perseverance, Mr. Frank Gardner's chief West Australian property. This mine was originally floated in 1895 with a capital of 175,006. After the first three years the oxidized ores came to an end, and great difficulties were experi- enced in finding a suitable process for treating the re- MINING PLANT EXTENSIONS 41 fractory ores. There were no surplus profits available for experiment or for erecting a large plant. The cost was entrely borne by Mr. Gardner and his friends, and the amount, something like 150,000, has since been repaid out of profits. Having mentioned the usual methods of mining-com- pany finance adopted in London, I will proceed to discuss the general question as to the applicability of the ordinary methods of accounting to the special case of mining. It is held by a great many professional men connected with mining that far less expenditure should be charged to capital account, and that the figures at which the original value of the property and plant stand among the assets, should be reduced as rapidly as possible. A mine is not a permanency like real estate, and the value of the machin- ery depends almost entirely on the supply of ore. Some alteration should therefore be made in the usual practice of entering up the price paid for the property and equip- ment at unalterable figures. It is true that most of the carefully managed mining companies make allowances every year for depreciation of plant, but few make any provision for the depreciation of the property itself. The consequence is that shareholders receive dividends which they regard as profits, and concurrently the value of the shares decreases. The real profit of the transaction in buying mining shares is the difference between the origi- nal purchase price of the shares and the sum of the total dividends added to the eventual price of disposal of the shares. We have the continual phenomenon in London of profits to mining shareholders concurrent with a gradual or sudden loss of capital. Such a method of managing mining companies' finances is illogical. Some part of the profits of each year's work should be devoted to the reduction of the capital account, and all expenditure subsequent to the initial cost of the property and equipment of the mine should be paid out 42 THE ECONOMICS OF MINING of the revenue. The method of reducing the value at which the property and original plant stands in the bal- ance sheet would depend largely on circumstances. It might be agreed from the first that, say, one-fifth of the value should be written off every year, and when the total assets had thus been replaced by cash, there might be a return of capital. Another plan would be to have a re- valuation every year, and, if the value of the ore reserves was less than at the beginning, to replace the deficiency with cash from the year's profits. It might also be suggested that the nominal capital at the end of every year should be rearranged so as to rep- resent the actual value of the properties, but this scheme would lend itself to much abuse, in addition to which the legal fees and government taxes would swallow up far too much money. It is not often that a rearrangement of the nominal cap- ital of a mining company, so as to bring it nearer the real value of the property, takes place ; as a rule, it only hap- pens when a mine has become exceedingly prosperous and the dividends paid are so high that the market quota- tion for the shares is greatly enhanced. Then, for the purpose of facilitating market dealings, the nominal capi- tal of the company is expanded so as to bring the current quotation nearer par. Recent examples of the capital being reduced, when it was found that the properties were nearing exhaustion, are to be found in the case of Mason & Barry, and the Mountain Copper Company. In the former case certain proportions of profits were distributed to shareholders, not as dividends, but in reduction of the capital, while in the case of the Mountain Copper Com- pany, the company was reconstructed and the shares ex- changed for debentures which are redeemable out of the profits. Discussion on the subject would not be complete with- out a reference being made to the incidence of the income MINING PLANT EXTENSIONS 43 tax on the profits of mining companies. As in the case with directors, so it is with the income-tax commissioners. They like to be able to show a large profit. They are very jealous of the allocation of profits to what they call capital expenditure. Very little is allowed in the way of writing 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 divided and new capital issued, none of the profits thus allocated would have escaped the income tax. Similarly, the profits of El Oro and the Great Fingall, used for the purpose of extending the plant, have been assessed. The commissioners would never dream of accepting the proposition I have made for con- ducting the finances of a mining company, but that is no reason why the system should not be adopted. This subject is capable of considerable discussion, and I hope that your readers will contribute their opinions and experiences. ORE TREATMENT AT KALGOORLIE (August 15, 1903.) The Editor: Sir in your issue of July u Mr. Philip Argall con- tributes some valuable discussion regarding the Diehl process as relating to Cripple Creek ores. As Mr. Ar- gall's information regarding the progress of metallur- gical practice at Kalgoorlie seems to be three years behind, and therefore his basis of argument wholly er- roneous, I trespass upon your space to give some recent and detailed costs. Aside from other matters, I think I can show to Mr. Argall that he is wholly unwarranted in believing that the roasting processes must ultimately prevail at Kalgoorlie. Much progress has been made in both processes at that place, and Mr. Argall's figures, which were taken in the early stages of sulphide treat- ment, do great injustice to both methods. I think I can do no better than to give the detailed costs in the Lake View mill, choosing that one because it is treating an ore of similar character and a tonnage more comparable to the tonnages handled by the large roasting plants at Kalgoorlie. The Lake View mill, however, will not ultimately be the best advocate of the wet-milling bromo-cyanide method, for it is an adapted plant with a stamp-mill of bad design and construction for a basis, and the accessory plant is not arranged to best advantage. Moreover the power plant on this mine (now under construction) is the worst on the field. Yet, even with these handicaps, the results are far different from those upon which Mr. Argall, probably for lack of more recent data, has formed his judgment. I 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 TREATMENT AT KALGOORLIE 4H and have been charged into costs, somewhat confusing issues; the costs given, however, are a fair average. I have reduced all tonnages and costs mentioned in this communication from the long ton to the short ton, so as to be on the footing of American practice. During the month a varying portion of a 7o-stamp mill treated 8,444 tons with a duty of 5,191 tons per stamp per day. The costs include superintendence, etc., but not depreciation. Water does not include boiler- feed, which is included in power. The costs of milling and concentrating 8,444 tons were, per ton : Milling Salaries, and wages $o . 0997 Water 0.0257 Supplies 0.0417 Maintenance 0.1500 Power 0.3514 Assaying 0.0037 Total milling $0.6722 Concentrating Salaries and wages $0.0896 Water o . 0257 Supplies 0.0028 Maintenance o. 0208 Power o . 0404 Assaying 0.0019 Total concentrating $0.1812 Total, per ton milled $0.8534 The cost of treatment of 7,962 tons of tailing were as follows, per ton: Salaries and wages $0.5040 Potassium cyanide 0.4514 Bromo-cyanide 0.4277 Lime 0.0322 Zinc shavings 0.0119 Sulphuric acid 0.0090 Other supplies 0.0793 Water 0.0271 Maintenance 0. 1610 46 THE ECONOMICS OF MINING Power $0.5274 Assaying 0.0405 Total, per ton of tailing $2.2715 The costs of roasting and cyaniding 482 tons of con- centrate were as follows, per ton : Roasting Salaries and wages $o . 9497 Fuel ,. 0.3157 Supplies 0.0368 Transport and drying of ore 0.4050 Maintenance o . 0443 Power 0.2354 Assaying 0.0847 Total $2 . 0716 Cyaniding Salaries and wages '. . . . $o . 5391 Potassium cyanide o . 6763 Sulphuric acid 0.0193 Lime 0.0114 Zinc shavings . 03 14 Water 0.0859 Other supplies 0.1809 Maintenance . 3593 Power o . 6029 Assaying 0.1428 Total $2.6493 Total cost, per ton of concentrate $4.7209 Combining these statements of cost, and reducing all the averages to the basis of tons milled, we obtain the following results: Milling and concentrating $0.8534 Treatment of tailing 2. 1422 Roasting and cyaniding concentrate 0.2699 Total cost per ton milled $3 . 2655 Royalty o . 1069 Total cost $3 . 3724 The yield was about $14 per ton, the extraction 92 per cent, and of this 65 per cent was secured from the concentrate and therefore did not pay royalty. The de- fective arrangement and construction of the mill and ORE TREATMENT AT KALGOORLIE 47 power plant resulted in a cost for power and main- tenance alone in excess of these costs on the Oroya Brownhill of 38.5^ per ton, although the latter treats but 4,000 tons per month, so it must be obvious that a well constructed plant on the Lake View would work at a cost of under $3 per ton. The Ivanhoe plant, now in course of alteration to treat 12,000 tons per month, will work for not over $2.75, probably $2.50. The Oroya Brownhill mill is now in course of enlargement and al- teration, and when complete, although treating the most difficult ore on the field, should show also good results. However, the figure of $3 above is sufficient to show the erroneousness of the figures of $7.86 in one instance and $5.77 plus royalty in another, as quoted by Mr. Argall for the Diehl costs. Lack of equally recent and detailed data from the larger roasting mills at Kalgoorlie renders comparison of costs difficult. The annual report of the Great Boulder for 1902 shows the costs on that mine to be $5 per ton, but this has been somewhat reduced since, I believe. The Great Boulder Perseverance, treating about 12,500 short tons per month, gives the latest results, with the largest tonnage on the field, at $3.65; but what items are included I do not know. The wet-milling bromo-cyaniding method requires about 20 per cent less power than the dry-milling roast- ing method, and involves less cost of maintenance, and also involves not over 70 per cent of the first cost, and therefore less depreciation; and above all it avoids dry- ing the ore and roasting 94 per cent of it. These economies are accomplished practically at the extra expense of concentration, bromo-cyanide and royalty. The use of bromo-cyanide partly replaces potassium cy- anide otherwise required, and altogether on the Lake View these special items involve about 7oc. per ton. On the other hand a dry crushing mill of the same 48 THE ECONOMICS OF MINING tonnage, treating Lake View ore for extra drying, extra power, extra roasting, extra cyanide and extra wear and tear, would involve fully $2 per ton. There is nothing very novel in the Diehl process be- yond the well understood methods of stamp-milling, concentrating and cyanide treatment of gold ores, ex- cept the grinding of the entire tailing to slime and the addition of bromo-cyanide. The rationale of the process makes much toward economy and steady 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- goorlie practice are altered by present practice, more especially the fact that the dry-crushing roasting mills grind all ores to slime for filter-press treatment, instead of treating a portion by percolation as he states. The wet-crushing mills do not return roasted concentrate to the battery. Kalgoorlie metallurgists do not have the same apparent aversion to filter-press treatment of tail- ing as Mr. Argall. The economy of percolation of sand over agitation and filter-press of slime for a pe- riod of six months on the Ivanhoe is but 4oc. per ton, beside the cost of grinding, 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- plied to Cripple Creek conditions, I am not sufficiently informed 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 out that power costs at Cripple Creek are not 15 per cent of that at the Lake View mine, that ORE TREATMENT AT KALGOORLIE 49 the cost of water would be almost nil, the cost of cyanide and other supplies less, and that the treatment of con- centrate would be much more economical. These four items would permit treating Lake View ore under Crip- ple Creek conditions with a well constructed mill of, say, 8,500 tons capacity, for not over $2 per ton. A point worthy of consideration by Cripple Creek opera- tors is the adaptability of this process for erection on the mines themselves, and therefore the avoidance of freight charges and customs-mill profits and especially the possibility of modifying the practice to take advan- tage of some of the more favorable characteristics of Cripple Creek ores, as compared to those of Kalgoor- lie.* London, July 29, 1903. H. C. HOOVER. * In a former article on the subject Lake View costs were given, including transport to the mill ; in this statement, for com- parative purposes, they have been omitted. It is especially point- ed out again that the above costs are upop a short-ton basis. GOLD MINING ACCOUNTS (August 15, 1903.) The Editor: SIR In your issue of July n, Mr. H. C. Hoover, at your request, opens for discussion the subject of gold mining accounts. Being associated with the management of a number of very prosperous mines in various parts of the world, Mr. Hoover speaks with the authority of one in a position to know and one who appreciates the value of uniformity in the treatment of expenditures of capital and of revenue and in the keeping of mining-costs accounts. In the business of mining, custom has not yet estab- lished a uniform method of charging expenditures for de- velopment or for the extension, renewal and maintenance of machinery, plant and equipment. Owing to the vary- ing conditions under which most mining ventures are financed and managed from the head office leaving the varying conditions at the mine out of the question it is doubtful if uniformity in these particulars can-, or ever will, be attained. But it is possible, and quite within the prov- ince of the profession, to urge a consistent degree of uni- formity in the practice of stating, if not of keeping, mine working costs. The suggestion that a commission of the technical societies be appointed to take up this work ought to meet with favor. Discussion of the feature suggested as to "how far ex- penditure for dissection of costs is warranted by results to be attained and with how much detail it can be done within the realm of accuracy" might lead to 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 by a frequent, regular and systematic dissec- tion of working costs, are commonly acknowledged. GOLD MINING ACCOUNTS 51 Economies are accomplished, and a material reduction of mining costs is effected in the saving of time, energy and money. It is possible to secure specific and detailed information of the costs of work at the time of, and during, its progress. A better opportunity is afforded for making a critical discrimination between capital and revenue ex- penditures, as the legitimate operating expenses are writ- ten off each month. And the manager, depending with full confidence upon his monthly cost-sheet, is relieved of a mass of detail and his mind is free and clear for directing current operations and planning for the future. But probably the most important result, and not so gen- erally understood, is the thorough industrial organization promoted by the conserving influence of a system of cost keeping. A department for finding costs must be sup- ported by the various operating departments. Regular written reports the cement of commercial organization are required from foremen, time-keepers and others, from which are secured the data for recording, segregating and distributing the expenditures for labor. Reports and records from the stores department maintain a systematic and complete control over the distribution of supplies. In this way responsibility is fixed, co-operation is secured, the active interest of every employee is enlisted, and a criterion of efficiency established. Upon the theory that the person who lacks enthusiasm in himself can never arouse it in others, this effectual inter-staff collaboration is ^preserved in the knowledge that the manager is per- sonally interested in and carefully scrutinizes each month's statement of costs. And the best of it is that by virtue of this same organization, of which cost finding is but a detail, these results and benefits are secured at prac- tically no expense whatever. That is to say, a compre- hensive system of cost-keeping may be established and maintained at no increase of expense for clerical assist- ance or otherwise. For the work as it comes into the 52 THE ECONOMICS OF MINING accounting department can be so methodized that the regular staff usually employed at the mine office can easily handle it. As to how elaborate a proper dissection of costs can be made, it can be asserted with reasonable assurance that the development of a system of cost-finding need depend only upon the amount of detailed information that can be used by the management. The actual operation of a practical system of mine accounting in effective service at the War Eagle and Center Star mines, of Ross- land, B. C., has proved this. And the same experience has demonstrated that such a system can be perfected and conducted which will exhibit in accurate detail, from ink to interest, the segregation of expenditures for labor, supplies and indirect expenses, and their determinate allocation to each and every stope, drift or other heading, separately, in which work is in progress. This experience and this statement relative to the ex- penditure necessary to carry out an effectual system of cost-keeping is submitted in the hope that, with the edge taken off the question of expense, a more general discus- sion of other and more important phases of the subject will follow. CHARLES V. JENKINS. Rossland, B. C., August i, 1903. MINE VALUATION BY GOVERNMENT (Editorial, August 8, 1903.) Among the various proposals for enlarging the duties of a paternal government, the most startling up to date is that which was seriously made in London by the President of the Council of West Australian Mine-own- ers, who suggested that a general inspector of mines be appointed by the State government with a view to periodical visits for the purpose of sampling and check- ing the ore reserves and estimating the value of the pro- ducing mines. Furthermore, this inspector was to re- ceive a salary which should "place him beyond the pale of temptation." At the meeting, Mr. H. C. Hoover pointed out the absurdity of the idea, but it seems to> have been taken seriously by a number of those interested in West Australian mines. The avowed purpose of this innovation, as stated by its proposer, was to do away with "the intrigue and manipulation of market operators who, for their own base ends, bribe the officers in charge of the mines to work the latter in the interests of the market," etc. It. must be confessed that the wide divergence in the esti- mates of ore reserves by different engineers, which has characterized the sensational fluctuations in the share quotations of the Kalgoorlie mines, does justify criti- cism and warrants thoughtful consideration. On several occasions during the last ten years the share market has been rigged by concerted action between managers and operators, some of whom have been directors; in part, this 'is explained by the fact that the ^ mine-owners of the boom period have included a large proportion of accidentally rich men of low antecedents. Various coteries have striven in turn to oust each other in order 54 THE ECONOMICS OF MINING to control the rate of production and sources of infor- mation at the mines. Several infamous episodes have disgraced the history of the Kalgoorlie companies, and it has required much good hard work to restore West Australian mines to the position of respectable invest- ments which many of them now occupy. Of course, the idea of a government inspector, to value the mines as an independent appraiser, is wholly fanciful; the cost of sampling the large mines of one district alone, that is, Kalgoorlie, would run into half a million dollars, as Mr. Hoover said; nor must the element of time be forgotten; it would take a competent engineer at least three years to do the work thoroughly at Kalgoorlie alone, and it is safe to say that such a man would never be able to keep pace with the development taking place even in a few of the largest mines of Western Australia. Moreover, such a man, unless appointed for life, would be the sport of political intrigue, and if his posi- tion were safe beyond dismissal his power would be such as it is inadvisable to delegate except under conditions for which there is no other remedy. But there is another remedy. Let it be recognized that it is as unprofessional for engineers to traffic in mining shares, especially those of mines under their management, as it is for brokers to buy and sell se- curities for their own account. Give up the idea that a man is a better manager by becoming a stockholder; recognize that his judgment becomes vitiated by heavy financial participation ; pay him handsomely ; not for put- ting up the price of shares, but for bringing the costs down; and when this has been done, turn round to head- quarters and' tell the directors that they are wrong when they gamble in the shares of the company whose trus- tees they are ; let them publish all information from the mine promptly and before they use it for their own ad- vantage ; let it be beneath a director's dignity to sneak MINE VALUATION BY GOVERNMENT 55 around the corner with a bit of official information be- fore it is formally published; and then, as a final step calculated to lessen the vagaries of ore estimates, elect directors who have had sufficient experience in the busi- ness of mining to be capable of choosing competent managers and of supporting them loyally when once chosen. This will be much cheaper than the appoint- ment of the impossible official suggested by the Presi- dent of the Council of West Australian Mine-owners. COST PER TON AS A BASIS OF MINE VALUATION BY R. OILMAN BROWN. (August 29, 1903.) Hardly second in importance to the determination of value per ton, by careful and systematic sampling, is the determination of cost per ton from the mine accounts. The object of sampling has been attained when the gross valuable content of the ore exposed in the mine has been determined. This, for the sake of convenience in subsequent calculation, is usually reduced to value per ton. From this gross value per ton must be deducted the total cost per ton and the loss per ton in treatment, the remainder being the net value per ton. Obviously an error in cost per ton is just as important as an error in gross value per ton, so that it is necessary to exam- ine with as careful scrutiny the method of obtaining the one as of the other. Several pitfalls have been pointed out recently in the columns of this JOURNAL which will be ignored in this present article ; or, rather, they are as- sumed to have been satisfactorily avoided, the desire being not to obscure another factor in valuation which has been touched upon but lightly, if at all. It is not intended in the present article to go into the details of mine accounting, but it will be assumed that in some way of other the engineer has obtained certain segregated totals representing the expenditure during a certain period in the various operations connected with mining and beneficiating the ore, and that the sum total of these segregated accounts represents the total cost of operations for the period in question. It is usual to divide these segregated totals by the tons of ore treated during the same period, and to call the quotients the cost per ton for the various departments. BASIS OF MINE VALUATION 57 In a certain sense the sum of these is a cost per ton, though not properly to be considered the cost per ton, as the result is rather a hazy approximation representing, perhaps, average work for the mine, but not sufficiently definite to be used with confidence in the delicate work of valuing ore reserves. Let us assume certain natural divisions of the accounts into stoping, development, reduction and general ex- penses. All the segregations can be easily grouped under these headings ; and this would naturally be done in the process of arriving at the cost, in the manner to be de- scribed. In the inexact method commonly employed, these totals would all be divided by the same tonnage probably by the tonnage reported from the mill or reduc- tion works, whereas, this would give true results only for the last two items, namely, reduction and general ex- pense. For stoping, the result might be approximate ex- cept in the case of a mine carrying a considerable amount of ore in the stopes. For development, it could give the true value only when the same amount of ore is stoped as is developed during the period. If development falls behind, the result per ton would be too little; if it ex- ceeds the output, it would be too much. This is the general statement of the matter, but it can be made clearer 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, 50,000. Total return per ton, $5.26. Total loss per ton, 64C. Total gross value per ton in ore, $5.90. Herewith are given in tabulated form the costs of the various departments and the costs per ton, as commonly calculated : 58 THE ECONOMICS OF MINING Per ton basis of tons Total. treated. Stoping $58,000 $i . 16 Development 50,000 i.oo Deduction 92,000 1.84 General expenses 22,000 .44 Total $222,000 $4-44 The following tonnages are also given: Tons. Ore broken in the stopes 10,000 Ore standing, blocked out, ready for breaking 100,000 Ore reasonably expected, but partly, if at all, developed. . 50,000 Total 160,000 These are the quantities assumed to be found by the engineer on his investigation of the property, and the re- coverable value per ton will be taken at the average of the past year, which we will assume to have been determined to be the fact by careful sampling. The most natural way of calculating the value of these reserves would be as follows : Total recoverable value of 160,000 tons, at $5.26. $841,600 Costs on 160,000 tons, at $4.44 710,400 Apparent profit in reserves $131,200 This is manifestly incorrect. Stoping and development should not be charged against ore already broken, nor should development be charged to that standing blocked out and ready for stoping. The estimate should read as follows, assuming the figures for cost per ton to be correct : 10,000 tons broken in stopes, at $2.28 per ton for milling and general expense $22,800 100,000 tons developed, ready for stoping, at $3.44 ($2.28 + $i.i6) 344,ooo 50,000 tons, reasonably expected, but not developed, at $4.44 222,000 Total costs $588,800 160,000 tons, recoverable value as above 841,600 Net profits 252,800 The cause of the great difference is obvious. It should be noted that in the accounts, transportation and handling BASIS OF MINE VALUATION 59 costs are assumed to belong in general expenses. The above figures must be taken as thrown in, apart from the fundamental matter with which this article opened, and they contain errors, as was indicated in our opening lines. Reduction costs and general expense are properly re- duced to the per ton basis by dividing by 50,000 tons, but stoping and development cannot properly be so reduced until we know whether 50,000 properly represents the tons stoped and the tons developed. In what follows we are using some quantities that an engineer examining the property can scarcely have come at directly, and indeed he will be fortunate if he has them at all ; but, recognizing their importance, by inquiry and estimate, he must arrive at some sort of a probable value for them. We have, as a general proposition, that the actual amount of ore broken during the year is equal to the 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 year. In the same way the ore devel- oped during the year is equal to the ore blocked out at the end of the year, plus the 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 : Tons. Broken in the stopes 20,000 Standing blocked out 120,000 Reasonably expected . ., 60,000 Ten thousand tons plus 50,000 minus 20,000 equals 40,000, which turns out to be the actual ore stoped during the year, so that the true cost of stoping per ton is 58,000 divided by 40,000, equals $1.45 per ton. In the same way 100,000 plus 40,000 minus 120,000 equals 20,000 tons, the actual ore developed during the year ; and $50,000, the total spent on the development, divided by 20,000 tons, equals $2.50 per ton, the true cost of developing a ton of 60 THE ECONOMICS OF MINING ore. Inasmuch as no costs are credited in this discussion to the ore reasonably expected, we need not carry this further, though the same reasoning would hold in regard to it. Collecting our true cost per ton, we have : Stoping $i . 45 Development 2 . 50 Reduction i .84 General expense 44 Giving the true total cost per ton at $6.23 This shows that the ore at this mine will not actually pay expenses for handling unless greater economies can be practiced; whereas, our first calculation gave a profit per ton of about 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 was prepared. Proceeding next with the valuation of ore reserves, we reproduce our earlier figures with the corrected costs in- troduced : 10,000 tons, broken, at $2.28 per ton $22,800 100,000 tons, developed, ready for breaking, at $3.73 ($2.28 + $1.45) per ton 373,coo 50,000 tons ore, reasonably expected, at $6.23 311,500 Total $707,300 Recoverable value, as above. . . 841,600 Net value on the reserves. 134,300 Iii order to lay the whole matter more clearly open and even at the risk of being tedious, it is worth our while to make another assumption regarding tonnages at the be- ginning of the period, as below : Tons. Broken in the stopes None. Standing ready for breaking 80,000 The tonnage and cost per ton follow in summary : Tonnage Cost for year. per ton. Stoping 60,000 $0.97 Development 80,000 0.62 Reduction and general expense, as before 50,000 2.28 Total $3.87 BASIS OF MINE VALUATION 61 On this basis, the value of the ore reserves is : . 10,000 tons, broken in stopes, as before $22,800 100,000 tons, ready for stoping, at $3.25 ($2.28 + 970.) per ton 325,000 .50,000 tons ore, reasonably to be expected, at $3.87 193,500 Total charges $541,300 The gross recoverable value, as before 841,600 Profits in reserves 300,300 The differences shown clinch the statement with which this paper opened. As a summary of the above there are two general prin- ciples to be enunciated : (A) Cost per ton is the quotient of total cost divided by the actual tonnage resulting from that expenditure. (B) Net value per ton is the gross recoverable value per ton, less cost per ton for those natural divisions of the work still to be performed upon the different classes of ore. Although the above principles are fundamental, like all general statements they may easily be pressed to ex- tremes, and it is for the engineer, after analysis of the situation, to decide the particular extent of their applica- tion ; a failure to recognize them at all, on the other hand, may invalidate the conclusions drawn from other- wise reliable work. MINE ACCOUNTS (August 29, 1903.) The Editor: SIR The concise and creamy presentation of the im- portant subject of gold mine accounts by Mr. H. C. Hoover in a recent number of the JOURNAL" leaves me little chance to get a good hold. But the necessity for discussion of an issue of such vital mornent to the mining industry leads me to venture some contribution at this juncture. Mr. Hoover does yeoman service by shutting off at the outset the puerile plea of diverse conditions, which has too often been the excuse for such woeful chaos as greets the investigator when he begins to attempt the arranging of actual methods into some show of system. The difficul- ties in the way of uniformity lie mainly in theory and not in practice, arising not from varying conditions, so much as from lack of method or of clean-cut ideas concerning the ends to be sought in systems of account. I presume that many engineers will smile at this statement, at first glance, because there can be no serious difference of opin- ion among well trained members of the profession as to what ought to be shown by the books. But, unfor- tunately, the t enforced examination of the accounts of many companies proves to the writer the very inadequate manner in which the expected information is obtainable, save in exceptional instances. Mr. Hoover lays down three methods, or principles, which should govern a proper system of accounts. In my own practice, I have always recommended such measures as would ensure these same results, but, perhaps, from an attitude not exactly similar. i. "To prevent fraud * * * and to carry convic- 'Page 44, July n, 1903. MINE ACCOUNTS 63 tion of honesty." This practically requires the keeping of all records and the summarizing of the same in such manner as to ensure adequate checking of one officer by another. This not only guards against fraudulent intent, but it also protects servants by verifying their records be- fore the opportunity to correct possible errors has passed. 2. "To show expenditure * * * on some unit basis, etc." This important end can be accomplished only by the most detailed accumulation of data from all sources, and this is the direction in which looseness is most commonly discerned. Discrepancies arise not so much from misconception or differences of opinion on methods of segregation, as from inability to comprehend the correct principles underlying mine accounts. 3. "To be presented in such a way that the owner, di- rector, shareholder, or what not, may * * * determine something of the efficiency of the manager himself" Here is a subject which demands careful handling. The best system of accounts for a given business is one capa- ble of yielding minute cost analyses at the hand of an ex- pert, but at the same time adapted to comprehensive sum- marizing for home office use. Some companies sacrifice everything else to fancied economy, by gathering only totals in the accountant's .books, thus rendering very diffi- cult the task of analyzing costs. On the other hand, not a few accumulate details in such heterogeneous fashion as to make it impossible to readily obtain grouped footings when required. The British system, if we may properly apply this term to anything at all, has, I think, developed a morbid ten- dency to extreme simplification of the general ledger ac- counts. Mr. Nicol Brown has finally evolved a plan by which four main accounts, with chiefly annual or monthly entries, carry nearly all of the business, in lump. But this necessitates a voluminous and complicated system of schedules to be made up from departmental reports, and in, 64 THE ECONOMICS OF MINING many respects the scheme is more cumbersome than is acceptable to American usage. In Mexico, a plan devised for the Compania Metal- lurgica and in use elsewhere in that country in more or less modified form, has features which overcome some of the objections to the British style. The principle is to carry on the general ledger a moderate number of promi- nent accounts, to which totals are posted from journal and cash book, using a subsidiary ledger to take up item- ized segregations which may be specialized to any extent deemed desirable. With this system, the accounts are numbered serially and all employees concerned are pro- vided with printed books, giving the complete classifica- tion by numbers and titles. In adapting it for use in one instance, we have arranged the general ledger to furnish information ordinarily liable to be required by the home office, which receives the monthly trial balance. A quar- terly report of audit of the books also goes to the home office, with an analysis of costs, made independently by the consulting engineer. The subsidiary ledger furnishes the material at once for such analysis. But the important point with this, as with any system of accounts, is the manner in which the records are kept and assembled for entry in the accountant's books. I do not know that it is fair to talk of an American system of mine accounts, only we may note the trend of practice in the United States to be toward labor-saving devices in book-keeping. The standard card systems, filing cases and automatic devices are mostly flexible and well adapted to the gathering of data and their preserva- tion in convenient form of study. But comparatively little has thus far been done towards applying these aids in mine accounts. The writer has used such appliances for several years, under a variety of conditions, and always with success. The real work consists in preparing the forms. After that the system almost works itself, and MINE ACCOUNTS 65 even prejudiced persons soon come to esteem the method and to operate it with keen satisfaction. If it be possible to formulate a standard system 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 points 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 comprehensive in its segregations. Each 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; (3) to different 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 raisons d'etres in the premises. Moreover, Mr. Hoover appears to have found his discordant elements largely in a country which is supposed to set the pace for us to follow, for there is no doubt that the British 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, I venture the prediction that we will evolve a system less cumbersome and unwieldy to accomplish the end in view. Duly crediting Mr. Hoover with the original sugges- tions that the Institute of Mining and Metallurgy and the American Institute of Mining Engineers appoint a joint committee to formulate some plan of working cost statements, after discussion of the subject, I would 66 THE ECONOMICS OF MINING venture to suggest a modified proposition, as follows : Let the Institute of Mining and Metallurgy and the Institution of Mining Engineers appoint a joint com- mittee of ten (five from each organization) to act as a British sub-committee to correspond and collect quali- fied opinions from their membership, and to classify the same, with recommendations. Let the American Insti- tute of Mining Engineers appoint a similar committee of ten to act independently on this side in the same manner and with a similar purpose. After a given pe- riod of deliberation, let each committee of ten select from its own membership two persons to form a new committee of four, to be charged with the duty of devel- oping a plan from the final reports of the larger com- mittees. Meanwhile, the free discussion of the subject in all its bearings need not be restricted in any degree. I respectfully submit this first draft of a plan which may well be modified in detail by wiser heads. The prin- ciple of the idea is one which might also be applied to' many other topics of interest; and the fact that many mining engineers are now enrolled in the respective insti- tutions on both shores suggests the propriety of establish- ing one or more joint standing-committees on general 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 require in reality but the simple framework about which may be built up the more complicated systems rendered necessary by products requiring amplified processes. But, if the necessity exists for standard specifications in the one case, so much the more are they called for in the busi- ness of mining and treating complex ores. The differences in modes of writing up particulai items, as mining development, etc., with other varia- MINE ACCOUNTS 67 tions in practice mentioned by Mr. Hoover, also the questions raised by your London correspondent, in an article in the sasme isue of the JOURNAL/ all serve to show the present lack of uniformity in method. To some extent, it may be feared that corresponding dis- crepancies in purpose may also be discernible. I can only add at this writing that my own practice has en- countered somewhat equivalent diversity of need in varying circumstances. But the general plan which covers the systems adopted is susceptible of adjustment to these several requirements, and the books of any corporation using the method will yield 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 the standard to be finally adopted, are very open ques- tions. It is to be hoped that the whole subject will be amply discussed with a view to the eventual adoption of definite standards by the profession at large. THEO. B. COMSTOCK. Los Angeles, Cal., August 14, 1903. a The Payment of Extensions of Mining Plant Out of Reve- nue/ by E. Walker, this JOURNAL, p. 48, July n, 1903. ORE-BREAKING AND SORTING ON THE RAND* BY H. S. DENNY. (September 19, 1903.) In all the mines on the Rand the ore before being sent to the surface is regulated to a certain maximum gauge by an arrangement of sizing bars fixed over the station bins at the shafts. The object, primarily, is to reduce the largest pieces of ore to such a gauge that there will be no liability to choke the outlet from the bin; but it serves also the secondary and equally important purpose of preventing rocks of too great a size from passing to the ore-sorting house. The ore when delivered at the surface is usually clas- sified into 'fine' and 'coarse rock' by dumping the skipload onto a grizzly in the headgear; the fine, being unsortable, go direct to the mill, and the coarse ore is sent to the sorting house. The rock in the sorting house is subjected to scrutiny either on floors, revolving tables or traveling belts, and the rejected waste goes to the dump. The sorted ore is fed into ore-breakers for further reduction. The breakers may be classified into two generic types, the gyratory and the crank motion type, the former be- ing largely represented by the Gates and the latter by the Blake machine. Each type has its supporters, but it is generally considered by the moderates that the former is the better machine when unit capacity is de- manded, and the latter when multiplication of machines * Abstract from advance sheets of paper entitled 'Observations on the Metallurgical Practice of the Witwatersrand,' by H. S. Denny, read before the Chemical, Metallurgical and Mining Soci- ety of South Africa. ORE-BREAKING AND SORTING 69 is not embarrassing to the general design, as its mainte- nance cost is less. The general scope of the rock-breaker is to reduce the ore to about a 2-in. cube before delivering to the mill, but the average in the mill-bins will be found to exceed this gauge, owing to wear in the crushing part of the breakers. In the most recent practice it is recog- nized that there is an advantage gained by subjecting the ore to a preliminary breaking; that is, to reduce* its size before passing it to the sorting house in order that there may be closer uniformity in the sizes of the pieces of ore that are subjected to the sorting operation. It is, I think, doubtful whether the practice of ore re- duction in breakers is carried sufficiently far. It would appear that a material increase may be obtained in the stamp duty if there were a succession of, say, three breakers, each reducing the ore to smaller gauge than the last, until the final product did not exceed an aver- age of, say, half-inch cubes. The line of demarkation defining the point where ordinary breaking should cease and milling begin, has never yet been accurately determined, and this limit should be ascertained by actual experiment. Recently there has been much discussion regarding the question of sorting, and in some particular cases where sorting had been practiced hitherto it has been decided to abandon the operation, as it is claimed that more favorable results can be obtained without it. There are many aspects of this question which lend themselves to conflicting conclusions, but that there are some cases in which the operation is highly beneficial, there can be no doubt. To say that sorting is an operation that should apply to every proposal is, in substance, to claim that the same 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- 70 THE ECONOMICS OF MINING other, and there will be limits at which it will reach its highest efficiency and its lowest. I propose to take a case representative of certainly the majority of the mines on the Witwatersrand, and will deal with it both on a sorting and a non-sorting basis. Assume that we have a mill of 100 stamps, a property of 100 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, $9.676 per ton. Assume costs at $5.76 per ton, divided as follows i 1 Mining $2.52 per ton milled (15,000 tons) $37,800 Crushing 0.12 Milling 0.60 Cyaniding 0.60 " " " Slime handling 0.12 General 0.72 Head office 0.36 Mine-development re- demption 0.72 " " " $5-76 Leaving a profit of $3.916. One hundred heavy stamps crush 500 tons per day, or 15,000 tons per month, equal to 180,000 tons per annum. Life of mine equal to 22.2 years. The net profit made in that period is 4,000,000 tons at $3.916 per ton, equal to $15,664,000. The present value of that amount at 5 per 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 12 dwt., equal to 600 dwt. From the remaining 50 tons, containing 600 dwt., we discard 20 1 In these calculations the i sterling is taken at $4.80; i shilling at 24 cents. ORE-BREAKING ON THE RAND 71 tons carrying 2 dwt., equal to 40 dwt., leaving 560 dwt. contained in 30 remaining tons. We thus have 80 tons of ore containing 600 plus 560, equal to 1,160 dwt., equal to, at $1.008 per dwt, $1,169.28, equal to $14.616 per ton; 80 per cent extraction equal to $11.694 per ton. The costs in this case would be as follows : Mining $3. 