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By W. Irwin Moyer

Two methods for the rapid valuation of oil properties are in common use. The one best known and most widely used is the "per barrel" value, based on the present daily production of the well, without regard to its past performance or the history of the sand or pool from which it produces. The second method is the "time to pay out," or the lengt of time required for a well to place itself upon the credit side of the ledger, from which time the returns from its production (less the operating expenses) will be clear profit. The time basis for valuation is also commonly used in the appraisal of an undeveloped lease. In most oil fields, it is not thought good business to invest in production that will not pay out in at least 4 to 5 years. Nearly all buyers (except in certain regions of very persistent production like the deep-sand territory of the Appalachian field) expect wells to pay out in considerably less time than this. Like the barrel-per-day price, the time necessary for a well to pay out has been determined for each field, so that one frequently hears a field or district referred to as having a certain time to pay out. This is considered the norm for that field or district and the buyer and seller base their value, to greater or less extent, on their belief in the accuracy of this time. The writer long ago became convinced of the inaccuracy of the barrel-per-day method, except when greatly modified for local conditions, such as the age of the wells, their economic limit, operating conditions in the field, the future price of oil, and the persistence of the sand as a producer. When so modified, this method becomes more of an analytic or predicted probable-yield valuation. While the appraiser may not go through each step in a valuation based on future returnable revenue, his knowledge of the field and the local conditions surrounding his leases make it possible for him to estimate a fair sales value that, in many cases, will be a close approximation to the truth. This is quite different from she commonly understood barrel-per-day value, in that the conditions turrounding the sale of one lease or property at a fair market value may

Jan 1, 1923

By F. E. Cash

"In the interest of accident prevention it is felt that a report of the measures taken during the past four years toward the reduction of fatal accidents in Alabama, especially in preventing falls of roof and coal, will be of interest throughout the mining districts.In order to determine the primary factors in the reduction of fatal accidents from falls of roof and coal, the operators, State Inspection Department, and the Alabama council of the Holmes Safety Association were asked: ""What has your organization done to help in the reduction of accidents from fails of roof and coal?"" The responses to this question have made this report possible.To bring out briefly the reduction in fatal accidents from falls of roof and coal as well as from all causes, the following three tables have been prepared.These statistics have been compiled from the records of the State Inspection Department.In the order mentioned, it is felt that credit for the reduction in fatal accidents from falls of roof and coal should be given to the individual operating companies, the State Inspection Department, the Alabama council and chapters of the Holmes Safety Association, and the Alabama Mining Institute. The individual operating companies naturally head the list in that they are directly concerned from a humanitarian as well as a financial point of view. The State Inspection Department through frequent and thorough inspections and by providing necessary statistics is largely responsible for the reduction. The Alabama council and its affiliated chapters of the Joseph A. Holmes Safety Association through its publicity and education reaches a large number of employees throughout the mining district. The Alabama Mining Institute defrays the council expenses and thus makes possible much of this service to the Alabama mining industry.In 1925 there were 49 fatalities, equivalent to 115,169 man days per fatality, from falls of roof and coal, which was by no means a good record; in 1926 the number and frequency of accidents were reduced to 42 fatalities and 149,096 man days per fatality. When in 1927 the fatalities from this cause mounted to 61 and the man days per fatality were reduced to 89,903, it was quickly realized that more concentrated efforts must be exerted to reduce such accidents.As early as August, 1927, at which time the fatalities from falls had reached a total of 31, the following letter from the Chief Mine Inspector was written to each operating company in the State and was the initiation of a very strenuous campaign by all parties concerned towards the reduction of accidents from falls of roof and coal."

