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By Henry E. Reed

This presentation is about a small company, Industrial Mineral Products, that was formed in 1972 with one product and one customer and by a series of value-added changes avoided disaster and increased sales many times over. The principal of the company stopped by my office in Seattle looking for industrial mineral opportunities in the Northwest. We got together and went through all the minerals in Ladoo's "Industrial Minerals" from Abrasives to Zircon to see if we could find something available on the vast holdings of the Burlington Northern. At that time one of our lessees was operating a silica sand mine near Ravensdale, Washington and indicated that he might be interested in selling out. This sounded interesting to my client and within two weeks the transaction was completed.

Jan 1, 1990

By James Matlock

The announcement of a minable reserve of 13.6 Mt (16 million tons) averaging 0.9 g/t (0.027 oz per ton) Au and 2.4 g/t (0.71 oz per ton) Ag for the open pit-heap leach reserve at Red Mountain No. 3 in Ouray County, Colorado, by Cornucopia Resources in November 1985 brings another open pit-heap leach precious metal ore body to the production stage. With about 8.2 Mt (9 million tons) of waste and metallurgical studies showing acceptable recovery rates, low reagent consumption, and good final percentage recovery, Red Mountain is a discovery that will add to the precious metal inventory of the US. Frank Baumgaruler of Denver, CO, recognized the precious metal potential in Red Mountain No. 3 and acquired all of the old claims. James Matlock conducted a field reconnaissance over Red Mountain No. 3 independently of the Baumgartner activities and recognized epithermal alteration and mineralization in the Tertiary volcanics. He recommended acquisition of the ground and was able to obtain rights and drill six core holes for Amoco in 1982. Amoco drilled a further nine core holes in 1983, but then dropped the property. Cyrano Resources examined the data and through its consulting geologist, V.F. Hollister, acquired the rights dropped by Amoco. In 1984 Cyrano began further drilling of the ore zone demonstrated by Amoco but they were then acquired by Cornucopia Resources. Cornucopia completed development of the property and commenced the permitting process in 1986. The property was recognized as a disseminated gold deposit by both Baumgartner and Matlock, and both deserve credit for properly evaluating mineralized outcrop in the Tertiary volcanics. However, Cornucopia recognized the profit potential in the heap leach exploitation of the ores and de- serves credit for completion of premine feasibility studies. The discovery is clearly a geological one, but the premine engineering studies were essential to the conversion of the prospect to a commercial mining enterprise. The deposit lies on the circular bounding fault of the Silverton caldera. Two reprints follow that help understand the geologic setting of the ore controls.