15 per ton milled (15,000 tons) $47,250 Crushing 0.12 1,800 Sorting 0.12 1,800 Milling 0.60 9,000 Cyaniding 0.60 9,000 Slime handling 0.12 ' . 1,800 General 0.84 ' ' 12,600 Head office 0.48 ' 7,200 Mine-development re- demption 0.90 " " " 13,500 $6.93 $103,950 It might be argued that mining costs should be taken lower in this case as against the first, seeing that the fair proportion of general charges is spread over the larger tonnage mined. The statement would leave a profit of $4.764 per ton milled; 18,750 tons per month, equal to 225,000 tons per annum ; life of mine equal to 17.7 years ; tons milled equal to 3,200,000, at $4.764 per ton; net profit equal to $15,244,800 earned in 17.7 years. The present value of that amount is $6,429,644, or a difference in favor of sorting of $958,980. In this comparison' we have the same sized plant milling the product of 18,750 tons mined in the one case as against 15,000 tons in the other. Against the extra cost of mining to produce 15,000 tons for the mill when sorting, we have the extra cost of milling, handling and treating the extra sand and slime which we should have to incur without sorting. It must not be forgotten, too, that in the case of non-sorting, every ton of waste rock has to be provided with 10 tons of water, and the cost of up-keep and cleaning out of slime pits will be increased by reason of the extra tonnage. I 72 THE ECONOMICS OF MINING have assumed the cost of milling to be the same in both cases. The only extra capital expenditure for the case in which we adopt sorting, is the sorting plant. It has been argued that, if the mill capacity were increased to an ex- tent sufficient to cope with the extra tonnage, this would be more economical than sorting. Taking the cases above cited, we must increase to 3,750 tons more; as one stamp will crush 150 tons per month, this is equal to 25 stamps more. With the increased ton- nage working costs might be reduced to, say, $5.28; but a -corresponding increase in the mill when sorting would also show reduced working costs, and therefore the com- parison would only increase the favorable aspect for sorting. The rock discarded I have estimated at 2 dwt. in value, $2.016 per ton. We get 80 per cent extraction from this, equal to $1.613. It has to be crushed, I2c. ; milled, 6oc. ; cyanided, 6oc. ; converted into slime and handled, I2c. ; total $1.44; and the margin in profit would not cover its share in depreciation of plant and the loss of water in- volved, while at the same time it is preventing the treat- ment of more valuable ore if sorted ; and all this, too, on the assumption that its corresponding residue would only be 0.4 dwt., and nothing in the slime, whereas, it is prob- able that the sand residue and the slime from it would be the same as the rest of the ore, and, therefore, more than 0.4 pennyweight. I am presupposing in these illustrations that 20 per cent sorting is not only possible, but easy of actual fulfillment. There are, however, many variations in the cases to which sorting is applied, and each case must be judged on its in- dividual merits. These variations may be expressed as lying mainly in the factor of reef thickness. For instance, on a reef 3 in. thick, where the stopes average, say, 42 in., the reef matter in every ton of ore mined is only 7 per cent, and, assuming that we have 50 ORE-BREAKING ON THE RAND 73 tons of fine, containing 3^ tons of reef, we have 50 tons of coarse rock containing the same proportion. In such instances it might be possible to sort 40 tons of waste rock in every 100 tons from the mine. On 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 product would be reef, no sorting would be pos- sible. These are two extreme cases, and between their limits will occur the variations between nothing and 50 per cent sorting. I have thus far assumed 50 per cent as representing the average percentage of fine in ore from the mine, but naturally there are important variations' in this factor dependent directly on: (1) Setting of grizzly bars. (2) Method of stoping. (3) Nature of ground. If machines are used exclusively for stoping, the per- centage of the fine will be high, while if hand labor only is used the percentage will be low. On many mines a combination of the two is resorted to ; 30 per cent, how- ever, represents about the minimum and 60 per cent the maximum, and something between the two, say 40 to 50 per cent, will be the average. With 50 per cent fine it is necessary to carry out an actual 50 per cent table-sorting to represent 25 per cent on the tonnage mined. On the above showing it is clear that, where it is possible to sort out waste rock of an average value of 2 dwt, it is a highly profitable proceeding. It is possible, however, to sort too little or too much. On a 3-in. reef, with a 4-ft. stope and 40 per cent fine, 20 per cent sorting would be far too low, while on 3-ft. reefs and 4-ft. stopes, allowing 50 per cent fine, 20 per 74 THE ECONOMICS OF MINING cent would be far too high, and the average value of the discarded rock would reflect this. Each case must, as before stated, be figured out on the particular circumstances regarding reef and stope thicknesses which obtain. In some cases on the Witwatersrand I have heard it argued that the quartzites immediately overlying or un- derlying the reef carry sufficient gold to make their treatment profitable, but I have not met any such cass personally, excepting in some isolated sections, where the occurrence is too limited to influence the general question. Naturally the object of sorting is to discard rock which cannot be treated profitably, and if the value of the waste rock at any time exceeds this limiting factor, then the operation is done at a loss. That limit will vary according to conditions, and must be computed inde- pendently for each proposition. It is not an easy matter to arrive at the value of waste rock. I know of no method of sampling in vogue to- day which could be called accurate. The best check on the work is the recovery set against the value in the mine, and the discretion of the manager must be relied upon to see that there is a proper correspondence be- twen these two points. There are methods which suggest themselves cer- tainly, and of these, either of the two following might be adopted: (1) A certain percentage, or even the whole of the waste rock coming from the sorting plant, to be passed through a set of two or more breakers and re- duced fine enough to be sampled. Samples to be taken constantly over a period of one month and the opera- tion to be repeated every few months. (2) Five or 10 stamps to be occasionally set aside entirely for waste rock, and the crushed product to be ORE-BREAKING ON THE RAND 75 treated independently of the ore passing through the re- mainder of the mill. Of these two alternatives the first is the more feasi- ble, although the second is undoubtedly the more accu- rate, but the expense attaching to the latter method prohibits it. If a mine is not in a position to keep its full mill going, it might use some of the idle stamps for this purpose, and instead of treating the resultant pulp sep- arately, simply take a careful series of screen samples. Another point (which has arisen and which bears very directly on our present condition wherein, owing to shortage of labor, we are, in some cases, able to mine only sufficient ore to feed a portion of our battery) is whether it is not of greater advantage to run the whole mill on unsorted ore than to adopt sorting and keep stamps lying idle. Take the case of a mine equipped with 100 stamps, where only 500 tons of ore can be milled per day. If 25 per cent sorting is adopted only 75 stamps can be run, whereas without sorting the full mill could be kept running. Assume the ore consists of 50 per cent coarse rock and 50 per cent fine, and is worth, delivered at surface, 14 dwt, and that we secure 80 per cent recovery in either case, and that the waste rock discarded in the case of sorting is 2 dwt., we then have the following comparative statement: Case for Sorting 100 stamps will crush 500 tons of ore per day. 250 tons fine at 14 dwt 3,5oo dwt. 125 tons sorted ore at 26 dwt 3,250 dwt. Total 375 tons of ore at 18 dwt 6,750 dwt. Eighty per cent of 18 dwt. amounts to 14.4 dwt. at $1.008, equal to $14.515 recovery. Expenditure Mining $3-36 per ton milled (375 tons) $1,260 Crushing 0.12 " 45 76 THE ECONOMICS OF MINING Sorting 0.12 per ton milled (375 tons) $45 Milling 0.60 225 Cyaniding 0.60 225 Slime handling 0.12 45 General 0.84 " " 315 Head office 0.48 180 Mine - development re- demption 0.96 " " 360 $7.20 $2,700 Profit $7.315 per ton, equal to $2,743,125. Case for Non-Sorting Five hundred tons at 14 dwt. equal to 7,000 dwt., 80 per cent of 14 dwt. equal to 11.2 dwt. at $1.008, equal to $11.289 per ton. Expenditure Mining $2.. 52 per ton milled (500 tons) $1,260 Crushing 0.12 Milling 0.60 Cyaniding 0.60 Slime handling o. 12 General o . 72 Head office 0.36 Mine - development re- demption o. 72 " " " u 360 60 300 300 60 360 180 $5.76 $2,880 Profit $5.529 per ton; 500 tons at $5.529 equal to $2,764.50. Difference in favor of non-sorting, $21.375. In the latter case, however, there is an extra charge for loss of water and for depreciation of the extra stamps to be run, and if these allowances be made there is in the comparison above made remarkably little dif- ference. The whole issue hinges finally on the value of the rock discarded. If that value is only i dwt., then sort- ing will prove advantageous, but if we allow 3' dwt. for the waste rock, then it would pay to run the idle stamps, and it is on the determination of this factor that the policy adopted must be guided. This comparison must in no way be confused, how- ever, with the question raised in the first illustration in which the tonnages crushed are equal. MINING INVESTMENT (Editorial, September 26, 1903.) Our friend Mr. J. H. Curie has been writing a series of useful articles in the London Economist; his utterances have been couched in very plain language, and have conveyed a large measure of 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 Economist a dose of advice which summarizes a good deal of what he has previously said. With the general tenor of these obiter dicta we do not quarrel; on the contrary, we welcome the introduction of so much good sense into mining matters, and congratulate the author on the excellent results likely to accrue from his out- spoken ratiocinations. However, as we ourselves live in a country where mining is still young and hopeful, with some of the exaggerations of youth but with all of its vigor, we take exception to certain of his conclusions. The latter undoubtedly suffer from brevity; unqualified generalizations are rarely impregnable, and in this case they are obviously endangered by the enormous range of conditions covered by the mining regions of the world. Mr. Curie says: "Don't invest in copper, tin or silver- lead mines, but stick to gold mines." Of course, this advice is intended not for mining operators or well- informed people, but for the average investor, who, like an innocent child, is supposed to wade on the edge of the sea of financial speculation. "Gold has a fixed value," he goes on to say, "whereas violent fluctuations in the prices of other metals upset all estimates of the earning capacity of the mines producing them." Why, then, should one not avoid risk of any kind and buy 78 THE ECONOMICS OF MINING Consols or United States bonds, or conservative bank stock or debentures of the most gilt-edged variety? Why? Simply because people who go into mining do so because they want a bigger return for their money and expect to get the benefit of a speculative enhance- ment of their principal. Bring mining to the strictly in- vestment basis of which Mr. Curie writes so much, and it shrivels to feeble dimensions indeed. The investor who wants to eliminate all risk in mining is like a man who expects to go bathing without getting wet. Such ideas entirely misinterpret the spirit of legitimate mining. What shareholder, we would ask, wants to forego en- tirely all the possibility of favorable development or of new discovery? It is the chance of enhancing the value of his holding which gives zest to the business of mining. Such possibility of further discovery entails inevitably the equal possibility of disappointment; the uncertainty cannot be all in one direction. In other words, the mining investor only asks that he may get 'a run for his money.' In Cornwall shareholders are known as 'adventurers/ not with the modern meaning of irresponsible schemers, but with the old Elizabethan idea of men who go on a venture, take a reasonable risk, and are hopeful of a favorable return. Mr. Curie has expressed great respect for the good sense of American engineers and mine operators; we feel safe in saying that these men heartily disagree with any such sweeping statements as the foregoing in re- gard to mines producing metals other than gold. Of course, when the product of a mine is liable to fluctuation in market value, the purchaser of it, or the stockholder, will expect a larger dividend to compensate for the added risk. Markets vary; even the purchasing power of gold is not constant; but the conclusion is not to try to get rid entirely of an essential factor risk but to require a proportionate return in the rate of interest. MINING INVESTMENT 79 There are many of our readers, we feel assured, who, if asked to choose between a gold mine yielding a small rate of interest with but little risk (such is the mine Mr. Curie recommends) and a silver-lead, copper or tin mine with a larger risk but with a bigger return for their money, will select the latter. The idea that all gold mines must have 60 per cent of their market valuation represented by net profit on ore in reserve and must yield 10 per cent on their investment price is the dream of a doctrinaire. A few such mines are quoted on the exchanges, and they exist just now mainly by reason of a busted bull market and an unusual condition of financial depression. When better times return, even these shares will rise to a figure 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* BY F. W. DENTON. (September 26, 1903.) Since the first of the present year a card system has been in use at the Baltic copper mine in connection with the general supply account. The system has proved satisfactory. Two sets of cards are employed. One set is retained in the supply clerk's office and is kept up to date by him, and the other set -is kept in the main office and is written up by the office clerks. The cards are 3 by 5 in. and 5 by 8 in. respectively, and are ruled as shown. The difference between the two sets is as fol- lows: On the supply clerk's card, Fig. I, only the date, balance on hand, quantity received, and quantity used are recorded, while on the office card, Fig. 2, all of these appear, and in addition the initials of the firm supplying the goods, cost, value of amounts consumed and the ac- counts to which the supplies are charged. The method of using the cards is as follows: When the duplicate bills for supplies are received one copy is sent to the supply clerk, who checks the bill and enters the quantities on his cards. As supplies are issued dur- ing the month a memorandum is made in an ordinary book in the usual manner. At the end of the month the supply clerk prepares from his memorandum book two reports, one of which is arranged according to the expense accounts and the other according to the kind of supplies. That is, on one report under each expense account will be put all of the supplies charged against that account for the month, and on the other report, * Paper read before the Lake Superior Mining Institute, August, 1903. CARD SYSTEM FOR MINE ACCOUNTS 81 under the name and size of each article, will be given the total consumption of that article. This last mentioned special report assists the office force in writing up the office cards. These reports are turned over to the gen- eral office. At the end of each month, when all of the supply bills have been received and checked, the office clerks enter the quantities and costs on the proper cards and compute a new average price if necessary. This average price may be computed as closely as desired. As soon as the pay-roll is finished at the first of the following month, before which time the supply clerk will have sent in his two reports, the office force takes the re- port of the supply clerk and completes the entries on the office cards. The special report of the supply clerk, showing the total amount issued of each kind of sup- plies, is used to check the work of picking out the in- dividual records from the detailed report arranged by accounts, and insures all entries being made on each card at the same time. When the entries are finished on a card, and before returning the card to the drawer, the respective quantities used during the month are multiplied by the average price and the amounts entered in the proper column on the card, and also in the proper place in the supply clerk's report. The balances of quantity and value are then brought down on the card, and the work on that card is finished. By copying the total value of supplies consumed from the cards to the supply clerk's special report and afterward checking the footing of this report with that of the detailed report, a good check on all the clerical work but the multiplication is obtained, and the average price checks that near enough. The values having been obtained in this way for the supply clerk's report, the main function of the card ceases as far as the mine books are concerned, and the 82 THE ECONOMICS OF MINING supply clerk's report is then used in the usual manner. If any allowance is to be made for freight and other expense connected with supplies not covered by the original supply bills, such allowance can be made by adding a certain percentage to the footing on the sup- ply clerk's report. At the Baltic the supply account on the ledger will in future be charged with the amounts of the supply bills only, and credited with the amounts as figured from the cards. The cost of handling supplies to and from ware- houses, the cost of heating and lighting these buildings, and any other expense connected with the . caring for supplies, are all charged off each month as they occur to one of the general expense accounts under the name of caring for supplies. The freight bills paid each month for supplies are charged off the same month to the vari- ous expense accounts in proportion to the values of the supplies used by these accounts. This method of hand- ling freight and other expense connected with supplies is as fair as any other in general use, and has the fol- lowing advantages: First, the balance shown by the sup- ply account on the ledger should check with the balance shown by the cards; second, by keeping the expense of caring for supplies by itself, this expense stands forth conspicuously each month and can be looked after the same as any other operating expense. The time required to write up the cards is not as much as one might suppose. At the Baltic 48 air drills are in operation and about 750 men are employed. On June I there were in use 871 cards of each kind, and the value of the supplies on hand shown by the cards was about $28,000, which does not include fuel. The monthly consumption of supplies covered by the cards is about $8,500. With this amount of business our office CARD SYSTEM FOR MINE ACCOUNTS 83 i I 4 84 THE ECONOMICS OF MINING force consists of a chief clerk, one assistant, one time- keeper and one supply clerk. It takes the clerk and his assistant about i-J days to write up the cards after the supply clerk's reports are received. As previously stated, the data taken from bills are copied on the cards at the end of the month when the office work is lightest. What are the advantages of the card system? Under our old method the supply account was charged with all expense connected with the supplies, and then 10 per cent was added to a price list to insure a balance on the safe side of the account. The list of prices could not be kept correct, because prices change, and the average price of the stock on hand was not known; therefore, the prices were seldom right^ and the 10 per cent addi- tion to this approximate price only served to insure charging off enough. When the time came for taking an inventory these prices would be put on the list turned in to the office, and if the total value was, sufficient to balance the ac- count, everything was considered satisfactory. Gener- ally there was a surplus, but just where it came in was not known. If there was a deficit, another round of warehouses and surface would be made and each trip would result in finding something that had been omitted from the original inventory. These finds might bal- ance the account. If they did not, then the deficit would be charged off and another year started with- out knowing just where the deficit occurred. Under the card system the balance that should be on hand is shown on 'the first of each month and this can readily be checked, in most cases by inspection, if desired. In any event, the cards check the consumption, because, when a requisition is put in for more of a given article, the cards should show the stock of that particular article to be used up or nearly so. By entering the exact bill-cost on the office cards and CARD SYSTEM FOR MINE ACCOUNTS 85 1 i i i i I U. s j j -^ - 1 c s I u 5 c c s I - as a S X c a ( I .8 8 S S 8 i r s s S K s S j i S 3! [ s 8 5 c o 1 ' S S ' S f 1 1 s * 1 1 ; j 1 j i s s 5 | s S ! 8 ' 8 s 8 S fe o^ 2' X-S g.2i g^ H^fe^'g^fe'H T7 d Ci c ^ e a Js. lss-gos SHH uow^Koc^ (2 106 THE ECONOMICS OF MINING To clear up this paradox, it is necessary to call atten- tion hastily both to the character of the ore-bodies, and to the conditions of sale and treatment. Cripple Creek has always been described as a high- grade camp. This is partly true. The ore occurs in a multitude of small veins, either single or in aggregates. Tn the small seams which constitute either the vein it- self, or a component part of it, the ore is rich, but the rock on the walls, or between the seams, is either wholly or partly waste. The rich seams may vary in thickness from a mere crack to a foot or two, and for these widths may carry from one to several hundred ounces per ton. There are no large ore-bodies in Cripple Creek. It is doubtful if any single ore-body, or even any single vein, has produced 100,000 tons of shipping ore. The largest and best veins have been found in the granite, where the rock-walls themselves are sometimes uniformly impreg- nated with rock value for a width of 30 or 40 ft. In such places large amounts of clean ore have been mined and shipped without sorting, but only in the swells; when the vein narrows down, it is always necessary to break some waste, in order to make room to work. The ore, therefore, is mined from veins of such a char- acter that it is impossible to get it out without mixing some worthless rock with it. The problem of handling this ore economically depends on the cost of treatment. This cost is at present and is likely to be always so high that it becomes very essential to throw out as much waste, or low-grade ore, as possible before shipping. Could the ore be treated for a dollar or two a ton, the proposition would be entirely different. The rich seams in the veins are always so friable that a large part of the value goes into fine, and can be saved by catching the latter on a grizzly, generally with about f-in. space be- tweeen the bars. Sometimes the proportion of value that can be saved by this method will be as high as 90 MINING COSTS AT CRIPPLE CREEK 107 per cent, or even more, of the total gold in the vein. Sometimes it may be only 25 per cent. It has also been proved possible to save considerable ore, simply by wash- ing the dust off the waste rejected from the ore-house, and collecting this dust in the form of slime. It will be evident to anyone who considers these facts that the problem of mining Cripple Creek ore is not so much one of breaking tons, but of saving value. It must be obvious, for instance, that in a vein where the value go into the fine, it may be very easy to break too much into fines. It may be far preferable to take less out of a stope at a greater cost. It is equally obvious that, after the ore is brought to the surface, it will pay to reject by sorting, even at considerable expense, all rock re- maining in the ore that will not pay for freight and treat- ment. In other words, the problem is not simple, but complex ; it is a question of maxima and minima, in which the maximum required is the largest amount of net profit from a given amount of gold in the deposit, while the variables are the cost of freight and treatment, of mining, of sorting, and the value of the rejected waste. Let us take as a practical example a body of 10,000 tons of ore, running i oz. gold per ton. This ore can be mixed and shipped without sorting at a handsome profit, as follows : Gross value of ore $200,000 Cost of mining 10,000 tons, at $3 per ton 30,000 Freight and treatment, $8.25 82,500 Total cost $i 12,500 Profit $87,500 But suppose we reject half of this ore by sorting? By so doing we throw away 5,000 tons that will average $2.50 per ton, or $12,500. The cost of sorting, at 5oc. per ton, will be $2,500 more. Then our shipment will be as follows : 108 THE ECONOMICS OF MINING 5,000 tons, at $37.50 per ton $187,500 Cost of mining and sorting, $6.50 per ton 32,500 Freight and treatment, $11.25 56,250 Total cost $88,750 Profit $98,750 In other words, the gross receipts in this case have fallen $12,500. The cost for mining per ton is more than twice as great ; the cost for freight and treatment per ton is $3 greater ; the apparent showing by the superintendent very bad ; but nevertheless he has made for the company $11,250 clear profit on the transaction. In the first case our total cost for mining, freight and treatment is only $11.25 P er ton > m tne second case it is $17.75 P er ton, but there is more money in the higher cost. This is an example that has been worked out in practice. It should be very plain, then, that nothing could be more absurd than to judge the merits of a superintendent in Cripple Creek merely by the shipping cost per ton of his ore. Any opinion must be formed on a good many other considerations. Here, by the way, I wish to avoid giving the impression which would be a satisfaction to many that it is not worth while to keep a close record of the costs of mining. On the contrary, this is one point that is too often over- looked. Costs can be kept in the fullest detail at a merely nominal expense. A good system of cost-keeping is so absolutely essential that no property of any size can be run successfully without it. No matter how able a man may be, he can get better results if he knows just what it costs him to do his work. But the costs, once obtained, must be used with discretion, always bearing in mind that the desired result is the greatest net profit in dollars and cents, and nothing else. To give a better idea of the complexity and cost of MINING COSTS AT CRIPPLE CREEK 109 operating the larger mines of the camp, the following statement of operations at one of the largest properties during one month may be of interest: 18,910 tons of rock were mined from 40 different and separate stopes at a cost of $2.07 per ton, or $39,068.39. The following develop- ment work was done in addition to the stoping : 2,237 ft- of drifts, cross-cuts, winzes, and raises in 46 different headings, at an average of $6.91, $15,455.21 ; ore-soning and loading cost, $8,999.98. This made a total of $63,- 523.58. The total amount of rock hoisted, both from stopes and development work, was 24,931 tons, at $2.55, which was reduced by sorting to 7,093 tons of shipping ore, at $8.96. I think it not unfair to say that these costs are good, considering the conditions. The rock is not excessively hard, but it cannot be called soft. Part of the rock is ordinary, unaltered granite, and part is equally hard porphyry. Wages will average $3.40 for eight hours. Coal costs about $4.60 per ton, and timber averages $20 per 1,000 ft. J. R. FINLAY. Colorado Springs, Col., Nov. 9, 1903. SOME ASPECTS OF MINING FINANCE i (Editorial, November 28, 1903.) There is a good deal in a name. If you call a company 'A Syndicate for Floating Mines' or 'An Association of Mining Underwriters' you will do for it what was done to the proverbial dog or the infant who succumbed to a shower of ill-assorted names drowned, as it were, at the very christening. So relief is obtained by a euphemism; the term 'exploration company' is comprehensive and includes all sorts of concerns, from those that start out to develop the waste places of the earth to those whose purpose obviously is to test the resources of a credulous public. They have become an institution and play an important part in the development of the mining industry. Exploration companies are intended in the first place, one may well presume, to explore potential mining regions ; but their activity cannot operate in this direction for long, because no organization can continue to pay out money indefinitely; either the cash, which is the first requisite, gives out before any valuable discovery is made, or such a discovery, perhaps several of them, is made, and then it 'becomes necessary to subdivide the interests into subsidiary companies. Broadly speaking, therefore, the exploration company becomes a financial house, which itself, or with others, underwrites mining issues and di- rects their policy afterward. The London firm of John Taylor & Sons has been quoted in New York in this con- nection, but this is an error, for that house is a private concern which undertakes the management of mines on the basis of a percentage of the profits. For instance, in the case of a well-known Tasmanian gold mine named the Tasmania which has just been brought out in London under the auspices of this firm, SOME ASPECTS OF MINING FINANCE 111 it appears from the prospectus that the nominal capital is placed at 500,000 shares of i each, of which 210,000 are offered to the public at par; the price paid to the local company owning the mine is 20,000 in cash, and 210,000 in fully paid shares. Intermediate agencies and under- writing commissions bring the purchase consideration up to 320,000 in cash and shares, that is, 90,000 more than the amount actually passed over to the owners of the mine; the remaining 180,000 represents working capital, subscribed in cash to an issue of 210,000 shares offered on the flotation of the company, the difference of 30,000 being cash used in making some of the payments specified. The contracts are in the name of a vendor syndicate, which pays the expenses incidental to the examination of the mine and the formation of the company ; this syndicate gets 247,000 shares and 19,500 in cash, out of which it pays for the mine, giving one agent 5,000 shares and another intermediary, mentioned by name, another block of 5,000 shares. The vendor syndicate is practically identical with a Colonial Mines Syndicate which under- takes to subscribe or procure subscriptions for the 210,- ooo shares, offered for subscription by the prospectus, in consideration of getting 53,500, payable as to 10,500 in cash and 43,000 in shares. There are sub-underwriting agreements between the Colonial Mines Syndicate and various other parties at a commission of 25 per cent, payable as to one-fifth in cash and the balance in fully paid shares. Thus it comes to this, that the vendor syndi- cate receives 37,000 shares, out of which two of its agents get 10,000, and a commission of about 25 per cent for its services in giving a guarantee to place 210,000 shares. The directors are holders of stock in the syndicate and participate largely in the profits of the flotation, while also subscribing (under sub-underwriting arrangements) for the shares now offered. All the contracts are given in the prospectus in a manner which exemplifies the beneficent 112 THE ECONOMICS OF MINING operation of the Companies Acts. Finally, it is stated that John Taylor & Sons, who individually are members of the syndicate, and two of whom are also directors, have agreed to serve the company as managers and consulting engineers in consideration of receiving 850 per annum in salary, office rent, etc., "and in addition 2j per cent of the net profits distributed by the company in every year, whether in the shape of cash or shares, but such additional remuneration shall not exceed in any one year the sum of 2,500." It appears to us that the terms and conditions are fair enough and that the professional services of the engineers are secured on a decidedly reasonable basis. Concerning the value of the mine, we can express no opinion. John Taylor & Sons has existed for three generations ; the firm began by undertaking the direction of mines, and eventually also, in certain cases, as we have seen, it has assumed part of the responsibility of finding the capital necessary for their development ; thus the financial side grew out of the professional. With the Exploration Com- pany, Ltd., the purchase of profitable mines led to the technical management of them after their acquisition. Both companies, the one distinguished by the possession of a lot of old-fashioned, but sound, mining experience, the other assisted by the capital of a great Jewish family, have been distinctly successful. The Exploration Com- pany is a limited-liability company which makes a busi- ness of promoting mining properties. Ever since Ham- ilton Smith induced the Rothschilds to take part in the organization of this company and it was followed by the Mining and Financial Trust, the Mines Development Company and other similar undertakings, there has been a steady growth in exploration companies of every kind. We refer, of course, to those interested in American mines, for South African finance covers a field quite apart. In London the formation of land and finance corpora- SOME ASPECTS OF MINING FINANCE 113 tions has proceeded without limit, a large part of the in- digestible financial paper now fluttering in that city being of this description ; but it is only of late that the same manifestation of mining activity has become apparent in New York. There are so many 'American' and 'United States' and 'Mexican' Finance, Exploration, Develop- ment, Securities, Investment and Prospecting companies that it is extremely difficult to prevent confusion, through mere similarity of name, between the few substantial con- cerns and the larger number of ephemeral creations. This activity in the financial incubator is due largely to the suc- cess of the English companies, but more particularly to the conspicuous position acquired by the Guggenheim Ex- ploration Company, one of the many channels through which flows the irrepressible financial energy of a large family of extremely clever men. Their success has prompted others to organize for the same purposes. Min- ing engineers who have grown gray in active service have viewed with chagrin the wealth acquired by one or two of their own profession whom financial participation has made rich in a few years, and have come to the conclusion that they, too, would take their part in the more lucrative branches of that many-sided, diversified and elastic occu- pation which is covered by the comprehensive term of 'the mining business/ Hence the partnership between engineers and bankers, engineers and promoters, engineers and adventurers, en- gineers and irresponsible schemers, until the financial arena has become as much of a medley as the stage of an opera at the moment of the grand climax. A man at forty is either his own doctor or a fool ; an engineer who has surveyed mankind from China to Peru needs no advice; yet, could we but presume on friendship, we would say to him that the promotion of companies is entirely outside his professional training and is best left to those that are bred to the business. Many a good engineer has been lost 114 THE ECONOMICS OF MINING in the unsuccessful promoter ; one man, with more of the financial instinct than the professional, wins ; but for every such case a hundred wreck their careers in their eagerness to drive cross-cuts to wealth. It is a difficult problem; the engineer is entitled to his 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 question has often arisen as between the architect and the 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 only, proceed to build the structures which he designs. Never- theless, the division of the work and the separation be- tween the two occupations is to the gain of the individual, no less, than of the community. It is again a question whether the shoemaker should stick to his last or take up a task which belongs, by fitness and by custom, to the tailor. SOME ASPECTS OF MINING FINANCE-II (Editorial, December 5, 1903.) We have seen more than one prospectus, issued of late by exploration companies organized in New York, in the pages of which reference has been made to the successes of similar undertakings in London and else- where. Several English organizations are quoted by name as examples of this kind of business activity, but it indicates how little is known concerning the ins and outs of the London arena, when three or four corporations, of entirely dissimilar character and methods, are given as models for American enterprise. On the other hand, the mere fact that London has been the leading mining market of the world since the modern development of mining began, warrants our turning thither for examples of well considered methods in the management of finan- cial organizations. By the mining men of this country, the Exploration Company has long been held as the typical London house making a business of promoting mining undertakings. In many respects there is a war- rant for this, although it must not be assumed that even this highly reputable concern has been uniformly suc- cessful. A few years ago it illustrated the dangers of ill-considered arid reckless finance, by taking up mines in Australia, for instance, without much regard for busi- ness caution; and finally embarked in tramway enter- prises in Paris which entailed a loss of fully $3,500,000. The Exploration Company has paid for its experience, and in returning, of late, to conservative mining, it has recovered much of the ground lost during a period of poor administration. Experience teaches, and whatever methods this company may now employ are those there- fore which, after trial, appear most likely to eliminate 116 THE ECONOMICS OF MINING the risks of mining as much as possible, while at the same time giving that quid pro quo which is the essence of sound business. Some of the recent methods adopted in connection with well-known mines will prove suggestive to those who may set out on the same quest. When the Exploration Company acquired El Oro mine they took an option to purchase, from Mr. Haggin and his partners, the whole of the shares of the Ameri- can Mining Company, which owned El Oro mine, and then formed the English company with a capital of 900,000; this represented the cash purchase considera- tion for the property, plus working capital, and left some few thousand shares unissued, in the hands of what is now El Oro Mining & Railway Company. In other words, the Exploration Company turned over the prop- erty complete to the English organization at absolute cost and without adding a dollar by way' of profit, and, in addition to all this, itself defrayed the cost of registra- tion and all the expenses incidental to the formation of the new company. The Exploration Company then solicited subscriptions from its friends in London toward the capital of El Oro Mining & Railway Company, charging them 5 per cent, or one shilling per share, which represented the Exploration Company's profit; but inasmuch as the vendors took a large number of shares in lieu of cash, and could not, therefore, be asked to pay this one shilling per share, and as, of course, the amount subscribed by the Exploration Company itself did not represent any profit (as it also had to pay commissions, expenses, flotation charges, and so forth, out of the profit it did receive in this manner), the net gain of this large transaction did not exceed 15,000. It is perhaps the only instance in which an English com- pany has acquired a property at absolute bedrock cost; and, barring that satisfactory result of the transaction, SOME ASPECTS OF MINING FINANCE 117 it cannot be said that this method of treating a property is a good precedent or a reasonable business proposition. In the case of the Tomboy mine, the Exploration Company followed what is known in London as the Hamilton Smith practice; that is to say, they purchased 51 per cent of the shares of the American company, and merely subscribed, and induced their friends to sub- scribe, for the shares in that company. Subsequently, rinding this scheme did not work at all, they persuaded the American directors to sell out the whole business to a company formed in London, and the American stock- holders now hold shares in the English company, in- stead of the English stockholders holding shares in the American. This is also a practice which does not at all commend itself ; for, while 51 per cent, of course, gives the control of a property, it is obvious that the sale of a few thousand shares will transfer that control. The practice now adopted by the Exploration Com- pany is approximately as follows: If a mining property is brought to the notice of any one of its representatives, and he (an engineer) is satisfied with the preliminary in- vestigation, they arrange to take an option upon the property, 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 London to acquire the mine, making themselves responsible for the purchase, offering to their friends a participation in the underwriting, for which probably a commission of 5 per cent 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 for 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 118 THE ECONOMICS OF MINING for working capital ; and, in addition, a sum from 5 to 10 per cent, according to the size of the property, is set aside as the promoters' (Exploration Company's) profit; unless a mine, on examination, shows that it can stand such promoters' profit, and still present a good mining chance of giving the shareholders their money back with a substantial rate of interest, it is not consid- ered good enough to put on the market. Of course the amount of commission which the promoters should add to the purchase price would very largely depend upon the size of the property, for what might be a reasonable percentage on a purchase price of $500,000 would be excessive and unreasonable on a property of $5,000,000. The phrase 'underwriting the capital' means that the organization bringing out a company with a capital, say, of i, 000,000; would by themselves and their friends un- dertake to subscribe for the whole or any portion of the capital not taken by the public, and in consideration for sudh guarantee they would be paid an underwriter's commission of, say, 5 per cent. The foregoing, of course, only applies to mining properties too big for the promot- ing organizations to handle alone ; but in the case of any mine which could be purchased and equipped for, say, $500,000, or even $1,000,000, if the property was consid- ered to have attractive prospects, the Exploration Com- pany would be much disposed to take the whole for its own account, and work it as a private business. SOME ASPECTS OF MINING FINANCE III (Editorial, December 17, 1903.) We have described some of the methods adapted by conservative houses engaged in the acquisition of min- ing property. There are several well-managed financial organizations in London, such as the Consolidated Mines Selection Company, which do not float mines 'off their own bat/ as it were, because a single undertaking of any magnitude would entail the absorption of most of their capital; therefore, instead of using up their resources in one big deal, they participate in several ventures. Either they obtain an allotment of interest in a business about to be issued by another house, and, having had the mine examined by their own engineer, they accept the participation; or, their agent having secured an option on a likely-looking property, they offer it to a larger concern and obtain a consideration, as well as a partici- pation, for their instrumentality in introducing a profit- able deal. Furthermore, many successful companies of this kind do not buy mines at all, but purchase blocks of shares on the open market, after their engineer has in- vestigated conditions at the mines ; that is, they maintain a staff of trustworthy engineers and obtain correct in- formation concerning the ore reserves and future pros- pects of mining properties already listed on the ex- change, utilizing this first-hand knowledge to acquire an interest whenever the quoted price warrants a purchase. Should their holding become large, they can usually ar- range to obtain representation on the directorate of the mining company. The Consolidated Mines Selection Company is the re- sult of the