Nov 1, 1929

GENTLEMEN Submitted herewith are the report of the Treasurer for the year 1938 and reports for the same year of the following standing committees: Admissions, Membership, Papers and Publications, Mining and Metal¬lurgy (Magazine), Library, Speakers for Local Sections and Student Societies, and Student Relations. To these reports members are referred for further details. Membership.-The end of the year 1938 saw Institute membership at an all-time peak: 12,474, made up of 2898 Student Associates and 9576 members of other classifications. The next highest level had been reached at the end of 1921 when corresponding figures were: total, 10,329; student members, 1450; all other classifications, 8879. The net gain for the year was 1495, of which 751 were Student Associates and 744 in the other categories. Two factors contribute to the growth of membership: (1) the enrolment of new members; and (2) the retention of members already on the roll as reflected in a relatively small number of resignations and suspensions for nonpayment of dues. For the first, much credit goes properly to the general Membership Committee that functioned for a second year under the chairmanship of Clyde E. Williams. With the cooperation of Institute members in general, to whom Mr. Williams expresses appreciation in his report, the Committee has been successful in acquainting eligible nonmembers with the purposes, activities and advantages of the Institute. The result has been the receipt during the year of 1162 applications, exclusive of Student Associates. This compares with 1212 during 1937 and 1266 during 1936. However, in considering this modest decline, account must be taken of the somewhat less prosperous conditions prevailing in the mineral industries and, consequently, among engineers engaged ?in those industries.

Jan 1, 1939

By Charles H. Fulton

The process of crushing ore in cyanide solution was first used at the Crown mine, New Zealand, in 1897, by Mr. F. R. W. Daw; and, two years later, Mr. John Hinton tried it experimentally at the old Dakota plant, Central City, South Dakota. To Mr. Hinton belongs the credit of introducing this important modification in the Black Hills, this being its first successful application in the U. S., and its results have been so satisfactory that it has become established as the proper manner in which to treat the dense oxidized siliceous ores of this district. Five mills are now crushing ore in cyanide solution, namely, the Horseshoe, 120 stamps (60 in operation); the Dakota, 30 stamps; the Maitland, 40 stamps; the Hidden Fortune, 60 stamps; the Lundberg, Dorr & Wilson, one 6-ft. Monadnock roller-mill; and several others intend to adopt this practice. The dry-crushing process still holds its place for the treatment of the more porous and open siliceous ores; and two mills continue to dry-crush dense siliceous ores. Character of the Ores. The occurrence of the ores of the Cambrian strata in the northern Black Hills has been frequently described.' In practice they are classified, according to their appearance, into " red " and " blue " ores, the former being oxidized and the latter unoxidized. At the present time, usually the red ores only are treated at the mills, although occasionally small quantities of blue ore, which have become intimately mixed with the red in mining, are included. Generally the extraction of values by the direct treatment of raw ore is from 70 to 75 per cent. for red ores, and from 25 to 50 per cent. for blue ores. The ores consist mainly of a siliceous matrix containing, as a +1SOUTH DAKOTA SCHOOL OF MINES, RAPID CITY, SO. DAK.

Jan 1, 1905

By C. Q. Payne

The art of crushing ores and other materials by means of rolls is a comparatively recent one. While the first record of rolls using iron crushing-surfaces dates hack to the year 1806, when they were employed in Cornwall, their principal developmcnt has taken place during the past 30 years. To Stephen R. Erom belongs the credit of the pioneer in introducing the belted high-speed roll, which has had its origin and a marked development in this country. His notable contrib'ution to the art was in the use of a single bed-plate or frame supporting the roll-shafts, and to which levers holding the mova, ble roll-bearings were pivoted. He also made use of steel tension-rods to support the crushing-strains, and of hammered-steel tires for the crushing-surfaces. These changes brought the design of crushing-rolls to a high level. Following closely thereon, about 1885, W. R. Eckart conceived the idea of the swivel or ball-and-socket support for the roll-shaft bearings. This is an excellent mechanical conception, especially for bearings held against a spring pressure, and while it may not be necessary for all types of rolls, yet it has been quite generally adopted by other roll-designers, and illustrates the refinement which roll-construction has now reached. Other engineers, as, for example, Argall, Vezin, Roger, and Sturtevant, to mention only a few among many, have also given the closest attention to the various details of rolls, such as the frame, springe, bearings, and shafts, and have developed many novel and original designs. It has remained, however, for the boldness and originality of Mr. Edison to extend the field of crushing-rolls in two new directions, and to cause them to ex-