Jan 1, 1990

By Anna H. Connard

SUMMARY The discussion focusses on developments in the debt/equity swap market since the Marte project was negotiated in early 1988. It emphasises carrying forward the recent market trends to anticipate the breadth and scope of debt/equity conversions for mine development in the 1990s. Secondary market prices of LDC paper, conversion values and political influences in the host countries and the use of near debt and commodity-based instruments as components of mine financing in debt/equity deals will be placed in the perspective of recent trends and expectations for the future. THE MARTE PROJECT The Marte mine is a gold porphyry deposit in Chile's high Atacama, for which financing was put together at the beginning of 1988. The Marte project was financed by a combination of common equity and loans. It was unusual that the equity infusions were made under different programs. Some of the international equity was infused with fresh funds via DL 600. Other common foreign equity was provided through the conversion of Chilean bank debt under Chapter XIX. On the loan side,. export credits for the import component of machinery and equipment were sought. Local bank financing was negotiated for the remainder of ' the project's anticipated cost. The debt conversion market in Chile was at its apex in terms of interest, activity and government support when the mine financing was arranged. The price of Chilean paper in the secondary market hovered about 62 to 66 cents per U.S. dollar of face value. Meanwhile, the Chilean government was negotiating conversion redemptions significantly closer to full face value. The government differentiated between debt paper exchanged for corporate investors who had sourced that paper in the secondary market, and debt paper held by bank investors who would incur a transaction loss in the conversion. The use of a combined DL 600lChapter XIX equity financing created different yield calculation bases for the various investors. Chapter XIX prevents remittance of profits before year 5 and capital repatriation before year 11. Investors choosing this vehicle have either for a corporate policy in the target project not to declare dividends until repatriation is allowed, or they have to seek uses for the peso liquidity that would be generated through dividend declarations in the early years. However, DL 600 investors face no such waiting period on dividends, nor do they have restrictions imposed on cashing out of the investment before the 11th year. Therefore, any equity structure with components of both investment mechanisms will have inherent differences in cost basis and future income flows for the various participants. This equity imbalance is defensible if the investment motivations of the parties are analyzed: a mining investor using fresh funds looks for a hurdle return on equity calculated at conservative commodity prices, with as much flexibility to reap upside benefits as possible; a mining investor choosing to invest through a debt conversion mechanism will realize a modest short term gain on the conversion, reducing his effective cost basis, but sacrificing some return because of the waiting period on repatriation of dividends. INVESTMENT OBJECTIVES A bank investor exchanging his own paper for an equity participation in a mining project realizes a conversion loss on the transaction. He seeks a risk adjusted acceptable hurdle rate of return to recoup that loss over time. Motivation for the bank investor to take that loss may be derived partly from a strategy to diversify its existing portfolio by internal policy and externally regulated guidelines. The bank will compare yields on its loan portfolio to that country with anticipated dividend flows discounted back at a risk adjusted rate. It will analyze the project with return objectives of yield enhancement over time and with

Jan 1, 1990

By R. E. MacDougall

Very few mineral properties spend their entire lifespans from discovery to depletion in the hands of one owner. More likely, properties will have several owners, and partial interests may change quite often. Similarly, mineral companies are bought and sold with frequency, in recent years at what appears to be an accelerating rate. The reasons for selling a property can be manifold -need for additional capital in other parts of the business, need for development capital, realization of a large gain at a perceived high point in the market, pessimistic commodity outlook, retirement of principals, or resolution of estate problems. Regardless of the reasons for a sale, there are specific steps that logically follow. Spruce up the business, package the information, market the property, negotiate the terms, close the sale, and make sure it stays sold. Adherence to certain very basic ground rules in property sales can maximize the profits and minimize the effort.

Jan 1, 1990

By Charles F. Herbert

It is difficult to decide who most deserves credit for discovery of a mining district that has produced over 19.8 Mg (7,000,000 fine oz) of gold and still contains a large reserve of low grade ore. Fred Culver may have made the first discovery. In the summer of 1867, the ship's log of the Hudson's Bay Co.'s steamer Otter stated that Fred Culver had been found nearly lifeless from wounds, without provisions, but with some 2.3 kg (80 oz) of rough, placer gold in the bottom of his canoe; he told of finding a rich creek and an attack by Indians that caused the death of his two companions. The place of rescue was about 24 km (15 miles) southeast from the present site of Juneau. Possibly John Muir, the hero of modem environmentalists, should be given important credit. In 1879 he reported finding mineralization along what later became to be known as the Juneau Gold Belt, and it was his report that induced the cantankerous German mining engineer, George Pilz, to grub- stake some of the prospectors who had drifted into Sitka from the declining gold placers of Cassiar, British Columbia. Pilz also offered rewards to Indians who might report gold discoveries.