amalgamation of the African Metals Com- pany and an older exploration company, organized by 120 THE ECONOMICS OF MINING Mr/ Walter McDermott, named the Mines Selection Company. The Mining and Financial Trust may also be quoted as having been founded on a sensible basis, and, al- though it is a concern which has withdrawn into the privacy of inactivity, it played an important part in the development of many celebrated American mines, among which the De Lamar, in Idaho; the Elkhorn, in Montana, and the Harqua Hala, in Arizona, may be in- stanced. Mr. T. A. Bennett was the founder of this company. He gave his services as mining engineer on the understanding that he was to receive no salary or retainer, but a large share in any business resulting from his active search for a good mine at a fair price. He stipulated only that his expenses should be paid when he was actually in the field. This was a fair and practi- cal scheme. It worked successfully, until the disap- pointment of the Harqua Hala gave a severe check to the further expansion of the company. The Mines Company, Ltd., was another concern which took an important part in American mining. It was formed by Mr. John Darlington and others, and was responsible for bringing out the Yankee Girl, New Gus- ton and American Belle mines at Red Mountain, Colo- rado, but it lost its standing through the over-capitali- zation which marked the last of these three important flotations. Then, there are all sorts of venturesome concerns, which make a brief splash or a long-continued splutter, following risky methods which may be described as financing on the edge of a razor. Every 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 discredited mining during recent years, but the dreary messes of Bottomley, Hooley and Wright are brushed aside as episodes to be forgot- SOME ASPECTS OF MINING FINANCE 121 ten with the indecency of a hurried funeral. In truth, they represent but the more extreme forms of reckless finance, which are no more a part of legitimate mining than the iniquities of the race-course are necessarily a part of the business of breeding good horses. SOME ASPECTS OF MINING FINANCE IV (Editorial, December 24, 1903.) Many 'development' and 'exploration' companies, which start with good intentions, slide down an easy descent into wrong-doing, merely from the lack of funds. Let the organizers of such enterprises realize this brutal fact : you cannot finance legitimately without money. To such gentlemen as are organizing 'exploration' companies we would give the advice which the Austrian general, 'Monticucoli, is said to have given to Maria Theresa, when he told her that three things were necessary for waging war successfully the first 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 either be squeezed against the hard wall of adversity, or it will stoop to questionable practices. It is as difficult for a promoting concern to be uniformly hon- orable, when trying to carry out big undertakings with a small capital, as it is for the wicked man to enter heaven. No array of names, or multiplicity of business interests, will suffice. The malice des choses, which pursues the poor financial company trying to push large operations, is one of the brutalities of existence. On the other hand, the utilization of a very large capi- tal, in actual purchase of properties, is not within the scope of the typical exploration company. Such action leads to a crippling of resources, because it requires the further use of funds in the support of the market for its own issues. A company which brings out a big mine, and becomes itself a large purchaser of the stock, is apt to be the butt of successful bear attacks, unless it is in a position to protect its holdings. The story of Lake View Consols, Le Roi, and other mines which have suffered aueer vicissi- SOME ASPECTS OF MINING FINANCE 123 tudes on the stock exchange, illustrates how dangerous it is for an issuing house to be 'long' on its own shares. An exploration company, primarily, is not an invest- ment corporation, but a house of issue ; its most profitable avenue of energy is in scouting for good mines, in order, by sifting a large number of likely properties, to secure the option finally on one which, after thorough examina- tion, it can commend to its clients. In this business, as in all others, it is a mistake to confuse the operations of a broker with those of a principal. The exploration com- pany will find it advantageous to act mainly as a corporate broker, for the buying and selling of mines. Therefore, a capital sufficient 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. A capital of 100,000, or $500,- ooo, should be ample for all work of this kind, during a period of several years, but it must be available as cash. With such a capital, it is possible to pay a 50 per cent divi- dend on the completion of a successful deal, while, at the same time, there is money enough to meet the expenses of a prolonged and extensive search for that most desir- able business a profitable mine with possibilities of de- velopment. Having finally found and secured a good mine at a fair price, the next step requires as much judgment as any which have preceded. Companies which try to make a grand coup on one transaction, regardless of rhyme or reason, always meet with a most miserable smash sooner or later usually sooner. In these matters, as in most of the affairs of life, it is both right and good policy to take a large view of business, and build it up by uniformity of fair dealing and cautious finance. A company which can make two 'or three sound deals, without over-capitalizing a mine or sand-bagging a mine-owner, is assured of a prosperous career, for such a reputation will bring to its 124 THE ECONOMICS OF MINING office a large share of the best mines that come to market. On the other hand, experience shows that, with rare ex- ceptions, most finance companies which have made one or two successful flotations become so greedy that they pn> ceed to over-capitalize their next issue, and strain to make so large and quick a profit as to end in a miserable fiasco. The American Belle flotation (which was brought out when the Guston and Yankee Girl mines had won a repu- tation for the Red Mountain district, and to the company which issued them) is a case in point. But we are treading on dangerous ground, where guides do well in warning the wayfarer while refusing themselves to go forward. In these matters an intelli- gent cognizance of what has happened to others is much cheaper than the bitter pill of experience, which is the in- evitable medicine doled out to the heedless and unwary who tread along the difficult path of mining finance. At a time when new exploration companies of every kind are being organized in New York, it will not be held im- proper to dwell upon the dangers which they may encounter, the success which they may win, and the stimulus they can afford to legitimate mining. SOME ASPECTS OF MINING FINANCE V (Editorial, December 31, 1903.) One form of unpractical finance which is prevalent in this country is unknown in England. We refer to the organization of companies with a large nominal capital, say, 1,000,000 shares, a part of which is given out as fully paid stock in exchange for the mine, while the bal- ance is peddled at a big discount to the public in order to secure working capital, and, in many cases, to make a quick profit for the concern at the back of the opera- tion. Such practices are rendered impossible in England by the Companies Acts, regulations covering the organi- zation and procedure of corporate enterprise. Under the lax statutes obtaining in several States a syndicate can take over a small mine or a mere prospect, organize a $1,000,000 company, pay the owners (themselves, it may be) 550,000 shares, carrying no liability, and sell the minority interest or remainder of the stock at 10 or 15 cents; sometimes even less, especially when a 'fiscal agency/ as the promoting concern is apt to call itself, represents a number of mines in course of development and 'pools' the various shares so as to make a combina- tion or 'bargain' offer, in order to procure the money needed to make mines out of holes in the ground. The price of the stock is raised according to the circum- stances, and among these circumstances the needs of the mine are apt to be less of a measure than the facility with which the stock can be sold to simple-minded peo- ple in a fool's hurry to get rich. There is an enormous amount of money subscribed, and mostly lost, in this way during the course of a year, especially among servant girls, clerks, railroad conduc- tors, tradesmen % and hard-working people with small sal- 126 THE ECONOMICS OF MINING aries. Iowa, Illinois, Indiana, and the regions most out of touch with precious metal mining, are fertile fields for enterprising organizers of such schemes. Office-holders of local repute, or other persons of some notoriety, are made directors and are given blocks of stock, to the intent that they may serve as lures to the people in vari- ous localities. Then reports of progress are sent in by self-constituted 'experts,' and 'dividends' are declared, out of the subscriptions, so as to hasten the instalments on the stock; for it is usually sold on this plan, so much per month out of the earnings of comparatively poor in- dividuals. These are the undertakings . which are liber- ally advertised in the daily press and in the illustrated weeklies. During the recent prosecution of a notorious mining promoter, it was shown that out of 1,250,000 shares, valued at $i per share, in a company operating a mine in Oregon, there were issued, and held, 25 shares in California, 14 in Canada, n in Delaware, 106 in Illinofs, 25 in Indiana, 422 in Iowa, 61 in Kansas, 16 in Maine, 27 in Maryland, 63 in Massachusetts, 14 in Mississippi, 49 in Missouri, 48 in Nebraska, 18 in Minnesota, 16 in New Jersey, 68 in New York, 95 in Pennsylvania, 70 in Wash- ington, 50 in Wisconsin, and the remainder in other States of the Union. This distribution suggests forcibly what efforts must have been made to sell the shares wherever a gullible head bobbed up. The favorite scheme for such undertakings is a 'tun- nel' or adit which is to pierce a mountain and intercept large numbers of veins. A string of mining claims is easily secured for a merely nominal sum in a half-de- serted portion of some well-known mining district, and any present unproductiveness is explained by excess of water, cost of shaft-sinking and other drawbacks, which are to be removed through the facilities afforded by such a drainage adit. Ideal cross-sections exhibiting a SOME ASPECTS OF MINING FINANCE 127 multiplicity of veins, an extremely steep contour of the surface, and ore reserves commensurate with tremen- dous 'backs,' are added to highly colored descriptions of the future of the undertaking. Shares are offered at 10 cents, to be increased to 25 cents within a specified pe- riod, and other advances may ensue, dependent upon the replies evoked by the circulars which are sent out, and the advertisements and favorable reading notices which appear in all kinds of papers, religious and old-fashioned periodicals being preferred by this type of promoter. A rather unique method of advertising a gigantic mining swindle some time ago was the sending of 'lecturers' throughout the country on a special railroad car; the duty of these fakirs was to tell the unsuspecting inhab- itants of the smaller towns how fortunes had been made by investors in mining shares, and to expatiate upon the millions that lay idle in the 'treasure vaults' of the property, the stock of which was offered at 'rock-bot- tom' prices. As the work at the mine proceeds, the im- patience of the ignorant investor is fed with accounts of rich strikes, veins one inch thick crossing a working 5 ft. wide being likely to appear as 'ore 5 ft. across/ while assays of specimens of walnut size are quoted under the guise of 'averages/ When, eventually, some of the subscribers cease to send in their instalments, they forfeit their interest, and the anxiety of the survivors is allayed by reports of 'well-known experts' and 'profes- sors/ who are vouched for by State officials or country bank-managers in a magnificently 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 unsophisticated shareholder is again called on to contribute by surrendering his old stock and pay- ing an additional fee for the new shares. And so the mockery of mining goes on, until the money subscribed 128 THE ECONOMICS OF MINING has all been used up in salaries for the insiders, and finally a hole in the ground with a dump is seized by an irate stockholder, whose first touch breaks down the whole house of cards marked cards, at that. The South Sea bubble and its associated frauds of the year 1720 have many a counterpart, even in this day and generation. What we chiefly object to is, they are described as mining. MINING FINANCE. (December 10, 1903.) The Editor. SIR I hope that your articles on 'Mining Finance/ recently published in the JOURNAL, will be widely read, and will serve to give the public better ideas on that sub- ject, and especially on the proper function of exploration companies. The public, even that portion which con- cerns itself at all about the subject, has very hazy ideas of mining finance. I have even met mining engineers, who were well up in their profession, but were rather like a sailor on horseback when it came to the financial part. If people who have money to invest would only look into this matter more, there would be fewer com- plaints about mining investments. How often we have seen fairly good mining propositions hampered by capital 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 could be well spent upon them. I was specially interested in what you have said about exploration companies and their proper functions. The popular mind has been somewhat confused on this point. Quite a number of people, I find, have a general idea that an exploration company is something like the 'holding company' that pernicious modern device, which has played such a malignant part in railroad and industrial finance, in the last two or three years. We have one con- spicuous example of the 'holding company' in mining, which many investors know to their sorrow. The less said about it the better ; it is certainly not an exploration company. The greater part of the public knows the exploration company only through the glowing advertisements of the promoters and stock peddlers, whose brilliant imagina- tions have seized upon the idea of exploration and finance 130 THE ECONOMICS OF MINING companies as capital devices to aid in fleecing the unsus- pecting outsider. The very titles are alluring, and they permit the use of gorgeous prospectuses, unhampered by any regard for truth. If the promoter has one particular mine to describe, he finds inconvenient limitations; the possibilities of finding an indefinite number give his men- dacity full scope. But this is inevitable, since all good things may be perverted 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 satisfactory mining market in this country. I do not mean by this a mining stock market, but a market in which mines, or good properties, can be disposed of in a satisfactory way. The prospector, or the mining engineer, who has a promising mineral property, needing capital for its development, often does not know where to go. If he has no friends with money, it is not an easy matter to se- cure his capital or dispose of his property. Too often he falls a victim to the promoter or to a broker of the conscienceless class, who reaps all the profits. The ex- ploration company or companies, for there is room for more than one or two of the right kind would help very materially in making the market that is wanted. Such companies, too, when well established, would be in a posi- tion to command the attention of investors, large and small. Of course, they will be liable to make mistakes sometimes; but, with any sort of good management, the proportion of such failures will not be large. I hope you will be able to develop further these ideas, which I have expressed in what, I fear, is a rather incon- sequent way. I want to see general investment in mines increase ; for I know that, if reliable ways of doing it are provided, such investments will be far better for the pub- lic than the putting of their money into blind pools and watered industrials. INVESTOR. New York, Dec. 6, 1903. RESUING IN UNDERGROUND WORK. (December 10, 1903.) The Editor. SIR The article appearing in your issue of September 12 (referring to the origin of the term 'resue' as applied to underground work) brings to mind some practical experi- ments carried out by the writer a few years ago, in which an attempt was made to determine the 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 idea of sorting out a high per- centage of the non-auriferous product. In the cases cited the adjoining rocks, or walls, of the vein contained no gold, the inclination of the vein was 85 from the hori- zontal, and the section of footwall taken out in the first instance was .separated from the vein by a clear plane and was broken without disturbing the ore. The average width of heading or breast in the first operation was 30 in. and the total width of stope after the reef had been ex- tracted was 36 in. In the second operation the maximum average width of stope was 30 inches. The two methods were, respectively, as follows : When resuing was applied, the vein was first stripped on the footwall (which, in this case, was the more eco- nomical to handle) to a width of 30 in. This waste rock was used largely as filling, although a certain percentage was necessarily sent to the surface. When some 3,600 sq. ft. of quartz had been stripped, this was broken down as a clean product, so that no sorting was required. In the second case, the quartz and adjoining rock were broken together, and the fineness to which this product was reduced allowed of sorting out only 5 per cent of the barren rock. The following figures are compiled from these experi- 132 THE ECONOMICS OF MINING ments, and although the period over which the work was extended was of necessity limited, and is possibly not an absolute guide as to what the work should cost under similar conditions over large areas, they indicate the most profitable method of handling ore occurring under these conditions. Example A shows a loss of $23.76 on the operation, while in B, where resuing is resorted to, a profit of $1,469.40 is made. In both cases 6 in. of quartz was dealt with. In the second comparison, C and D, a 12-in. vein val- ued at 30 dwt. was worked, and while the discrepancy is not so marked, it is shown that under these conditions there is still a considerable margin in favor of resuing. The last example, E, is purely theoretical, as far as the percentage sorted is concerned, and is given in further support of the contention held. Comparisons Between Stripping Narrow Reefs and Stoping Them with Waste. Example A. Width of reef, 6 in.; value, 50 dwt. Stoping width, 30 in. ; value, 10 dwt. One ton contains 20 per cent of reef and 80 per cent of waste ; 5 per cent is sorted, 5 per cent of So per cent is 4, leaving 76 per cent of the waste. So that 96 per cent goes to the mill with a value of 10.41 dwt. per ton. Recov- ery equals 75 per cent of 10.41 dwt. ; that is, 7.8 dwt. at $0.96, which is $7.49. One hundred tons at $7.49 is $749. On a basis of 100 tons milled it is necessary to charge : To mining 104 tons at $3.60 $374.40 tramming 104 0.36 37-44 hoisting 104 0.18 18.72 milling 100 1.44 144.00 0.72 72.00 0.66 66.00 0.60.. 60.00 redemption, charges, general, pumping Total expenses for 100 tons $772 . 56 Value of gold recovered, 100 tons 748.80 Loss $23.76 Example B. Stripping 30 in. of waste and mining 6 in. of clean reef. Width of reef, 6 in. ; value, 50 dwt. per ton. Recov- ery, 75 per cent of 50 dwt. ; that is, 37.5 dwt. at $0.96, or $36. On a basis of 100 tons at $36, $3,600, it is necessary to charge : RESUING IN UNDERGROUND WORK 133 To mining 500 tons of waste, at $2.40 $1,200.00 milling 100 tons of reef, at $3.60 360.00 handling no tons of waste, at $0.48 52.80 tramming 100 tons of reef, at $0.36 36.00 hoisting 100 tons of waste, at $18 18.00 hoisting 100 tons of reef, at $18 18.00 milling 100 tons of reef, at $1.92 192.00 redemption, at $0.96 96 . oo charges, at $0.84 84 . oo pumping, at $0.72 72.00 Total expenses for 100 tons $2,128.80 Value of gold recovered, 100 tons 3,600.00 Profit by stripping $1,471 .40- Example C. Width of reef, 12 in.; value, 30 dwt per ton. Stoping reef and waste together. Average value of 30 in., 12 dwt; 40 per cent of this is reef; 60 per cent is waste; 5 per cent is sorted, equal to 3 per cent of the waste; leaving 97 per cent to mill, averaging 12.4 dwt. ; 75 per cent recovery of 12.4 dwt. is 9.3 dwt per ton. Value of gold in 100 tons (9.3 dwt. at $8.93) is $893. Tons. Cost. Total. Mining 103 at $3.60 $370.80 Tramming 103 " 0.36 37-o8 Hoisting 103 " 0.18 18.54 Milling 100 " 1.44 144.00 Pumping 100 " 0.60 60.00 Redemption 100 " 0.72 72.00 Charges 100 " 0.66 66.00 Total expenses for 100 tons $768.42 Value of gold recovered 892.80 Profit $124.38 Example D. Stripping 12-in reef. Value, 30 dwt. ; 75 per cent recovery, is 22.5 dwt, or $21.60. Value of gold in 100 tons at $21.60 is $2,160. Tons. Cost. Total. Mining waste 250 at $2.40 $600.00 Mining reef 100 " 3.60 360.00 Handling waste 23 " 0.48 11.04 Handling reef 100 " 0.36 36.00 Hoisting waste 23 " 0.18 4.14 Hoisting reef 100 " 0.18 18.00 Milling 100 " 1.92 192.00 Pumping ' 0.72 72.00 Redemption ' 0.96 96.00 Charges " 0.72 72.00 Total expenses for 100 tons $1,461 . 18 Value of gold recovered 2,160.00 Profit $698.82 1.34 THE ECONOMICS OF MINING Example E. Width of reef, 12 in.; value, 30 dwt. per ton. Stoping reef and waste together, 30 in. wide, and then sorting 20 per cent of the rock mined. Value of rock before sorting, 12 dwt.; after sorting, 15 dwt.; 75 per cent extraction gives 11.25 dwt. recovery; 100 tons at 11.25 dwt. at $0.96 equals $1,080. Expenses. Mining 125 tons at $3.60 ~ $450.00 Tramming 125 tons at $0.36 45-00 Hoisting 125 tons at $0.18 22.50 Sorting 25 tons at $0.96 24.00 Milling 100 tons at $1.44 144.00 Pumping loo tons at $0.60 60.00 Redemption 100 tons at $0.72 72.00 Charges 100 tons at $0.66 66 . oo Total expenses for 100 tons $883 . 50 Value of gold recovered 1,080.00 Profit $196.50 These figures reflect the importance of carefully weigh- ing the merits of the two methods of stoping when deal- ing with narrow veins. F. C. ROBERTS. Bulawa.yo, Rhodesia, Oct. 27, 1903. GOLD MINING IN RHODESIA. BY F. C. ROBERTS. (December 10, 1903.) Introductory. Lying between latitudes 16 and 23 south, and longitudes 25 and 30 east, Rhodesia, which, a few years ago, was almost wholly inhabited by native tribes, can now boast of a white population of about ten thousand. The country derives its name from the great founder, Cecil John Rhodes. In its physical aspects Rhodesia differs from most of the Western mining States of America, in that few really high mountain ranges traverse the country. The mining districts embrace nu- merous small hills which gradually fade away into large areas of, first, undulating and then almost flat, plains. In the granite belts an independent type 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 300 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, which is now being extended over the country, will bring within easy access of the centers, Bulawayo in Matabeleland and Salisbury 136 THE ECONOMICS OF MINING in Mashonaland, every mining district of importance, and thereby remove the hindrance due to prohibitive prices and scarcity of wagon transport. An independent line, 200 miles long, which is practically the first lap in' the Cape to Cairo railway, from Bulawayo via Victoria Falls, will tap the Wankie coal-field by the end of November. The Wankie coal will then be available for use in practi- cally every mining district of Rhodesia. Geology. Geologically, those parts of Rhodesia which have been at all explored present much the same features as other quartz countries. In two instances, however, we are favored with geological problems which promise to be' of especial interest and importance, and in both in- stances the commercial aspect of the inquiry will stimulate scientific investigation. I refer to an auriferous diorite in the one case, and an auriferous hornblende porphyrite in the other. No geological survey has yet been made in Rhodesia, hence only a generalized description is possible. By far the greater portion of the country consists of granite rocks, in wide belts, having a strike somewhat west of north and east of south. The gold belts embrace the areas characterized by slates and schists, varying in extent from a few hundred yards wide by half a dozen miles in length, to 15 miles wide by 30 miles in length. These metamor- phic rocks are traversed by numerous dikes, consisting of the many varieties of diorite. In the valleys, or small gulches, of the hill country, the alluvium is of very limited extent, suggesting a lack of those extreme climatic con- ditions necessary to produce rapid erosion. The quartz veins include several distinct types ; the most common are the interlaminated veins, which are found abundantly in the foliated rocks, though numerous segre- gated veins also exist. The quartz occurs generally in lenticular bodies, sometimes distinctly isolated, but more usually in parallel series, exhibiting great variations in GOLD MINING IN RHODESIA 137 width and vertical persistence. On the whole, the veins are narrow and their lateral extent is rather 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 interesting occurrence. A large amount of work has been- accomplished laterally, and the vertical depth reached is over 600 ft. The irregularity of the gold contents of the dike and various other char- acteristics would seem to support the lateral secretion theory. 1 The writer has lately discovered an auriferous horn- blende porphyrite. This rock is most interesting petro- graphically, and is quite uncommon in this country. It consists, as seen under the microscope, "of large crystals of feldspar (chiefly plagioclase), possibly with some orthoclase and smaller calcareous pseudomorphs after hornblende, retaining good crystal outline, imbedded in a fine-grained feldspathic ground-mass. The feld- spars are somewhat crushed and the alteration of the hornblende implies 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 500 ft. above the surrounding country. In close proximity to the porphyrite are the crystalline schists. A superficial examination shows considerable variation in width, the maximum being about 150 ft., while the lateral extent will probably reach 1,000 ft. or more. Enough work has not been done to decipher the geological structure, nor can an intelligent idea, as yet, be formed with regard to the origin of the gold content. Samples taken over the various widths exposed give from 2 to 15 dwt. per ton, and although these results are not 1 The gold-bearing diorite of the Ayrshire mine was discussed in this JOURNAL, under date of July 11, 1903, p. 44, by Mr. E. D. Berrington, and, on October 3, 1903, by Mr. J. E. Spurr. 138 THE ECONOMICS OF MINING representative, they indicate an occurrence of unique character. Ancient W or kings. An interesting feature of Rho^ desia is the fact that every auriferous district has been largely worked by an extinct race, popularly referred to as the 'ancients/ and although some relics left by these people have been found in the bottom of old stopes lately opened, as well as among the numerous ruins existing in the country, no satisfactory explanation has been ad- vanced touching their identity. The amount of work ac- complished and the quantity of gold, copper and iron ex- tracted by them must have been enormous. While the remains of these workings have largely aided the pros- pector during the modern reopening of the country, when conditions were more or less abnormal, there is little doubt that their effect has tended to hinder the introduction of a thorough system of prospecting, and has in a great measure deflected attention from the large areas contain- ing virgin reefs. Several calculations of the amount of gold extracted by these 'ancients' have been made ; these estimates are hypothetic and no accuracy is claimed for them, but the latest reach $300,000,000. It has been the custom to judge the value of a mining proposition in Rhodesia by the extent of the 'old workings/ without re- gard to geological considerations; hence many disap- pointments. The knowledge displayed by the 'ancients' in determin- ing the value of the ore was indeed marvelous. It is not to be assumed that they realized width of vein as an im- portant factor, but it would appear to have been a suffi- cient encouragement to them that a vein contained, say, a minimum value of 10 dwt. per ton. This work no doubt extended over a very long period, for wherever the rock was not readily softened by weathering, they built fires against the stope-breasts and then threw water upon the heated rock so as to induce fracture. In some instances, GOLD MINING IN RHODESIA 139 where it is evident from the contours that water was not encountered, they worked to a depth of no less than 250 ft. on the dip. Financial Considerations. The British South Africa Company formerly had the right to demand up to 50 per cent of the vendor's interests, but this right was seldom exercised to its full extent; it has now been reduced to 30 per cent, and is generally satisfied by the transfer of the necessary number of shares in the new company. The modus operandi obtaining in Rhodesia, and adopted by practically every financial house having an interest here, includes many features which, to those unacquainted with the local conditions and the market considerations, would appear to cast an unnecessary burden of heavy capitalization upon the mines ; but there are explanatory circumstances. A mining claim in Rhodesia embraces an area 150 ft. along the strike of the outcrop or old working, by 600 ft. ; hence ten claims constitute a block 1,500 ft. by 600 ft., which is. equal to the mining claim as defined by the United States Mineral Code. The other regulations contained in the Mineral Ordinance are really only modifications of the United States laws. What is termed the 'parent company' in Rhodesia is a limited liability company, with a capital of from $150,000 to $5,000,000, formed for the purpose of acquiring mines, lands, farms, etc., the latter being necessary in order to secure timber. At the present time the timber consti- tutes the only fuel of the country ; the mining company pays a royalty of $1.20 per cord to the farm-owner. The number of claims controlled by these parent companies varies from 100, in small concerns, to as many as 5,000 in the larger companies. The object of the parent com- pany is to carry out a system of prospecting and develop- ment work, with a view to placing independent prop- erties upon the market. It is obvious that, in a country where development expenses are very high, there must 140 THE ECONOMICS OF MINING be a limit to these operations ; for if an attempt is made by the parent company to develop from 18 months to two years' supply of ore, upon a number of claims, it becomes impossible to finance the work ; hence it is clear that the gold-mining company must assume big respon- sibilities, and therein lies the key to many failures. The problems with which the parent company is faced are as follows : (a) Capital and shares involved in purchase of prop- erty. (b) Capital involved in prospecting and development work. (c) Capital involved in installation of temporary sur- face equipment. (d) Interest accumulating upon capital invested. The chief considerations of the gold-mining company are as follows : 1 i ) Capital involved in purchase of property from the parent company. (2) Capital involved in development work. (3) Capital or shares involved in commutation of Chartered Company's rights. (4) Capital involved in purchase and erection of plant. ( 5 ) Capital or shares involved in making provision for possible extension of plant. Assuming a width of vein of 30 in., with the ore-bodies not too scattered, it becomes necessary to make provision for an expenditure of no less than $360,000, in order to bring a property to a milling stage and equip it with a 2O-stamp mill, cyanide plant, etc. This should, under ordinary circumstances, give 18 to 20 months' run of pay-ore. As a matter of fact, no mine in this country should commence the reduction of ore with less than three years' ore in such a state of exposure as to be rea- sonably counted upon to return a margin over and above the estimated working expenses ; for it is next to impos- GOLD MINING IN RHODESIA 141 sible to keep the development work as far ahead of the reduction plant as the constantly fluctuating and ineffi- cient labor-supply demands. Assay Plans. At most of those mines, which have reached an advanced stage of development, surface and assay plans, as well as section and stoping plans, are kept ; while the data embodied in the plans vary somewhat for different mines, the fundamental principles are adhered to. The development assays as well as the stope-assays are taken at intervals of 5 ft., and plotted weekly. The pennyweights are shown in red and the width in inches in black. All samples are taken over the actual reef- width, which figures are adjusted to an assumed stoping- width in the assay-book. In the opinion of the writer, the methods (often used when the width of reef is under an assumed stoping- width) of sampling over the stoping- width, embracing both reef and country matter, are liable to produce in- accurate results. It appears 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 pro- portion of each section as to insure reliable results. These remarks are particularly applicable to this region, where so many small but rich veins occur, which, in many cases, have lent themselves more readily to oxidation than the enclosing rock. Sectional sampling is largely practiced, not only in development work, but at all stope-breasts, in order to avoid the handling of ore which will not leave a margin over mining and milling expenses. In this coun- try the unit of value is the troy pennyweight, equal to about 4 shillings, or one dollar. In order that immediate approximations may be made of the stope-breasts, daily samples are taken and panned ; these furnish, after one has become familiar with the character of the gold, etc., satisfactory results ; but the results plotted always refer to fire-assays. 142 THE ECONOMICS OF MINING For the purpose of avoiding inaccuracies, the individual stopes are plotted to large scale upon separate blocks, and these are used for calculating tonnages. The usual scale for underground general plans, etc., varies from I in. = 20 ft. to i in. = 60 ft., depending upon the extent of the property. Development Work. Generally speaking, the quartz veins in this country may be said to be narrow. The lateral continuity varies greatly, and rarely exceeds the full length of a block (1,500 ft.) ; the grade (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 Wanderer mine, where a dry-crushing plant of about 3OO-ton capacity has recently been erected, the average is under 5 dwt. per ton ; in this instance no un- derground work is necessary, the ore being quarried. In common with other countries where the industry is only emerging from infancy, Rhodesian ventures have suf- fered by the erection of reduction plants before sufficient work has been accomplished underground. The period consumed in reaching the milling stage varies, of course, with the width and lateral continuity of the reef in each case, but it may be said that in Rhodesia it requires from three to four years from the date that work is initiated. The comparative cost of unskilled labor would suggest, at first sight, that the costs of development work should be very low ; this is not the case, however, for although the native wage seems low, when the other expenses in- cident to their employment are considered, it is found that they account for about 30 per cent of the total cost. This is not clearly reflected in the figures following, as in this case the contract system is largely employed. The costs of stores, mining material, etc., together with many other incidental charges associated with mining in this country, as well as administrative expenses, are very GOLD MINING IN RHODESIA 143 Scale of dwts. H to I oz. " " inches M" to t foot. 144 THE ECONOMICS OF MINING high. It is therefore essential that large footages be ob- tained, so that a reasonable distribution may be made of the 'constants/ An analysis of the costs of development upon a Rhodesian mine is given herewith : Mine Development. Cost Per Ton Percent- Milled, age of Total Cost Cents. total cost. Salaries $1,692.28 4.44 2.47 White wages : 2,611.68 6.86 3.83 Contractors 21,882.74 57-50 32.03 Native wages 3,176.40 8.34 4.15 Native food 1,080.00 2.84 1.58 Stores 2,666.20 7.00 3.90 Maintenance 759-50 2.00 i.n Workshops 1,046.86 2.74 1.53 Native hospital 287.14 0.74 0.42 Native labor supply 74-4O o. 18 o. 10 Pumping 4,439.52 11.66 . 6.50 Compound 864.08 2.26 1.27 Compressors and rock-drills. 16,399.74 43-o8 '24.00 Winding 1,605.16 4.22 2.35 Underground tramming.... 2,731.50 7.18 3-99 Assay account 690.94 1.80 i.oi Surveying and sampling.... 712.70 1.86 1.04 Rock-drills and sharpening. 5,579.28 14.66 8.17 Total $68,300.12 I79-36 99-45 The footage executed during the period covered by this expenditure amounted to 2,677, representing a cost of $26.50 per foot. With hand labor, driving in fairly hard ground, 40 ft. per month is considered good work, while with machine- drills 80 ft. is an average. On the Rand, anything up to 200 ft. per month is made in driving; in shaft-sinking also this rate is attained. Upon one property with which the writer was connected in the Transvaal about six years ago, no less than 260 ft. of sinking was accomplished dur- ing one month, i. e., from the 1,027- ft. leve l to the 1,287- ft. level. The smaller amount of work accomplished in this coun- try is due largely to the inferior equipment, both under- ground and on the surface, for handling large quantities of broken rock. GOLD MINING IN RHODESIA 145 Working Expenses. I believe that, in Rhodesia, the requirements of an engineer, in respect to the number of properties he is expected to manage, are unusual. It is therefore necessary that detailed and complete records be kept. The comparatively high and constantly fluctuating prices of mining materials and supplies make it essential that constant quotations of these articles be obtained and filed for daily reference, with the hope of effecting econ- omy in operating expenses, as well as for the purpose of getting out estimates which can be treated with con- fidence. This also suggests the importance of correctly measur- ing the tonnages 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 number of cars discarded as waste (in all cases estimating 20 cu. ft. of broken rock=i ton), is taken as the tonnage crushed. It is apparent that greater care is required be- fore a comprehensive comparison can be made of theoreti- cal and actual results. The above methods would be all right, if, after determining the number of cubic feet to the ton in individual cases, each car delivered to the mill was of exactly the same capacity and filled to the same point, and moisture samples taken. This, however, is not prac- ticable. The stope measurements, in some cases, are used as a check, but it is hardly necessary to state that only an approximation is arrived 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 system be adopted, at least in cases where the figures are to be filed for record and 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. 146 THE ECONOMICS OF MINING Milling. The introduction of heavy stamps with the object of securing a large stamp-duty seems to have reached its practical limits, that is, at 1,456 Ib. In Africa the mill is used more as a crushing machine than with the idea of effecting perfect amalgamation, and so long as the ores lend themselves readily to subsequent treatment by cyanide in the state of fineness produced by the use of a low discharge and a coarse screen (20 to 25-mesh), a high duty is well enough. The prevailing method of operating a stamp-mill, in so far as the mechanical end of the work is concerned, is as follows : Order of drop, 1-3-5-2-4 ; height of drop, 8 in. ; number of drops per minute, 96. As a further means of increasing the stamp-duty, double crushing with rock-breakers is resorted to; the product being fed to the mill is crushed in the first case to about a 2.5-in. ring, and then passed to No. 2 crusher, where it is reduced to about a i-in. ring. This method might be economically extended to three courses of crush- ing before being fed to the battery. That most important branch of the work, namely, sort- ing, is almost entirely neglected in Rhodesian mines, and I daresay many tons of rock are sent through the mill which would not pay for the wear and tear that they are responsible for. Over a period of 12 months, with rock- breaking capacity sufficient to reduce the product to a 2-in. ring before entering the mill, an average duty of 5.5 tons per stamp per 24 hours has been obtained with 1,265- Ib. stamps (an effective weight of 1,150 Ib.), using a 2.5- in. discharge, 2O-mesh screen, and the mill running at 96 eight-inch drops per minute. It is well known that a stamp-mill under ordinary con- ditions does a large amount of unnecessary work, that is to say, the product, when it has been reduced to the fineness indicated by the screen, is not immediately dis- charged; hence a large percentage of the ore is reduced to a much finer state of division than there is (from a GOLD MINING IN RHODESIA 147 crushing point of view) any necessity for. In recent years a great deal of attention has been given to this sub- ject, with the result that there are now on the market sev- eral classes of subsidiary crushers for use in connection with the stamp-mill. As an illustration of the product furnished from a stamp-battery, it may be stated that the writer has found, when using a lo-mesh screen, that 87 per cent of the discharged product will pass through a 3O-mesh screen, and a duty per stamp (of 1,150 Ib.) of nearly 10 tons is obtained, with ordinarily hard quartz. Cyanidation. Generally speaking, the ores of Rho- desia present few difficulties in metallurgical treatment. In most cases the veins produce a typical free-milling ore ; at the mills with which the writer is connected the richest tailing contains 3 dwt. per ton, from an ore carrying 14 dwt. to 16 dwt. per ton. If the mill were operated with a view to high plate-extraction, and the tonnage sacrificed, the grade of tailing would be even less. The sand, if fresh, lends itself readily to cyanide treatment at a low cost per ton, while, if highly oxidized, as is often the case when working in close proximity to the ancient workings, a small additional cost is incurred in neutral- izing. The construction of the double-treatment cyanide plant in use in this country presents no new features, and em- braces the usual appliances necessary with zinc precipita- tion. The time of treatment varies with different ores, according to the character of the gold. In one instance the gold appears to be coated with a very thin film of iron sulphide and will not readily amalgamate;, numerous coarse particles are contained in the tailing ; and as much as 10 to 12 days are required to obtain a good extraction, although the usual treatment covers three to four days only. A great variation is shown in the fineness of the gold produced from cyanide slime; this is largely due to the 148 THE ECONOMICS OF MINING fluxes used, or the preliminary method of treatment; it is quite possible, and not expensive, to produce gold as fine as 900 by using the following flux : Gold slime, 100 parts ; fused borax, 20 to 35 ; manganese dioxide, 20 to 40 ; sand, 15 to 40 parts. This is a modification of what we called Crosse's flux at Johannesburg. The exact proportion of borax, manganese dioxide and sand is best determined by practical tests; sometimes fluorspar (about 5 parts) is used. The addition of a cyanide plant in a country of free- milling ores may be questioned, but it is contended that if the grade of tailing in the first- case will pay for treat- ment, it is a distinct advantage to cyanide because of the increased capacity of the mill. Gold Returns. At the present time all declarations of gold output from the several producing mines are made in bullion. The Mining Ordinance in Rhodesia demands that affi- davits shall be made to the government, covering the actual amount of gold recovered monthly, by the indi- vidual companies, as well as by private enterprise. Hence, after each clean-up a declaration of this nature is made. The same form is requested by the local Chamber of Mines, the latter organization publishing the returns. Unfortunately the unit used is the bullion ounce, which may vary from 700 to 950 fine. It is obvious, therefore, that to make any comparisons without being in possession of the figures giving the exact fineness of the gold is a waste of time. In cyanide gold the discrepancies are even greater, the fineness varying from 250 to 750. The elas- ticity attending this method of dealing with gold is very great, and could be utilized for purposes of much graver importance than appears on the face of it. It would be far better to obliterate the troy measure altogether, sub- stituting shillings and decimals of shillings, rather than to continue the use of a method so devoid of meaning. GOLD MINING IN RHODESIA 149 The monthly production of gold (or bullion) from Rhodesia has reached 23,570 oz. There are two or three large mills under construction, which will add to the pro- duction of next year. With this increase and the intro- duction of a constant supply of Asiatic labor, the proba- bilities are that an output of 40,000 oz. will be reached within a year or so. MINE LABOR AND COSTS ON THE WITWATERSRAND BY T. LANE CARTER. (December 31, 1903.) The scarcity of Kaffir labor on the Rand has made for efficiency in its use, so that today the native workers are handled more skillfully than 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 large gold mine, of work- ing costs during a month before the war, and of a month after the war, are of interest : In May, 1899. In June, 1903- Total number of Kaffirs at work. 2,304 1,156 Average number of sick and idle. 462 107 Cost of recruiting a Kaffir i.2 i6s. 4 O ^ c *- ^ M 4) u, ^ tn C crt D I-* fS CM VH IH CL 0> U. |l| 17 111 s"|S lilll o oooooooooo c o C w R i S I ^ bfi >'C 3 111 s | w "" s < Od ^ o o o o o & 2 o^ ^ /^J w \o o o f_) vO ^^ CM * K \ u : b n rr 1 -rt ! | b c i 1 c/ X^ n - ^ u n u -V C/) fO vO 00 ; ; - ; "& VO O MINING IN THE MOJAVE DESERT 159 $3 ; muckers, 9 hours, $2.50 ; car-men, 9 hours, $3 ; tim- ber-men, 9 hours, $3.50; amalgamators, 12 hours, $4; stationary engineers, 12 hours, $4; hoisting engineers, 8 hours, $3.50; pump-men, 12 hours, $3.50. EUGENE H. BARTON. Randsburg, Cal., Dec. 15, 1903. COST OF MINING ZINC ORE IN THE JOPLIN DISTRICT The Editor: (February 25, 1904.) SIR Your reviews of the lead and zinc production and the Joplin district in your issues of January 7 and 14, and the discussions in more recent issues, have attracted my attention. The views expressed as to the cost of min- ing zinc ore in the Joplin district recall a problem which presented itself to me about a year ago. Naturally enough, it is popular among the mine oper- ators to refer the cost of mining to units of the product sold. A statement like the following is very simple and easily understood : Zinc ore sells for $34, the cost of min- ing and royalty amounts to $28, and the profit is, there- fore, $6 per ton of zinc ore. This method of calculation may not be objectionable as applied to a particular mine producing ore of uniform richness, but it is readily shown that to generalize with such estimates of cost may be very misleading. It costs practically the same to mine and mill material yielding 5 per cent of clean zinc ore as it does if the mine- run ore yields 10 per cent, but the operating- cost referred to a ton of product in the former case is about double. The royalty charges, on the other hand, are a definite per- centage of the receipts from ore sales, and are, therefore, proportional to the selling price and amount of clean zinc ore produced. The determination of the cost of produc- tion of a ton of zinc ore may be further complicated when a considerable part of the product of the mine is lead ore. The price of both lead and zinc ore are subject to changes from week to week, and are possibly chargeable also with different rates of royalty. The table given herewith was calculated to meet just such a problem under conditions where the margin of profit was small, and likely to be altogether wiped out by COST OF MINING ZINC ORE 161 O to 'O'O IN. IN.CO OOONO>-'i-i0404cOTl- to\O NO 1x00 00 CO O 04 xfr\O CO O 04 -1- ix ON >-H co LO tx ON HI co iO tx^N w -. 