Jan 1, 1913

By E. E. Harton

Bureau of Mines Information Circular 16, Bibliography of Investment and Operating Costs for Chemical and Petroleum Plants, was published in October 1949 as an aid in making estimates of investment and operating costs of processes for manufacturing synthetic liquid fuels. Development of such processes by the Bureau of Mines was authorized by Public Law 290, 78th Congress. This bibliography included refer¬ences to and abstracts of publications appearing from 1930 to September 1948 on all processes in general use in the petroleum refining and chemical industries. Publications in this field have been numerous since compilation of the above bibliography, and the present report was prepared to cover the field from September 1948 through June 1952.3/

Jan 1, 1955

Research personnel from the Bureau of Mines, representatives of the Mining Enforcement and Safety Administration (MESA), and members of the mining industry met with other Government and Industry representatives at three seminars held in Pittsburgh, Pa., November 4, 1975; St. Louis, Mo., November 6, 1975; and Denver, Colo., November L1, 1975, to discuss the results of Bureau-sponsored research on coal mine illumination. The program, aimed at developing suitable illumination systems fur the working; places of underground coal mines, covered hardware development and field evaluation and the status of proposed MESA standards and proposed MESA enforcement procedures. These proceedings contain the opening remarks to the seminars and eight technical presentations an various aspects of coal mine illumination.

Jan 1, 1976

By F. F. Netzeband

This report relates to the sulfur industry of seven States--Arkansas, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, and Texas--and is part of a national study of the sulfur industry by the Bureau of Mines. Markets as used 1n this report are divided into two components for individual analysis--(1) supplier markets which include regional Frasch and byproduct sulfur producers and (2) consumer markets which include processors and manufacturers requiring sulfur in their operations. The term sulfur as used in this report includes brimstone, native sulfur, elemental sulfur, or sulfur equivalents.

Jan 1, 1964

By Paul J. Guay

This report presents the results of evaluating a longwall mining system specifically designed to extract a very deep web (60 inches or deeper) from a longwall panel. The report includes a productivity and cost analysis comparing the new mining sys-tem with a high capacity conventional longwall operation taking a 30-inch wide web. The analysis shows the new system will increase annual production 44 percent and decrease cost per ton off the face 21 percent. The report also includes conceptual drawings and specifications for a high capacity four-drum shearer and a unique shield type of roof support specifically designed for very wide web operation. The advantages and problems associated with wide web mining are discussed in general and as they relate specifically to the equipment selected for the new mining system. The study concludes by recommending that surface coal loading tests be conducted as the follow-on work.

Jan 1, 1978

By William O. Vanderburg

This paper gives the results of a reconnaissance of the mining districts in Pershing County, Nev., made from March 9 to April 1, 1936. During the field work nearly all of the mining districts in the county were visited, and considerable data were obtained on active and inactive properties. The report covers the location of the various mining districts, nature of the deposits, information on past

Jan 1, 1936

By Albert E. Ketler

Introduction – The introduction of computerized monitoring and control (M/c) equipment into the U.S. coal mining industry may prove to be of truly revolutionary proportions in the 801s.Many of you are aware that the British have developed and have been using such sophisticated M/C equipment for performing production and safety related tasks in their coal mines for nearly a decade. The benefits of M/C systems in the mining industry are usually separated into those which improve productivity, and hence make money for the company, and those which improve safety, and hence cost money. The economic benefits of M/C are startling for the production related functions such as for monitoring and controlling conveyor belts, de-watering pumps, electrical power distribution, and the like. It doesn't take much analysis to show that hundreds and even thousands of tons of coal don't get mined every time a belt shuts down or when power is out due to circuit breakers tripping for any number of reasons. A flood, caused by a malfunctioning pump which goes undetected for lack of feedback monitoring of pumping parameters, can destroy literally millions of dollars worth of mining equipment. The M/C system would be justified or not based on whether or not the productivity benefits balanced the cost within a timespan commensurate with the return on capital philosophy of the company. The safety related benefits are easily underestimated or ignored completely and the purpose of this paper is to under-score some of these benefits, as well as to review the application of M/C to the coal mining industry. The companies involved are Transmitton Ltd of England and Minetics Corp of Pittsburgh, Pennsylvania. Transmitton is probably the most experienced manufacturer of M/C equipment in the world having some 200 installations to its credit. Minetics is the marketing and manufacturing arm for Transmitton in the U.S.A. and is responsible for all aspects of distribution and service. Plans are underway for manufacturing of the Transmitton hardware for U.S. sales to be transplanted into U.S. subcontractors by 1981. Thus our coal mining industry will benefit from British technology, but without the delays and additional costs usually involved in international shipments.