Jan 1, 1990

By Jan H. Hommen

TRENDS IN MINE FINANCE Reviewing historical trends may help in dealing with future funding strategies. The first trend is the increase in the use of debt to fund corporate America. Surprisingly, when comparing that with other corporates in the global marketplace, the U.S. does not look too poorly. Japanese, in particular, but also German companies, are much more leveraged than their U.S. counterparts. Note that in Japan and Germany the government and the consumer have shown substantial restraints when it comes to credit. Not so in the U.S. where the savings rate (4%) is much lower than that in Japan (20%) and in Germany (14%). As a result, the cost of leverage is substantially lower in Japan and in Germany than in the U.S. Lower debt costs in these countries allows one to obtain more of it for the same price. The close relationships between financial institutions, corporations and governments in Japan and Germany also make the risk of leverage more bearable and understandable. Also note that interest rate volatility in these countries is more subdued. The investor base in common stock is also changing. Private pension funds have been net sellers of equities during the last few years while public pension funds have been net buyers. Individuals are basically out of the market. It is estimated that over $330 billion of equity was retired in the U.S. through 1986-1988. The reasons are well known: restructurings, buy-backs, takeovers, mergers, and buy-outs. This de-equitization is likely to continue as the cost of equity capital is higher than the cost of debt capital, even on a before-tax basis. Because there has been no market for equity since October 19, 1987, junk bonds have replaced equity capital in the corporate finance structure. The non-investor-grade borrower has access to the public markets through high-yielding debt securities that often look like senior equity. Deregulation has also provided 24-hour markets; securitization can now liquify assets that before were rusting on balance sheets; information processing and communication tools give facts that are instantaneously available, creating the need for products to cover risk and exposures unknown before the start of the information and technology explosion. Thus we now have swaps, options, futures, options on futures, caps, as well as program trading, portfolio insurance, index funds, etc. Globalization will be unstoppable. Today's environment demands it. Corporations are now global competitors, even though they may have never shipped a product off-shore. Boundaries are disappearing and impediments have been removed. Stocks can be issued in a global offering with distribution in all major financial centers of the world. The high leverage of Japanese companies has made common stocks very scarce, which with the high savings rate, makes equity capital inexpensive in Japan. If markets were perfect everyone would issue stock in Tokyo and buy it back in New York. This would certainly stop the bleeding on the balance of payments. With the deficit balance of payments in America, it is no surprise that the cost of money is expensive here. The risk-return relationship on U.S. equity is not favorable enough to appeal to Japanese equity investors. The Tokyo-market, helped by a stronger yen, surpassed New York as the most important equity market in the world. The question is, will the Tokyo market hold up when Japanese domestic consumption increases at the expense of savings? In the U.S. debt markets, the plain vanilla debenture is making a comeback after a period of absence. Commercial paper has replaced short term bank borrowings for working capital funding by larger corporations. The banks have made an interesting comeback with loan sale programs that will continue to attract borrowers. There will be a continuing

Jan 1, 1990

By J. Platt

Debate over acid rain legislation has presented a moving target for coal and utility company planners attempting to figure out how legislation will affect their business environment. In spite of disagreement among experts, the prospect for continued change, and persistent --perhaps even growing --uncertainty, a great deal has been learned about coal market dynamics. This paper reviews progress and describes some of the major problems and controversies.

Jan 1, 1990

By Kennedy JT

This is a question that will be asked many times and by many individuals during the various evaluation stages of any new project. However, the question itself will often have different connotations to the different groups invariably involved in such an exercise. As examples, consider just three of the several different groups involved in the development of a new mining project - Financiers, Consulting Engineers and the Sponsors of the project (potential borrowers). To the Financiers, a 'bankable project' will be one against which they will be prepared to lend funds (but not necessarily all of the funds requested by the Sponsors). This usually means that in the first instance the technical information presented to the bank has satisfactorily covered all of the requisite areas to the levels of accuracy required. More importantly, the financial evaluation of the projected economic performance of the mine, as a whole, is considered sound and a set of arrangements under which the bank is prepared to advance loan funds have been structured which fully satisfy the bank's credit criteria. To Consulting Engineers preparing a feasibility study (or a part thereof), on behalf of the project Sponsors, the term 'bankable' invariably only refers to the technical completeness and the level of detail contained in the report which they are preparing. Their scope of work will not necessarily have been broad enough to fully satisfy a bank's requirements. It is unusual to see any specific references to overall project viability or profitability in Consulting Engineers' feasibility reports, other than those which are automatically associated with the use of the term 'ore'.