0) I 04 04 0} I 04 CO tiO vovo Jx tXQQ O\O\O'-<>-i01fOCOTf irj\O VO txQO CO VQ CO O 0< ^f>S <^ O coiOt^O\-i C00 tx O\ I-H ro 10 tx CO_ CO O\ O\ O\ O\ O\ O O O O O M "- 1 "- 1 "- -> O4 OO 00 00 00 ON ON ON ON ON O tx txCO ON ON "- fOiOtN.ON oooooooooo /^ CO vO NO txCO OO ON O O *~* 04 04 CO ^f ^ *-O^O tx txOO ON ON k} 04 \O CO O OJ Tf\O ONI-I coiOtxON*-iCOtotxONi-i coiotx g < tx txoq 00 00 00 00 ON ON ON ON ON 5 HH M M M ^j d d d o d d d d d d d d >-i i-i H< M M t-i M >-i M o o p tN.tN.tN,ONONOHh-i04fOcocorJ- OVO txOO 00 ON O O 04 rtvOCO Q fOiOtxCN" coiOtxON^ CO ur> ix. ON ^ ^~ tx tx K rxco co co co oo CTNONONONCTNO o S i4 tq o * tx tx lx ON ON O>-*i-i04cocorfto tONO tXQO 00 ON Q O O 04 3-VO CO H-I cOiOtxON>-i coiOtxON 1 - 1 coiOtxO 04 ^ lx tx tx tx ^00 OOOOOOOO ONONONONONO O O O HH I-H ^ ^' d d d d d d d d d d d d d d M M HH M M -' 04 CO T- to u V , tONO txOO 2^ O M 04 co ^ IONO txOO ON O "-i o.y U c >-i>-i>-iH-! | - | 0)04040404O404040404cococococOCO &ifi^ 162 THE ECONOMICS OF MINING a drop of a few dollars in the price of either lead or zinc ore. The mine-run showed a very uniform yield of 2.3 per cent zinc ore and i.i per cent lead ore, calculated from the results of milling 12,277 tons. Although the yield varied fractionally from day to day, the average for any month did not vary more than o.i per cent from that adopted in the preparation of the table ; the figures repre- sent the calculated net cash yield per ton of mine-run after the payment of the royalty. Out of these amounts the cost of mining and milling is to be paid. The use of the table may be illlustrated by an example : Assume that zinc ore is selling on a $28 basis for 60 per cent ore ; that the ore contains some iron, and must pay a penalty of $2 per ton, fetching, therefore, $26 per ton in the bin; and that lead ore sells for $25 per thousand pounds in the bin. Under these conditions a reference to the table shows the net cash receipts to be equivalent to $1.033 P er ton > an d, if tne operating expense is $i per ton, the margin of profit is 33c. per ton of ore mined and milled. Should zinc ore prices decline $2 per ton, then receipts would fall to $0.992 per ton, and the mine would show a small loss. Since the cost of mining is given by our books, a reference to this table affords, at once, the data for an accurate estimate of prospective gains or losses under ruling current prices for lead and zinc ores, and makes prompt action certain, if changes in prices demand it. The table is useful only for the particular combination of yield and royalty assumed, but a similar table may be prepared to represent any other combination of condi- tions. When a mine produces zinc ore alone, or lead ore alone, the problem of determining costs is simpler and lends itself very nicely to representation by a diagram. Such a diagram for zinc ore is presented herewith. The selling price per ton of ore is represented on the vertical scale at the left of the diagram, the rates of roy- COST OF MINING ZINC ORE 163 10 10 15 20 25 35 10 46 Operators Net Receipts per Ton of Zinc Ore after Deducting Royalties. COST DIAGRAM FOR JOPLIN ZINC ORES. 164 THE ECONOMICS OF MINING alty are represented by one set of diagonal lines, and the rates of yield of clean zinc ore, expressed in per cents of mine-run, are represented by another set of diagonal lines. The horizontal scale at the bottom shows the operators' net receipts per ton from the sale of the zinc ore, after deducting royalty, and the vertical scale at the right ex- presses the operators' net receipts per ton of mine run for any combination of prices, royalty and rate of yield. Out of these amounts, the operator is to pay his working costs and make his profit. The use of the diagram is explained by two examples, one wherein the net receipts per ton of mine-run are determined for an assumed combination of price, royalty and yield; and the other in which the working costs, royalty and yield being assumed, the selling price is determined at which costs and receipts would just balance. If the mine yields both lead and zinc, the net receipts per ton of mine-run may be deter- mined for each separately, preferably for convenience, by different diagrams, the sum of the two being the total receipts per ton. Values for lead ores may be shown on the same diagram, if desired; but since the relative yield of lead ores is often small, a different scale for the yield diagonals makes a more convenient and useful diagram. Another use of the diagram is illustrated by the follow- ing example : Assume the selling price of zinc ore at $30, royalty 20 per cent, yield 5 per cent, operating costs $i per ton of mine-run. Take $30 on the scale of selling prices at the left, and follow the horizontal line to the 20 per cent royalty-diagonal, then follow the intersecting vertical line to the bottom of the diagram, on which we read $24, which represents the operators' net receipts per ton of clean zinc ore sold, after deducting royalties. Now take $i, on the vertical scale at the right of the diagram, follow the horizontal line to the 5 per cent yield diagonal, then follow the intersecting vertical line to the bottom line, on which we read $20. This represents the working COST OF MINING ZINC ORE 165 cost on clean zinc ore, and the profit must be, therefore, the difference between $24 and $20, namely, $4 per ton of zinc ore sold. This will be seen to correspond with the calculations in the first example on the diagram. As- suming that 100 tons of mine-run are handled daily, the product will be 5 tons of clean zinc ore, and the profit by the first method is figured on 100 tons of mine-run at 2oc., namely, $20, and by the method just explained, the profit is on 5 tons of zinc ore at $4, or $20, as before. The cost of mining and milling in the Joplin district varies from 8oc. to $i per ton of mine-run. This figure does not include any charge for redeeming the capital spent in opening up the mine and equipping it. When the ore-bodies are of considerable size, the mills of mod- ern construction, and the operator has little or no pump- ing to do, these figures need seldom be exceeded, and in some cases costs may fall somewhat below the lesser fig- ure. Between these limits, costs vary according to physical conditions, being high in hard sheet-ground, where air-drills must be employed, and the powder bills are large, and in soft ground, where the saving in the powder bills is offset by the cost of 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 quoted as low as 75c. per ton. Large areas of sheet-ground are now known in the Carterville Webb City district. Most mines in this sheet- ground vary in yield of zinc ore from 2.5 to 5 per cent, although, in some cases, they are very much richer. Adopting $i per ton as a fair estimate of the cost of the mining and milling in this kind of ground, and referring to the diagram, we get the prices of ore at which the mines of different rate of yield will come into profitable production. In making comparisons, the effect of quality on the sell- ing price of zinc ore must be kept in mind, for, although 166 THE ECONOMICS OF MINING the basis price for 60 per cent zinc ore may be $30 per ton, one mine may produce ore of so high a grade that it finds ready sale at $34, whereas another mine may pro- duce ore containing mundic and will fetch, according to the assay, one or more dollars less than the basis price. According to rate of royalty, from 10 to 25 per cent : Ore yielding 5 per cent will pay, when the zinc ore sells at $22.20 to $26.70. Ore yielding 4.5 per cent will pay, when the zinc ore sells at $24.70 to $29.70. Ore yielding 4 per cent will pay, when the zinc ore sells at $27.80 to $3340. Ore yielding 3.5 per cent will pay, when the zinc ore sells at $31.80 to 38.20. Ore yielding 3 per cent will pay, when the zinc ore sells at $37.40 to $44.40. Ore yielding 2.5 per cent will pay, when the zinc ore sells at $44.50 to $53-00 1 . Ore yielding 2 per cent will pay, when the zinc ore sells at $55.00 to $67.00*. The foregoing data serve to emphasize the fallacy which may develop by basing costs on the tonnage of zinc ore sold. The richer mines yielding 7 to 10 per cent and upward are exceptions among the general run of Joplin mines, and those which are running on ore leaner than 5 per cent doubtless constitute the majority. When ore prices advance beyond $25, the 4.5 per cent and 4 per cent mines start up; when prices go to $32 the 3.5 per cent mines begin to produce, and at $37 the 3 per cent mines are worked. Each successive class offers to the market more ex- pensive 'ore, and consequently the average cost of pro- duction for the entire district, referred to the cleaned zinc ore, seems to advance nearly in proportion to the ad- vancing ore prices. The cost of mining per ton of 'mine- run remains, however, practically unchanged, except for the effect of changing prices of labor and supplies. W. SPENCER HUTCHINSON. Boston, Feb. I, 1904. 1 Estimated because beyond the limits of the diagram. MINING IN RHODESIA (March 10, 1904.) The Editor: SIR In your issue of December 10, 1903 (Vol. LXXVI, pp. 885-888), appears a very interesting and timely article on 'Gold Mining in Rhodesia/ by Mr. F. C. Roberts. It has an especial interest for me, for many of the data upon which the article is based have been fur- nished by a mine in which 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 manager, and later succeeded me as engineer. Having spent nearly six years in Rhodesia, and having had exceptional opportunities of studying a large portion of that section of it known as Matabeleland and it is to this section that Mr. Roberts more particularly, though not exclusively, refers I would like the opportunity of offering a little friendly criticism on the article referred to. In my remarks I shall keep in mind the fact that an article which attempts in such small compass to treat of every feature of the gold-mining industry in Rhodesia must necessarily be incomplete. The first statement upon which I would comment is: "In but one instance in the whole of Rhodesia has it been found advantageous to attack the orebodies and veins through adits." If this means that only one adit has been driven in Rhodesia it is very wide of the truth. I have seen adits on no fewer than seven different prop- erties, and there are others in the country; and I have every reason to believe that it will be found advantageous to win the ore from more than one of these. Physical and Geological Features. While it is a fact that "few really high mountain ranges traverse the coun- try" it must be borne in mind that the general elevation 168 THE ECONOMICS OF MINING is high, Bulawayo being 4,469 ft. above sea-level, and the summits of the highest hills reach an elevation of nearly 6,000 ft. Viewed from the plains and valleys the hills certainly do not appear high. I had not observed the feature of "conical hills" in the granite belts, though I have traversed the country from its eastern boundary as far west as 27 20' E. long., and from its southern boundary as far north as 17 40' S. lat. The weathering of the granite hills in Rhodesia is the same as in other parts of the world, the prevailing types being either domes or boulder-strewn ridges with castellated escarpments. The conical hills (more cor- rectly, pyramidal) are rather characteristic of the schis- tose areas. It is true that "no geological survey has yet been made in Rhodesia" (though in no other country in the world is one more needed), and the several so-called 'geo- logical' maps of it which have been published have no scientific value whatever; but the "generalized descrip- tion" of the geology given by Mr. Roberts is not very accurate, if not actually misleading. Enough is known of the subject to afford a better account than has been presented by Mr. Roberts ; but of course it must be un- derstood that he writes as a miner rather than as a geologist. We are told that "By far the greater portion of the country consists of granite rocks, in wide belts, having a strike somewhat west of north and east of south." Even if in the term "granite rocks" we include typical granite, syenite, gneiss, and all granitoid varieties of rocks, I think Mr. Roberts' estimate of the extent of their occur- rence is an excessively high one. I should say that very much less than one-half the total area of the country is granitic. The strike of these rocks is not accurately given, indeed no general strike prevails. Some of the larger granite belts have a trend almost due east-and- MINING IN RHODESIA 169 west, some smaller ones trend north-and-south ; and some in fact trend in almost every direction. While it is true that "the gold belts embrace the areas characterized by slates and schists," it is also true that some of the gold mines are well within the granite areas. This is the case of a typical mine described, 1 the imme- diate country-rock being granitoid, and it lies on the northern side of an extensive granite belt, trending nearly east-and-west, and bounded on the north and south by hills of metamorphic rocks. We are told that "In the valleys, or small gulches of the hill country, the alluvium is of very limited extent, suggesting a lack of those extreme climatic conditions necessary to produce rapid erosion." But even if it were true which I take leave to doubt that the alluvium is so limited, surely the fact suggests something else than that stated. Do not the torrential summer rains account for the removal of the alluvium from the hill country? In the broad valleys the thickness of the alluvium is often very great, and every one who has visited the country is familiar with the deep rifts by which the river-fords are usually approached. The description of the quartz veins might have been extended by a reference to a number of large ones which are not only wide, but may be traced almost continuously for several miles. Reference is made to the auriferous diorite of the Ayrshire mine, but, as you point out in a footnote, this has been previously described in the JOUR- NAL at greater length. I am greatly interested in Mr. Roberts' account of his discovery of an auriferous horn- blende porphyrite, and I wonder if it occurs in a part of the country which I visited. Ancient Workings. Some of those who have devoted much time to the study of the question of the ancient race, 1 THE ENGINEERING AND MINING JOURNAL, p. 885, Dec. 10, 1903. 170 THE ECONOMICS OF MINING or races, who formerly exploited the Rhodesian gold- fields, will hardly feel flattered on being told that "no satisfactory explanation has been advanced touching their (the ancients') identity," notwithstanding that ethno- graphical investigators have written volumes on the sub- ject. But I am prepared to go all the way with Mr. Rob- erts when he speaks of the estimates that have been made of the gold recovered by the ancients as "hypothetic" I think they are ridiculous ; but I cannot believe with him that 10 dwt. of gold per ton of ore was the minimum value of that treated by the ancients I think 'they must have, in many cases, treated ore as low as, if not lower than, 5 dwt. of gold to the ton. Financial Considerations. We have here a brief but fair account of the financing of Rhodesian mines, many of which, it may be emphasized, are very largely over- capitalized. In referring to the Mineral Ordinance, Mr. Roberts omitted to mention that a new 'one has been drawn up and is expected soon to be promulgated, and from which the objectionable feature of the 'law of the apex* is to be eliminated. Mr. John Hays Hammond has been largely blamed I know not with what truth for the adoption of this indefensible feature of the orig- inal ordinance. But as the new ordinance can hardly be made retroactive, it is likely that the lawyers may yet reap a golden harvest from the obnoxious law. Assay Plans. Mr. Roberts' description of these as in use in Rhodesia is correct as far as it goes; and it is satisfactory to learn that while slight differences of method of constructing the plans may be found in the several mines, "the fundamental principles are adhered to." This general uniformity of principle may be largely attributable to Mr. E. H. Garthwaite, the government engineer, who has made a special study of sampling and mine-valuation, and has been in a position to impress his views on the companies' engineers. The assay diagram MINING IN RHODESIA 171 figured by Mr. Roberts 2 seems to me to have been unfortunately selected and inaccurately described. I do not think the use of graphic diagrams has yet be- come general in Rhodesia; nor is the one illustrated a 'stoping diagram.' I recognized it at once as a simple assay-plan of a prospecting level which was opened up under my direction in 1897-98. The suggestion that assay values should be given in shillings instead of troy pennyweights is most important, and it is to be hoped that this system may be adopted in the near future. Development Work. It is difficult to offer any criti- cism of the figures presented by Mr. Roberts, as they are incomplete and some minor errors appear. It would seem that in the period under review 2,677 ft- f devel- opment was accomplished, and 38,100 tons of ore were won and milled. Now, if the shafts, levels and winzes averaged 4 by 6 ft. in cross-section, and allowing 14 cu. ft. of quartz to the ton, there would only be 4,589 tons obtained from the footage given. Perhaps the decimal point in the middle column of figures is misplaced one figure to the left, in which case the tons milled would figure out about 3,810, and the total cost per ton milled would be $17.93 instead of $1.79, which would be ab- surd. What is probably the fact is the omission to men- tion the area stoped. But 'stopage' is not 'footage.' If no stoping is included in the cost the price given per foot, $26.50 (it figures out $25.51), is excessive, even for Rhodesia. On the other hand, if the total cost of mining ore is only $1.79 per ton the figure seems too low. Put- ting the cost of milling which is not given at one-half that of mining, which is fair, the total cost per ton would only be $2.68, a figure that is too low for Mr. Roberts or anyone else to reach in Rhodesia. Then the two items "Compressors and rock-drills" and "Rock-drills and sharpening" together amount to $21,- 3 THE ENGINEERING AND MINING JOURNAL, p. 886, Dec. 3, 1903. 172 THE ECONOMICS OF MINING 979, out of a total of $68,300, or over 32 per cent. And here I might say that this seems to confirm my expressed opinion that at the mine in question, owing to the scarcity and high cost of fuel, the installation of a compressor plant was not advisable until cheaper fuel could be ob- tained. Possibly some part, or the whole, of the cost of the compressor plant is included in the item $16,399; if so, a portion at least of the cost of all the other plant should be included as well. It is not worth while to dis- cuss these figures further until additional light is thrown upon them by their author. Milling. We are informed that "The introduction of heavy stamps with the object of securing a large stamp- duty has now reached its practical limits, that is, at 1,456 Ib." Does not this weight exceed the limit? I fear so, and the fear is partly inspired by what Mr. Roberts says further on the subject. When I drew up the first specifi- cations for the mill under review I called for stamps of 1,050 Ib. falling weight, but later, on consulting with some of the leading engineers at Johannesburg and Bula- wayo, I altered the specification to 1,250 Ib. But the mill was ultimately erected under Mr. Roberts' direction and, I presume, according to his specifications. Cyanidation. Mr. Roberts' remarks on this subject are interesting and important. It may be questioned, as he points out, whether it is advisable to instal a cyanide plant in Rhodesia so long as the ore continues free-mill- ing. There would be no question of its advisability when- ever the sulphide ore is reached. It is all a question of testing for each particular mine. Perhaps I feel an exceptional interest in Mr. Roberts' article, dealing as it does with a mine of which the first development was done under my direction ; but it should have a general interest as well, and it is only to be re- gretted that it was not longer and more detailed. Shanghai, Jan. 25, 1904. WALLACE BROAD. THE ECONOMIC RATIO OF TREATMENT CAPACITY TO ORE-RESERVES BY H. C. HOOVER. (March 24, 1904.) Although every metal mine is a problem peculiar to itself to such an extent as to upset most generalizations, it will be not wholly useless to contemplate certain problems in the abstract. In various forms they confront every engi- neer, sooner or later, and although discussion involves much reiteration of elementary principles, yet there are so many mines in which even elementary matters of good management are continually disregarded as to warrant such repetition. The ensuing discussion applies mostly to that great majority of mines, the uncertainty of whose continuity in depth necessitates in every project of general policy a substantial margin of security against the un- known. Starting with an assumption of unbroken con- tinuity to their utmost boundaries, our South African friends need but little outside of compound-interest tables upon which to found their finance. In the great majority of mines, however, the result of development at their lowest levels remains speculative and gives a zest such as an assumed persistence can never afford. That the most economical and profitable treatment- capacity is the maximum capacity which can be employed, is not difficult to demonstrate; that the maximum must depend, however, upon the speed of development, and that development must be pushed as fast as the limitations of nature will permit, is but to state a corollary. Yet. curious as it seems, the number of mines which have been op- erated upon the principle that the mill is the fixed quan- tity and the mine the variable, exceeds the number con- ducted upon the reverse plan. The objective of develop- 174 THE ECONOMICS OF MINING ment in this preponderating number is to feed the mill. This assertion is verified by the fact that while the ma- jority of mines now in operation are more than ten years old, nevertheless a minor number have reached a depth of over 2,000 ft. when they might, even in this comparatively short period have attained a depth of 3,000 ft. had they pursued the policy of development under highest pressure and the erection of treatment units such as would keep the ore-extraction close to such development. It will be granted that the true objective of mining is to gain the greatest profit from a given body of ore. The maximum output is not only necessary for the cheapest production, but money locked up in ore underground is idle money, and the profits from mining can be increased in no mean degree by rendering it liquid. There are, however, limitations imposed upon the investment of large sums of money in equipment to secure the maximum out- put, in view of the uncertainty of continuity in depth, which need to be considered. In considering these limi- tations, and a method by which the economic ratio may be arrived at, it will be necessary to demonstrate the gen- erally accepted proposal already laid down. The problem may be reduced to the question of conducting operations upon a given output as against a greater output, because few well managed mines of the character under discus- sion are, in their initial stages, equipped to their maxi- mum possibilities and certainly the great majority, as shown above, are not yet so equipped ; therefore, the prob- lem in actual practice presents itself either in the form of increasing the output, or determining originally some vol- ume of output to be provided for, as against some smaller volume. We may call the initial treatment-capacity the primary equipment, and the increased plant the secondary equipment. The factors in this problem are : (i) The cost of production as affected by increased output. CAPACITY AND ORE-RESERVES 175 (2) The redemption of capital invested in secondary equipment. (3) Limitations imposed by the uncertainty of contin- uity in depth. (i) The elaboration of accounts during the past has introduced to the engineer many complications of mining finance which did not trouble our forefathers. We now divide the various charges against working expenses into, first, those charges variable with tonnage (such as devel- opment, haulage, treatment, etc.) ; and second, those charges, usually referred to as 'fixed/ which depend par- tially upon the element of time as well as tonnage, and include, partly or wholly, pumping, management, amor- tization 1 of capital invested, etc. Moreover, there is a factor of no mean importance arising from the loss of interest through idle profits locked up in ore standing in the mine ; this also must be taken into account. From the standpoint of such 'fixed charges' as depend partially upon the element of time, obviously the shorter the period involved in the extraction of the ore the bet- ter. The introduction of increased equipment necessarily shortens the time of extraction, and the saving (and therefore increased profits), which can be thus effected, amounts nearly to the whole of the fixed charges over the increased tonnage. There are certain inevitable co- ordinate reductions in working expenses, other than fixed charges, as the result of a larger volume of output. What these amounts will aggregate, in increased profits on the increased tonnage, depends somewhat on the pro- portion of the increased volume to the volume previously treated, but the total saving on the increased tonnage may be taken in minimum as equal to the fixed charges. Also the profits will be increased by the interest earnings 1 By 'amortization' is meant the recovery of capital invested with accumulated interest thereon. 176 THE ECONOMICS OF MINING of the extra profit taken out, as between the earlier time it would have been put into service by the secondary equipment, and the later time it would be released by the primary equipment. If this be taken at a fixed rate, say 4 per cent compound interest, it then becomes a factor of the profit per ton of ore. A minor addition also arises from the increased interest-earning on the greater profit secured by the increase of profit arising from the saving of an amount equal to fixed charges. We may consoli- date all these additions to profit, as the result of ex- panded output (of course not including the ordinary profit on the ore), into tne one phrase 'increment of profits/ How important this 'increment of profits' may become will be seen by taking a few examples. On a low-grade deposit, yielding a profit of $2 per ton, under Cali- fornia conditions of fixed charges of, say, 3 ville district probably averages about i6c. per yd. The gold is all fine, screens with 3/8-in. holes being used. Winters are mild, and no difficulties from freezing are en- countered. Water is conveyed by an excellent ditch system to all parts of the district, the expense averaging about $125 per month per dredge. Unlimited electric power is obtainable at i.5c. per kw. hour. An excellent class of labor can be had at the following wages : CREW FOR ONE DREDGE. I Foreman at $5 . oo per day $5 . oo 3 Winchmen " 3.00 " 3 Oilers " 2.50 " I Blacksmith " 3 . 50 " 1 Helper " 2.50 " 2 Chinamen " i . 75 " Total $31 .00 In addition there is a superintendent, whose time is generally distributed among several dredges. The winch- men and oilers work 8-hour shifts, while the blacksmith and helper work 10 hours. The Chinamen clear the ground of brush and trees, 'bury dead men' 1 and do gen- eral chores. Low costs are attainable largely by reason of conveni- ent communication with San Francisco, and the presence of well-equipped machine-shops on the spot. *Not in the mortuary sense ; in dredging, 'dead men' are anchors of wood or metal to which mooring cables are at- tached. GOLD DREDGING AT OROVILLE 291 The ground is prospected by shafts or drill-holes sunk to bed-rock, the gravel therefrom being rocked or panned. Beside giving a sample of the gravel, prospect holes should yield important data, as to the distribution of the gold, the character of the deposit and the nature of the bed-rock. The gravel from successive lengths of a hole is treated separately, and the respective amounts of gold estimated. Such estimates are checked with the weight of the gold recovered from the entire boring. With practice this estimation becomes fairly accurate. Shafts are preferred where it is possible to sink them, as they give more com- plete and accurate information ; but if water is present in any quantity, they become too expensive, and drilling must be resorted to. Owing to the availability of Chinese labor, shafts are cheaper to sink in dry ground than drill- holes. About one hole per 5 or 10 acres will serve to sample a large tract ; but prospect holes are put down much more frequently in the immediate vicinity of the dredge, both before construction and during operation. If care is not exercised in prospecting with drilling machines, the sample may easily prove misleading. Errors frequently occur from the squeezing of material into the bottom of the casing, thus giving a larger sample than is called for by the size of the hole. Sliming and consequent loss of gold will sometimes result when too long a period of churning transpires before pumping the hole. The casing should be kept driven below the point of drilling when- ever possible. The practice is to drill and pump the hole in i -ft. sections, the material from each foot being panned separately. Where great care is required, sections of only 6 in. are drilled and pumped at a time. Frequently the whole foot can be pumped with but little drilling. The drill crew consists of one man in charge, one sand-pump man, one drill-man, one fireman and one or two laborers. 292 THE ECONOMICS OF MINING The man in charge should have a knowledge of the prin- ciples of sampling, for upon his judgment depends the value of the results obtained. He usually does the panning himself. Where oil is used for fuel, one man attends to both the sand-pumping and firing. The cost of sampling with churn-drills, under favorable circumstances, is $2 to $2.50, with $3.50 per foot as a maximum. Gold dredges are similar in general type and operation ; but details of design are of great importance. In fact, suc- cessful dredge-building depends upon working out the details, and a dredge properly built for one locality, with given conditions, may be totally unfit for another. If a dredge is not suitably constructed for its particular work, the cost of repairs is certain to be large. The importance of this consideration is shown when it is understood that this item of expense ranges from one-quarter to one-half the total cost of operation. Several types have been tried, but the bucket-line dredge has now superseded all others. Buckets with a capacity of 3 cu. ft. were first used ; later, dredges were built with 5-ft. buckets, while near Folsom a 7-5-ft. bucket, has been used with a fair measure of success, and a new dredge, of the same capacity, correct- ing the faults of the first, is now in process of construc- tion. Dredges of n and 12-ft. bucket capacity are used In other districts, but it is impossible to compare results without data covering all the local conditions. Two 5~ft. bucket dredges, built to handle gravel to a depth of 60 ft. 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 possibility of handling bigger boulders, a less than proportional in- crease of power and general expense, and probably a less than proportional increase in the cost of repairs. The disadvantages ar^e a greater first cost, the necessity for special facilities for handling the heavy dredge-parts GOLD DREDGING AT OROVILLE 293 when making repairs or renewals, and the increased diffi- culty of washing the large and highly irregular amount of material delivered by the buckets to the screen. It seems probable that the 7.5-ft., and possibly larger, bucket will prove the most desirable under conditions existing at Oroville. Gold is lost in several ways. A certain amount goes off in the tailing from the sluices; and, if the gravel is not thoroughly washed, the coarse material will carry some up the stacker. Some is left on the bed-rock, though this amount should be small. A slight loss occurs from the material which drains from the buckets into the well during their journey from the bank to the upper tum- blers. Exhaustive tests of the table-tailing have been made, showing a very small loss, in no case as much as 2c. per yd. With good management it is probable that an extraction of about 90 per cent is obtained. Both cocoa-matting and angle-iron riffles have proved excellent devices, most of the gold being caught directly under the screens. While it is not advisable here to go into the subject of dredge-building, it is well to mention one or two points. The bucket-line and tumblers are subject to enormous strain and wear; their maintenance constitutes the larger part of the repairs. Any improvements which increase the strength and life of the various wearing parts, with- out excessive increase in cost, are sure to be welcomed. The operators have been constantly urging 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-ft. machine, in process of building at Folsom, has bucket-pins of 6-in. diam., and other parts in proportion. A 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 294 THE ECONOMICS OF MINING pitch of the bucket-chain links, which results from the wearing of the pins. The revolving screen is desirable for clayey, sticky gravel, as it helps disintegration more than the flat screen ; where ground is not sticky, however, the flat screen is preferable, since it costs less, is easier to repair and renew, and uses less power. It is important that the power which drives the bucket-line and that which raises the ladder should come from different mo- tors. There is thus reserve power in case the bank caves, so as to cover the ladder and buckets. When dredging an overburden of barren soil, some convenient method of disposing of it, without passing it over the tables and fouling the riffles, is desirable. For this, and other pur- poses, the hopper should be made to discharge into the well, or to one side of the dredge, when desired. Both intermittent and close-connected bucket-lines are in use, but the close-connected type, as a rule, finds more favor among operators. It is claimed and it is undoubt- edly true that the intermittent line can be run faster and that the buckets fill better ; but, as there are only half as many buckets for the same number of links, the dredg- ing capacity is less. An intermittent bucket-line will han- dle larger boulders than a close-connected one, and it is to be preferred in some cases for this reason. To hold the boat against the bank and move ahead, either spuds or a head-line are used. Each method has advantages and advocates. A little time is lost in walking ahead with spuds, but the labor of burying 'dead men' for the head-line and moving the latter by hand along a high bank is obviated; wider cuts can be dug, but they are ordinarily of no particular advantage. Spuds hold the dredge steadily against the bank and obviate the roll- ing and pitching, which are a disadvantage when the head-line is used. It costs more to equip a dredge with spuds, but they are generally preferred in Oroville when dredging in ponds. When working in swiftly running GOLD DREDGING AT OROVILLE 295 water, a dredge equipped with both head-line and spuds would be desirable. Of mining costs in general, and of dredging costs in particular, it may be said that bare figures, without de- tails of the items considered and of the local conditions, convey no definite information and are practically value- less. By a little bookkeeping dredging costs may be made as desired. If the figures included all expenses incurred during the year, and an amount for the depreciation of the dredge, a much more satisfactory basis for compari- son would be available. Amortization of the price of the ground manifestly varies with each case considered, and comparisons are useless. Owing to the slack methods of measurement frequently employed, the yardage quoted may easily vary 20 per cent. The following table of costs applies to a 3-5-ft. close- connected, bucket-line dredge working in the high-water channel of the Feather river, or adjacent thereto: Bank Measure Percent- age of - time in Cl V^UU1\~ Repair al ment, cu. opera- 1 ind Sup- General % 1903. yd. dug. tion. Labor. Power. plies. Expense. w Dec.. 35,000 68.78 $.0382 $.0221 $.0130 $.0398 $.1131 Jan.. 37,000 67.61 .0306 .0173 .0276 .0023 .0778 Feb.. 37,800 86.16 .0276 .0199 .0114 .0062 .0651 Mar. 40,500 65.88 .0250 .Ol8l .0038 .0028 .0497 Apr 1 . 24,680 42.68 .0392 .0170 .0414 0035 .1001 May. 33,572 74-33 .0322 .0238 .0370 .0016 .0946 June. 44,878 87.76 .0234 .0173 .0239 .0022 .0668 July. 35,520 72.44 .0315 .0196 .0280 .0018 .0809 Aug. 49,340 84.80 0235 .0131 0335 .0010 .0711 Sept. 34,226 88 79 .0305 .OI90 .0285 .0032 .0812 Oct. 2 36,000 88.68 .0297 .O229 .O2O7 .0319 .1052 Nov. 38,000 88.43 .O27O .0199 0433 .0026 .0928 Dec.. 38,500 86.73 .0285 0175 .0087 .0017 .0564 Aver.. 37,309 77.11 .0291 1 Flood. 2 Taxes and insurance. .0189 .0241 .0075 .0796 Gravel 30 to 45 ft. deep is considered easy digging by Oroville operators. Under the head of 'labor' are in- 296 THE ECONOMICS OF MINING eluded the superintendent's salary and such work on re- pairs as could be made without the aid of the local custom machine-shop. For December, the first month of opera- tion, the costs are increased under the head of 'labor,' by superintendent's salary prior to start of actual digging; and under head of 'general expense,' by all the organiza- tion expenses of the company, the taxes on land and the insurance for one year. In April high water forced an entire shut-down, thus accounting for the small yardage. Tower' is increased by reason of the pumping of water from the river to the dredge-pond ; it has since been found advisable to obtain water from a ditch at about $75 per month. One new stacker-belt was bought during the year and a 4O-h. p. motor for the pumps, to replace one of 30 h. p. which proved inadequate. While the bucket- line kept in good condition, there was no general replace- ment of parts, the bucket-backs being still in use in October, 1904. Stacker-belt No. 3 was purchased in January, 1904, and is now about worn out with 8 months' use, although guaranteed for one year. This, with the expense of an entire new bucket-line stacker-belt recently purchased, and other parts, has kept the costs for 1904 somewhat above figures for 1903, although an in- creased yardage averaging over 40,000 cu. yd. per month has been dug. The table includes all expense incurred for whatever reason, but does not include interest nor a sum for amortization of the capital invested in land and dredge. Above is a summary of the operating expense of a 5-ft. intermittent bucket-dredge for the calendar year 1903. This dredge cost $45,000, which is much lower than that of the better class of dredges now being installed. Most of the ground was fairly easy digging, but little tight gravel being encountered. Proportion of time in opera- tion, 69.4; bank measurement, 474,610 cu. yd. The aver- age cost was as follows: Operative labor, i.85c. ; power, GOLD DREDGING AT OROVILLE 297 1.150.; repairs and supplies, 3.460.; general expenses, 1.250.; total, 7.710. per cu. yd. 'Operative labor' includes superintendent's salary per cubic yard; 'repairs and supplies' includes the labor of repairs, as well as the materials ; 'general expense' covers general expense at Oroville and at San Francisco, taxes, insurance, and bullion charges, beside the expenses of prospecting. To the above should be added interest on the money invested, including the dredging plant and land, which may be assumed as approximately 0.750. per yd., and about $4,50x3 for yearly depreciation of the dredge, say ic. per yd. This brings the total expense close to 9.50. per yd. Out of the profits 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 spud in soft ground 40 ft. deep, under very favorable Oroville conditions : Total excava- tion, 96,112 cu. yd. The cost of labor was 0.9570.; power, 0.9990. ; supplies, 0.9350. ; sundry, 0.43000. ; taxes and insurance proportion for the month, 0.10750.; total, 3.42850. per cu. yd. There was no charge for mainte- nance and repairs during the month. All repairing necessary was done by the regular crew, no shut-down for that purpose of any moment taking place, thus accounting for the large yardage and the in^ significant expense for repairs. On the other hand, costs for one company have run for several months together over 2oc. per cu. yd., which shows the amount of varia- tion encountered, and the erroneous impression given by costs which cover but a short period of Jime. Figures recently quoted, 1 with no details as to items included, give yearly averages of from 4.92 to 7.470. per cu. yd., the general average for a number of years being 1 This JOURNAL, October 6, 1904, p. 541. 