Jan 1, 1981

By Blake M. Caldwell, Thomas C. Poulter

A new approach to an old problem has made it possible to do in a a tively short period what has not been accomplished in the past three quarters of a century using strictly experimental methods. A theoretical study was made of the underlying principles whereby a jet is formed by a shaped charge and of the mechanism of the penetration of the target by that jet. It was found that there are more than 10, and perhaps as many as 15 variables affectin!? the performance of the shaped charge. Only a few calculations are necessary to show that it is physically impossible to investigate all of these variables experimentally. The shaped charge theory has been extended to include a previously little-understood mechanism in high explosive phenomena; namely, low order detonation. By superimposing a high order detonation on a zone already undergoing low order detonation, all appreciable improvement in performance is accomplished. The development of a design wherehy these phenomena are coordinated in such a way as to develop a jet which is tailored to meet the specific target requirement will be described in detail. The shortcomings or even impossibility of strictly experimental techniques will be illustrated by a discussion of the development of a special-purpose explosive charge. INTRODUCTION In an article appearing in the May, 1888 issue of Scribner's Magazine, Charles E. Monroe described his early experiments with gun cotton (Fig. 1) which led to his name being most fre-quently connected with our present-day shaped charge. Although the sunken letters or "cavities" in Mon- roe's gun cotton were not lined, they produced some penetration of an iron plate. The credit for the lined shaped charge, however, should rightfully go to Dr. R. W. Wood of the Physics Dept. of Johns Hopkins University, who was responsible for first discovering the fact that a metal liner in a cavity of explosive gave high velocity fragments and/or jets of metal. This discovery was made by Dr. Wood inadvertently while investigating an accidental death resulting from an electric blasting cap. He discovered that a jet of high velocity copper particles was ejected from the dimple

Jan 1, 1958

By V. C. Smith

Reliable and detailed statistical data available for Kentucky, Ohio and West Virginia are the most meager and unsatisfactory of any of the producing states. Detailed histories and statistics are available for only a few pools. The antiquity of these pools, loose nomenclature, particularly where several names are applied to the same pool or various parts of the pool or a new namsed when the pool was rediscovered, made the collection of accurat historical and statistical data almost impossible. So many of the data reported are unreliable that a breakdown by pools or even by counties, until more accurate information is available, would lead to gross errors. Rather than perpetuate inaccuracies, we have endeavored to go to original sources wherever possible, sift these and provide data that may serve as an incentive and basis for future work. The necessity for accurate information is thoroughly recognized by the operators, particularly because of the effect of recent government regulations and request? for data in connection with the preparation of the various codes a pending legislation. Producers, both major operating companies and individuals, . freely given their time and assistance in the compilation of these data. Valuable information was obtained from tax records, rate cases, statistics published by the oil and gas publications and the Bureau of Mines. So many individuals cooperated in the preparation of these data that individual credit cannot be given. Undoubtedly many errors will be found. Some of the data are open to controversy, and many have been omitted in the hope that new information of a more reliable character may become available. Other omissions are due to an inability to contact the proper individuals, many of whom are no longer connected with this industry. Pennsylvania grade crude sold in 1933 for the lowest price since 1895. Gas production could not find sufficient new markets to fill the void left by industrial stagnation. In the gas industry, where the market price is fixed by contract, uncertainty persisted because of impending legislative action affecting both taxes and utility rates. As a result of these factors and a lack of new money, drilling was restricted to a new low. The lifting of proration toward the end of the year in the Pennsylvania