Jan 1, 1990

By J. E. Garlanger

Each year, Florida mines approximately 40 million tons of phosphorite, most of which is ultimately converted to various commercial fertilizers. The phosphorite is mined from within the bottom portion of the 40-to 60-ft. thick surficial aquifer, using open pit mining techniques. The ore zone or "matrix" is generally overlain by relatively permeable fine sand to silty and slightly clayey fine sand. The ore itself is highly variable in nature but, in Central Florida, typically consists of less permeable clayey phosphatic sands and sandy clays with stringers of permeable sand. The ore is much more sandy in the north Florida mining area.

Jan 1, 1990

By S. Don Brown

Between 1987 and 1988, the Bureau of Mines studied the mineral resources of the White River National Forest and part of the Arapaho National Forest to appraise the resources present and to determine the types of deposits, and their location, that could be mined economically if sufficient demand and metal prices existed. The study included a comprehensive literature search and a limited amount of field investigation of minerals and mining activity in and near the Forest. This report summarizes a more comprehensive minerals report on the Forests prepared by the Bureau of Mines and was written for a general audience without a background in geology or related fields. Mineral resource information indicates that in the Gore Range-the area between Tennessee Pass and Gilman may contain large base-and precious-metal deposits, and could be the focus of exploration activity in the near future. The Breckenridge mining district was found to have a moderate to high likelihood for mineral exploration and possible development of gold. Recent exploration and minor development work has occurred in several other areas: Montezuma, Kokomo-Tenmile, and Upper Blue River districts, and portions of the Sawatch Range.

Jan 1, 1990

By Roger L. Williams

The Zinc Corporation of America Monaca smelter continues to use the St. Joe-developed electrothermic process for producing zinc metal and zinc oxide. As we enter the 1990s, the electrothermic process flexibility permits treatment of larger quantities? and lower-grade zinc-bearing recycle materials. A new sinter plant having one large sinter machine will increase sinter feed production required to meet our capacity target of 150,000 tons per year.

Jan 1, 1990

By Gus Van Weert

The cost of oxygen is a major and common factor in the hydrometallurgical processes developed or proposed tor the oxidation of refractory pyrites. This cost involves charges for the generation and the transfer of the 02 to the mineral slurry. Bio-oxidation faces considerable design demands which require large scale equipment to be resolved. Nitric acid assisted oxidation offers low cost oxygen units; this method of pyrite oxidation deserves a closer look for large scale plants treating pyritic gold ores and concentrates.

Jan 1, 1990

By S. E. James

EAF dust has been listed as a "hazardous waste" due to the presence of lead and cadmium, and at times chromium. The 550,00 tpy production of . .EA]' dust, estimated for the United States alone, contains more than 10,000 tpy of lead and about 250 tpy of cadmium in addition to nearly 1'00,000 tpy zinc. Even though the listing of .EAF dust as a hazardous material stimulated extractive metallurgical work worldwide, process development efforts have focused only on the recycle of the potentially-valuable zinc units. However, the recycle of the lead and cadmium, while not lucrative, is the more critical effort. Horsehead Resource Development Company, Inc. (HRD), in conjunction with its sister company, Zinc Corporation of America (ZCA), has taken a unique approach to total recycle of the toxic heavy metals found in the EAF dust. Impure oxide, produced by either a Waelz kiln or FLAME REACTOR Process and containing the lead and cadmium, is calcined in a rotary kiln at Palmerton, Pennsylvania, to produce a refined zinc-rich intermediate for ZCA's electrothermic zinc plant at Monaca, Pennsylvania. During the calcining operation, lead and cadmium are concentrated in a fume product and shipped to ZCA's electrolytic plant at Bartlesville, Oklahoma. At Bartlesville, a new hydrometallurgical circuit has been constructed and the existing cadmium plant expanded. The combined facilities permit the total recovery of cadmium to refined metal and the lead to .a silver-rich intermediate, which is sold to lead smelters. In this paper the Waelzing, calcining and new leaching facilities will be described.