298 THE ECONOMICS OF MINING 6c. These figures may contain all legitimate charges against operating costs, notwithstanding the fact that the intermittent bucket-line type of dredge is used, as this particular company works under, very favorable condi- tions, namely, dredging almost exclusively in the present river channel, thereby saving the cost of water and en- countering only loose and easily dug gravel, and having a well-equipped machine-shop devoted to dredge-repairs and operating five dredges in the same vicinity. The manager of this company, in common with others equally well informed, holds that the average of operating costs for the Oroville district is certainly not less than 70. per cu. yd. at this time. It is evident that with more than one dredge, items such as superintendence, repairs, office expense, etc., may be materially reduced. What the future may hold forth to operators of large and improved dredges is hazardous to say, but predictions are freely made of a cost of from 4 to 5c. per yd. under favorable circumstances. Conditions favorable to dredging at a low cost must approximate those found commonly at Oroville, namely, a soft and not uneven bedrock, few boulders over 500 Ib. in weight, gravel banks from 20 to 60 ft. deep and not sufficiently indurated to require blasting, a plentiful supply of water, cheap power, machine-shop facilities, nearness to supplies and means of transportation, mild winters and intelligent labor at reasonable wages. Gold concentrated on a hard, rough bedrock cannot be dredged. Very large boulders have to be left with con- siderable gravel surrounding them, and, if many are en- countered, dredging becomes impossible. In departing from the favorable conditions stated above, the expense and difficulty of operation increases, necessitating a higher grade of ground for profit. The conditions bearing on the cost of operation are such that each tract of ground becomes a problem in itself, and GOLD DREDGING AT OROVILLE 291) any attempt to use the costs obtained under one set of conditions, to predict those which would hold under others, 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 about gold dredging ; but, in the future, as well as in the past, progress will no doubt result from the helpful professional spirit prevalent in the Oroville district. Good dredging conditions are not generally found with gravel deposits; but no form of mining gives more certain results, pro- vided the average content of the deposit and the operating facilities have been found favorable by competent investi- gators, and a suitable dredge be installed. THE BASIS OF VALUE (Editorial, December 15, 1904.) The recent break in the share quotations of the Amal- gamated Copper Company and the Greene Consolidated Copper Company doubtless illustrates several of the va- garies of human nature and some of the eccentricities of speculation; but unlike as these two undertakings 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 affect adversely the quoted value of mining shares, those will suffer most which are rendered vulnerable by absence of reliable information. The daily press may very properly sneer at Mr. T. W. Lawson and attempt to deny him his hard-bought notoriety by referring to him as "a Boston operator" ; but the fact is that neither he nor any other adventurer could depress a security such as Amalgamated if it published proper reports and balance sheets. As it is, the helpless speculator knows nothing of the assets or of the intrinsic value of the property represented by his share certificates ; it may be a South Sea bubble of iridescent air, and he might as well throw his money on the roulette table. We venture to say, however, that if a proper accounting of the business were given, accompanied by reports on the physical condition of the mines by the technical chiefs, such men as Mr. Benjamin B. Thayer or Mr. Charles W. Goodale, the value of Amalgamated 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 made, but none of the usual and proper estimates of ore r reserves are given to the shareholders and THE BASIS OF VALUE 301 without these, the rate of dividend, cost of cop- per, and so forth, are illusive. Here again, we ven- ture to say that if such members of the management as Mr. Arthur S. Dwight or Mr. W. B. Devereux were to make a report on the ore-reserves and future prospects, there would be given a stability to the investment in this copper mine such as it can never possess under existing circumstances. Whether people buy as gamblers or as investors, sooner or later they must face the facts, and the fundamental fact in a mining enterprise is the known quantity of ore in the mine. EQUIPMENT AND ORE-RESERVES (December 15, 1904.) The Editor: SIR I have been greatly interested in following the discussion on 'Ore-Reserves,' together with your impar- tial treatment of the subject. It is an excellent illustra- tion of the timely fruitfulness of developing a subject in this way. Indeed, I know of no greater service that the leading mining journal of the world can perform than to thresh out such puzzling questions by public discussion. Here is something practical. The faulting of the strata of the stock market may confuse many a wise and honest director or superintendent, who wishes to follow the pay-streak of honesty, and the vein of business. Firstly, I would cordially agree with you in the wis- dom of dealing frankly with the public. If ore-reserves are to be hoarded, let the knowledge of the fact of re- serves be as open as is the existence of the mine itself. Indeed, there is no more signal mark of ethical progress, in civilization at large, and in the control of business in particular, than the growing demand by the people for a free, open statement of the respective facts. The people may not always get this, but they have learned to ask for it ; and in this I presume that vox populi is vox Dei. . But secondly, assuming, to be specific, that the con- trasted views of Mr. Hoover and Mr. Curie represent the opposite opinions of the speculator and of the investor respectively, is it fair to formulate the questions at issue from the standpoint of either, or, for that matter, from a standpoint intermediate between both? That is, may there not be other and more powerful considerations of business, to the demands of which the private interests of both investor and speculator must conform? It may be true, for the present as the speculator is furnishing most of the money necessary to develop mines that his EQUIPMENT AND ORE-RESERVES 303 interests must be consulted; this may be a present busi- ness necessity. But is it possible to educate the specu- lator to the more rational views of the investor? And is it possible, in turn, to quicken the investor with the spec- ulator's practical keenness for results? And to do both so that business practice may attain that method of mine management which is best for all concerned in the long run? Then, thirdly, what will best serve the real purpose of capital invested? If the application of actuary mathe- matics to such problems were highly developed, it would be necessary only to refer to a manual of dividend accu- mulation, amortization of investment, sinking fund reduc- tion, etc., to know at once what are the financial forces that are competing for control as this complex of interests seeks its natural equilibrium. Now a mine, even a large one, with large, well-defined veins carrying a generous supply of ore, even this is not like a farm which may go on indefinitely producing from the same ground year after year. An exhausted mine is simply 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 bound 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 quickly as possible, so as to release the capital for employment in other fields. The illustration is good ; but it is not an argument. 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 might 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 304 THE ECONOMICS OF MINING wish you would so discuss it. Is not the interest of the transient speculator, represented by Mr. Hoover, justified by the conditions of some mines? And, on the other hand, is not the interest of the long investor, represented by Mr. Curie, equally well justified by the conditions of other mines? Do not both views represent some truth but only as applied to special cases? Will it not be well to continue the discussion till we may see clearly brought out the particular kind of mine to which applies, re- spectively, the interest of the investor and of the specu- lator? C. S. PALMER. New York, December 5, 1904. LEASING AT CRIPPLE CREEK (December 15, 1904.) The Editor: > Sir There has been a considerable improvement lately in the output of the Cripple Creek district, both in quan- tity and quality of ore. Simultaneously there has been a decided extension of the leasing system both in practice and in popular favor. Undoubtedly a portion of the im- proved results are due to the success of many leases especially on Stratton'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 min- ing engineer may interest a portion of the mining public. Many suppose that the reason why lessees often do markedly better than companies is that they get more work out of their men and do a good deal of the work themselves*. Undoubtedly in 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 for a mine superintendent to accomplish just as good results for his company as a lessee can for himself. Many leases of importance in the Cripple Creek district are managed by hired superinten- dents, just as mining companies are. In my opinion the superiority of the lessee comes from the fact that his train- ing qualifies him to find ore and mine it to the best ad- vantage. He is often aided by the fact that he has no professional record to make. He is not worried about costs per ton. His sole object is to make money, and he makes it by shipping clean ore. Nobody 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. It is curious to note how little there is in mining literature on 306 THE ECONOMICS OF MINING the subject of mining concentrating ores. By concen- trating ore I mean an ore in which the metal sought is not uniformly distributed through the mass ; in other words, an ore consisting in large part of worthless rock which must in some way be separated from the valuable mineral. Most of the mines in the Rocky Mountain region are of this character. The handling of such ore- bodies affords a much greater scope for intelligence and business judgment than does the extraction of a body of uniform ore. In the latter case, one's efficiency can be measured in cost per ton of ore mined. In the former, one's efficiency must be measured by the cost of metals produced. It is not fair even to make a comparison of the cost of concentrates ; in the case of lead ores, for example, one man may take a 50 per cent concentrate and another a 70 per cent. Obviously in a concentrating proposition the main effort is to get rid of the worthless gangue and save the valuable metal. Whether this gangue can best be removed in the process of mining, or in a concentrating mill, or partly in both, is often a ques- tion upon the solution of which depends the success of a mining venture. In Cripple Creek the ores are almost universally of the mixed type. They will not yield to ordinary methods of water concentration. After the ore is broken it can only be separated crudely by means of screening, supplemented by hand-picking; but the concentrating can be begun at the moment the drilling begins underground by taking care to break nothing except what will pay. There is plenty of room for skill and experience in determining such questions as the following: (i) what ground to break and what to leave; (2) where to put the holes and how much powder to use in breaking in order to leave the rock in the best condition for effective sorting; (3) whether it is best to sort underground, or on the surface, or both; (4) whether to use hand-drills or machines; (5) LEASING AT CRIPPLE CREEK 307 what appliances to use in the shape of washers, sorting- tables, picking belts, etc., etc. Each of these questions of handling the ore may, and does, vitally affect the lessee's pocketbook. He must do his mining solely with a view to making profits, for profits he must have or quit. A mine manager may go through the motions of mining in apparently good style. He may have nice machinery, good pumps, elaborate re- ports, accurate cost-sheets and no profits. He may mine large orebodies at small cost. He may point with pride to the very things that ought to condemn him as hopelessly incompetent. He may be mining too much and mining too cheap. In saving at the spigot he may be losing at the bung. The lessee rarely commits such blunders. He thinks solely of dollars and cents. He makes no reports and seldom bothers about indicator cards, but he watches his ore like a hawk and mines it right. He ignores the frills and attacks the substance of his business. So far so good. But the lessee's limitations are also conspicuous. Ordinarily his interest in the property does not extend beyond the hope of making some money out of a limited block of ground. His development work is apt to be done grudgingly and with little attention to its subsequent utility. In mines that have been partially developed by the leasing system it often happens that the entire mine must be re-opened on more comprehensive lines before it can be worked out. It usually happens also that the owners fall back at last upon the services of hired managers who, while having some qualifications that the lessees lack, are deficient in the very important practical virtues that the lessees possess. It seems to me that the lessee fills a peculiar province in the mining business that is essentially his own that of furnishing the hard common sense and practical en- terprise necessary to exploit doubtful and poorly man- 308 THE ECONOMICS OF MINING aged mines. He has to take chances, and in taking them he is rewarded by a certain percentage of successes. He takes chances that a thoroughly competent mining engi- neer might not be willing to advise. There is much that the average lessee knows which should be essential to the success of every mining operator, but which is strangely neglected by many. There are some mine managers who appear to forget that their busi- ness is mining, and who neglect the problem of handling the ore to spend their time on refinements which may be of importance, but which ought to be left to others. I believe it to be rare that any amount of technical knowl- edge is of sufficient value to cover up a deficiency in the knowledge of plain, straight mining. When the lessee demonstrates by his success that such deficiency has ex- isted elsewhere, he is doing the business and the profes- sion a great, but perhaps unconscious, service. J. R. FINLAY. Colorado Springs, November 14, 1904. SECRECY IN MINING (Editorial, December 29, 1904.) The West Australian Commission, empowered to hold an inquiry into the fiasco arising from the manipulation of shares in the Boulder Deep Levels at Kalgoorlie, has presented its report to the State government. It is recom- mended : "(0 That all mines shall be open to inspection by shareholders at convenient hours. (2) That the Minister of Mines shall be empowered to authorize an official to take samples from any property, inspect the working, and (3) compel the companies to keep assay plans, also plans of the underground workings where they will be avail- able for inspection by shareholders. (4) It is further recommended that misrepresentation or concealment of facts shall be punishable by fine or imprisonment, and (5) that managers' reports shall be published locally coincidently with their reaching the head office. The Commission says that the enforcement of these recom- mendations will put an end to secrecy adopted by some mines." The intention of these recommendations, in so far as they signify the lifting of secrecy 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 suffer. Admission to mines should be regulated so as not to impede operations, and it should include the experts engaged by shareholders, as well as the shareholders themselves. A 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. If the Minister for Mines is to be em- powered to send an official to inspect, then the Minister himself, no less than his deputy, must on no account be 310 THE ECONOMICS OF MINING the possessor, buyer, or seller of the shares of any mine in the region over which he holds this authority. Assay- plans and maps are necessary to all mines, whether large or small; and this recommendation should meet with unqualified approval. We presume that, in order to punish misrepresentation and concealment of facts, the intention to defraud would have to be proved; this is a legal 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, is reasonable; it will work no hardship on the shareholders in Europe or elsewhere, and it will be a proper concession to Australian shareholders. If the Western Australian government imposes such a condi- tion, we do not see why the Englishman should object. This also will serve as an obstacle to the manipulation of the local stock market, by encouraging the diffusion of official information simultaneously at both ends, the head office in London and the place where the mine is situated. Everything that tends to give shareholders full informa- tion, works for the investment aspect of mining; changes in the physical condition of a mine are frequent, but these account for only one-quarter of the fluctuations in shares. A straightforward policy gives security, and without that a mine becomes merely the sport of gamblers. MINE VALUATION (Editorial, January 19, 1905.) On another page we reply to a correspondent in Mex- ico, who asks for an explanation of the use of annuity tables in the appraisal of mine shares, and we have taken the opportunity to publish Inwood's tables, which are used by investors in South African mines. To some of our readers, it will seem absurd to apply such methods to the cheerful gamble of a mining venture ; and to these same readers, the vagaries of 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 you 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 business ; and, if our insistence on certain fundamental principles can contribute to that end, one of the purposes of this JOUR- NAL will be fulfilled. It is pitiful to notice how the daily press, in its comment on the Montreal & Boston impos- ture, appears 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 for niceties of valuation, and 312 THE ECONOMICS OF MINING consider, properly enough, that market conditions are a more important factor than any academic ratiocinations; but, even for those gentlemen who dabble on the danger- ous margin of the financial rapids, it will be found well to have an idea of that which is the fundamental basis of their speculations. Sooner or later, they must face the facts ; every speculator eventually fails to find one more reckless than himself. Ore-reserves, and profits derived from them, are the essence of successful mining enter- prise; without them, the mine is only a hole in the ground. Dividends indicate the surplus of a moment; they are no criterion of future returns, unless these are insured by accurately measured reserves of ore. Low costs are a symptom of healthy economy, but they do not guarantee profits; they simply prove that the minus quantity to be deducted from the value of the production is relatively small. Good management does not make a mine ; it is only an aid. We sympathize with the unfor- tunate Britisher who, after several experiences with poor mines and good managers, is said to have exclaimed that in future he would invest in mines that could stand bad management. Properly ascertained resources in the form of orebodies, thoroughly sampled and measured, are the only assurance of the long life of a mining enterprise ; and, without such assurance, it is not an investment. But this does not belittle the worthiness of sensible specula- tion, which has been, and ever will be, the quickest way to make money. We simply desire to emphasize the essen- tials of an 'investment,' which is the attractive term too generally applied to schemes of an essentially speculative character. Pay your money and take your choice; but, for the sake of sound mining, let us make distinctions which are essential. MINE VALUATION (January 19, 1905.) The Editor: Sir I quote from the editorial in your issue of De- cember 8, 1904, entitled 'The Logic of Valuation' : "In the first place, an investment in a well developed copper mine should yield 10 per cent ; secondly, 5 per cent should be set aside for a sinking fund to redeem the principal. By the annuity tables, it is found that, assuming 10 years' life for the mine, the number of years' purchase of divi- dend to yield 10 per cent income and redemption of prin- cipal at 5 per cent compound interest is 6.14 years. This 6.14, multiplied by the annual dividend $4.80 makes $29.47, say, $30, which is the amount that should be paid per share to give the purchaser 10 per cent income, and return to him, at the end of 10 years, the price which he paid for the share." I encounter this question of "so many years' purchase, at so much income, and redemption of principal at a cer- tain interest," very frequently; and I am free to say that it is obscure to me, though I have no doubt it works out in a very simple form. As a matter of fact, this whole matter of capitalization of a debt, annuity etc. amortiza- tion, number of years' purchase of dividend, sinking fund, and annuities is only vaguely understood by me, and I should like to obtain some convenient manual whereby I can post myself thoroughly. Can you recom- mend anything on the list of works handled by your JOURNAL that will fill the bill ? There may be others among your subscribers whose experience with financial questions of this particular nature is as limited as mine; and if you would elucidate the point mentioned in your editorial, you .would confer a favor on us all. E H W Parral, Mexico, December 19, 1904. 314 THE ECONOMICS OF MINING [The amortization of capital invested in equipment as related to the decreased cost attained by such additional machinery has been discussed in this JOURNAL by several writers, notably Mr. H. C. Hoover, in our issue of March 24, 1904. A discussion ensued, and to this our corre- spondent is referred. Amortization is the recovery of capital invested, at the end of a certain term. Number of years 5 purchase means the number of annual profits which together represent a return of the capital;- a mine sold for $100,000 is bought at five years' purchase if it yields $20,000 profit per annum. The question of life and return of capital on the basis of an annuity is a more complicated question. In 1811 Inwood's tables; were first published; they give the present value of an annuity at different rates per cent for any number of years and replacement of principal on termination of the annuity. What immediate lump sum must one pay to receive $25 annuity and have the money paid for the annuity replaced at the end of 25 years ? The tables in question give the answer in the form of 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 of annuity. These annuity tables can be applied to the valuation of mine shares, and they have been so applied by the in- vestors in South African mines. We applied the method recently, as quoted above by our correspondent. Of course, as a rule, mining enterprises do not lend them- selves to such logical treatment, as investors rarely lock up their scrip for five or ten years, either actually in a safe or mentally, by their way of regarding their com- mitments. But the mine which has ceased to be a pros- pect essentially a gamble and has developed even be- yond the early stages, when it is a highly speculative risk, to that stage of assured productiveness which war- rants the application of the term 'investment' such a mine can be valued in a logical manner or else it should MINE VALUATION 315 Number of years' Purchase of Dividend to Yield 6 to 10 Per Cent Income and Redemption of Principal (5 Per Cent Compound Interest}. "Life." I At 5 Per Cent. .95 At 6 Per Cent. .04 At 7 Per Cent. .03 At 8 Per Cent. 93 At 9 Per Cent. .92 At 10 Per Cent. .91 2 :: 1 1 ifi 1.8? 1.78 1.76 1.74 3. . 2.72 2.67 2.62 2.58 2.53 2.49 4 7. 54 3.46 3.30 3.31 3.24 3.17 5. . 4.77 4.21 4. IO 3. 90 3.89 3-79 6 5 oi 4 76 462 4 40 4 36 7 5 78 C 82 5 40 5 21 5. 03 4 87 8 , 6 46 6 21 5 07 5 75 5 57 5.34 o. . 7 II 6 80 6 51 6 25 6 oo O'O^J ? 76 10. . . . , 7 72 7 36 7 O2 ""O 6 71 6 42 3*' 6 14 ii 7 5O 7 14 6 81 6 ^o 12 8 78 7 O4 7 c^ 7 16 6 81 13. . , 9.3Q 8 85 836 7 00 7.40 7 10 14 9OO 970 8 74 8 24 7 7O 7 7O 1C. . . 10.38 0.71 0. II 8 56 8'o6 7 61 16 10 84 IO IO 945 8 85 8 31 7 82 17. II 27 10 48 z5 976 912 8 54 8 02 18 II 69 10 83 ./u 10 06 9 37 8 76 8 20 10. 12 O8 ii 16 IO 77 9 60 8 O5 8 37 20 12 46 II 47 IO 5O o 82 917 -o/ 8 51 21 . . 12 82 II 76 10 83 10 O2 9 20 0.51 8 65 22 , , . 13 16 12 O4 II 06 IO 20 944 23. . . 17 40 12 3O II 27 10 77 *jL o 58 8 88 24. . 13 80 12 55 II 47 IO 57 971 8 oo 25. . . 14 OO 12 78 II 65 10 67 / x 9 82 9 08 26 14.37 I'l OO II 82 10 8l 9O3 916 27 , . 14 04 1^ 21 II 08 10 Q4 10 03 924 28 . 14 OO 13 41 12 14 II 05 IO 12 971 2Q . jc 14 J7 CTQ 12 28 II l6 10 20 977 3O. . . 15 37 13 76 12 41 II 26 10 27 947 71. . 15 5Q 17 O7 12 57 II 7C TO 7/1 *K5 9^8 32 ^o oy 15 80 14 08 12 6c 11 -OO nA7 lu -o4 TO 4T 4 9C7 77 16 oo 14 27 12 7C II SI TO A(\ Oo 9tj<7 7X 16 19 14 77 ^/O 12 8? 11.51. nCQ TO C2 O/ 35 . 16.37 14 50 12 05 II 65 IO 57 96/1 36.. 16 54 14 62 17 O7 II 72 10 61 o 68 16 71 14 74 17 12 11 /* II 78 TO 6c. 9*7T -g . . 16 87 14 85 17 IQ II 87 10 60 I * 73 TO. . 17 O2 14 05 17 26 ii 88 TO *77 9*76 40. . . . 17 16 15 O4 17 77 II O7 lu -/o TO "76 ./u 9*78 45 SO.. 17-77 . 18.25 15.46 15.76 I3.60 17. 80 12. II 12.27 10.88 10.06 ./o 9.86 fV2 316 THE ECONOMICS OF MINING be let alone. For the convenience of our readers we add the annuity tables referred to, as they appear in 'The Mines of the Transvaal,' published by The Statist, a London financial journal which has done good work in this department of mining business. EDITOR.] GRAVEL-MINING COSTS IN ALASKA AND NORTHWEST CANADA* BY CHESTER W. PURINGTON. (February 9, 1905.) The data in the table on page 318 have been compiled from statistics collected during a recent inspection of the placer fields in Alaska, Yukon Territory and northern British Columbia. Of the statements furnished by opera- tors, only those which are considered reliable have been used. The work attempted had no relation to the sam- pling or valuing of mining properties, and time did not permit, usually, of the measuring of the ground. Owing to the varying conditions governing the cost of mining in the North, the territory has been divided into three provinces. The South Coast 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 Fortymile, Eagle, Birch Creek, Fairbanks and Ram- part districts of Alaska. The Seward Peninsula province includes the Nome, Council and Solomon districts of Alaska. The Nizina 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 118 differ- ent operations were first tabulated with reference to the method employed and to situation. A second table was then prepared, in which the working cost was augmented * The figures that are given here are extracted from a re- port on the 'Costs and Methods of Gravel and Placer Mining in Alaska/ and here published by permission of the Director of the United States Geological Survey. The data furnish as near approximations as the nature of the work permits. The cost of all supplies, rates of transportation, cost of labor, and description of water, timber and fuel resources in all important parts of the territory, as well as full descriptions of all the methods of min- ing employed, will be given in the final report. 318 THE ECONOMICS OF MINING by an amount per cubic yard based on allowance for depreciation of plant. A general figure of six years was taken as the average life of an individual property, and, except in the case of winter drifting operations, 120 days .* autdump-jpt ipt* aunuoog uapjnqjSAO SuVdilu . - . -Suuaq ton ou id ajnn : punoj8 UKOJJ tpnos aui*4J pue auiijua . 'uusqmn Suumbsj punoja p*m io uazojjA'ivivcl aunjU SUIpUt pUB ! atniB A tlO U9dQ 3om|S oj 8uij[DUjap puB mBJ| ao 8utppi>is ' sdi^s jo auiduind ou twip do} auidduis ;}uipnpui 'ssxoq -aoinp o?ut 8ai[3AOHS : }t asd :8uri(Dr(riBJpAH jo auidumd ou lauppirnapAH ~sn~ S " ZJZ $m GRAVEL-MINING 1 * ~S~3~ ! p ll g l I|!li^i6j from An\ il i I rl other COSTS. as the working season. It was then assumed that five annual payments are made to a depreciation fund. The fund is equivalent to the cost of plant and maintenance of same during the life of the property, plus six years' GRAVEL-MINING COSTS 319 simple interest on the investment at 5 per cent. . Each annual payment was divided by the season's output in cubic yards, and the amount thus obtained added to the daily working expenses, to get the total output cost per yard, as far as possible. Prices paid for mining property are taken no account of, as they represent an unknown factor. In cases where expensive plants have been in- stalled the amortization was separately figured for each case. In cases of shoveling-in and small mechanical plants, the installation and maintenance cost was taken at an average amount for a group of operations in each district. Where the operation implies an additional strip- ping of overburden, which is always separately charged, the cost was distributed and added to the gravel extrac- tion cost. From the second table, where the costs were reduced to one figure for each district, a third table (as given) was prepared, giving as nearly as possible the average cost for each of the 17 separate methods considered in one or more of the three provinces. Where the opera- tions from which the averages are derived exceed two in number, the fact is so indicated in the table. The attempt has been made to reject figures which were evidently not representative. The final figure ar- rived at is not, however, always satisfactory. For exam- ple, under No. 5 (the method of working open-cut by shoveling into wheelbarrows, wheeling to bucket, hoist- ing and conveying to sluice by self-dumping carrier or cable), $2.14 is representative for the Klondike, where seepage water is generally pumped from the pit, and many operators pump the water for sluicing. On the other hand, a plant in the Birch Creek district of Alaska, mining only 22 cu. yd. per day, and handling the water by a drain, operated at a cost of $1.50 per cubic yard. In No. 13 (drifting solidly frozen ground, steam or hot-water thawing, hoisting and conveying with the 320 THE ECONOMICS OF MINING use of the self-pumping bucket), the cost in the Klon- dike is $1.95; while the higher figure given is arrived at by combining the expensive American camps of Forty- mile and Fairbanks, where the cost is $4.63 and $3.56 re- spectively. The high cost of hydraulicking with use of hydraulic lift, in the Seward Peninsula, is caused by the difficulty of moving the gravel to the bedrock sluice, 1 and the ex- pense of the ditches and installations. Hydraulicking by means of water under natural head without the use of the hydraulic lift, or some other means of elevating the material, was not seen in the Seward Peninsula. It is known that a hydraulic plant is in successful operation at Bluff, 50 miles to the east of Nome, but no data are available. In the interior, only bench gravels are hy- draulicked. Steeper grades for sluices can be obtained, and the gravel is more easily moved. The high duty of the miners' inch in the Klondike is a large factor in bringing down the cost of No. i and No. 16. It should be distinctly understood, if hydraulicking costs in the interior appear attractively low, that the water supply is exceedingly variable, and that no reliable estimate can be made beforehand of the output of a given season's operations. Furthermore, while much of the bench gravel was originally rich, the pay-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 attempts it, and a singularly fortunate one who makes a financial success of it. Mr. Stephen Birch, operating in the Nizina district of difficulty is due, not only to the exceedingly gentle grades of the streams, but also to the shingly character of the material handled. GRAVEL-MINING COSTS 321 Alaska, has courteously furnished, for this report, a sum- mary of the costs of working placer ground on Dan creek. These figures are given herewith, as they imply a total charge of invested capital, in addition to working costs against one season's operations. By ground sluicing through 2O-in. flume, 6,803 cu. yd., $8,781.44, or $1.14 per cubic yard. By use of 8-in. cotton-pressure hose and nozzle, through 2O-in. flume, 1,600 cu. yd., $1,457.00, or $0.91 per cubic yard. Use of pick and shovel only, through lo-in. sluice-box, 2,320 cu. yd., $5,100, or $1.87 per cubic yard. 273-ft. tunnel, 6 by 6 ft., timbered, $1,017.00, or $3.72 per running foot. Or 407 cu. yd. of gravel removed, which cost $2.50 per cubic yard. Mr. Birch adds : "While the cost may seem high, it is because of the fact that it includes the tools and material now on hand, which were necessary to remove this gravel. Now, if this work is continued for a number of years, the depreciation of the tools, etc., could be charged propor- tionately. These prices may not be a criterion for future operations in that country, but were our first cost of oper- ation, and any strangers going into that section of coun- try would be apt to run up their costs to these figures." The cost of shoveling into sluice-boxes in the remote parts of the Seward Peninsula reaches to $5 per cu. yd., and even higher. Some drifting operations have been carried on in the Kugrok and Fairhaven districts, on which figures are not at hand. Dredging estimates furnished by reliable interior oper- ators place the cost at 8oc. per cu. yd., where gravel must be thawed by points ahead of the dredge. In the Seward Peninsula it is estimated that if the property is sufficiently large for a lo-year life to be allowed, a dredge can be operated at the cost of 3OC. per yd. The field for dredges in placer mining in Alaska is extremely limited. In 322 THE ECONOMICS OF MINING the Seward Peninsula it is not impossible that some of the wide, shallow creek deposits will be worked success- fully by means of the steam scraper. The cost of an experimental operation on Ophir creek was said to be under 2Oc. per yd. The costs of operating by two mechanical systems, in the Seward Peninsula (involving the labor of men in shoveling into cars and tramming, in the one case to the bottom of an incline, and in the other to a bedrock sluice leading to hydraulic elevator throat), are unfortunately not available for publication. The derricking system, No. 7, however, both in the interior and the Seward Peninsula, appears to be superior in point of cost to either of the above mentioned, for the working of the average Alaska open-cuts. Frozen ground cannot be attacked with success by the steam-shovel. Even where it digs the gravel successfully, if men follow it clean to bedrock by hand, the cost of operating is sometimes doubled. The steam-shovel has, however, a field in northern placer mining. Regarding mechanical operations in general, the im- portant principle should be emphasized that the main ex- pense is getting the material into the receptacle which conveys it to the sluice or washing plant. Tramming, even for a long distance and to a considerable elevation, adds a very small proportionate amount to the total cost of working. The establishment of a permanent washing plant, economically situated, as regards water supply and dump, should be considered by every Alaskan miner who proposes working the 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 tramming possible, will go far toward attaining the ends of adequate grade and room for tailing, which are the sine qua non accompaniments of successful gravel mining. THE COST OF MINING (Editorial, February 16, 1905.) On another page we publish a suggestive contribution by Mr. W. R. Ingalls on the cost of mining, a subject of the utmost importance. Whether regarded in its broad economic aspect as implying the whole process of winning the metals, or in the narrower sense as covering only the actual breaking of ore, the question is one which must appeal to the readers of this JOURNAL in a most practical way. Just as in ordinary life it is a proverb that money is easier to make than to keep, so in mining it is not too much to say that the finding of ore requires less skill than the beneficiation of it ; at all events, the haphazard meth- ods of the one must ever be in strong contrast to the log- ical ways of the other. The subject presents many as- pects, each of which invites discussion. There is the gen- eral question of the attainable minimum of expense as affecting the world's output of metals, and the relation of the growing rate of labor to the increasing application of machinery ; there is the accountant's and director's view of the portion of cost properly chargeable to mining, with a glance back at the days when development was charged to capital account, and perishable machinery to assets. There is a general inquiry into the conditions which cause costs to vary within such wide limits in different mining regions, and the pertinent subject of the factors contribut- ing to particularly creditable results at individual mines. Finally, there comes the broad problem of practice under- ground, where more money is lost or saved than is dreamt of in the philosophy of the average investor. These are but suggestions ; our own views will find expression at a later date, when our friends will have given a good start to a discussion, the obvious usefulness of which should elicit a widespread expression of experience and opinion. THE COST OF MINING BY W. R. INGALLS. (February 16, 1905.) There is perhaps no subject more difficult to generalize. The cost of mining varies according to conditions in a manner so obvious as to require no antithetical citations. There can be no question as to what constitutes the ulti- mate cost of mining, but opinions differ as to what enters into the cost during a limited or arbitrary period, such as .the fiscal year; in other words, accounts are kept in vari- our ways. Many other difficulties may be mentioned. Notwithstanding all these, it is worth while to attempt :some generalizations, making due allowance for the vari- ables, since it is only through such deductions that we obtain standards for comparison. The determination of standards would be useful in at least three ways : ( I ) They would enable 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 expenses, since a knowledge of the cost of each part of the work indicates the direction where economy can be effected, and (3) they would furnish the engineer who has to value mines, especially new mines, with improved means of estimating the probable cost of mining, and therefore the net value of the ore. The cost of keeping accounts, even in the fullest detail, is so slight that there is no good reason why they should not be kept in a thor- oughly instructive manner. The value of any accounting is greatly diminished if it be not so systematized as to give all the information that may be commercially or technic- ally required. THE COST OF MINING 325 At the present time there is a great lack of recorded in- formation such as will furnish the desired guidance to the engineer. It is a frequent practice to estimate that be- cause a certain orebody is being mined in one place at a certain cost, a supposedly similar orebody may 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, because of peculiarities in the particular orebody and 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 was 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 was estimated by one of them by a rather far-fetched analogy ; the other two simply expressed the .opinion that it would probably be a certain amount per ton, no reasons being given, and no references to the conditions affecting the cost. The estimates of mining and treating the ore were certainly at fault somewhere, since the mine proved unsuccessful. If, in estimating the cost of mining, as in estimating the cost of smelting and other engineering processes, the esti- mate be divided into 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- 326 THE ECONOMICS OF MINING ly to receive critical attention than when a lump estimate is made without any analysis. The presentation of a detailed estimate in a report on a mining proposition is a good 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 no evidence as to its accuracy, and in many cases can be pronounced no more than "prob- able" or "improbable" or some other uncertain character- ization. It may be suggested that (in view of the numer- ous reports that are circulated without any information as to the cost of mining, cost of plant, etc., wmch it is nec- essary to know about, leaving it to the investigator to de- termine those factors) we should be grateful for what little is sometimes offered, and so we are, but it is not that class of mining report to which I am referring in this article. In venturing the suggestion that it is possible to fore- cast the probable cost of mining in a more rational 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 the various conditions that affect the cost of stoping, tramming, hoisting, timber- ing, pumping, etc., and that there are such technical pa- pers as that of Kinzie on the mining and milling methods at Douglas Island, and that of MacDonald on the method and cost of mine timbering at Rossland, and many others of the same class, which go thoroughly and lucidly into the engineering conditions. We need more papers of that character which will give information as to the unit costs under numerous and various conditions, and espe- cially the unit requirements of labor, in hours of work, and material, in pounds, tons and other measures. In making analyses of costs for purposes of compari- son, it is essential that the basis for itemization shall be as nearly uniform as possible. Some recently published THE COST OF MINING 327 statements have permitted the following tabulation, which, though admittedly imperfect, will certainly prove suggestive : Item. A 1 B 2 C 3 1. Miners and helpers $0.35 $0.435 $0.429 2. Trammers, shovelers, etc 0.41 0.365 0.790 3. Drill sharpening and repairs.. 0.15 0.120 0.261 4. Compressed air .'. 0.120 0.083 5. Maintenance of cars 0.03 0.090 0.038 6. Explosives 0.13 0.145 0.092 7. Timber 0.28 o.iio 0.205 8. Timbermen 0.23 0.190 0.067 9. Hoisting 0.23 0.190 10. Pumping o. 035 11. Supplies, n.e.s. 4 0.04 0.040 0.105 12. Supervision 5 0.23 0.225 ? Total $2.07 $2.065 $2.070 1 Cripple Creek, Col. (reported by J. R. Finlay). 3 Centre Star Mine, Rossland, B. C. (official report). 3 Bunker Hill and Sullivan, Coeur d'Alene (official report). * Including all supplies not elsewhere specified. "Including bosses, assaying, surveying. The above classification appears to me quite useful, al- though for thorough comparison we ought to know the rates of wages, consumption of certain material (especially coal) and prices of the principal materials. Items i, 3, 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 9 the cost of hoisting and delivering at the surface; items 7 and 8 the cost of supporting the ground, and item 10 the cost of keeping the mine dry. Each of these steps in the work is likely to vary rather widely in different mines. The ups and downs may offset each other and make the totals about the same, as, for ex- ample, in the three cases given above, but they may not. There are comparatively few mining companies which report their costs with the above detail. Numerous com- panies, however, report costs itemized as follows: I, la- bor; 2, coal; 3, timber; 4, explosives; 5, other supplies; 328 THE ECONOMICS OF MINING 6, supervision ; 7, administration and general expense. Such a statement is useful, but it is more useful if the items are subdivided according to the various branches of the work. In considering the comparative cost of mining, the fol- lowing are some of the essential conditions determining the result which it is necessary to take into account: 1. Size and character of the ore deposit. 2. Method of mining, (a) open cast, (b) underground. If the latter, whether room-and-pillar system, caving, fill- ing, timbering, or a combination of two or more. The proportion of the orebody extracted is an important con- sideration. The system of breaking the ground, the lay- out of the mine, the method of handling the ore, drainage, etc., are determining factors. 3. Depth and longitudinal extent of the workings. In- crease in depth increases the cost of hoisting and pump- ing; increase in longitudinal and lateral direction in- creases the cost of tramming. 4. Character and amount of necessary development work; i. e., the work that must be done to discover and give access to the ore. The amount of 'dead work' that is required is one of the greatest causes of variation in the cost of mining. 5. Quantity of water to be raised from the mine and the depth from which it must be lifted. 6. Quantity of coal, dynamite, timber, steel, etc., con- sumed per ton of ore. 7. Wages of labor of various kinds and its quality. 8. Cost per ton of coal and its quality. 9. Cost per pound of dynamite (various grades). 10. Cost of timber per 1,000 ft., board measure. 