Jan 1, 1934

By George Collins

AT the meeting of the Western Division of the American Mining Congress, held in Denver last September, papers were read by F. H. Brownell, a vice-president of the American Smelting and Refining Co. and chairman of its finance committee, and by H. Foster Bain, former director of the United States Bureau of Mines and now secretary of the A. I. M. E.. which dealt thoroughly with certain phases of my sub-ject. These addresses can hardly have failed to awaken serious reflection in all who listened to them; but their implications have apparently not penetrated the con-sciousness of bankers, economists and statesmen, whose business it is, or should be, to prepare for the economic and social changes which must inevitably follow, if the conclusions which I shall outline hereinafter are true. In discussing this subject I wish to disclaim any intention or desire to forecast the course of the metal markets or the immediate prospects of the mining in-dustry. The facts' adduced must inevitably influence the value of metals, the activity and profitableness of mining, and perhaps also the social status of those en-gaged in it. But my forecasts do not refer to this year, next, year, or the year after. The nearest ap-proach to a date on which I will venture is that the relative scarcity of gold may begin to make itself felt in something like ten years from now, but its effect will not culminate for several years thereafter. Scarcity of new gold is likely to be offset, to some extent, by increasing use of currencies based on credit; but unless it is found possible to dispense with the gold standard altogether, this can hardly prevent a great ultimate fall in commodity prices. This fall, moreover, is likely to be more severe in manufactured goods than in what are, popularly termed raw ma-terials; and most of all in those manufactured goods which are susceptible to the greatest degree to cheapen-ing by mass production, and which are least counter-affected by increasing metal prices; by which I mean those in which the cost of metal contained forms a relatively small, element in the total cost of production.

Jan 6, 1927

By M. E. Wadsworth

The chief value of a paper like this consists in its statistical tables, putting on record material useful to future inquirers. The data here given have been compiled from time to time as far back as 1874, and subsequently brought up to date. Much of the data could only be procured by personal inspection of the catalogues, as for example those relating to the Lawrence Scientific School, which were taken at that time from the catalogue of Harvard University, on file in the University Library, by the present writer, then an instructor in that institution. These tables of statistics were first prepared for publication by the present writer in 1888-1890 and published in his "Report to the Board of Control of the Michigan College of Mines " (Michigan Mining School) for 1886 to 1890. Later they were revised, enlarged and brought down to date in his reports to the same Board for 1890-92; and since that time they have been, at his request, revised, greatly enlarged and kept up to date by Mrs. Frances H. Scott, the efficient Librarian and Secretary of the Michigan College of Mines. Great credit is due to her for her devotion to this work and her untiring efforts to have the statistics complete as far as possible. The accompanying running commentary is given simply as a string to hold these statistics together, and in order to call attention to a few points. In compiling any tables like those accompanying this paper, one is confronted by serious difficulties, some of which render these results only approximate. In order to insure greater correctness and fullness in the statistics to be published the writer's reports for 1890-92 were sent to the president of every college, university, and technical school in the country, so far as known. Accompanying this was a personal letter which asked of each one his aid in correcting any errors, and in giving fuller statistics. But relatively few answers were obtained, and subsequently from one to many letters have been sent to each institution not formerly reply-