Jan 1, 1990

By Thor Pedersen

Elkem's technologies for the processing of waste materials, dusts, sludges and other residues, are based on the use of their Multi-Purpose Furnace as the primary processing component. The Multi-Purpose Furnace? is an electric slag resistance reduction furnace equipped with a hot media, Modular Freeze Lining and Elkem's proprietary, air tight electrode seals. The oil cooled? freeze lining allows specific heat fluxes 2 to 3 times higher than furnaces lined with conventional refractory. Reduction activities taking place within the furnace are free from the reoxidation potential of infiltrated air as Elkem's electrode seals are positively gas tight. Small quantities of highly concentrated off gas of controlled composition are produced to suit the requirements of downstream processing. The high electrical thermal efficiency achieved by generating heat within the slag itself, combined with the ability to operate at high melting rates and intense power density, makes the Multi-Purpose Furnace 9 an unique implement for the design of furnace products. These characteristics are utilized in the processing example cited, "Elkem's EAF Dust Processing Technology", which combines two proven technologies in an economically feasible system for the recovery of contained metal values from K061 wastes at the same time producing a disposable slag product. The portion of the example dealing with the condensation of zinc was prepared with the assistance of Imperial Smelting Processes, Limited of Bristol, England with whom Elkem has a non- exclusive license.

Jan 1, 1990

By Louis J. Sousa

In November 1989, the U.S. Bureau of Mines sponsored a 2-day conference to stimulate thinking and discussion about changing materials technologies and implications for the Government's materials information programs. On the first day of the conference, speakers provided overviews of developments occurring in each of the major materials groups. Emerging technological developments, applications, economic and national defense significance, intermaterial competition, and potential market growth in advanced plastics, polymer composites, ceramics, metals, and electronic materials were described. In general, the speakers forecast advanced materials market growth rates in excess of overall gross national product (GNP) though high costs will tend to limit growth outside of aerospace, defense, electronics, medical equipment, and other typically high value-added businesses. On the second day, a wide range of speakers representing several facets of the materials community described how advances in materials technology are creating a need for new types of data, statistics, information, and analysis. Reflecting the speakers' broad range of organizational, professional, and personal perspectives, an array of information needs was identified. Most requirements, however, seemed to fall into one of five major categories: Federal materials research activities, material standards, market and economic information, health and safety, and public policy.

Jan 1, 1990

By Donald E. Buck

In 1988, Albania's centrally planned economy continued to decline. The country's officially published yearend economic report did not contain concrete results such as the growth of national income or industrial output. 2 The shortfall for central budget earnings for 1988 amounted to 9% below the planned target. Losses in industry were attributed to poor management and organization, as well as to low technical standards and excessive consumption of fuels and raw materials. The construction, energy, and mining sectors of industry did not meet their annual production plans. As in 1987, within these sectors, the chromite and petroleum extracting and processing industries continued to lag in output. Both chromite and petroleum remained Albania's chief sources of foreign exchange; the production downturn of these commodities continued to negatively affect the country's foreign trade position, especially in view of constitutional prohibitions against using foreign credit to finance trade. The chief events in the minerals industry in 1988 included the construction startup of the first of four planned new concentrators at the Bulquize chromite mine, as well as the construction startup of new ferrochromium capacities at Elbasan. Also, the copper mining industry reported the completion of facility expansion at the Perlat mine in the Mid-rite district. Albania began new facility construction at the Dinamo heavy-equipment enterprise at Tirana to maximize self-sufficiency in mining equipment production. Upon completion, the new factory would double the out-put of mining equipment at the enterprise and would introduce new designs for electric trucks and pneumatic drills for the mining industry. The new facility would also increase the production of new machinery and equipment for the country's beneficiation plants.