11. Tons 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 THE COST OF MINING 329 those of large orebodies, of which the whole, or nearly the whole, is extracted and sent to the mill, as, for example, those of Ducktown, in Tennessee; Flat 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 be made only by considering as the ore all the material that has to be taken out; but inasmuch as it is seldom profitable to take out more than enough to afford working room, the costs in such mines are necessarily higher than in those wherein large faces of ore can be worked in great chambers. The lowest cost of mining ought theoretically to be- experi- enced in large deposits of ore that can be entirely extract- ed as suitable for milling or smelting, and can be opened by drifts of large size. Considered commercially and, after all, mining is sim- ply a commercial 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 outlay for plant and develop- ment work ; 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 cost of plant for its ex- traction are certainly factors in the cost of mining; this leads to the much-discussed question 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 compari- son of costs can be made only in the light of analysis of all the determining conditions. The cost of mining at one place may be $3 per ton and at another place only $2, yet the 'better work may really be done at the former. In itemizing the various elements of cost, such as breaking ground, shoveling and tramming, explosives, timbering, pumping, etc., and comparing them, we shall arrive closer 330 THE ECONOMICS OF MINING to the actual results, but we shall fail to get at the truth unless we consider the proportion of the orebody ulti- mately won and the final profit in its extraction. Mr. J. R. Finlay expresses this principle so clearly in discussing the cost of mining at Cripple Creek, Col., 1 that it is useful to repeat some of his remarks. He says : "A low cost per ton, either of 'crude rock hoisted or of sorted ore shipped, does not necessarily indicate either good mining or good management, and is nearly as apt to indicate the contrary. Two mines may be working in exactly 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 and making larger profits. "At Cripple Creek the ore occurs in a multitude of small veins, either single or in aggregates. In the small seams which constitute either the vein itself or a compo- nent part of it, the ore is rich, but the rock on the walls, or between the seams, is either wholly or partly waste. The rich seams may vary in thickness from a mere crack to a foot or two ; and fpr these widths, it may carry from one to several hundred ounces gold per ton. "There are no large orebodies in Cripple Creek. It is doubtful if any single orebody, or even any single vein, has produced 100,000 tons of shipping ore. The largest and best veins have been found in the granite, where the rock- walls themselves are sometimes uniformly impregnated with value for a width of 30 or 40 ft. In such places large amounts of clean ore have been mined and shipped without sorting, but only in the swells ; when the vein narrows down it is always necessary to break some waste in order to make room to work. "The ore, therefore, is mined from veins of such a character that it is impossible to get it out without mixing with some worthless rock. The problem of handling this 1 THE ENGINEERING AND MINING JOURNAL, November 21, 1903. THE COST OF MINING 331 ore economically depends on the cost of treatment. This cost is at present and is likely to be always so high that it becomes very essential to throw out as much waste, or low-grade ore, as possible before shipping. Could the ore be treated for a dollar or two a ton, the proposition would be entirely different." The ore shipped from Cripple Creek is a concentrate produced by hand sorting. Numerous mines in other dis- tricts are operated under similar conditions. Even at Lake Superior a considerable proportion of barren and lean rock is sorted out of the rock hoisted, in order to effect a preliminary concentration 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 might also be technically considered a process of ore- dressing, it would be highly impracticable in book-keeping to distinguish between it and mining. These features indicate some of the difficulties in re- ducing the cost of mining under various conditions to any sound basis of comparison. Unquestionably, however, an analysis of the elements of cost would bring us nearer to such a basis, and an examination of the costs, as officially reported by various mining companies, will show the de- sirability of such an analysis. It is, for example, difficult for anyone not familiar with the special conditions to understand why the cost of extracting a ton of ore from a great, well-equipped mine like the Anaconda should be $3.50 per ton, when ore is mined for $2 per ton at Cripple Creek, Col. Anyone examining the reports of the Lake Superior copper companies is naturally led to inquire why the cost of mining in the Atlantic is only QOC. per ton, and in some other mines of the same district twice as much. Another interesting question would naturally arise as to 332 THE ECONOMICS OF MINING why mining can be done with insignificant equipment and so cheaply as it has been in the Joplin district of Mis- souri. It is hoped that a discussion of these questions and others of the same character will be taken up in further contributions. THE COST OF MINING (February 23, 1905.) The Editor: SIR As Mr. Ingalls begins by saying in his recent arti- cle, the matter of the proper cost for mining is a hard sub- ject to generalize, but I am of the impression that, if more companies published their costs in proper detail, the diffi- culty of generalization would be much less, because even in cases of wide difference of conditions, there would still be found operations in which the conditions were more or less parallel. I have amused myself in comparing cer- tain items of cost at the Treadwell mine in Alaska, as published by Mr. Kinzie, and those of the Portland mine at Cripple Creek. At first glance one might say that in no two places could the conditions be more dis- similar the Treadwell, with its immense bodies of uni- form ore, mined very rapidly with comparatively small outlay for exploration and development, and the Port- land, with its aggregate of more or less scattered and small orebodies requiring for exploitation a large amount of development work, done to a considerable extent at ran- dom. Nevertheless, I find 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 broken per machine shift in underground stopes of the Treadwell at 34.96. He does not state whether this is tonnage removed from the stopes or the actual tonnage broken, it being understood that in the underground part of the Treadwell mine about one-half of the ore broken is left in the stopes until they are worked through. In case the tonnage referred to is the actual breakage record of the machines, the performance is almost identical in cost with that in the wide stopes 334 THE ECONOMICS OF MINING at the Portland mine. The table below gives the com- parison. At the Portland, small machines, 2\ in., operated by one man at $4.00, are used; at the Treadwell, 3f-in. machines, using 2.15 times as much air at the same pis- ton speed as the Portland machines, and operated by two men at $7.87 per day. Portland. Treadwell. Tons per machine in all stopes 12.4 34-96 Tons in wide stopes 17.7* t34.g6 Tons per machine in drifts 5.3 9.6 Tons per foot in drifts 2.5 7 Labor cost per ton on ore broken in large Cents. Cents. stopes 22.6 22.5 Labor cost per ton broken in drifts 75 . 82 Labor cost per foot of drift for machine drilling ' 1.86 5.75 * One-man machines, t Two-men machines. In the above cases the comparison is not unfavorable to the Cripple Creek property, the development work being much cheaper at Cripple Creek than at the Tread- well, but in this particular the cases are not parallel. Development work in the Treadwell means large open- ings designed for the extraction of heavy tonnage. At Cripple Creek the primary object of development work is to discover ore, and consequently the drifting and cross-cutting are designed to be driven with the greatest speed and the least expense, regardless of the future utility of the work for mining purposes. The result of this difference in design of development work shows in the cost of tramming, which is over 2oc. per ton at the Portland, as against a trifle over 3c. at the Treadwell. Twenty cents per ton is about the least that the tramming can be done for in Cripple Creek under the present plan in mining operations. It is not prac- ticable to introduce haulage systems underground on ac- count of the small, scattered orebodies connected by crooked drifts. It is hard to see how any other arrange- THE COST OF MINING 335 ment than the present would apply. Therefore, the dif- ference of cost of tramming between the Portland mine and the Treadwell is sufficiently accounted for by the radical difference of conditions. Another expense at the Portland is timbering, which averaged for six months almost exactly 5oc. per ton. At the Treadwell this expense is practically zero. This is a point in which the practice at the Portland mine might be open to criticism, because other mines in Crip- ple Creek succeed in extracting their ore with almost as small expense for timber as the Treadwell. Neverthe- less, as I have attempted to point out in one or two former communications, the problem is not one of mere cost per ton, but that of mining the value at the least cost from a profit-making point of view, and in my judg- ment the timbering cost at the Portland is fully justified by the conditions. Again, the cost of ore-sorting at the Portland is about three times as much as that of milling and concentrating at the Treadwell. Here again the difference of cost is justified by a difference of conditions so obvious as scarcely to merit discussion. The cost of hoisting at the Portland is about 22C. per ton, as against about nc. for the Ready Bullion and Alaska Mexican, which handle about the same tonnage. This difference is one which should not exist, and is ac- counted for largely by the bad design of almost all Crip- ple Creek hoisting plants. There is no reason why Cripple Creek ores should not be hoisted by skips and dumped directly into ore-bins, as is done at the Treadwell, there- by doing away with the expense of top-tramming, which in Cripple Creek is invariably a large item. I am giving the above comparisons largely because they are interesting in themselves, and partly to show that if the proper details were given, there is a legiti- mate comparison that can be made between mines even 336 THE ECONOMICS OF MINING of great apparent difference in character. The publi- cation of costs would be of advantage to many, probably most, mining companies, because by so doing they would bring to light certain deficiencies in their own management, which would, in course of time, be pointed out to them. Many companies are deluded into think- ing that their superintendents are good mining men, simply because they have been on the property a long time. Taken in the large, the discussion of mining costs will merge into that provoked by Mr. Hoover's article on mine equipment and ore reserves. Most competent mine managers will probably agree with Mr. Hoover that the problem is, to extract and market the entire deposit constituting a mine at the greatest profit to the stockholder. They will fully agree with him on the economy, not only of providing abundant equipment for the rather speedy working of visible ore supplies, but also of working that equipment to its utmost capacity. The consideration of such subjects is the consideration of mining costs in the widest sense. The problem of deciding upon the best methods, the proper scale of op- erations and the most desirable cost to be aimed at, is one big enough for the best business intelligence a min- ing engineer can muster. Unfortunately, too many engineers confine their attention too much to technical subjects, and the owners of large enterprises often find it necessary to leave them out of consideration in the decision of the broader aspects of the business. Ability to see things in their proper proportions and to lay strong hold of the essential features of an enter- prise are more vital to the success of a manager than all other qualities combined, and are more necessary at the beginning of an enterprise than at any other time. It is, indeed, rare that a good mine is absolutely spoiled, but nothing is more common than to see mines worked THE COST OF MINING 337 out under such handicaps of bad management that they fall enormously short of producing their just profits. This bad management is just as apt to be the result of some mistake in general principles, such as methods of mining, design and scope of plant, as from failure to work out everyday details. Mistakes due to failure to comprehend the structure and capabilities of the ore- bodies are extremely common, and I have seen mines brought to the verge of ruin by such mistakes. It is only when the salient features of an enterprise have been worked out and decided on, that one is justi- fied in figuring on the details of cost. For instance, one can scarcely estimate how much it will cost to hoist a ton of rock until he knows what kind of an engine he is going to have, as well as the appliances used in load- ing and dumping, etc. If his tonnage is small and un- certain, he will probably prefer not to put in skips with underground loading-pockets, but will use light engines, small cages or buckets. Thereby he will save a portion of his plant investment at the expense of a higher cost in daily manipulation. If you are able to hoist only 40 tons a day, you will still be compelled to employ two engineers at $4 a day, and your hoisting will cost 2oc. a ton for engineers' labor alone. Circumstances may be such that a hoisting cost of 4oc. a ton will be just as good practice at one place as 4c. a ton at another place. The thoroughly competent engineer will see the folly of working on unjustifiable economies. If a man really ex- pects to hoist only 10,000 tons altogether, he will be a better engineer to get all that rock out with a windlass at $i a ton than to buy a $10,000 hoist in order to get it up for loc. a ton. The same kind of reasoning applies, in many ways, to a variety of items that make up mining costs. For ex- ample, a man may be doing excellent drifting, but he may do so much of it that it may appear as a large item 338 THE ECONOMICS OF MINING in his cost of ore. Very likely he ought to receive praise for his good drifting, instead of blame for his high cost per ton. It seems to me, therefore, that the costs that afford most interesting comparisons and are most easy to ob- tain, are those which apply to such things as drifting, shaft-sinking, shoveling, machine drilling, etc., etc.; in fact, just such details as Mr. Kinzie gives in his paper on the Treadwell. When costs on these things are cor- rectly stated, with information regarding the conditions of working (such as ventilation, water, kind of rock, manner and method of working), they become valuable. It would probably be amazing to see the difference between mines in the same district, working under iden- tical conditions. These costs, therefore, and not the total costs, are those that might be given publicity with- out harm to the mining companies, and more often to their great advantage. J. R. FlNLAY. Colorado Springs, Feb. 19, 1905. MINE RESERVES (March 2, 1905.) The Editor: SIR When I wrote you, early last year, asking for an expression of opinion as to the wisdom of the prac- tice of keeping a reserve of gold or bullion at a mine, it was because I had a premonition that the question would have to be settled in Western Australia sooner 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 you, 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 evidence of the leading Kalgoorlie mine man- agers, given before the Boulder Perseverance Commis- sion, in favor of the retaining of a reserve at the mine, is analyzed, it will be found that the chief reason ad- duced in support is that the share market must be kept level by having level yields. The members of the royal commission were so impressed by this contention that in their rinding they adopt the views put forward by the mine managers. Still, is it in any sense the duty of the mine manager to consider the share market? If he does, is there not always the risk that he will take a hand in it? With men receiving the regal salaries earned by the managers of the big Kalgoorlie mines, there ought not to be any temptation to go astray by using the knowledge they obtain in their official position to speculate in their company's shares. But the history of Kalgoorlie mining is such as to enforce the conviction that, not only have wrong estimates of the value of the ore been given, but also that bullion reserves have been used to assist in market operations. With smaller com- 340 THE ECONOMICS OF MINING panics, where salaries are low, how much greater must be the temptation to men to try to make themselves financially secure by manipulating the bullion reserve. But does the existence of a gold reserve protect shares from fluctuations? Victorian experience says No. The grade of the ore falls off and the yield is kept up by the assistance of the gold reserve. No one, ostensibly, knows of the true state of affairs, except the manager and the directors when the latter are kept posted as to the reserve or the manager alone, and perhaps one of his trusted officials. Yet the market soon shows signs that something is wrong, although the yields have kept up to their average. Some one invariably learns of the changed circumstances of the property, and he gets rich at the expense of others. Is this good for the industry? It may be said that a study of the assay plans will con- vey the fact of the falling off in the grade of ore. But we in Victoria do not have assay plans, and even if we had, the ordinary shareholder, like the mine manager, hopes that pay-dirt may again be entered. As it is, how- ever, the practice of keeping gold reserves has been practically abandoned here. And it is an answer to those who think that stocks would depreciate if yields were to fluctuate, that some of the most stable shares in the bullion market are those where no gold reserve is maintained. Shareholders are educated to know that they must expect variations in yield. All they want to be told is, that the mine is opened up well ahead of the picks, and that the average value of the dirt is main- tained. Then they are not alarmed by poor patches. One point touched upon in the evidence given before the royal commission deserves attention. Managers stated that they would not tell a shareholder the amount of the reserve if he made an inquiry on the point. The Victorian Companies Act provides that in a mining company a shareholder or a creditor can demand, and MINE RESERVES 341 must be supplied with, three months' accounts from the board. Just see the position the directors would be in if, while telling that the debts were so much and the assets so much, they omitted to state that there were so many ounces of gold held in reserve. Should the shareholder sell on the statement and the scrip rise, he could recover against them for furnishing a false return. If he held, and shares declined, he would still be in the same strong- position. It is the duty of the directors to know if a gold reserve exists, and still more is it their duty to know how it is used. With this information in their hands, they have no right to refuse to tell a partner that is, a fellow shareholder how the reserve stands. Only under certain conditions can a gold reserve at a mine owned by a company be justified, (i) That it shall be kept with the full knowledge and consent of the shareholders. (2) That every monthly yield shall be re- corded truthfully say, 10,000 tons for 8,250 oz.; 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 withdrawals from it, or the addi- tions to it, shall be stated. Then the ordinary shareholder will know how he stands, and as he is the backbone of the industry, it is to everyone's interest that he shall not be deceived, and so be led to withdraw his support from !t - F. H. BATHURST. Melbourne, Victoria, Jan. 21, 1905. THE COST OF MINING (March 9, 1905.") The Editor: SIR Mr. Ingalls' timely article on the above subject calls attention, not only to the desirability of uniform methods of keeping mine costs, but also to the publica- tion of itemized statements of costs. On the latter point there is much difference of opinion. There should be no difference of opinion regarding which enters into the cost of mining. Nothing short of the total cost can be correct, and anything less is, to say the least, misleading. No matter 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), and which, I presume, rep- resents English methods: Cost for Year Ending June 30, 1904. Blocking out ore, etc $4. 131 Ore breaking 5. 182 Timbering 0.744 Pumping 0.933 Hoisting and tramming 1 .469 Ore sorting and loading 0.608 General lighting 0. 112 Surveying 0.080 Mine sampling 0.066 Wages of foreman, etc 0.265 Watchman o. 134 $13-7240 THE COST OF MINING 343 Repairs and improvements to buildings and plants $0.2896 Shipping and selling ore, sampling and assaying o. 1793 Salaries of consulting engineer and manager 0.8923 Salaries of clerks 0.0323 Auditing fees and expenses 0.0244 Assay plans o . 0364 Traveling expenses o . 0050 Exploitation expenses * o . 0770 Insurance o. 1494 Taxes (less adjustment) o. 1693 Compensation, etc., cage accidents 0.2502 Strike expenses 0.0875 Legal expenses 0.0252 Loss on cottages o.ouo Miscellaneous 0.0730 Total $2.310 Freight and treatment on 43,758 tons $7-743 London office expenses, including $5,178.80 for a special report on the mine 0.513 Total cost $24.290 A good system of cost keeping, not necessarily an elaborate one, is an essential requirement of any well- managed mine, nevertheless it is very often, through faulty methods or tediously minute classifications, a mat- ter of considerable expense. When the ordinary shift bosses are 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 effort 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 stope, 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 fledgelings instead of experienced birds in charge of the operations. The autocrat, seated in his office 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 THE ECONOMICS OF MINING pays little if any attention to the practical mining ability of those in charge of the operations. Should not the ability to discover ore, or even not to lose it, when discovered, rank fully as high as mere cost of produc- tion? The most elaborate cost system ever devised will never successfully displace mining skill acquired 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 or another; but somehow, before the total cost reached a minus quantity profits vanished, the stockholders kicked, or something else happened, a strike, like as not, 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 up unprofitable and practically abandoned mines, made them pay handsomely, and turned them over at the expiration of their leases in condition where even the Rodomont autocrat could for some time work them profitably from his observation point, perhaps thousands of miles distant from the field of operation. Now, lessees do not depend on any elaboration of mining costs to secure these results, but rely almost entirely on their ability as miners and on their practical experience, which has taught them that mining is the art of making money from ore deposits; that the cost per ton is only one factor; and that breaking 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 objective point in mining. Therefore, I hold, the successful miner in any given mine is he who returns the largest percentage of profit from the gross 'value of the ore, not necessarily THE COST OF MINING. 345 the one who can show the lowest mining cost. To reach this desirable condition, the cost of milling or smelting must be studied, together with the cost of the actual min- ing and sorting or dressing of the ore; hence these charges, very properly grouped separately in the itemized costs, are brought together to form the total mining cost as previously defined. I favor a simple system of cost keeping, where the dis- tribution of supplies, etc., is made direct from the mine store, on the orders of the superintendent or shift bosses, and they are charged at once to the particular place or work indicated. The general subdivisions of mine costs that suggest themselves are: (i) Winning (blocking out ore), (2) stoping the ore, (3) dressing or milling or smelting the ore, the sum of these being the entire cost of producing and disposing of one ton of ore, provided always, the amount won during the period under review equals the amount of ore stoped, otherwise corrections must be made for increased or decreased ore reserves ; or, at least, the condition of the ore reserves should be clearly stated. The average stockholder is satisfied with the totals as above, together with the value of the ore and profit per ton, or the usual balance sheet and profit and loss state- ment. Then why bewilder him with itemized statements of costs? Useful and indispensable though they may be to the management, they are as invariably useless to stockholders. The matter of publishing itemized mining costs is one that mining companies do not, as a rule, approve. As the president of a large company once said to me, "It is our private business, and why should we give it to the world to satisfy the curious, or help educate young min- ing engineers who have not had practical experience along those lines, or to furnish ammunition for the stock- holders to make erroneous comparisons between two 346 THE ECONOMICS OF MINING mines of perhaps very different type?" Throughout the Rocky Mountain region the average mining companies have dealings with the railways and smelters in marketing their ores, and, rightly or wrongly, very often believe that these corporations are anxious to secure as high a tariff as they believe the ore will stand; and so, in places as far apart as British Columbia and the San Juan, and once in Old Mexico, I have at various times heard mine- owners say something like this : "Why should we pub- lish the itemized costs of producing a ton of marketable ore? Neither the railroads nor the smelters publish itemized costs for hauling or for smelting a ton of ore, and, furthermore, we do not believe that it costs the rail- way corporations any more to haul a ton of $50 ore than it would to move a ton of $15 ore over the same distance, and yet the charge is often double. And so with the smelters, the charges on some ores are based simply on their precious metal value." A full discussion of the various methods of classifying mine costs may, and I hope will, result in the gradual adoption of a uniform system, from which tentative com- parisons can readily be made between mines of similar type, etc. ; but under the present economic conditions that obtain in the West, the great majority of mining com- panies will, as now, refrain from publishing itemized statements of costs. p HJLIp ARQALL Denver, December 12, 1904. THE COST OF MINING (March 23, 1905.) The Editor: SIR The scope of such a discussion is necessarily wide, but in the following I shall confine myself to cer- tain fundamentals, rather than to a comparison of ex- amples. An intelligent study of mining costs must be preceded by an analysis of the various items going to make up the total, in order to obtain a segregation that shall be logical and useful. Such items as Mr. Ingalls gives in his brief tabulation are certainly useful, but they do not yield the whole, or even the larger part, of the value that the figures in themselves contain. This, I un- derstand, Mr. Ingalls recognizes, and I have no doubt that he will fully indorse the statement that a classifica- tion in this form may conceal details of the first impor- tance to the engineer. In the first place, it is pertinent to inquire, What are the uses to which accounting lends itself? There is the obvious use of supplying a business need ; of giving to the stockholders, present and prospective, a reliable idea of what the property can do in the way of profits; and, in general, how it is managed, though it must be admitted that comparisons of cost in this way may be misleading. In fact, they are chiefly valuable in raising inquiries that only a more logical segregation can answer. These com- mercial accounts will naturally fall under obvious and simple heads, presenting what would be, from the engi- neer's point of view, mere summaries of the more ex- tended subdivisions which are technically useful ; and it is the logical basis for these technical accounts which par- ticularly concerns this discussion. This basis may be simply a cutting of expenditure into small items, as is the case in Mr. Ingalls' table. Fre- quently this is all that is done, and the valuable infor- 348 THE ECONOMICS OF MINING mation afforded is considered the end of the business. But there is more to be gained than these figures directly give ; and, with this fact in view, it is worth considering what it is for which the engineer really has use. As manager, he wishes to compare his accounts, month by month and year by year,- both with themselves and also with those of other mines, as a check upon operation and for suggestion of improvement; so far as this goes, the items, as given herewith, answer fairly. But he wishes also to know how costs will be altered by change in ton- nage. This is a matter of importance, for the mine man- ager as well as for the examining engineer; it is imper- : fectly given by such a system, except for those divisions which are direct functions of tonnage. Some accounts are not functions of tonnage at all, such as superinten- dence, offices and taxes ; others are not proportional func- tions, such as pumping, hoisting; there is a long list of such accounts. Then both the manager and the examining engineer need a division; this should recognize accounts: (A) that are independent of, and (B) those that are dependent, on, tonnage; that is, (A) where the totals for a period do not alter with variation in tonnage, and (B) where they do so alter. Further, under (A) there are some (Ai) accounts that are practically constant, such as superintendence and management, and others (A2) that, while independent of tonnage, are variable, such as those that alter with change of season, traveling expense, etc. In close estimates it will help to have these known sep- arately. (B) also has two natural subdivisions: (Bi) where totals are virtually direct functions of tonnage, and (62) where totals are indirect functions of tonnage; that is, they alter with tonnage, but not proportionately. Examples of (Bi) are 'stoping' and 'tramming'; (B2) includes development, which varies according to condi- tions of mine and orebodies; also certain repairs. THE COST OF MINING 349 There is another large class of accounts, namely, those additions to plant, equipment and repairs that will make themselves felt over extended periods; in other words, 'capital expenditures/ These should be redeemed by charges against operating expenses over varying periods. Whatever may be the business policy of charging these off, there can be small question that the accurate logical treatment for the engineer is to consider them as a part of his operating expense, month by month. No estimate of cost which roughly assumes that such expenditures will equalize themselves will be fair; if they are not put into 'working cost' there is always the danger that they will be overlooked entirely in making estimates. A division of expenditure on these lines can be carried out to any extent of itemization, and will give a system of technical accounts that will furnish all the data desired. In studying the problem of a proper segregation, it will be seen that none of the advantages of the more common systems of plain subdivision will be lost; the basis is applicable to the smallest as well as to the largest mines; the degree of subdivision can be extended, as easily as in any other system, to any degree of minute- ness demanded. In the foregoing I have aimed to outline a familiar principle ; it is so well established that a large part of the recent discussion in this JOURNAL on 'Mine Equipment and Ore Reserves' hinges upon it. However, though the principle is not new in practice, so far as I know, before the discussion referred to, it had not been brought out in P rint R. GILMAN BROWN. San Francisco, March i, 1905. THE COST OF MINING (April 6, 1905.) The Editor: SIR In proposing this intricate subject, Mr. Ingalls has paved the way for an almost unlimited interchange of ideas upon an important, but neglected, branch of min- ing. As Mr. Finlay has so well put it, "The problem of deciding upon the best methods, the proper scale of opera- tions and the most desirable working cost to be aimed at, is one big enough for the best business intelligence that a mining engineer can muster." The subject involves a phase of mining concerning which not alone the newly graduated mining engineer lacks knowledge; it includes problems and conditions which many engineers of long experience have not had the good fortune to encounter. To obtain reliable and well segregated figures pertaining to working costs from the average mine, this is one of the most difficult tasks which the engineer can undertake; unlike the other fac- tors that contribute to mine valuation, the necessary data can be obtained only from written records. I cannot understand why so many mining 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 is 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 proper 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 given vein. THE COST OF MINING 351 It does not appear to be a difficult task to standardize the headings to be used in the final classification of min- ing costs, such as mining, tramming, hoisting, sorting, crushing, and so on, following the different processes used in the treatment of the ore ; but to settle upon a uni- form method of segregating the items contributing to these accounts, and a correct distribution of the moneys expended, this is a subject which should elicit informa- tion both interesting and instructive. For, no matter what the system of time-keeping may be (within economic limits), there are certain moneys which must be dis- tributed without the assistance of detailed record. Working costs will continue to show variations, in the same districts, under the same conditions of vein-width, capacity, etc., because engineers, like other people, differ in their views of application; but, nevertheless, there are certain fundamental principles to be observed. If uni- formity is regarded in mine statements (which reflect the local conditions), a desire to effect legitimate economy will be created, and inferior methods will soon be elimi- nated. As a concrete example, in illustration of the methods sometimes applied in the segregation of accounts, where milling and cyanidation only are employed, the following will serve ; the final summary is given first, in order to elucidate some. points more clearly: Summary. Cost Percent- Total Cost. Per Ton. age. Mining $128,787.68 $3.38 45.54 Transport of ore 3,857.18 o.io 1.36 Sorting and crushing 8,625.31 0.22 3.00 Milling 38,963.87 i. 02 12. oo Cyanidation 34,586.34 0.90 0.12 Gold realization 4,013.80 o.io 1.42 General charges 22,037.60 0.57 7.8 Office expenses 9,367.60 0.24 3.32 Development redemption 32,451.93 0.84 11.4 (Depreciation?) Total $282,691 .31 $7.42 352 THE ECONOMICS OF MINING In order to make the above summary valuable, and comparison possible, it is necessary to know what con- tributes to the several accounts. This is shown, in case of 'mining,' for example, to be as follows : Mining. Cost Percent- Total Cost. Per Ton. age. Salaries $4,462.88 $0.116 3.49 Wages (skilled) 12,018.84 0.315 9.34 Contractors 10,132.88 0.266 7.89 Wages (unskilled) 26,751.86 0.700 20.78 Food 10,889.82 0.280 8.49 Stores 3,7i9.n 0.096 2.88 Explosives 12,229.29 0.320 9.49 Charcoal 41.46 o.ooi 0.03 Fuel (timber) 475-75 0.012 0.39 Maintenance 2,590.76 0.066 2.00 Workshops 817.74 0.021 0.63 Transport 235.63 0.006 0.18 Hospital 539-76 0.014 0.42 Labor premiums 220.67 0.006 0.19 Pumping 10,867.76 0.288 8.44 Compound expenses 3,620.68 0.090 2.8 Compressor charges 633.08 0.016 0.49 Manufacturing and sharpening hand drills 8,489.17 0.220 6.59 Hoisting 5,7O2.ii 0.148 4.42 Underground tramming 13,040.95 0.338 10.05 Asaying 986.14 0.026 0.76 Surveying and sampling 321.31 0.008 0.25 Totals $128,787.68 $3.38 A number of the accounts given herewith, such as maintenance, pumping, underground tramming, manu- facturing and sharpening drills, require again to be sub- divided, because they in turn contain important factors ; with all this the question arises: To what extent does it pay to segregate mining accounts? The remaining items stores, wages, salaries, fuel, etc. carry us back to the timekeeper's and the storeman's records. It appears to me that with the details as given herewith, when accompanied by a correct distribution and a knowledge of the local conditions, the engineer should be fortified with material sufficient to direct the work effectively and to compile reliable forecasts. THE COST OF MINING 353 Probably one of the most troublesome accounts to deal with, especially in cases where the shares are quoted on the market, is 'development,' to which is charged the money expended in opening up the ore-bearing ground, before and after the reduction of ore has begun. The common interpretation of the term makes it include all operations (such as driving, cross-cutting, sinking ex- clusive of main shafts raising, hauling, sampling, assay- ing, surveying and handling the barren ground) which result in the opening up of ore. Up to the time when milling begins, we will assume that $50,000 has been expended upon development work, and it is estimated that 100,000 tons of ore have been developed, hence an obligation of o.5c. per ton has been created ; but a part of this money has contributed toward the partial exposure of other tonnage, which, however, cannot be accurately estimated. In order to arrive at the cost per ton of the developed ore, the measurements taken underground are used, while the monev spent is redeemed upon the basis of the tons milled. These two figures seldom, if ever, agree ; and, while the sorted product will account for a part of the discrepancy, there are always large differences between the tonnages as measured un- derground and the combined total of tons milled and sorted. In addition to this consideration, there are monthly expenditures on account of development work. The cost of development per ton over any period, as one month, depends upon the width of the vein encountered, the relative position of orebodies, labor conditions, etc., during that period ; thus, if development costs are charged to the current-month expense, wild fluctuation will occur in the working costs. Such irregularities create a feeling of uncertainty, which might be followed by forced sales of the shares and consequent depreciation, a result not tolerated in some mining centers. 354 THE ECONOMICS OF MINING Before the reduction of ore has begun, the cost of de- veloping a certain tonnage is far greater than at any other period, because administration and other constant charges must be wholly carried by this account; hence it seems only fair that certain adjustments should be made in redeeming this expenditure, otherwise the present shareholders become unduly taxed for the benefit of future holders. In some instances the expenditure, on ac- count of development up to the time milling begins, is charged to 'capital account/ and written off in the same manner as machinery, reservoirs, or other permanent equipment ; in such a case only the current-month expense is charged to working 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- velopment for each month thereafter to this account. Then a fixed charge is made monthly for development, and the 'suspense' account is written off in annual sums, which are measured by the work of the previous year. This method seems to give satisfactory results. It is desirable that the methods of distribution be re- flected 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., are supposed to cover expenditures on permanent work and equipment. If the conditions are such that the life of the enterprise can be calculated accurately, the treatment of this account is simple, and the capital can be amortized at a certain com- puted rate of interest. If this account be not embodied in a statement of working costs, nor referred to therein, effective work in mine equipment is not reflected. Hence, for this and for other less weighty reasons, it would seem important that a certain life be assumed, or other meas- THE COST OF MINING 355 ures taken whereby the moneys might, be redeemed upon a fixed basis, without creating an unduly heavy charge. A discussion that will conduce toward standardization of mining costs, as well as toward method in other depart- ments, will prove of invaluable service, both to the engi- neer and the investor. R c ROBERTS Berkeley, Cal., March 7, 1905. COST OF CHLORINATING CRIPPLE CREEK ORES BY PHILIP ARGALL. (April 27, 1905.) The special report on the operations of the Portland mine and mill during the year 1904, recently issued by the president of the Portland Gold Mining Company, gives us, for the first time, an opportunity of analyzing and esti- mating the total cost of chlorinating Cripple Creek ore in a modern mill. During the year under review, the Portland Gold Min- ing Company treated in its Colorado City mill 88,997.44 tons of ore, averaging $24.257 per ton. The mill was -credited with earning a treatment charge of $623,253.03 in handling this ore, which amounts to $7.003 per ton; the profit on the year's operation of the mill is said to be $153,833.73, or $1.7285 per ton treated; by deducting the latter amount from the treatment charge, we find the cost of milling a ton of ore, including metal loss, is $5.2745. There is a heading 'loss by extraction,' and that must mean metal loss, $105,951.41, which amounts to $1.1965 per ton treated, from which it appears that the book cost of chlorinating a ton of ore during the past year was $4.084, exclusive of amortization and interest on the capital used in the business. The method of keep- ing the accounts is somewhat peculiar, and evidently de- signed to compare the result of milling the Portland ore in the Portland mill, against selling the ore to the cus- tom mills; this, at least, would account for the peculiar system of allowing the mill $7 per ton for treating the ore, and I shall try to make this comparison. Turning to the treasurer's balance sheet, it is possible to trace out pretty closely the items of the above cost, but I make it very nearly IDC. per ton more, which would be almost balanced by the 'treating concentrates' item, or COST OF CHLORINATING 357 there may be some credit not apparent on the balance sheet that offsets this extra 10 cents. Total Cost Expense. Per Ton. Bullion expense $7,600.86 $0.0855 Treating concentrates 8,363.92 0.0938 Operating account 125,675.27 1.4121 Chemicals 69,451.63 0.7804 Assay supplies <. 5,362.21 0.0602 Store-room account 43,675.18 0.4907 Fuel (roasting and drying only) 38,835.48 0.4285 Power (electric) 26,395.92 0.2966 General expenses 12,150.95 0.1367 Legal expenses 10,763 .51 o . 1209 Office expenses 6,690.07 0.0752 Office furniture (fixtures) 890.38 o.oioo Repairs 442.90 0.0050 Treating by-products 16,493.20 o. 1853 88,997.44 tons $4.1809 $372,091.48 or $4.1809 In addition to the foregoing amounts there is a charge of $27,079.59 to 'equipment' and $33,560.76 to 'construc- tion.' As the mill has been in operation several years it is difficult to understand the further charge for equipment, in addition to a heavy construction charge ; in the matter of repairs, however, the palm is conceded to the Portland mill, unless perchance the cost of repairs is hidden in the 'storehouse' and operating accounts. To compare intelligently the above costs with the rates charged for treating ore by the custom chlorination mills, we must include amortization and the capital involved in the business. It is well known that the custom mills pay for the ore as it is sampled, and carry a large stock of ore on hand, usually a month's run. Therefore, we must charge to the Portland mill the interest on the capital locked up in ore, bullion, stores, etc., and I shall assume the following: Ore, 3,000 tons $50,000 Store 30,000 Bullion and gold in solution, etc 40,000 Working capital 30,000 Total $150,000 358 THE ECONOMICS OF MINING This at 8% will equal 0.1350. per ton of ore treated. Summarizing these figures we have the following : Cost of chlorinating (book cost) $4.084 Interest on capital invested in the business o. 135 Amortization, say 0.781 Metal loss 1 . 190 Total $6. 