Jan 1, 1898

By C. P. Sandberg

C. P. Sandberg, London, Eng. 1 think we should all be grateful to the Pennsylvania Railroad Company, and to their chemist, Dr. Dudley, for spending so much time and money in order to solve an important question; nor are me less indebted to the public spirit which leads them to impart tlie experience thus gained. In Europe nothing similar has hitherto been done, either by a company or by any private individual. In England the great railway companies employ their engineers in other ways, and do not keep a chemist or specialist to study rails; bat even if they did they would probably not publish the results. The chief professional engineers are so occupied with their private practice of railroad construction generally, that they cannot be expected to devote their time and energies to so special a question. The German Railway Union has, in my opinion, missed the real object of its elaborate researches by falling into the error of specifying costly, impracticable tests for rails—tests at the same time which do not infallibly expose the impurities that may be in the rails under examination. There has, therefore, been nothing done on this side of the Atlantic in the way of exhaustive study to determine the best composition for steel rails. America should consequently have full credit for the enlightened example which she has set. I wish, however, to make a few remarks on Dr. Dudley's second paper,—& paper which follows very much upan the same lines of argument as the first red three years ago, upon which I have previously touched in my pabr on the same subject read at the meeting in August last. If Dr. Dudley had discovered a new metal he could hardly, I think, have taken wore pains to prove that he was correct in his first formula for the best chemical colnposition of steel rails. But I hare seen so much done in the way of proof by experiment that I am inclined to think that almost anything can be proved by experiments and by satnples. If Dr. Dudley would only give up his formula, which would not suit any country—not even America—

Jan 1, 1881

By A Cooper

The current financial climate has given rise to fears that falling mineral prices and tight credit will force mining companies to cut back on production and new project development in a bid to cut costs and conserve cash. However, a prolonged squeeze on global supply can have only one result: a massive and potentially explosive demand for metals in the not-too-distant future. A resurgent global economy will also generate dramatic new demand for oil and energy, with a return to higher oil prices likely. How then should the mining industry plan for the future? In-pit crushing and conveying (IPCC) could lead the way as a partial or complete substitute for trucks. In 13 of 15 studies undertaken by Sandvik and Snowden, comparing IPCC with truck-optimised pit designs, IPCC generated operating savings ranging from US$0.18 to US$0.82 per tonne moved, compared to trucks. Trucks have higher operating, maintenance and energy costs than conveyors. New emission standards on diesel engines may make them more emission friendly but less efficient in terms of energy usage. With far more efficient energy use and cheaper operating costs per tonne moved than trucks, conveying offers an attractive alternative for the bad times ahead and into the apparent energy depleted future. When evaluating alternatives, a reasonable first step would be to conduct a scoping level study which analyses the differences in capital and operating costs between a truck and shovel operation and an IPCC solution. The study can also determine what type of IPCC is best suited to the particular mining application. The results can then be used to decide whether a more detailed study is justifiable. IPCC is a proven process that, with a fresh mindset, can make a significant improvement to mining operations. Sandvik (as an OEM with a full suite of IPCC equipment) can undertake these studies in ten working days in conjunction with Snowden or any other independent mine planner who knows how to schedule for IPCC. Because most mining industry personnel have been æborn and bredÆ on trucks and shovels û this paper focuses on some of the practical considerations necessary to make IPCC systems work that the Sandvik Technical Services Group has encountered during these studies.

Jan 1, 2009

By B. H. Dunshee

This paper is not intended to be a technical discussion of square-set framing as used in mines, but merely a short description of the different kinds of framing that have been used in the Butte mines, and what has been decided upon, after years of practical experience, as being the best, taking into consideration the physical condition of the veins and country rock, and also the supply of timber available for mining purposes. Butte is, essentially, a square-set district. Virginia City, Nev., was the first mining camp to use this method of timbering, and to Philip Deidesheimer, who went to the Ophir mine in 1860, is given the credit of solving the problem of square-set framing, where large bodies of ore were stoped and the timbers were supposed to hold the ground from caving without any filling. That he did his work well is shown by the fact that the main features of his framing are in use to-day. In the Butte mines the conditions are such that this method of timbering is generally used. We do not, of course, depend upon the timbers any more than is necessary. The worked-out stopes are filled with waste rock as close behind the miners as possible and not interfere with mining operations. The waste rock is obtained from development work on the different levels or from the surface. In the earlier days of mining in Butte there were numerous independent companies and naturally there were different ideas as to the best way to frame the square sets, although the general features were the same. Timber was abundant for mining purposes and the common practice was to use sawed lumber, generally 10 by 10 in. or 12 by 12 in. square. Some of the mines used for girts 6 by 10 in. or 8 by 12 in. timber, depending upon whether they used 10-in. square or 12-in. square timber for posts and caps. This avoided the necessity of framiug the ends of the girts, and also required less timber for the