Jan 1, 1990

By George Hope, Edward H. Smith

In late 1989, LAC Minerals purchased 65% of Bond International Gold and as a result became controlling shareholder of the El Indio Mine through Bond and San Jose. El Indio is a world class, complex sulphide gold deposit located in the hydrothermal alteration belt of the Andes mountains in the 4th Region of Chile. The mine is located in the high Andes about 185 km east of La Serena at an elevation of 4000 meters. The 1450 workers at El Indio live in the mine camp at 3200 m and on days off are bussed to La Serena. The El Indio mine was started in 1979 by St. Joe Minerals Corp., bought by Bond in 1987 and subsequently by LAC in 1989. The mine has produced 2.7 million oz. of gold, 9. 5 million oz. of silver and 170,000 t of copper since start of operation. The mill is currently operating at a rate of 2850 t/d and producing a copper/gold concentrate which is roasted to produce a copper/gold calcine and high quality, saleable crude As203• A small proportion of the precious metals are also produced as bullion from the leach circuit. Total production during 1989 was 224,197 ounces of gold, 1,309,342 ounces of silver and 26,968 tonnes of copper. The average cash cost of production for the period was U.S. $96 per ounce of gold, net of by-product credits. The average realized price was $5.30 per ounce of silver and $1.14 per pound of copper.

Jan 1, 1990

By R. E. Krauss

The McLaughlin Mine is a world class epithermal gold deposit located in the coastal thrust fault of Northern California, U.S.A. Homestake adopted a proactive strategy in the permitting of the Mine. Extensive environmental base line studies were undertaken. Engineering and process alternatives were evaluated for environmental impact along with other factors. A unique pressure oxidation process was selected. Screening studies were conducted as a basis for the selection of waste rock and tailings disposal sites. Project engineering and permitting were fast tracked. Construction required eighteen months and the first gold bar was poured in Parch of 1985, six years after the initial discovery. Project facilities are designed and operated so as to minimize environmental impacts. A comprehensive monitering program demonstrates permit compliance. Reclamation of the site is ongoing throughout the Mine?s twenty year life. Non-mined lands are managed to maximize wildlife habitat value.

Jan 1, 1990

By Gordon T. Austin

The combined value of production of natural abrasives, which includes tripoli, special silica stone, garnet, staurolite, and emery, increased about 9% in 1988. In the case of emery, the increase was due to an increase in unit value of the material produced. The increase in the value of garnet and staurolite production was simply the result of an increase in the quantity of materials produced. However, special silica stone experienced both an increase in unit value and quantity produced. The nonmetallic manufactured abrasives industry, which includes only silicon carbide and fused aluminum oxide in the reported statistics, enjoyed the best production year since 1981 in terms of total quantity produced. Production increased 22% in quantity and 16% in value com-pared with those of 1987.

Jan 1, 1990

By Robert F. Calman

OUTLINE FIVE EXAMPLES OF GOLD-LINKED FINANCINGS 1. Financing the Lupin Mine • Sale of Cdn $40.0 million of 12% preferred shares and Cdn $40.0 million of Gold Purchase Warrants @ $595 per ounce. 2. Financing the Copper Range acquisition • Borrowing 100,000 ounces from a Canadian chartered bank @ US$307 for five years. 3. Financing the Round Mountain expansion • Borrowing up to US $80.0 million in dollars, convertible into gold, repayable over five years from a group of North American banks. 4. Financing the Tenneco Precious Metals Division acquisition •Sale of SFr 110.0 million of ten year 3-718% bonds with warrants to buy 132,000 ounces of gold at US $560. 5. On Forward Sales, Puts and Calls • Gold, Silver, Canadian Dollars, Swiss Francs THE FINANCIAL RULES AT ECHO BAY 1. Never bet the company 2. Equity is the primary form of capital for a gold mining company 3. On debt 4. The Yardsticks for Corporate Decisions 5. Financial Community Relationships 6. Dividend Policy No Text Available Tables Follow

Jan 1, 1990