190 It would appear that the gold in the ore is billed to the Portland mill at $20 per oz. (the price paid by the custom mills), less $7 per ton treatment charge, so we are now in position to make a fair comparison between the Port- land mill and the custom mills in the matter of total cost of chlorinating Cripple Creek ore. As noted in this JOURNAL for December 29, 1904, p. 1022, the rate charged by the custom mills on ore varying from 1.25 to 1.5 oz. of gold is $7.75 per ton, less $i per ton on long-time con- tracts, so on the latter basis ($6.75) it cannot be said that the charge of the custom chlbrination mills is too high ; they have a large amount of capital invested in their plants and are entitled to a good interest on the in- vestment, considering the ephemeral nature of the busi- ness they are engaged in. I am pleased to see continued improvements in the chlorination process, as shown in the following extract from the report of the superintendent of the Portland mill : "We have inaugurated a system of saving the values in wash-water from the barrels, which has heretofore run down the creek, and now saves the company thou- sands of dollars each year." COST OF MINING AND MILLING BY R. J. GRANT. (April 27, 1905.) The detailed expenditure to be discussed refers to oper- ations at the Cosmopolitan mine, situated at Kookynie, in Western Australia. The figures are those for Septem- ber, 1904. It should be added that the Cosmopolitan is about 500 miles from the coast, and 120 miles northeast from Kalgoorlie, on the government railway. It is one of the many companies in Western Australia under the management of Messrs. Bewick, Moreing & Company. It was taken over by them in the latter part of 1902, with H. A. Shipman as mine manager. At that time the costs were about $6.75 per ton for mining and milling. When Mr. Shipman left, in May, 1904, the costs had been reduced to $2.95. The writer succeeded Mr. Shipman. George Gill is underground superinten- dent, and Alfred Bloomfield is mill superintendent. The conditions are not all that might be desired for low costs ; the labor question is a serious one, and wages are high for the class of workmen employed. The average wage per eight-hour shift is about $3.20 ; this includes all classes, from $2.85 per shift paid to truckers and shov- elers, which is the lowest rate, to $4 per shift for machine men 'working in wet ground, being the highest rate. Both machine men get the same rate ; in other words, no helper is recognized. Supplies are all high, explosives costing 50% more than in America, and other goods in proportion. Wood is used for fuel, and costs about $5.60 per cord, two cords being equal to one ton of average coal. Mine water, which is salt and contains i% solid matter, is used for steam- 360 THE ECONOMICS OF MINING ing and is a constant expense. The cost of cleaning boilers alone is over $300 per month. The ore, or 'stone/ as it is called, is a glassy white quartz, carrying a small amount of iron pyrite, and, at present, about 7 dwt. gold per ton. The 'reef lies at an angle of 41 between hard granite walls, and averages 8 ft. in width, occasionally carrying from I to 4 ft. of waste in the center. All ore in the stopes has to be shov- eled, owing to the flatness of the foot- wall. For the month under report, the ore came from the 700, 800 and 900-ft. levels but chiefly from the goo-ft. level. The ore is trucked from the stopes to bins at the shaft, and hoisted from there in skips, holding about 2j tons each, to the surface, where it is dumped into bins. It is run by gravity over grizzlies into Blake crushers set to i| in. It is then hoisted 50 ft. and trucked to the mill bins. The mill contains 50 stamps, each weighing, when newly shod, 1,090 Ib. .The drop is 8 in., and the speed averages 106 drops per minute. The screens used are 2O-mesh wire- cloth, and the height of discharge is from \ to 2^ in. The pulp goes from the stamps over copper plates, 12 ft. long, then over 10 Wilfley tables to a tailing wheel, where it is elevated 50 ft. and run into leaching vats, which are fitted with distributors; here the sand settles, and is treated with cyanide. The sand residue is carried, by trucking and hoisting, to a dump 60 ft. high. The slime runs back to spitzkasten, where it is settled ; then it passes into agi- tation vats and is treated with a 0.07% cyanide solution, and filter-pressed; the overflow water is run back to the battery and used again. The residue is trucked to a mixer, where water is added, and afterward pumped to a dam. The mining and milling costs include everything ex- cept the London office expenditure, and cover taxes, in- surance, general manager's salary, etc. All development work in the mine is done on contract at the following MINING AND MILLING COSTS 361 average prices: Drifts, $10; cross-cuts, $12.50; raises, $8.20 per ft. The contractor provides all explosives and candles, and delivers the ore into the bins at the main shaft, the company furnishing drills, tools and power. Precipitation takes place in ordinary zinc boxes ; the clean-up is effected by the acid method. The roasting and smelting are done in the usual manner. The gold is extracted as follows : Amalgamation (boxes and plates) 61 . 55% Concentrate by cyanidation 8 . 50 " Sand by cyanidation 14.50 " Slime by cyanidation and filter-pressing 6.00 '' Average value of 'heads' for month 6 dwt. 18 gr. Average value of 'residues' for month o *' 15 Total extraction 90. 55 " :rage value of 'heads' for month ;rage value of 'residues' for month The cost of mining was as follows : Per Ton Mined. Labor and salaries $0.48 Explosives o . 1050 Candles 0.0125 Steel 0.0705 Sundry supplies 0.0610 Power for machine drills o. 1300 Assaying and sampling 0.0165 Repairs and maintenance 0.0430 General expenses 0.0575 Proportion pumping o. 1225 Trucking and hoisting ore 0.2350 Timbering and filling stopes o. 1300 9,193 tons $1-3555 The cost of milling is given in the table below : Per Ton Milled. Rock-breaking $o. 0382 Ore transport, from crushers to mill-bins 0.0618 Battery and plates 0.4062 Concentrating 0.0340 Cyaniding concentrate o . 0236 Cyaniding sand by percolation 0.2254 Cyaniding slime by agitation o . 0886 Filter-pressing slime 0.0776 Precipitation and smelting 0.0698 Disposal of residue o. 1778 9,193 tons $i .2030 362 THE ECONOMICS OF MINING The working cost per actual ton treated was as follows : Milling (9,193 tons). Per Ton Milled. Labor and salaries < $0.0906 Power o. 1750 Repairs and maintenance 0.0544 Assaying and sampling 0.0072 General expenses 0.0108 Quicksilver 0.0070 Shoes and dies 0.0358 Sundry supplies 0.0254 Total cost $0.4062 Concentrating (157 tons saved). Per Ton Treated. Labor and salaries $i . 2194 Power 0.4266 Repairs and maintenance o. 1318 General expenses o. 1466 Sundry supplies o. 0654 Total cost $i .9898 Cyaniding Concentrate (162 tons treated). Per Ton Treated. Labor and salaries $0.4286 Power 0.0566 Assaying . . , 0.0324 General expenses 0.0496 Potassium cyanide o . 7692 Total $i .3364 Cyaniding Sand by Percolation (6,768 tons). Per Ton Treated. Labor and salaries. $0.0498 Power 0.0724 Repairs and maintenance 0.0428 Assaying o . 0064 General expenses 0.0060 Potassium cyanide 0.0936 Sundry supplies 0.0024 Total cost $0.2734 Cyaniding Slime by Agitation (1,456 tons). Per Ton Treated. Labor and salaries $0.0906 Power o . 0308 Repairs and maintenance 0.0530 Assaying 0.0218 General expenses 0.0106 Potassium cyanide o . 3294 Sundry supplies 0.0222 Total cost $0.5584 MINING AND MILLING COSTS 363 Filter-pressing Slime (1,456 tons). Per Ton Treated. Labor and salaries $0.3488 Power 0.0206 Repairs and maintenance 0.0362 General expenses 0.0418 Filter-cloth 0.0336 Sundry supplies v 0.0092 Total cost $0.4902 Precipitation and Smelting (9,193 tons}. Per Ton Treated. Labor and salaries $0.0204 Repairs and maintenance 0.0022 Assaying 0.0050 General expenses 0.0024 Fuel 0.0046 Zinc shavings 0.0138 Sulphuric acid 0.0126 Sundry supples 0.0088 Total cost $0.0698 HOIST BY HIS OWN PETARD (Editorial, April 27, 1905.) A spasm of exactitude has swept across the mining world; 'ore-reserves' has become a term of dreaded im- port ; the young men have armed themselves with a boom- erang and the old hands have been astonished into silence. The campaign for method in sampling, for conscience in estimating, and for science in final appraisal of mines has succeeded beyond our expectation. Transmission of ideas has been helped by the technical literature of the profession, and now, like the undertow that meets the oncoming surf, we are receiving the backward wave of a discussion that has spent its force for good. We are threatened with virtues that have been exaggerated to vices, and with methods that have been debased to a fetich. The whole question of ore-reserves has become a state of mind ; there is a palsy on judgment, an eclipse of experience. The mining engineer, who once used his brains with cheerful confidence to formulate clear opinions regarding the condition of a mine, now stands panic-stricken on the edge of a difficulty from which he cannot retreat. From emphasizing the care required in determining the com- mercial value of ore, from the demand that the old happy- go-lucky style of inspection shall no longer be tolerated, from these and other efforts to ally science with experi- ence, we have passed to that stage where engineers state tonnages with fearsome minuteness and quibble over as- says of academic difference, until the last stroke of all is the suggestion, in South Africa, to "audit ore reserves" and appoint a government-certificated-ore-reserve-audi- tor! In truth, it is time to pull up. West Australian mining has been suffering from this intoxication of theory until it is recognized that each estimate of the ore blocked out in a mine must be more conservative than the HOIST BY HIS OWN PETARD 365 last. A variation which is no real difference becomes a discrepancy; a capable engineer's work is stultified by that of another equally capable, simply because the two of them do not sing a perfect duet of appraisal, and share- holders tremble every time a cablegram comes from the mine manager. It has gone so far that the general condi- tion of a mine, the metallurgical treatment of the ore, the excellence of management, are of no avail when weighed against the estimate of the ore in reserve; indeed, one could maintain the shares of a mining company at a big premium without producing an ounce of gold or paying a penny of dividend, if only at stated intervals some engi- neer would certify that the ore-reserves had increased. In South Africa the sampler looms almost bigger than the consulting engineer, and in America the English-owned mines which are suffering from the same miasma are de- scribed by their engineers in terms which are so cautious that, whether twice as much or half the amount of ore stated should be extracted, no censure would be possible. In the old days they guessed twice and divided by two for accuracy's sake ; nowadays the engineer, more solicitous for his own reputation than his client's welfare, hedges with providence and divides by two, so as to be safe. Min- ing is being made ridiculous ; there is an idea that risk can be eliminated, that shareholders can insist on supernatural closeness of calculation, that engineers must save their skins and that everyone must "get out from under" when an orebody happens to misbehave. And in all this, have we not lost the main point of mining what the old Cornish captains would call the 'sport' of it the exercise of experienced judgment in sizing up the present character and future prospects of a mine? It appears so. We no longer buy a mine for the chance of favorable development, the making of a mine out of a prospect, or a bonanza out of a struggling hole-in-the-ground ; we take no risks ; we buy ore, as if 366 THE ECONOMICS OF MINING by all the measuring and assaying and arithmetic we can eliminate the essential risk of estimating what we do not see, save at its edges. Sample and survey and calculate all you please, and then, even if you face the facts like a man and do not play tricks to avoid responsibility, you still have only one-half sometimes not even one-half of the essential problem. The future prospects of a mine remain beyond the vision of a timid doctrinaire; to gauge them fairly needs the ability to observe beyond the point of the pick, and the honesty to weigh facts, to an extent far beyond the shifting compromise of a conservative ore-reserver. It is time to get back to bedrock. DREDGING AT OROVILLE* BY L. J. HOHL. (May ii, 1905.) The average running time of the boats varies a great deal in different months and under different circum- stances. A new boat will be able to make better running time, as no serious breaks are likely to occur if it has been made strong enough in the first place. A breakdown of any magnitude, such as upper tumbler shaft, lower tum- bler shaft or bucket line, will cut down the average run- ning time. Where the boats are influenced by the stage of the water in the river, high water may seriously ham- per them at certain seasons, and last winter was an ex- ceptionally severe one in this respect, high water occur- ring as early as November, 1903, and being with us all through February and March of 1904. To show an extreme case I have taken a selected year in the run of a boat exposed to the high water, so that the year contains all the high water of last season. Beside high water troubles, the bucket line was in bad shape and broke frequently, the upper tumbler shaft broke twice during the period under consideration, the lower tumbler and its shaft had to be renewed, also the con- veyor-belt, and, to cap the climax, the power was abnor- mally unsteady and unreliable during most of that year. The running time of the boat, figuring on the basis of 365 days in the year and 24 hours to the day, was 16 hours out of 24. It may seem odd to call particular at- tention to the fact that in this calculation the year is taken as having 365 days and each day to have 24 hours, but when you look over the records of some of the boats you will find that some of the stoppages (such as high water, holidays, etc.) are not counted on, the owner or manager * Abstract from paper read before the Thirteenth Annual Con- vention of the California Miners' Association, December, 1904. 368 THE ECONOMICS OF MINING arguing that the dredge should not be charged with any delays not originating in the dredge or its appurtenances. The simple truth that the dredge is not earning anything when it is stopped, whether such stoppage originates within or without the dredge, and which fact finds ex- pression on the balance sheet of the company at the end of the year, is sufficient to show the fallacy of the assumption. Returning to the case under consideration, I append a tabulated statement: Causes of Stoppages, in Per Cents. Belting 1.3 Bucket line 23 . i Lines breaking and changing 4.8 Cleaning up 1.7 Conveyor 5.3 Elevating machinery 1.5 Frictions and winches 2.5 General repairs 1.7 High water 15.6 Holidays 1.8 Ladder and ladder hoist 1.3 Lower tumbler 8.3 Oiling 3.8 Power off 4.5 Shaking screen 4.5 Stones, roots and stumps 0.7 Upper tumbler 16.2 Water pump 1.4 Total loo. o Another set of figures follows, covering the operations of dredges over a period of three years, and it is but fair to state that the high percentage shown under the head of power troubles is not attributable to the present com- pany operating in the field, but to an older electric-power plant : Causes of Stoppages, in Per Cents. Moving ahead 5.7 Power troubles 15.6 Repairs and holidays 75.4 Sand pump 3.3 Total . .100.0 DREDGING AT OROVILLE 369 The average running time for the period given was 16 hours, 56 minutes. From other records extending over long periods of time it is probable that the best average running time of the boats will hardly exceed 18 hours out of 24, taking all causes of stoppages into consideration and figuring on 365 days per year. It is true that in a few cases better running time has been obtained, but where this has been the fact, it was due to conditions sur- rounding that case, which it is not safe to figure on in every instance. While the figures so far presented were for Bucyrus boats, I have condensed from Mr. Monroe's paper in the Mining and Scientific Press of February 6, 1904, cor- responding data for a 5-01. ft. Risdon boat, which I give below : Causes of Stoppages, in Per Cents. Bucket line and ladder 30.7 Cleanups 7.7 General repairs 17.9 Lines 9.9 Power troubles 7.9 Pumps 5.4 Screens 4.5 Stacker 9.4 Total loo.o The data above extended over a period of one year, but not a picked one, it being a regular calendar year. The bucket line on the boat was renewed during the year, which raises the percentage of time lost on account of the bucket line and ladder. Comparing the percentage of time lost on account of shaking screens and stacker with the percentage given for the picked year of the Bucyrus boat, we find, curiously enough, that the loss due to the shaking device in either case was exactly the same, while the Risdon stacker shows 9.4% as against 5.3% for the belt-conveyor. The running time of the Risdon dredge for the year amounts to 16 hours, 39 minutes out of 24 hours. The cost of repairs to the con- 370 THE ECONOMICS OF MINING veyor during the year for the Risdon boat amounted to $1,241.28, an amount which about equals the cost of the belt-conveyor in this particular instance, if the difference in lost time is taken into consideration. As to the capacity of the different types and styles of boats, no fixed rule can be laid down, for the reason that the same dredge in different ground may not be able to make as much of a yardage, owing to local conditions. To mention one of these conditions, I would say that the washing of very sandy soil is more difficult than that of pure gravel, and it may be necessary to cut down the digging, for the reason that with full buckets the riffles become crowded. A fair average yardage would be about as follows : Bucket Capacity. Yd. Per Month. Risdon dredge 3 cu. ft. 25,000 to 35,000 Risdon dredge 5 cu. ft. 35,ooo to 45,000 Bucyrus dredge 3 cu. ft. 35,ooo to 45,000 Bucyrus dredge 5 cu. ft. 50,000 to 65,000 The above figures would represent the work of a dredge, as now in use in the Oroville district, extending over a long period of time. The maximum obtainable will far exceed the figures quoted, and may be kept up for a short period with any one of the boats. The cost of production depends to a great extent on the magnitude of the enterprise, which reduces the gen- eral expenses by dividing them up among a number of different boats, and by the chance of diminishing the cost of repair by the erection of shops hear by. It has to be kept in mind that the operating expenses are influenced by local conditions, such as nature of the ground, general efficiency of digging and washing appliances, adjustment of motors and resistances to their work, extraordinary repairs occurring in short periods of time and a number of other details. The following statement will give a fair representation of the extremes of the cost per cubic yard of material : DREDGING AT OROVILLE 371 Operating Expenses Per Cubic Yard of Material Power i. 06 i. 20 1.15 1.61 1.77 Repairs 2.86 3.03 3.46 2.97 3.80 Labor 1.64 1.82 1.85 2.33 2.05 General expenses. 0.64 0.67 1.23 1.28 0.73 Totals 6.20 6.72 7.69 8.19 8.35 The data for the above statement were obtained from different operators in the district; the period over which they extend is in each case not less than one year. In some of the figures given the taxes are included under the heading of general expenses, in others they are not. The cost of superintendence in some instances is included under the item of dredge labor, in others it is charged to general expense, but in all cases the totals give all the ex- penses incident to the working of the dredge and keeping it in good running order. The life of a boat has not been determined as yet, but with a well and strongly constructed hull, which is taken good care of, it should be not less than 12 to 15 years in this climate. It is self-evident that during that period a great portion of the machinery and appliances will have to be renewed over and over again, such as tumblers, lad- der rollers, buckets, shaking screens, pulleys and shafts, spuds, conveyors, etc. ; but the item of dredge repairs, as shown in the above statements of cost of operating, will cover these items, and there is no doubt that the experi- ence gained so far, and which will be gained in the future, will have a tendency to gradually diminish such expenses, and, what is even more important, forestall the occurrence of larger mishaps. THE COST OF MINING (May n, 1905.) The Editor: SIR Mr. Ingalls' very pertinent article, 'Cost of Min- ing in America,' brings up a subject meriting the broadest discussion. There are few of us who have managed min- ing properties who cannot add something to the general fund of knowledge in this department. My own custom has been always to keep a monthly record, and at the end of the year to make a full general report in the form of a statement of cost and production. I happen to have re- tained a copy of one of these reports made several years ago, and no harm can be done now by making it public. The results may not be 'standard,' but when it is taken into account that we were 60 miles from even a wagon road, and that the lode was only from 2j to 3 1-3 ft. wide, and the orebodies small and scattered over three-fourths of a mile on the strike, it will be seen that worse might have been done. Of course, in a report of this nature, only the general headings are required, and these sift down to : Cost per ton : Prospecting and dead work. Ore extraction. Ore reduction. General expenses and sundries. To determine these a more or less detailed series of accounts must be kept. In my own work, I have con- sidered only a few general subdivisions as necessary ; although strict account is kept of everything in detail. For instance : In my 'statement of costs,' etc., ore extrac- tion is what is usually classed as 'mining,' and this I THE COST OF MINING 373 consider as made up, for the purpose of this report, about as follows: Mining : Assay department: Labor. Materials. Sundries. Ore breaking: Labor ) Materials j Including same for timbering, etc. Sundries. Administration : Salaries. General expenses. Office expenses. Under the head of 'materials' is bunched everything used in that line during each month. 'Sundries' embraces minor expenses not coming under any one of the general headings adopted item n of Mr. Ingalls' list. 'General expenses' embraces the fixed expenditures in carrying on the work, such as items 4, 5, 9 and 10 of Mr. Ingalls' list. In this way one gets a full and accurate idea of the work carried on during a year, without the need of tabu- lating all expenses in minute detail; for subdivision can be carried out to the point of stultifying the object in view. Although some improvements can undoubtedly be suggested, still I believe that such a compilation as I here present about covers the ground, and gives a much more full information than could fifty pages of . written report. All repairing, of whatever nature, in the mine, all drift- ing, sinking, raising and timbering of such works, run- ning out waste, etc., I always class as 'prospecting and dead work,' and only consider the ore as mined when it is delivered to the bins or on the dump. All sorting and 374 THE ECONOMICS OF MINING 00 . 1 --- vo' lx . co ix in o\ O co o M VO i- w Tt- rf o\ inoo ro ^ >-i c p p u s I W J5 s H M I CO tx -> x ,-, T- 1 * tx tx ro in in N "? an " 6 6 6 ~ 6*6 6 d\ xvov iPOVO wVOvO NO\N txmi-i 00 \0 00 M 0\ * M \ N N txrotvfON i-i fOOr^ moo O*\O vo *--9-<-<- 1-1 i-t CO Tt O N ro rn 6/MX) ^"00 ^f ON W O\ ^"VO O *o in w VO O^OO >VO f> 00 Tf P< Tf IX I - 2 e 8e 5 ! 5 I S^gi >& dg a, Sj S g CU 5 - ; O"O> H H< .0-3 H eq c5 w 4 uivd txod d\ d N o 4 ovd txod d\ d ^' ro 4 c c 5c s 8| SE 73 ti I "*"-a" sod d\d * C05T OF MINING 375 ^ c t: 3 3- 2 w- S u, 3 c H o rt > o" o > i> o (/) H< H H< HPn O s 3 2 H * -3 5= 376 THE ECONOMICS OF MINING preliminary work necessary to secure workable ore should be charged to 'ore extraction/ In the case we now have under consideration, it will be noted that about 33 per cent of the cost per ton was due to prospecting and dead work. This was due to the urgent need, at all times, for ore; there being practically no reserves, and no regular, continuous orebody. Under the head of 'general ex- penses/ I always include improvements of all kinds, and have always charged these to the working expenses of the month in which they were made. I venture to say that there are few cases where tn<: costs in one mining district can be taken for granted as fitting some other camp ; and where grave mistakes are sometimes made is in assuming this, when, as a fact, ma- terials of all kinds may cost from two to three times as much in a new region as in some favored region which the engineer making the 'finding' may have in mind. In figuring on probable costs the greatest care should always be used, and the fact borne in mind that mining and mill- ing costs that can be closely approximated do not consti- tute the sole expense of exploiting a new orebody; but prospecting, dead work and general expenses have to be taken into account, for they often amount to as much as do mining and milling. Especially is this the case with small, irregular lodes and orebodies of irregular shape. I hope that this letter may, at least, cause some one to take issue with me, thus enlarging the discussion on such a vital subject ; or if not worthy of such attention, that it will bring out the latent knowledge of some well informed co-workers who, because it all seems so simple to them, refrain from giving valuable experience to the profession at lar e ' E. A. H. TAYS. Fuerte, Sinaloa, Mexico, February 16, 1905. THE COST OF MINING 377 SUMMARY.* Total production for year $280,797.37 Total expenses for year 186,243.14 Difference $94,554.23 What concentrate would produce net by shipping 71 1.95 $95,266.18 Less gold purchased during year 1,172.19 Net profit for year, assay production $94,093.19 Net profit for year, actual returns from bank $93,757-65 * See table, pp. 374*5 SOME PUMPING DATA BY R. OILMAN BROWN. (May 18, 1905.) The following figures have been collected from records kept at the Brunswick mine, Grass Valley, Cal., during the fall and winter of 1903-4. In the previous year an extraordinary flow of water was cut on the 1,250- ft. level (1,017 ft. vertical depth), which quickly drowned the Cornish pumps by which the mine had been pre- viously drained. The water raised to the 7OO-ft. level (505 ft., vertically, below the collar of the shaft and 376 ft. below the drainage adit), and was there held by the i2-in. plunger of the Cornish system. The problem of unwatering presented some complica- tions, chief among which was the small size of the shaft compartments, which, in the upper and older part, were 32 by 39 in. clear. This precluded the use of large sink- ing-pumps and finally led to the selection of the air-lift for the actual unwatering, lack of efficiency being of but small moment when compared with the advantages of- fered in compactness, simplicity and small first cost. The use of the air-lift for the work was first suggested by E. A. Rix, of San Francisco. The general scheme for freeing the mine of water and installing a permanent system was worked out as follows : Starting from the rate at which the flooding water had risen in the shaft, it was determined that the permanent system should have a maximum capacity of 500 gal. per min. ; a pump of that capacity was to be installed at the 7oo-ft. level and the water lowered from that horizon with an air-lift to the 9OO-ft. level. There an auxiliary pump was to be placed, and the water again lowered by the air-lift to the i,ooo-ft. level. Here a second perma- nent pump was to be placed, discharging to the 7OO-ft. PUMPING DATA 379 level. Below the i,ooo-ft. level the unwatering was to be continued as far as possible, a pump station to be cut out and the auxiliary pump to be removed to it, the remain- ing distance to be freed by the air-lift again, assisted by a small sinking-pump and by bailing. The event showed that the capability of the air-lift had been underestimated, for the water was lowered with it from the 700 to the i,ooo-ft. level, and there held for five weeks while the second pump was being installed. During this period of installation the lift was handling 25.6 cu. ft. per min. to a vertical height of 288 ft., with a submersion below the surface of the water of 152. Air Lift. The air was supplied by a pair of duplex single-stage compressors, driven by electricity, and giving a united displacement of 9.91 cu. ft. free air per revolu- tion. The speed was constant at no rev. per. min. These compressors were placed 50 ft. from the collar of the shaft, and delivered the air through a receiver and a 4-in. air-column to the mine. The column for the air- lift was of 7~in. tubing, with flange unions, and it was lowered down the shaft on skids sliding on the track of the skipway. The interior air-pipe was 2 inches. The following table gives the record for a part of the unwatering period, arranged in a decreasing series, ac- cording to the ratio of submersion to lift. By 'submer- sion' is meant the vertical depth of the bottom of the air-pipe below the surface of the water, and by 'lift' the vertical height of the discharge above the surface of the water. Tree air' is assumed to equal the displacement of the compressor cylinders. The data given in the table on page 380 seem conflicting, but they indicate clearly the change in efficiency of air- lift work due to increasing submersion. The power con- sumed was determined by meter readings over extended periods, and includes all the mechanical losses in the compressors and pipes. 380 THE ECONOMICS OF MINING Subsequently a 4-in. column and i-in. air-pipe were used below the i,ooo-ft. level, with the results given at the foot of the table. This was more in the nature of an experiment than anything else, and showed clearly the unsatisfactory operation under such an extreme condition. As the final result of the experience gained in this fa ^ c : I 3* < S s| So 8 5 c36 1.86 103 191 90 541 58.9 9-2 10. 1 1.84 97 179 90 54i 58.9 9-2 9 I i. to 1.64 1.25 3 260 185 172 87 89 84 907 54i 541 46.5 56.5 49- J 9-5 9.6 ii. 9^6 10.7 12.4 .87 174 151 90 1090 48.5 22.5 7-9 .86 204 175 90 1090 33- 33-1 6.3 75 186 139 89 1090 43- 25-4 .72 189 136 89 1090 40.5 26.9 7- 65 240 157 94 1090 31.9 34-2 6.7 .65 288 190 93 1090 25-9 42.1 6.2 59 273 161 99 1090 29-5 37- 7.2 59 277 163 1090 30. 36.3 6.8 .58 264 152 98 IOOO 30.4 35-9 6.7 57 280 160 97 1000 27.7 39-4 6.7 .57 281 159 97 1090 27.7 39-4 6-4 53 287 153 96 1090 27. 40.4 6.4 t.25 196 48 60 1090 9 121. i 1.8 t Below i.ooo ft. level. work, it can be conceded that constant volume of com- pressor delivery (that is, constant speed of motors), and frequent changing submersion and lift are not conducive to economical work; exact adjustment of air vol- ume and pressure to submersion and lift are essen- tials for good efficiency, and under the conditions usual in work of this kind are not obtainable. Ror regular air- lift work, as from deep wells, 32 to 35% is spoken of as PUMPING DATA 381 quite within the range of possibilities. Notwithstand- ing the low efficiency, however, the method proved itself highly useful, and cost less in power and plartt combined than any other that could have been applied. Electric Pump. The electric pumps adopted for this installation were of the Aldrich type, manufactured by the Allentown Rolling Mills. The two main pumps were 5-plunger, single-acting, 6-in. diam. by 12-in. stroke, with a rated displacement of 66.7 cu. ft. per min. One of these was placed at the 7oo-ft. level, before the unwatering was commenced. It was driven by two 4O-h. p., 44O-volt, induction motors, through a single set of reduction gears. The other pump was a duplicate, except that it was driven by one 5O-h. p. motor. The respective heads for these pumps are 376 and 290 ft. The auxiliary pump was of 3-plunger upright type, driven by a 4<>h. p. motor. The current was brought into the mine by lead-covered, armored, three-conductor cables. As originally installed, the cable, as far as the 7- blacksmith's coal " 16.50 19.38 $120.29 i%y 2 boxes candles 2040 Snowflake " 3.00 $55.50 $55-50 2,600 Ib. powder Repauno gelatine ' 14-25 370.50 10,700 ft. triple tape fuse ' 0.46 49.42 2,400 caps Lion brand... ' 0.75 18.00 437.92 50,000 ft. timber and plank " 17.50 $875.00 The ratio of plank and square timber used was, square timber 55.36%; 2-in. plank, 44.64%. Labor. Blacksmith, 57 days @ $4.00 $228.00 Blacksmith helper, 24^4 days: ' 3.00 72.75 300.75 Carpenter, 77 days " 4.50 $346.50 Superintendent 556.92 Contractors 3,424.00 Pumping and hoisting account 1,916,05 Plant maintenance and ad jitions account 534-79 $8,567.7* Hardware supplies $0.561916 per foot Candles 0.259345 Ammunition 2.046355 Timber except guides 4.0887 Pumping and hoisting account 8.9535 Plant maintenance and additional account.... 2.4986 Blacksmith work 1.405374 Carpenter work 1.61916 Superintendent * 2.60 Contract price 16.00 $40.03 " " 10 in., all timber 10 by lo-in. fir. For hoisting the rock we used a bucket with the bail pivoted below the center, and for lack of height under the sheave it was hung just 2 ft. under the cage; to dump it we hinged a door on 386 THE ECONOMICS OF MINING the opposite side of the shaft from that on which we caged the cars ; on this door we placed the car and dumped the rock into it from the bucket. We used the cage to lower and hoist men, also to hoist rock from the 4OO-ft. level, where we had two shifts, of two men each, running a drift. While the mine made considerable water, the shaft was quite free from it ; what there was came from near the surface and amounted to 50 gal. per hour, which we hoisted to the 6oo-ft. station and dumped it into a launder, which carried it to the mine sump. We started to sink November 29, and finished February 19. The shaft being well in the foot-wall the granite was very hard for 160 ft. ; the remainder, while it was good stiff ground, broke well. The contract price was $16 per foot, the company furnishing all material ; there were four contractors, who employed eight others, thus making four men per shift. We used two 0-32 Ingersoll-Sergeant rock-drills. When sending up rock, one of the shaft men acted as top car- man, for which I allowed the contractors $3.50 per shift ; this man also handled the rock from the drift, so that when there was no rock coming out of the shaft we had no top man to pay. We found this plan advantageous both to the company and contractors, for the man that worked on top got $4, the same as the men on the bottom, hence he got a 'move on him/ The distance sunk 214 ft.@$i6 cost $3,424 ; to which add $357 for top carman ; dividing by 864, the number of shifts, gives $4.37 per shift per man. The top work was charged to pumping and hoisting account. J AMES HUMES. Basin, Mon., May 15, 1905. THE COST OF MINING (Editorial, June 8, 1905.) The contributions to this discussion have not been numerous, but they have come from men entitled to speak with authority. On the main points there has been prac- tical unanimity; for instance, the need of a simple but comprehensive system of accounts and the subordination of the cost of mining to the vital question of profit per ton of ore. Among the factors which explain the marked differences of cost made apparent by the reports of min- ing companies, two are specially notable; we refer to the effect of sorting and the efficiency of labor. In districts where mining operations follow small and irregular seams of rich ore scattered through a large mass of material of low grade, it is a fundamental problem whether to work the rich ore separately, obtaining a clean high-grade prod- uct, or to break down the entire mass of mineralized lode, with subsequent sorting at surface. It is a question whether the maximum profit can be secured by breaking the rich streak by itself (that is, to 'resue') or to min- imize the cost of breaking by taking the full width in one blasting operation. In the one case the expense incurred underground is greater; in the other, sorting supervenes at surface. The choice of methods will depend largely upon the contents and character of the extra width of rock broken down with the main ore-streak. Here is where the 'cost of mining' trembles in the balance. Each case must be worked out individually, according to particular conditions; and, in the weighing of the factors affecting the final profit, there comes the test of good management. The quality of the labor employed is another basic fac- tor. It is hardly realized, by shareholders and directors, how great a difference in the cost of mining is created by inefficient labor. In this respect the mines which are able to use the contract system and those which are free 388 THE ECONOMICS OF MINING from the unintelligent tyranny of the miners' unions have a great advantage over those that are dominated by walk- ing delegates and are compelled to employ unskillful work- men at 'day's pay.' Thus the Joplin and the Flat River districts in Missouri afford a strong contrast. Among other aspects of the labor problem, it is, we think, a safe generalization, that mine operators find it economical to make the best of whatever native labor may be available. In Korea, in Mexico, in Burma, in most countries where the natives can be trained to do the work in mines, it is cheaper to educate them to the American or European methods than it is to introduce the high-priced workmen of more advanced communities, because the extra skill secured thereby is rarely compensation for the climatic effects on foreigners and the dependence upon men who cannot be replaced save with great loss of time and the incurring of a one-sided obligation. In all comparisons initiated between working costs obtained under labor con- ditions so diverse as those of the United States, South Africa, Mexico, and Western Australia, it is necessary to have regard to this factor. In a recent issue Mr. Philip Argall made some perti- nent remarks concerning the ability to discover ore in a mine as being at least as precious as that of keeping down the costs of operation after the ore has been found. He quoted an instance the identity of which it was not diffi- cult to recognize. Undoubtedly, skill in seeking ore- bodies is one of the most difficult to appraise, because it must be, to a large extent, dependent upon accident; nevertheless, it is well for those in control of mines especially such as maintain an expensive organization to realize that no quality is so directly contributory to profitable mining as the instinct or experience that enables a superintendent to follow the ore or, when it fails, to pick up a new trail of ore deposition. That is why 'tributers' or lessees make an expensive mine management look silly THE COST OF MINING 389 when they take over a mine supposed to be exhausted and forthwith uncover valuable ore-shoots. Occasionally, the increase in output, coincident with the tributer's regime, is traceable to patches of rich ore hidden by miners pre- viously on May's pay' ; but, as a rule, it is simply the re- sult of the initiative displayed by men who are no longer working for a company, but for themselves. Any method of management which utilizes this characteristic of hu- manity is likely to induce economy in the cost of op- eration. DEEP MINING (Editorial, June i, 1905.) The finding of gold at 4,161 feet in a Bendigo mine is affording subject for comment, in Australia particularly. Murchison's dictum regarding the non-persistence of gold- quartz veins is resurrected, and that worthy geologist, but unfortunate generalizer on mining matters, is held up to ridicule. When Murchison wrote, 50 years ago, gold mining afforded no data for large statements regarding persistence; and even today the discussion of the subject is academic unless it is tied to the economic aspect ; in other words, veins may or may not persist to .depths be- yond man's reach; the point is, that man will make no effort to follow them if they do not pay. It is the prob- lem of the persistence, not of gold-quartz, but of pay ore. Thus, our esteemed contemporary, the Australian Mining Standard, says that "the question (of depth in mining) is, of course, largely governed by the cost of working." It is wholly governed by it ; mining is not a scientific pur- suit, but a money-making business, based, of course, on the application of scientific knowledge. That is why emi- nent geologists occasionally go astray. It is interesting to know that quartz carrying native gold, probably in coarse particles visible to' the eye, has been intersected by man's burrowing at a depth of three- quarters of a mile ; but this does not imply profitable min- ing at that depth. The ore in the New Chum Railway mine, at Bendigo, was cut by a winze sunk 305 ft. below a crosscut at 3,856 ft. ; the discovery is the result of ex- pensive exploration. The last profitable mining was at 3,350 ft. We question whether the orebody will prove remunerative, simply because we are aware that mining at Bendigo, on the whole, has not been profitable below 2,500 ft. or even at a shallower horizon, despite oc- casional patchy discoveries and a few orebodies of such DEEP MINING 391 dimensions as to pay spasmodic dividends which, while they have lasted, obliterated the memory of a much longer series of calls. Even in South Africa the romance of an indefinitely deep search for the 'banket,' through shafts planned to go from one to two miles deep, has paled of late. It is recognized that the profitable character of the 'reefs' decreases in depth. As we said two years ago, even Methuselah died. It is as well to get alongside of fact ; the more money is wasted on academic theories, the less is available for sound mining. Meanwhile, observant men no longer repeat the fallacy of enrichment in depth, or even of indefinite persistence of pay ore; but, recogniz- ing conditions as disclosed in world-wide mining, they are extending the horizon of profitable operations by re- ducing costs. In 1850 a lode would have been consid- ered 'played out' if the yield decreased from 5 oz. of gold at surface to 2 oz. at 200 ft., because it would then have ceased to be profitable. Twenty years ago people were glad to begin with a yield of an ounce ; and, if the ore reached to 1,000 ft. before it fell to half an ounce, they were well satisfied. Nowadays we can go deeper; and, though the diminution continues, we can snatch profits from material yielding less than a quarter of an ounce, thereby extending the economic horizon another 1,000 ft. This is merely an illustration, but something of the sort really does occur in practical work; and it suffices to emphasize the conclusion, that if you want to know aoout the structural peculiarities and distribution of ore in a lode, you do well to ask the geologist; if you want to know whether a mine will pay, and how long, you had better ask the man who has managed mines. NOTES ON MINE REPORTS BY CHESTER F. LEE. (June 8, 1905.) General Principles. A report should be clear, definite and complete. Want of clearness in statement is a fatal defect. Muddy statements, confusion of ideas and run- ning one subject into another are worse faults in this class of writing than any other. Clear expression results from clear thought. Everything should be figured out and thought out beforehand, all doubts settled, and then a statement made in as few and simple words as may be. All that is to be said on any one head should.be said at one place; part of a subject in one place and part in another leads to confusion. Definiteness is equally essen- tial. Hazy and ambiguous statements as to essential points are inadmissible. They are signs of incompetence or a desire to mislead. A man who knows his business and is honest will make statements in a form that cannot be misunderstood. Many reports otherwise good are fatally defective for want of some detail essential to the complete understand- ing of the proposition. Judgment is here necessary to distinguish between the trivial and unessential and that- which is vital and apposite. Nothing can be omitted which is a link in the chain of facts that leads to the con- clusions stated, or is essential to their clear comprehen- sion ; but nothing should be included that is not essential to this end. That mining is the business of making money out of ore should never be lost sight of. The ob- ject of a report is primarily commercial ; it is a matter of business. Such technical matter as is necessary to clear- ness and completeness has place, but nothing further. The temper in which the matter should be approached is judicial. No personal bias or feeling should enter. All should be cold, hard facts, and the conclusions such as NOTES ON MINE REPORTS 393 can be justly drawn from the facts stated. Everything should be ascertained with exactness, nothing guessed at or left to chance, and no stone left unturned to check conclusions in all possible ways. Pains taken in this last particular will save many a costly blunder. Divisions. Requirements will vary greatly, but the fol- lowing heads (or their equivalents) will cover most cases, and often many of them can be dispensed with. The or- der of treatment is not insisted on: 1. Conclusions 2. Situation (Geography) 3. Claims (Surface extent) 4. Title 5. History 6. Orebearing Zone 7. Character of Deposit 8. Geology 9. Mineralogy 10. Developments (Workings) 11. Production 12. Ore Developed 13. Ore Values 14. Treatment (Process and Handling) 15. Costs and Proceeds 16. Plant 17. Working Methods 18. Assays and Sampling 19. Maps 20. Miscellaneous 21. Appendix 22. Index Conclusions. It is the conviction of the writer that the conclusions should be the first thing in a report. The busy man wants to know nothing more, and all readers get at the meat of the matter sooner from knowing the net results at the outset. An engineer of prominence requires all reports submitted to him to have the con- clusions reduced to the following terms : Ore zone ft. long by ft. wide by ft. deep. Ore-shoots in the above (enumerating each) ft. long by ft. wide by ft. deep. Ore can be mined for $ per ton. Ore can be treated for $ per ton. By process. Per cent of extraction Requires assay value to pay of Assay value found 394 THE ECONOMICS OF MINING It is not possible to fit all cases to so rigid a form, but it illustrates the requirements of those who want things boiled down to the last degree. They require reports to be clear, crisp, net. Conclusions should be put in as few and clear words as possible; too much pains cannot "be taken in making them at once a summary and epitome of the whole. The conclusions, though standing first, are of course written last. Situation. Under this caption come such matters as geographical location, accessibility, transportation facili- ties, topography and climate. Claims. Claims or surface extent of property should be fully set forth and a complete map prepared, showing every possible detail of surface boundaries and divisions, survey lines, contours, surface improvements, buildings, etc. A good set of photographs is an aid to clearness. Title. Title to the property under examination is prop- erly matter for a lawyer's opinion, but if it is merely pos- sessory, or rests on patents or its equivalent, so state. History. The salient points in the history of the prop- erty should be next given. Points of failure are often more interesting than those of success. To know what to avoid is half-way to know what to do. Properties of any age are sure to have gone through several stages and many vicissitudes, of interest to the prospective purchaser. Ore Zone. By 'ore-bearing zone' is meant the extent of ground in which ore may reasonably be looked for. A succinct statement of the proportion of the property likely to yield a profit is desirable. Evidence on this head is looked for, not only in the ground in question, but in near-by property and throughout the district, if need be. Character of Deposit. Without a fair working knowl- edge of ore deposits in general and an intimate acquain- tance with the deposit under discussion in particular, nothing worthy can be set down. An outline only can be given of what suitable treatment of this section requires. NOTES ON MINE REPORTS 395 It would include the origin and form of the deposit, the physical and geological character of the walls or limiting change of formation or structure; the strike and dip of the deposit ; the occurrence and frequency of shoots, chim- neys or other enriched areas, their origin, form, dip, pitch, etc. In general, it may be said that every characteristic, peculiarity and salient feature of the orebody should be described. Occasional sketches are an aid to clearness. Geology. The essential points of the local geology should be carefully examined and succinctly stated ; not a scientific treatise, but a plain statement of whatever af- fects the economic aspects of the case is the thing. Dikes, faults, slips, cross-courses, change of formation and sim- ilar phenomena should be described, and their influence on the size, continuity, mineralization, etc., of the orebody considered. Suitable maps and sketches are helpful in showing these details. Mineralogy. This will comprise an enumeration of the minerals in the ore, and in the gangue and walls ; a dis- cussion of the chemical and physical changes these min- erals have undergone, oxidations, alteration products, etc. Values in the various minerals to be determined, and a differentiation made between what is profitable and what is not. Developments. A detail account of all the workings of the mine, with the results that have been accomplished. Here again a good set of maps is indispensable. Gener- ally a vertical longitudinal section of the deposit will show most of the openings, but often frequent cross-sections are necessary. A map of the whole mine in plan is the basis for this work. Production. This is best presented in tabulated form ; dates, character of ore, parts of the mine producing it, values in the several metals, total gross values, deductions, costs and the like, in as full detail as is possible. A concise history of the output makes the text of this heading. 