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By Juan J. Monsalve, AMAN SONI, Nino Ripepi, Richard Bishop

The design and strength of pillars are important parameters when implementing the room-and-pillar mining method in a limestone mine. The process becomes complex with the presence of karst voids, which are frequent phenomena in carbonate rock formations. This research continues a previous study aimed at studying the effect of karst voids on the strength of a particular limestone pillar. Using calculated pillar strength and estimated redistributed stresses, it was assessed that the pillar can counter more stress than currently imparted on it. Numerical modeling studies combining in situ stress determination and excavation sequencing were used to estimate the existing stresses on the pillar. Different possibilities of modification to existing pillar design were simulated using distinct element method (DEM) modeling to determine a better design.

Jun 1, 2023

By Xinghai Lei, Yuqi Shang, Guiming Li, Lu He

There are many factors affecting the stability of open-pit mine slopes, among which slopes with soft interlayers have become an important factor inducing deformation and instability due to their poor mechanical properties. In this paper, for the destabilization of a slope with soft interlayer under rainfall infiltration in an open-pit mine in Zhejiang Province of China during the rainy season, a sudden change of displacement at the monitoring point and the formation of a continuous plastic deformation of the slope are proposed as the criteria for slope destabilization through the establishment of a rainwater seepage-stress coupling model combined with the strength reduction method, and by using COMSOL Multiphysics finite element numerical simulation software to establish a three-dimensional numerical model based on the actual mining slope conditions. The safety principle is introduced through the strength reduction method to analyze the stability of the slope with soft interlayer under the coupling effect of seepage and stress. The safety coefficients of the slope with soft interlayer are calculated by using Numerical methods under the coupling effect of seepage and stress. The influence of rainfall intensity and duration on the stability or safety factor of the slope with soft interlayers was studied through analysis of stress, saturation, displacement, and pore pressure evolution. The mechanism of rainfall affecting slope stability was investigated, and the findings were validated using an engineering case study of a slope with a soft interlayer. The findings show that rainfall intensity is the main factor affecting slope stability in the open-pit mine slope with soft interlayer. The higher the rainfall intensity, the faster the shallow soil forms a saturation zone, whereas soft interlayers speed up the process and endanger slope stability. The slope prevention and control technology of the prestressed anchor cable (rod) framework was proposed based on the slope management construction conditions of the mine, and the effectiveness of the measure was verified through on-site industrial tests. The research findings provide a reference for preventing and controlling slope with soft interlayers in open-pit mines under similar conditions.

Feb 20, 2024

By Rod L. Norfleet

Cemented tungsten carbides are a sintered powder - metallurgical product essential to modern industry. Because of their moderate unit price and our dependence upon foreign sources for the component raw materials, a growing recycling industry has developed in the United States. There are two basic approaches taken to recycling cemented carbides; those which leave constituting materials unaltered or direct-reuse and those which separate the constitutes back to the raw components. To separate the carbides back to their raw components usually requires expensive chemical processing and is thus confined to the lower value materials such as grinding sludges. The direct-reuse methods recycle cemented carbides back to an intermediate level, a powder capable of being recompacted and resintered into a functional end-product. The three most commonly used methods of direct-reuse recycling, the coldstream process, bloaching and the Bernard or zinc process, are reviewed,

Jan 1, 1984

By S. L. Ducummon

Inactive underground mines now provide essential habitat for more than half of North America's 44 bat species, including some of the largest remaining populations. Thousands of abandoned mines have already been closed or are slated for safety closures, and many are destroyed during renewed mining in historic districts. The available evidence suggests that millions of bats have already been lost due to these closures. Bats are primary predators of night-flying insects that cost American farmers and foresters billions of dollars annually, therefore, threats to bat survival are cause for serious concern. Fortunately, mine closure methods exist that protect both bats and humans. Bat Conservation International (BCI) and the USDI-Bureau of Land Management founded the North American Bats and Mines Project to provide national leadership and coordination to minimize the loss of mine-roosting bats. This partnership has involved federal and state mine-land and wildlife managers and the mining industry. BCI has trained hundreds of mine-land and wildlife managers nationwide in mine assessment techniques for bats and bat-compatible closure methods, published technical information on bats and mine-land management, presented papers on bats and mines at national mining and wildlife conferences, and collaborated with numerous federal, state, and private partners to protect some of the most important mine-roosting bat populations. Our new mining industry initiative, Mining for Habitat, is designed to develop bat habitat conservation and enhancement plans for active mining operations. It includes the creation of cost-effective artificial underground bat roosts using surplus mining materials such as old mine-truck tires and culverts buried beneath waste rock.

Jan 1, 1997

By P. V. R. Bhaskar Sarma, P. K. Sahoo, G. Roy Chaudhury

A process was developed to treat an ammoniacal leach liquor containing zinc using Di (2-ethyl hexyl) phosphoric acid (D2EHPA) as the extractant. The objective of this work was to develop a process package for the treatment of complex sulfide leach liquors. Zinc extraction could not be carried out directly from the ammoniacal solution in mixer-settler units because of crud formation and low extraction efficiency. After neutralizing the free ammonia with H2SO4, the extraction efficiency was only about 40%, due to the high concentration of (NH4)2SO4. To decrease the (NH4)2SO4 concentration, the free NH3 was steam stripped, and the resultant liquor was subjected to zinc solvent extraction. An extraction efficiency of 98% could be achieved by controlling the equilibrium pH. Stripping studies were also optimized after removing ammonia from the zinc-loaded organic. A continuous 100-hr operation that included extraction, scrubbing and stripping, was carried out successfully.