Jan 1, 1914

By Philip Henry

THERE is a difference of opinion among engineers on the subject of depreciation in general, and still more on its application to any given case. The committee which was appointed by the American Society of Civil Engineers to make a report on Valuation of Public Utilities, states "There is no subject connected with valuation about which there are more diverse views than those relating to depreciation;" and in the discussion which took place upon the presentation of the preliminary report of this committee in January, 1914, that part of the report dealing with depreciation called forth more discussion than any other. From this discussion it was evident that the word " depreciation" was not always used in the same sense, so it is quite important that some definition be adopted. As this paper relates to the proper method of treating depreciation by corporations or individuals operating oil properties, both of which must make a return of annual net income to the government in connection with the income tax, it will be in order to adopt the definition of the Internal Revenue Bureau. Under date of Mar. 29, 1910, the Commissioner of Internal Revenue of the Treasury Department stated "Deduction on account of depreciation of property must be based on lifetime of property, its cost, value and use." Again, on Form 1035, "Return of Annual Net Income" for miscellaneous corporations (Section 2, Act of Congress approved Oct. 3, 1913), a deduction from gross income is allowed for "Total amount of depreciation for the year." This item is defined more particularly as follows: "The amount claimed under Item No. 5 (b) for depreciation should be such an amount as measures the loss which the corporation actually sustains during the year in the value of buildings, machinery, and such other property as is subject to depreciation on account of wear and tear, exhaustion, or obsolescence. The amount taken credit for on this account in order to be allowable should be so entered on the books as to constitute a liability against the assets of the corporation. The amount claimed under this item should not cover losses in the value of stocks and bonds. Decrease in the book value of securities owned, so far as such decrease represents a decline in the actual value of such securities, should be deducted under item 5 (a) of the return.

Jan 1, 1915

By C. Richard Tinsley

INTRODUCTION The economic analysis (Chapter 3), the engineering studies (Chapter 10), the credit structure (and the consequential funding sources) - Chapter 11, and the overall feasibility structure for any venture are all directed to determining one major decision element: How much and how certain is the reward for taking these risks? Risk assessment is a surprisingly weak area of analysis and is usually addressed in a checklist fashion. It is much preferable to deal within a risk system so that the inevitable tradeoffs among risks are correctly made. DEFINITION The first step toward risk definition must be to ascertain all of the risks to which a project or a company is exposed; otherwise one will remain ignorant of the possibility of a financially crippling loss until it occurs. (Carter and Crockford, 1974). However, simply stating what "risk" is can lead to debate. For example, risk could be (adapted from Vaughan, 1982): -the chance of a loss - uncertainty of loss -possibility of loss - uncertainty -dispersion of actual from expected results - probability of an outcome different from the one expected - possibility of an occurrence of an undesirable contingency -a condition in which a possibility of a loss exists. For the minerals industry financier, the last definition is probably the most appropriate. However, from a mineral company's point of view the definition might well include the possibility of not achieving the expected financial return. RISK CLASSIFICATION Risk identification will be readily agreed as the all-important first step. There are five major "branches" of risk classification. These are: -Statistical -Modellers -Checklist -Project Financing -Insurance The Statistical set discovered probability theory and any risk discussion soon deteriorates into a mathematical jungle (Megill, 1977; Hartman, 1976; Reutlinger, 1970; and Pouliquen, 1970).Their use of terminology tells its own story: coin toss (binomial distribution), gamblers' ruin, delphi (oracle) techniques, monte-carlo simulations, random walks, etcetera. These techniques inadequately represent the judgements necessary in an increasingly complicated and interrelated world. The risk Modellers have turned to the computer to handle these inter-relationships but soon find barriers because of "simultaneity". Certainly the computer has its uses to conduct various analyses (marketed as "sensitivity" analyses) but very often one finds that this involves changing one or two variables at a time, all other things being equal. Unfortunately, in a modern and complex world all other things do not remain equal. The statisticians will, no doubt, jump to their own defence by citing this

Jan 1, 1985