396 THE ECONOMICS OF MINING Ore Developed. 'Ore developed' covers what used to be designated 'ore in sight/ The quantity of ore ready for extraction and exposed on four sides should be listed under 'developed ore'; what is exposed on two or three sides is 'probable ore,' and everything else comes under a consideration of the 'future of the mine/ or some similar phrase. As much of this should be tabulated as possible. Ore Values. The values found in the orebodies from the systematic sampling of the mine should come next, in tables, with such comment as is indispensable to lucidity. Treatment. The handling of the ore from the time it is broken in the mine (and even the method of breaking) until the finished product is marketed should be given in detail. When more than one form of handling or treat- ment is possible they should be compared, and their rela- tive efficiency, cost, saving, etc., given. The percentage saved, and the losses and their causes in the various steps of the process, should be given in full. Costs. Costs are divided into mining, metallurgical and general. Each should be given in detail, with analy- sis of all elements that produce them, under divisions of labor, supplies, etc. With costs, naturally comes a consid- eration of proceeds. Metallurgical processes, with their losses and proceeds, are set down in one column and the values of the metals treated, wasted and saved in another. It is here that the net value of the ore comes out. This is the main point of the report, and appears as such in the initial paragraph giving the conclusions. Plant. A description of the plant and other surface improvements comes next, with such alterations and addi- tions thereto as may be advised. Questions as to ade- quacy of plant already installed, and of relation of plant to output and ore reserves, are here discussed. Working Methods. An outline plan of opening up the property if not already developed, and a discussion of working methods underground, is indispensable. NOTES ON MINE REPORTS 397 Assay and Sampling. The table of assay results and the calculations of averages should be relegated to an appendix if there is any number of them. Method of sampling should be clearly set forth in detail, so that a judgment can be formed of the thoroughness of the work and of the justness of the conclusions reached. Maps. The essential maps are : Surface plan; the workings in plan; a vertical longitudinal section of the orebody. To these may be added a key-map of the region where the property is situated, a geological section of the immediate vicinity, plans of levels separately, cross- sections of orebodies at typical points, plans of surface improvements, plans of stopes at different stages, details of timbering, etc., assay plans, and an almost infinite variety of other special and detailed drawings. Miscellaneous. All the collateral information useful in connection with the property not strictly belonging elsewhere can be collected here. Appendix. After the body of the report all additional data should be placed, as : Detailed lists of assays and calculations of average value, tests made in connection with treatment investigations, smelter or mill returns in detail, lists of surface improvements, buildings, etc., in- ventories of machinery, outfit, supplies and the like. Statements and matters that are purely financial should be in an entirely separate document. Index. Any report of more than four pages without an index or table of contents is faulty to that extent. MINE REPORTS (Editorial, June 15, 1905.) The 'Notes on Mine Reports,' which appeared in our last issue, may awaken expression of diverse opinions. Mr. Chester F. Lee has many sensible things to say ; one of these we venture to emphasize. It is true that "a man who is honest will make statements in a form that cannot be misunderstood." The spirit of science does demand straight thinking and the direct expression of ideas; the application of science to mining asks for the same recti- tude of mind. Equivocation, ambiguity and indirection of any sort in a mine report are unscientific even when unintentional ; but when deliberately adopted, they are unprofessional. We have no patience with a report writ- ten in such manner that, whether the mine either does half as well or yields twice as much as the engineer vaguely predicts, it can yet be interpreted as a vindication of correct judgment. Such work is mere hocus-pocus, which evades responsibility and plays the fool with the client or company paying for the report; it is dishonest, in that it is a failure to "deliver the goods" in this case, an opinion that cannot be misunderstood. We have seen the development of this tendency among engineers more careful of their reputation than of their duty. It is a bad practice ; the engineer who receives $5,000 for his exam- ination and report is paid ten times as much as the man whose fee is $500, for the simple reason that he has a well-earned reputation which he puts to risk every time he truthfully expresses his judgment or gives his ap- praisal of a mine. The physical exertion, the mental exer- cise, the time consumed are much the same in both cases ; in fact, the junior or the man with the lesser reputation is apt to expend more muscle, nerve tissue and time than he of the big fees; the valid reason for paying the one ten times more than the other is that the former has MINE REPORTS 399 already won a reputation which he imperils each time his judgment is put to the test. If he plays round the sub- ject, gives conclusions in magniloquent but ambiguous phrases, shifts his responsibility to subordinates, or in any way refuses to fulfill his bargain the opinion which faces the facts and accepts the responsibility for an experi- enced judgment he is dishonest. The statement quoted from Mr. Lee is prefaced with the clause "a man who knows his business"; and this proviso (interpreted in a sense Mr. Lee does not intend) anticipates the reply of those who adopt the methods just criticised; they will say that they know their business well enough to "get out from under" when any responsibility overhangs them ; they deem it clever to get large fees for the simulacra of opinions, and they consider it worldly-wise to "take care of their reputations" by avoiding statements for which they can be brought to book. But such conduct is foreign to the right spirit of the engineering profession ; it is not even sound business ; it is the attitude of a tricky trades- man. THE INTERVAL BETWEEN LEVELS (Editorial, June 22, 1905.) The proper distance between levels is a practical point that is often presented to the judgment of mine managers. Those who avoid the fatigue of thinking, plan their main drifts 100 ft. apart, because a century is a neat number and it represents an interval which is honored by usage, if by nothing else. However, there are others who are not the slaves to empiricism of this unintelligent kind. In South Africa, it has been found that economy, without loss of efficiency, is gained by increasing the distance between levels. Before the war, 150 ft. was. the interval generally adopted ; since then, this has been doubled in certain instances, such as the Roodepoort United mine, and there is now talk of attaining a maximum of 600 ft., measured on the dip of the lode. A saving in mining cost of from one to three shillings per ton is anticipated. The distance necessary between working levels depends, in the first instance, upon the character of a lode. On the Rand, the beds of 'banket' are fairly regular in their be- havior and in their gold content ; therefore, frequent drifts are not needed for exploratory purposes ; the ground be- tween any two levels, that are 300 ft. apart, can be as- sumed to possess average characteristics to an extent impossible in most of the variable veins which represent the ore deposits of other regions. Levels 60 ft. apart are common in mines based upon thin veins of rich gold- bearing quartz, subject to eccentricity of dip and the sud- den changes due to short ore-shoots. The ratio, between the cost of driving a drift in rich ore and the value of the output to be obtained from the stopes overhead, constitutes a problem quite different from that of large levels in a low- grade mine. Although, before the eventual exhaustion of a mine, it may be necessary to drive intermediate drifts, it is obvious that, for exploratory purposes in a fairly THE INTERVAL BETWEEN LEVELS 401 uniform lode of low grade, it is not necessary to make these longitudinal cuts near together. The money spent in extending such levels remains unproductive until stop- ing begins ; and, in big mines, not only is capital thus ex- pended unprofitably, but the maintenance of drifts not in use represents a constant charge which it is advisable to avoid. At the Calumet & Hecla, levels were placed 100 ft. apart, as measured on the dip of the lode, or about 65 ft. in vertical interval. In this case the drift did not even fulfil an exploratory purpose, because it included only a fraction of the total width of ore. The Tamarack ben- efited by the error of its big neighbor, and the levels were run every 180 ft., measured vertically, giving 300 ft. along the lode. Afterward, sub-levels were extended at intervals of 100 ft. At the Burra Burra mine, of the Tennessee Copper Company, the main levels are 300 ft. apart, but the lode is crosscut at each 100 ft. of sinking; and, when actual extraction begins, sub-levels are ex- tended from the crosscuts. These initial crosscuts and the less frequent main levels are adequate for exploratory purposes; for stoping, the sub-levels are needed in order to afford points of attack and to facilitate transport. In a mine the output of which goes to a smelter, it is unde- sirable to drop the ore down chutes of excessive height, because a powdery product hinders the working of the furnace. When the ore is destined for a stamp-mill, the disintegration is not injurious; on the contrary, it per- forms part of the work of the crushing machinery. Drainage is another factor. In wet ground, it is ex- pedient to run the new level at such an interval below the working drift that the block last opened up will be- come drained while the upper one is being stoped. Ex- cessive water hinders mining and adds to all the costs of operation ; by adjusting the lifts between levels, the pump- ing can be limited and the drainage of the lode can be regulated. In mines where the loose ground of a fault 402 THE ECONOMICS OF MINING either coincides with, or crosses, the lode, it will be found that the water-level follows the main shaft as sinking progresses. Faults also affect the problem in hand be- cause, when a lode is subject to such dislocations, it becomes necessary to drift at short vertical intervals in order to determine the position of the vein or of the ore- shoot. A lift of several hundred feet is impracticable under such conditions, because a displacement of the lode might change the whole plan of development and render such a level inoperative. In mines of this kind (and most metal lodes are liable to such eccentricities of behavior) the function of a drift is exploratory first, and operative afterward ; it serves the purpose of testing the Tein and of finding the ore-shoot before it is turned into an under- ground artery for the transport of material to the shaft. THE COST OF MINING-II. BY W. R. INGALLS. (July 15, 1905-) In my first paper on this subject, which has been com- mented upon by Messrs. Finlay, Argall, Tays and Brown, I did not look forward to a discussion of the advisability of keeping accounts which would show the cost of min- ing, nor did I contemplate a discussion of the itemization of mining costs, except incidentally. My purpose was rather to draw out the experience, reduced to dollars and cents, in mining under various conditions, and by itemiza- tion and classification of costs to analyze the differences in conditions. Mr. Finlay appreciated this intention, and re- marked that, even in cases of wide difference of condi- tions, there would still be found operations in which the conditions were more or less parallel. It was far from my purpose to uphold the desirability of attaining a low cost of mining per ton, at expense of the maximum profit ; in- deed, such argument as I presented on that topic was quite the reverse; but I aimed to draw out the reasons why mining costs should vary so much, not only under obviously dissimilar conditions, but also under conditions that appear approximately analogous, or at least that may so appear to those who have not minutely studied them. In considering the cost of mining from this viewpoint, I have taken the trouble to compile the following data, which are mostly from official reports, either the originals or the abstracts published in THE ENGINEERING AND MINING JOURNAL. They refer only to gold, silver, cop- per, lead and zinc mines ; coal and iron mines are excluded from the scope of this inquiry ; and the case of the Lake Superior copper mines is reserved for a separate article. Few, if any, engineers being familiar with the funda- mental conditions which determine the cost of mining in 404 THE ECONOMICS OF MINING all of the districts mentioned, explanations from those who are acquainted with them will surely be welcomed, as will be also such further data as will throw more light on the subject. Grass Valley, California. North Star Mines Company in 1902 mined 17,399 tons of ore, at cost of $15.90 per ton, divided as follows : Operating expenses, $7.76 ; gen- eral expense, $1.11 ; extraordinary expense, $0.57; devel- opment, $5.04; improvements, $1.42. Calaveras County, California. Utica Mine. Large vein on Mother Lode. In producing about 300 tons of ore per day there are required two lo-hour shifts, each consisting of 12 miners, 12 helpers, 16 shovelers and 6 trammers; total, 45 ; in addition to which a crew of 10 timbermen is employed. Miners are paid $3 ; timbermen, $3 ; helpers, shovelers and carmen, $2.50 per day. 1 Sutler Creek, California. Central Eureka Mining Company, in 1902, produced 43,545 tons of ore, at cost of $1,795 f r mining, and $0.519 for developing. 2 Randsburg, California. Yellow Aster Mining & Mill- ing Company. Eugene H. Barton 3 reported the cost of mining 14,601 tons of ore as follows : Mining. Cost. Per Ton. Labor $10,696.69 $0.73260 Timbering 803.55 0.05500 Timber 2,661.47 0.18228 Powder 580.68 0.03977 Fuse 93-90 0.00643 Caps 44-97 0.00308 Lights 306.62 0.02100 Blacksmithing 498.32 0.03414 Development 628.72 0.04306 Haulage 643.90 0.04410 Hoisting 697.92 0.04780 Total . $17,656.40 $1.16620 *J. H. Collier, Jr., Transactions American Institute Mining Engineers, 1899. *Idem, June 6, 1903, p. 869. "THE ENGINEERING AND MINING JOURNAL, January 28, 1904. THE COST OF MINING 405 General Expenses. Cost. Per Ton. Miscellaneous $1,460.10 $0.10000 Assaying 160.61 o.oiioo Salaries 950.87 0.06507 Tailing 313-33 0.02146 Incidentals 440.92 0.03020 Total $3,325.83 $0.22773 The general expense is to some extent chargeable to the milling. Water is obtained from wells 6.5 miles from the mine, whence it is pumped at a cost of IQC. per 1,000 gal., which comes to 22.O5C. per ton of ore, no part of this be- ing included in the cost of mining. The mine is equipped to produce 500 tons of ore per day. Fuel-oil costs 4.50. per gal. ; lumber, $32.50 per M. The rate of wages is as follows : Miners, 9 hours, $3 ; muckers, 9 hours, $2.50 ; carmen, 9 hours, $3 ; timbermen, 9 hours, $3.50 ; amal- gamators, 12 hours, $4; stationary engineers, 12 hours, $4; hoisting engineers, 8 hours, $3.50; pump-men, 12 hours, $3.50. Black Hills, South Dakota. Homestake mines. Vein of mineralized schist, 300 to 500 ft. wide. Worked par- tially open-cast, partially underground. In 1898 mining cost, $2.17; general expense, $0.14. In the year ended June I, 1903, the cost of mining 1,279,075 tons of ore was $2.04, not including general expense ; total cost, exclusive of milling, was $2.37. Mine opened to depth of 1,100 ft. Bingham, Utah. Massive deposits of pyrite (gold, sil- ver and copper-bearing) in limestone, dipping moderate- ly. Operated chiefly through adits. Timbering with square sets. Utah Consolidated Mining Company ; Highland Boy mine, operated through six adits to 7oo-ft. level, and by shaft to 800 ft. Ore transported by aerial tramway 12,700 ft. to Bingham station, thence by rail to smelter at Mur- ray. In 1902 produced 167,713 tons of ore at a cost of $1.45 for mining and tramway, $0.25 for exploration and development; in 1903, produced 190,256 tons, at a cost of 406 THE ECONOMICS OF MINING $1.78 for mining and tramway, $0.033 f r exploration and development ; general expenses not included. Mercur, Utah. Deposits of gold ore in limestone, lying approximately flat. Mercur Mining & Milling Company, in the year ending June 30, 1902, extracted ore at cost of $1.41 per ton, including general expense; in year end- ing June 30, 1903, extracted 346,359 tons, at cost of $1.30 per ton. Mining done by caving system. Mine operated through adit, with electric haulage, two locomotives, 10- h.p. each, capable of hauling 20 tons at six miles per hour. Frisco, Utah. Horn Silver Mining Company in 1900 produced 27,411 tons of ore, at cost of $4.88 per ton, of which labor on ore was $2.087 J on dead work, $0.703 ; on surface, $0.850; supplies, timber, fuel, etc., $1.24. Cripple Creek, Colorado. Gold mining in veins in igne- ous rocks (chiefly andesite). Mines operated through shafts ; depths moderate ; water variable. Miners receive $3.40 per day of eight hours (42.5^ per hour). Coal costs about $4.60 per ton. Considerable timbering required. Mining costs generally from $2.50 to $3.50 per ton of ore hoisted, including taxes, insurance and general expense. Sorting of the ore on the surface materially increases the cost per ton of ore shipped. 4 Stratton's Independence, Ltd., in year ending June 30, 1902, mined 230,699 tons of ore, at cost of $4.18 per ton, of which $1.27 per ton was on account of development work. The latter comprised 264 ft. of shaft, 1,521 ft. of raises, 160 ft. of winzes, and 11,738 ft. of drifts and cross- cuts. Total depth of main shaft, 1 ,430 ft. In year ending June 30, 1903, 229,797 tons were hoisted, at total expense of $3.70 per ton, of which $0.87 was for development, which comprised 1,716 ft. of raises and 8,387 ft. of drifts and cross-cuts. *J. R- Finlay, THE ENGINEERING AND MINING JOURNAL, Novem- ber 21, 1903. THE COST OF MINING 407 Leadville, Colorado. Blanket vein, containing massive shoots of argentiferous galena, blende and pyrites. Oper- ated through shafts; depths moderate. Rather larger quantity of water to pump. Timbering with square sets. Miners receive $3 per day. Mining costs large producers about $2 per ton, including general expense. Ouray, Colorado. Camp Bird vein, a fissure dipping about 70 ; average width, 6 to 7 ft. Vein material, quartz, impregnated with gold, galena, pyrite and chalcopyrite. Ore occurs in shoots, wherein the grade is subject to con- siderable variation. Mine opened by adit 2,200 ft. long. Timbering is required only in the raises, winzes, chutes and floors of stopes. About 40% of the ore broken in stoping is taken out, the remainder is left in the stopes; the percentage of waste trammed out is small. Mine worked by two 8-hour shifts ; 3.25-in. machine drills most- ly in favor ; 40% dynamite ^compressors driven by electric power. Large-machine men receive $4.50 per shift ; help- ers, $4 ; small-machine men, $4 ; smiths, $4 ; helpers, $3.25 ; timber-men, $4 to $4.50 ; helpers, $3 ; shovelers, $3 ; tram- mers, $3 ; enginemen, $4.50." During the year ending April 30, 1903, there were broken 111,245 tons of ore, wet weight, of which 71,793 tons were delivered to the mill and 39,452 tons were left in the stopes. The ore milled, less moisture, amounted to 66,825 tons. The cost of mining, not including general expense, was $367,838, or $5.50 per ton on the ore deliv- ered to the mill (dry weight), or $3.50 per ton on the ore broken (wet weight). Telluride, Colorado. Liberty Bell mine, 1902, pro- duced about 7,500 tons of ore per month, at cost of $2 to $2.30, not including general expense. Butte, Montana. Immense* veins, dipping steeply, in granite. Ore, chalcocite, bornite and enargite, with 5 C. W. Purington, Transactions American Institute Mining En- gineers, 1902. 408 THE ECONOMICS OF MINING pyrite, in a quartzose and granitic gangue. Veins attain a width of 100 ft. and more, 10 to 20 ft. stopes being com- mon. The cost of mining at Butte ranges from $3 to $4 per ton. The following returns were made by the Butte copper companies to the assessors of Silver Bow county, Mon- tana: 6 Colusa Parrot, 265,113 tons, mining cost, $3.70 per ton; Butte & Boston, 245,333 tons, $3.27; Parrot, 253,284 tons, $2.81 ; Boston and Montana, 907,227 tons, $2.61 ; Anaconda, 1,392,835 tons, $3.49; Washoe, 106,588 tons, $3.79; Montana Ore Purchasing Company, 293,332 tons, $3.54. These figures, submitted for taxation pur- poses, are of little technical value. Anaconda Copper IVJining Company : The production in 1897-1898 was 628,051 tons of ore from the Anaconda mine, and 813,487 from the Syndicate mine. The cost per ton was as follows: Item. Anaconda. Syndicate. Labor $2.470 $2.244 Explosives o. 105 o. 133 Coal 0.144 0.144 Supplies o.no 0.108 Assaying o . 007 o . 006 Administration and general expenses.... 0.177 0.138 Personal injuries 0.028 0.023 Timber 0.290 0.305 Water 0.018 0.014 Repairs and renewals 0.327 0.219 New constructions 0.237 o.no Total $3.913 $3-444 Cceur d'Alene, Idaho. Steeply dipping fissure veins and shear zones, containing large and wide bodies of sil- ver-lead ore. Mostly opened by adits ; water power avail- able and generally used; timber abundant and cheap. Miners receive $3.50 per day. Three methods of mining employed: (i) timbering (square sets) ; (2) filling; (3) THE ENGINEERING AND MINING JOURNAL, July 25, 1904. THE COST OF MINING 409 timbering and filling. Cost of mining and milling, $2.50 to $3.50 per ton (Finlay). The Bunker Hill & Sullivan Mining Company in 1902 extracted 260,500 tons of ore, at cost of $2.09 per ton. Miners receive $3.50 ; muckers, $3 ; timbermen, $4. In 1903 the cost of mining 288,713 tons of ore was $1.633 per ton, not including general expense, which came to ii.5c. per ton. All the ore was trammed from the mine by electric haulage through the Kellogg tunnel (12,000 ft. long), at a cost of 7c. per ton. In addition to the ore, 47,000 tons of waste was trammed. Drifts, cross-cuts, raises and winzes cost an average of $7.31 per foot, 4,043 ft. being driven. Douglas Island, Alaska. Auriferous dike of syenite in carbonaceous slate. Dike stands at steep angle and attains width of 420 ft. Situated close to the sea, with respect to which the position of the orebodies has great influence on the methods and costs of mining. Mines formerly worked chiefly open-cast ; henceforth the underground mining will be the more important. Miners receive $2.50 per day, with board and lodging. Alaska-Treadwell, opened by shafts to 900 ft. below sea-level. Water less than 50 gal. per min. ; levels opened no ft. and 150 ft. apart; no timbering required; hoisting by skips from storage bins. Vertical pillars left to support walls, 20% loss of ore estimated. In stoping, one drill breaks 34.96 tons of ore, with consumption of 12.53 Ib. of No. 2 dynamite, in 10 hours, in addition to which 0.85 Ib. of powder per ton of ore is consumed in bulldozing. In the year ending May 30, 1903, the Alaska-Treadwell mined 759,625 tons at cost of 0.9022, not including gen- eral expense. Development work amounted to 6,145 ft- An average of 33 machine drills was employed in the mine (7 on development, 4 on cutting out, 7.5 in pits, and 14.5 in underground stoping). The total of holes drilled was 783,360 ft., and of ore broken 906,625 tons, making 410 THE ECONOMICS OF MINING an average of 1.14 tons per foot of hole drilled. The aver- age work per machine per 10 hours was 34.4 ft. of hole drilled. Machine drillers in the open pit were paid $3.50 per day, with board and lodging ; underground, $2.50, with board and lodging; the difference being due to the extra-danger in the open-cuts. Alaska-Mexican, 1900: Mined 166,449 tons, at cost of $1.0834 per ton, not including general expense. Develop- ment work, 3,094 ft. In 1901, mined 178,960 tons, at cost of $1.1923. Development work, 5,441 ft. In 1902, mined 207,455 tons, at cost of $1.059. Development work, 5,286 ft. Scale of wages: Machine drillers, $2.50; helpers, $2.25 ; common labor (white), $2; smiths, $4; plus board and lodging in each case. Indian labor, $2, without board or lodging. Alaska United, 1901 : Ready Bullion mine 171,642 tons raised, chiefly from 450 to 6oo-ft. levels. Cost per ton, $1.1788, not including general expense. Develop- ment work, 2,535 ft. "7oo-ft." mine 89,840 tons raised, chiefly from 400- ft. level. Cost, $1.2281 per ton. Devel- opment work, 1,708 feet. Rossland, British Columbia. Zones of sheared rock, mineralized with auriferous pyrrhotite and chalcopyrite up to width of 100 ft. or more, dipping at about 70. Vein-filling very hard ; stopes timbered with square sets ; ore stands 10 cu. ft. to the ton. About 20% is sorted out as low-grade (to second-class dump). Timbering costs about 2 ic. per ton of ore raised, 27c. per ton of ore shipped. 7 Center Star Mining Company, operating on large vein of auriferous copper ore. The costs per foot of develop- ment work and per ton of ore mined during the year end- ed September 30, 1903, were as indicated in the following table : 7 B. McDonald, Journal Canadian Mining Institute, Vol. VI, p. 129. THE COST OF MINING 411 Development. Mining, Winzes, Raises, Drifting, per per ft. per ft. per ft. ton. Drilling $6.10 $7.31 $4-53 $0.405 Blasting 2.48 2.40 1.08 0.030 Explosives 3.13 3.72 2.72 0.145 General mine labor.... 0.51 0.64 0.43 0.040 Mine lighting, candles. 0.26 0.19 0.14 0.015 Mine lighting, electric. 0.30 0.22 0.13 o.oio Smithing i.oo 1.14 0.72 0.065 Tramming and shov- eling, direct 5-5i 0.65 i. 21 0.240 Tramming and shov- eling, apportioned. .. 0.64 0.35 0.42 0.085 Timbering, labor 1.81 3.08 0.02 0.190 Timbering, material. .. 0.33 0.57 o.oi o.oio Machine drill fittings. 0.86 0.94 0.60 0.055 General mine labor 1.57 1.18 0.84 0.090 Hoisting, underg'nd. .. 4-79 .... .... Hoisting, main shaft.. 1.48 0.89 0.94 Compressed air 1.74 2.08 1.07 Mine ventilation 0.23 0.17 0.13 Pumping 0.71 1.09 0.34 Assaying 0.55 0.47 0.14 Surveying 0.20 0.17 o.n General expense 3.57 2.71 1.51 Totals $38.77 $29.97 $17.09 $2.065 The development work done, and the cost, and the aver- ages per foot, are shown in the table below : Feet. Amount. Per ft. General work $3,058 Raises 168.0 5,577 $29-97 Winzes 79.0 3,062 38.77 Drifting 2,903.5 49,622 17.09 Totals 3,168.5 $61,319 $19-35 Under general work are included stations, re-timber- ing, machinery and equipment, repairs and maintenance. The total quantity of ore mined and sold was 88,387 tons, of which 3,934 tons came from development work. The average cost of mining, viz., $2.065, is computed on the 84,453 tons of ore stoped. The development work, costing $61,319, amounted to about $0.725 per ton on the ore stoped. Ymir Gold Mines, Ltd., in 1901, mined 70,640 tons of ore, at average cost per ton of $1.814 for mining, $0.150 412 THE ECONOMICS OF MINING for administration and $0.279 for general and contingent expense ; the last two items should be proportioned be- tween mining and milling. Ducktown, Tennessee. Huge lenticular deposits of cupriferous pyrite in schist. Lenses vary from a few feet to 150 ft. wide, with great length, dipping steeply. Opened as yet to only moderate depth. Ore stoped out in chambers ; no timbering. Tennessee Copper Company, 1902, mined 250,769 tons, at $0.8411, not including general expense. Flat River, Missouri. Immense shoots of lead ore ; galena disseminated in magnesian limestone ; position ap- proximately flat; stopes 80 ft. high and 60 ft. wide not uncommon. Mines operated through shafts, 300 to 500 ft. deep, with efficient equipment. No timbering required ; water, 200 to 2,000 gal. per min. Miners receive $1.85; shovelers, $1.75; all nine hours. Coal (from southern Illinois) costs $2.20 per ton. Mining cost, about $i per ton, including general expense and delivery to mill, on basis of about i ,000 tons per day, but not including devel- opment work, construction or amortization of plant. These statements refer to the conditions before the recent strikes, as result of which wages have been increased, time re- duced to eight hours, and efficiency of labor decreased, somewhat increasing the cost of mining. Prospecting in this district, both from surface and underground, is done chiefly by diamond drilling. Joplin, Missouri. Deposits of zinc-blende and galena in lenses of chert in limestone ; also sheet deposits of sim- ilar ore. Considerable variation in character of ore as to hardness, and as to roof, but the sheet deposits are gener- ally very hard. The deposits lie approximately flat and at moderate depth, say 150 to 250 ft. Life of the mines is short and conditions decree cheapness of plant rather than durability. Ground is not developed ahead, except by churn-drilling from surface. Cost of opening mine to THE COST OF MINING 413 produce 75 to 100 tons of ore in 10 hours, including con- centrating mill, is about $15,000. Miners are paid $2.25 and shovelers $2 per day. About 25 to 37.5 tons of ore is stoped per drill per day. The cost of mining in ground that requires no timbering is approximately as follows : Miners and helpers, I7c. ; trammers and shovelers, 8c. ; drill sharpening, etc., 50.; explosives, roc. ; hoisting (la- bor), 6c. ; supplies, 4c. ; fuel, QC. ; supervision, gc. ; total, 68c. ; not including any pumping or general expense. The actual costs in six different mines operated during the same year were as follows : Surface plant $0.000 $0.000 $0.004 $0.010 $0.017 $0.006 Rep. surface plant.... 0.007 0.005 0.002 o.on 0.017 0.008 Underground plant... o.ooo o.ooo 0.002 0.016 0.053 0.016 Rep. und'ground plant, o.ooo 0.005 o.ooi 0.021 0.040 0.014 Hoisting 0.023 0.032 0.023 0.035 0.042 0.031 Fuel 0.028 0.031 0.036 0.040 0.067 0.040 Mining 0.248 0.258 0.241 0.231 0.282 0.252 Development o.ooo 0.041 0.022 o.on 0.023 0.019 Blacksmithing 0.029 0.033 0.041 0.034 0.035 0.034 Shoveling and tram'g. 0.121 0.174 0.123 0.148 0.161 0.143 Explosives 0.085 0.073 0.096 o.uo 0.125 0.008 Tools 0.003 0.003 0.004 0.020 0.015 0.009 Timber and track.... 0.005 0.003 0.004 o.on 0.028 o.oio Lighting 0.004 0.007 0.006 0.008 o.oio 0.007 Lubricating o.ooo o.ooo o.ooo o.ooo o.ooi o.ooo Pumping o.ooo o.ooo o.ooo o.ooo 0.020 0.004 Accidents 0.002 o.ooo 0.002 o.ooo 0.009 0.003 Totals $0.56 $0.66 $0.60 $0.71 $0.94 $0.70 The sheet-ground of the Joplin district is a mineralized, fine-grained chert, averaging about 8 ft. in thickness, ex- tremely hard and requiring the heaviest type of machine- drills. INDEX Accounts (mine), card system for 80 African Metals Co 119 Alaska Mexican mine 335 Alaska Treadwell mine. 303, 333 Aldrich electric pump 381 Amending Companies Bill 210 American Institute of Mining Engineers 66 Amortization 175, 221, 255 Area stoped out as con- tract basis 27 Argall, Philip 44 "Cost of Chlorinating Cripple Creek Ores" . 356 "Cost of Mining" 342 Associated Northern Blocks mine 283 Bain, H. R, "Mining Costs at Cripple Creek" 154 Baltic Copper mine, card system in use at 80 Baltic mine 96 Bancroft, Geo. J., "Mine Equipment and Ore- Reserves" 227 Barton, Eugene H., "Min- ing and Milling in the Mojave Desert" 157 Basis of value 300 Bathurst, F. H 275 "Mine Reserves" 339 "Secret Reserves"... . 206 Benjamin, Edward H 15 Bingham, Utah 405 Birch, Stephen 320 Black Hills, S. Dak 404 Bookkeeping, suggestions as to labor-saving in.... 64 Boulder Perseverance. 275, 281 Boulder Perseverance Commission 338, 339 Broad, Wallace 202 "Mining in Rhodesia". 167 Brown, Nicol 62 Brown, R. G 257 "Cost of Mining" 347 "Cost per Ton as a Basis of Mine Val- uation" 56 "Gold Mine Accounts". 91 "Mine Equipment and Ore-Reserves" 283 "Some Pumping Data" 378 "Treatment Capacity and Ore-Reserves".. 217 Brunswick mine 378 Bucyrus dredges 369 Burra Burra mine 401 Butte, Mont 407 Calaveras county, Cal .... 404 California, gold dredging in 268 Calumet & Hecla mine. 198, 401 Card systems for mine ac- counts 94, 80 416 INDEX Carter, T. Lane 10 "Mine Labor and Costs on the Witwaters- rand" 150 Carterville Webb City dis- trict 165 Center Star mine 52 Cceur d'Alene, Idaho 408 Cole, Wm. C 86 Colonial Mines Syndicate. Ill Commission, Boulder Per- severance 338 Commission, Royal ....... 281 Compafiia Metallurgica, Mexico 64 Companies Acts 125 Companies, no-liability.... 260 Comstock, Theo. B 92, 93 "Card Systems for Mine Accounts".... 94 "Mine Accounts" 62 Consolidated Mines Selec- tion Co 119 Contract basis area stoped out 27 Contract system in mining. 23 Cornish pump system 381 Cornucopia mine 230 Cosmopolitan mine .... 248, 359 Cost of Chlorinating Crip- ple Creek Ores 356 Cost of Mining. .323, 324, 333, 342, 347, 350, 372, 384, 387 403 Cost of mining and mill- ing 359 Cost per ton as a basis of mine va-luation 56 Costs, dredging 269 Costs, engineers' estimates. 264 Costs, gravel mining in Alaska and Northwest Canada . . 317 Costs, mining, at Cripple Creek 103 Cripple Creek 406 costs at 246 leasing at 301 mining costs at 103, 154 mining problems at... 107 ores, cost of chlori- nating 356 Cripple Creek and Lake View costs contrasted. . . 48 Crown Reef mine 244 Curie, J. H 17, 77, 87, 101 "Ore-Reserves in Gold Mines" 249 Cyanidation in Rhode- sia 147, 172 Daly, H. J 208 Darlington, John 120 Day's work defined 26 Deep mining. 390 Deep level mines on the Rand 235 Delaware & Hudson Co.. 223 Denny, G. A 92 "Economic Ratio of Treatment Capacity to Ore-Reserves"... 232 Denny, H. S., "Ore-break- ing and Sorting on the Rand" 68 Denton, F. W 94 "A Card System for Mine Accounts". ... 80 Diehl process 44 Douglas Island 409 Dredges, Bucyrus 369 Dredging at Oroville 367 Dredging costs 269 Ducktown, Tenn 412 Economic ratio of treat- ment capacity to ore- reserves . . 232 INDEX 417 El Oro mine 116 El Oro Mg. & Ry. Co., 40, 116 Engineers' estimate of costs 264 Equation, personal 253 Equipment and ore-re- serves. .180, 182, 185,244, 278 302 Exploration Co., Ltd 112 Extensions of mining plant, payment of 38 Finance, mining, another aspect of 190 Finance, mining, some as- pects of.. 110, 115, 119, 122 . 125 Finlay, J. R 154, 155 "Cost of Mining" 333 "Leasing at Cripple Creek" 301 "Mining Costs at Crip- ple Creek" 103 Flat River, Mo 412 Freiberg mining 185 Frisco, Utah 406 ' Futures, appraising of 98 Gardner, Frank 40 Garthwaite, E. H 170 Gold dredging in Califor- nia 268 Gold Dredging at Oroville. 289 Gold-mine accounts. 34, 50, 91 Gold mining as an in- vestment 17 Gold mining in Rhodesia. 135 Gold mines, ore-reserves in 249 Gold mines, valuation of 211, 255 Golden Cloud mine 230 Grant, R. J., "Cost of Mining and Milling"... . 359 Grass Valley, Cal 404 Great Boulder Persever- ance mine 40, 47 Great Boulder Proprie- tary 281 Great Fingall Con. Mg. Co. 40 Guggenheim Exploration Co.... 113, 115, 116, 117, 118 Hall, R. N 202 Hamilton, Richard 281 Hammond, John Hays 170 Herzig, C. S., "No-Liability Companies" 260 Hobart, R, Amortization. 221 Hohl, L. J., "Dredging at Oroville" 367 Hoist by his own petard.. 364 Homestake mine 303 Hoover, H. C., 50, 53, 62 91, 181, 182, 187, 189, 194, 195, 197, 199, 217, 224, 227 "Economic Ratio of Treatment Capacity to Ore-Reserves"... 173 "Gold Mine Ac- counts" 37 "Ore-Reserves" 255 "Ore Treatment at Kalgoorlie" 44 "Valuation of Gold Mines" 211 Hutchinson, W. S., "Cost of Mining Zinc Ore in the Joplin District" 160 Humes, James, "Cost of Mining" 384 Ingalls, W. R 185, 257 "Cost of Mining". 324, 403 "Economic Ratio of Treatment Capacity to Ore-Reserves"... 194 "Engineers' Estimate of Costs" 264 "Mining in Missouri". 271 418 INDEX Ingersoll-Sergeant rock- drills 386 Institute of Mining and Metallurgy 66 Institution of Mining En- gineers 66 Interval between levels 400 Investment in mines 87 Inwood's tables 311, 315 Ivanhoe mine 282 Jenkins, Chas. V., "Gold Mining Accounts" 50 Johannesburg, mining methods at 22 Joplin, Mo 412 Joplin, costs at 271 Joplin district, cost of mining zinc ore in 160 Joplin zinc ores, cost dia- gram for 163 Kaffirs as sorters 12 Kalgoorlie, ore treatment at 44 Kalgurli mine 283 Kolar district, India 214 Lake View consols. .. .122, 208 Lake View and Cripple Creek costs contrasted . . 48 Lake View mill, Kalgoor- lie, treatment costs at. . . 44 Lassen Mining Co 15 Lawrence, Benj. B....194, 255 "Mine Equipment and Ore-Reserves" 189 Leadville, Col 407 Leasing at Cripple Creek. 301 Lee, Chester F., "Notes on Mine Reports" 392 Le Roi mine 122 Levels, intervals between . . 400 Main Reef Leader mine.. 245 Mason & Barry 42 Matabeleland, mining in.. 167 McDermott, Walter 120 Mercur, Utah 406 Milling in Rhodesia 172 Mine accounts 62 Mine, appraising the value of 101 Mine equipment and ore- reserves. . .187, 189, 227, 285 Mine labor and costs on the Witwatersrand 150 Mine reports 398 Mine reports, notes on 392 Mine reserves 339 Mine valuation 1..311, 313 Mine valuation by Govern- ment 53 Mines Company, Ltd 120 Mines Development Co... 112 Mines, investment in 87 Mines, investigation and management of 2 Mines, operation of 3 Mines Selection Co 120 Mines, valuation of 5 Mining, causes of failure in 1 Mining, cost of... 323, 324, 333, 342, 347, 350, 372, 384, 387 403 Mining costs at Cripple Creek 154 Mining costs, gravel, in Alaska and Northwest Canada 317 Mining, deep 390 Mining finance 129 Mining finance, another as- pect of . 190 Mining and Financial Trust 112, 120 Mining investment 77 INDEX 419 Mining methods at Johan- nesburg 22 Mining and milling, cost of 359 Mining and milling in the Mojave desert 157 Mining in Missouri 271 Mining in Rhodesia. . .167, 200 Mining risks 20 Mining, secrecy in 309 Missouri, mining in. ..... 271 Montreal & Boston 311 Moreing, C. Algernon 38 Moss,' Frank A 283 Mountain Copper Co 42 Mysore Gold Mining Co. . 39 Nicholson, R. B 282 No-liability companies.... 260 Notes on mine reports... 392 Ore-breaking and sorting on the Rand 68 Ore-dressing, assay results as a guide in 31 Ore-reserves 258 economic limit of 178 economic ratio of treatment capacity to 232 in gold mines 249 and mine equipment. . 285 and treatment capa- city 173, 194 Ore sorting 8 Ore treatment at Kal- goorlie 44 Oroville, dredging 367 Oroville, dredging cost. . . . 269 Oroville, gold dredging at. 289 Oroya-Brownhill mine.. 47, 276 Ouray, Colo 407 Palmer, C. S., "Equipment and Ore-Reserves".. . 302 Personal equation, the . ... 253 Pittsburg Coal Co 223 Portland Gold Mining Co. 256 Portland mine 333 Promoters, swindling 126 Pump, Aldrich electric.... 381 Cornish system 381 Pumping data, some 378 Purington, C. W., "Gravel Mining Costs in Alaska and Northwest Canada". 317 Rand, ore-breaking and sorting on 68 Rand, unemployed labor on 152 Rand, value of mines on.. 20 Randsburg, Cal 404 Reading Co 223 Ready Bullion mine 335 Red Mountain, Colo., mines .' 120, 124 Reserves, mine 339 Reserves, secret. 205, 206, 275 281 Resuing, explained 9 Resuing in underground work 131 Rhodesia, ancient mine workings in 169 gold mining in 135 gold production in 149 mining in 167, 200 mining, working ex- penses 145 Rickard, T. A 230 "Appraising Futures". 98 "Basis of Value" 300 "Cost of Mining". 323, 387 "Deep Mining" 390 "Equipment and Ore- Reserves" ..180, 182, 185, 187, 189, 244, 248 . . 278 420 INDEX Rickard, T. A., "Gold Min- ing as an Investment". . 17 "Hoist by His Own Petard" 364 "Intervals between Levels" 400 "Investment in Mines" 87 "Mine Reports" 398 "Mine Valuation" 311 "Mine Valuation by Government" 52 "Mining Investment".. 77 "Mining Risks" 20 "Ore Sorting" 8 "Secret Reserves" . .205, 275 281 "Secrecy in Mining".. 309 "Some Aspects of Min- ing Finance". .110, 115, 119, 122! 125 "The Personal Equa- tion" 253 "Valuation of Mines". 5 Rix, E. A 378 Roberts, F. C 167 "Cost of Mining" 350 "Gold Mining in Rho- desia" .....' 135 "Mining in Rhodesia". 200 "Resuing in Under- ground Work" 131 Roberts, G. M 283 Rock-drills, Ingersoll- Sergeant 386 Rock-drilling on the Rand. 152 Roodefort United mine... 400 Rossland, B. C 410 Royal Commission 281 Secret reserves. . .275, 281, 286 Secrecy in mining 309 Shaft sinking by hand.... 15 Sloss-Sheffield Co 223 Smith, Hamilton 112, 117 Smith, Howard D., and E. W. Stebbins, "Gold Dredging at Oroville".. 289 Sorting at Johannesburg.. 10 South Reef mine 245 Spilsbury, E. G 194, 255 "Mine Equipment and Ore-Reserves" 187 St. Francois county, Mo., costs 272 Stamp-mills in Rhodesia.. 146 Stebbins & Smith, "Dredg- ing Costs" 269 Stevenson, Robert, ' "Val- uation of Gold Mines" . . 225 Stratton, W. S., estate.... 229 Sutter Creek, Cal 404 Tasmania gold mine 110 Taylor, John, & Sons. .39, 112 Tays, E. A. H., "Cost of Mining" 372 Telluride, Col 407 Tomboy Gold Mines, Ltd. 40 Treatment capacity and ore-reserves 172, 217 Twelvetrees, W. H 98 Union Iron Co. United States Code . 224 Mineral 139 Valuation of gold mines.. 211, 225 Valuation of mine 311, 313 Valuation of mines by the cost per ton 56 Valuation of mines by Government 53 Value, basis of 300 INDEX 421 Victorian Companies Act. 207, 340 W., E. H., "Mine Valua- tion" 313 Walker, Edward, "The Payment of Extensions of Mining Plant out of Revenue" 38 Wanderer mine, Rhode- sia 142 Wankie coal-field 136 War Eagle mine 52 Waring & Son 30 Waring, W. Geo., "Notes on Zinc Mining" 28 West Australian mine- owners, council of.... 53 Western Australia, costs.. 246 Witwatersrand 10 Witwatersand, costs at.... 150 Witwatersrand mines 69 Williams, Percy, "The Val- uation of Mines" 4 Work (day's) defined 26 Yale, C. G., "Gold Dredg- ing in California" 268 Yellow Aster Mining & Milling Co 157 Zinc concentrate, weight and volume of 29 Zinc minerals, specific gravity and composi- tion of 31 Zinc mining notes 28 Zinc ore in the Joplin dis- trict, cost of mining 160 Zinc ores, valuation of. ... 28 CIRCULATION DEPARTMENT TOR Main Stacte LOANPERIODl HOME Boomay be RenewedbycaHngM FORM NO. DD6 U. C.BERKELEY LIBRARIES M127168 TN THE UNIVERSITY OF CALIFORNIA LIBRARY