Jan 1, 1995

By Zhiyuan Ma, Yong Liu, Xianjin Lyu, Jianfang Lyu, Jikui Zhou

A stable and continuous leaching process for niobium and tantalum extraction from ferrocolumbium tantalum (FT) was developed. The effects of initial concentration of HF and H2SO4, grinding fineness, leaching time, and temperature on the leaching rate of Ta, Nb, Fe, and Si were studied. Experimental results show that the leaching rates of Ta, Nb, Fe, and Si were enhanced by the increase of acid concentrate, fineness, leaching time, and leaching temperature. The optimum process conditions are HF initial concentration of 5 mol/L, H2SO4 initial concentration of 2.5 mol/L, − 74 μm percentage of 65%, leaching time of 20 min, and leaching temperature of 25 °C. Continuous leaching of FT was carried out by feeding ore and acid every 20 min. By leaching with HF − H2SO4 for 4 h, then adding appropriate amount of HNO3 into the solution and keeping for another 1 h, a high Nb extraction rate of 99.8% was achieved. The established method provides a promising technique for the high-efficiency separation of niobium and tantalum from FT.

Jun 5, 2022

By Edwin R. (Original by) Phelps

Surface mining refers to the process of removing the material (over- burden) overlying a coal seam and exposing the coal so that it can be loaded out and conveyed by trucks or other methods to the preparation plant or other facility. Surface mining has not always been important in the coal industry. In the early 1900s, almost all of the coal mined in the United States was mined by underground methods. In 1900, about 192 Mt (212 million st) of bituminous coal were mined and less than 1% was mined by surface methods. The development and use of larger equipment has allowed surface mining to gain prominence throughout the years. Table 1 shows the total production of coal by mining method in the United States for ten-year periods since 1920 and indicates the growth of surface-mined coal production. Surface mining will undoubtedly continue to account for a large percentage of the coal production in the US for many years because: 1) The capacity of surface mining excavators has continued to increase. Today, mining companies are using shovels (see Fig. 1) which are able to move up to 137.6 m3 (180 cu yd) in each bite and draglines (see Fig. 2) which move up to 168.2 m3 (220 cu yd) in each bucketful. 2) Increasing tonnage from the thick western coal seams is being produced by surface mining methods. 3) Surface mining has normally had lower costs and a better safety record than underground mining; 4) Surface mining normally recovers a- much higher percentage of the coal reserve than can be recovered by underground mining. 5) Some coal measures can best be extracted by surface mining [ ] methods because of geologic reasons such as the nature of the roof or bottom, thickness of the seam, multiple bedding, etc.

Jan 1, 1981

By R. Gradnik

The continuous need for infrastructure expansion forces the mining industry to develop underground structures into more sensitive and violent environments. When underground excavation enters into deep and high stress rock conditions, geotechnical designers find themselves faced with the difficult task of selecting a rock support system that will meet today's stringent requirements. Whatever support system is chosen, it is mandatory that potential rock movement be controlled. All this has intensified the development of safety systems and new, unique solutions which can enable construction companies to go both, further and deeper, without reducing the level of safety. To address these needs, Atlas Copco developed the Roofex® bolt, specifically designed to withstand large static and dynamic deformations under prespecified load conditions. The Roofex Rock Bolt acts as stiff support up to a designable load level before the sliding effect of the mechanical frictional system is triggered and allows highly controlled rock mass movement without loosing the support function.

Jan 1, 2011

By Reno H. Sales

The syngenetic, metamorphic water, and source bed concept theories of ore deposition proposed by Anton Gray, C, Lo Knight and others, to explain ores in sedimentary rocks, are challenged on the basis of a survey of the literature and personal observation, A hydrothermal origin for the Northern Rhodesian Copperbelt deposits is indicated by the presence of post-Roan age igneous rocks and post-gabbro mineralization, the wide distribution of ore in the various Lower Roan lithologic types, and the zoning of the copper-iron sulphlde minerals and minor elements The proposal by Gray and Knight that igneous rocks are not favorable as guides to nonferrous metal deposits, and Gray's hypothesis that the redistribution of connate waters and their dissolved metals by metamorphic processes was responsible for the emplacement of ores, are rejected as contrary to field evidence, The absence of exposed potential igneous source rocks is shown to be an invalid argument for the proponents of any syngenetic hypothesis, The common association of ore deposits with calc-alkaline intrusive rocks and their derivatives is, however, demonstrated to be convincing evidence that an exploration program based upon a magmatic theory of origin, would have found most of the important known non-ferrous metal deposits of the world, It is urged that prospecting be continued on the sound basis of accumulated knowledge of the lithologic and structural facts surrounding known ore deposits.

Jan 1, 1960

By J. A. Finch

A closed grinding circuit, typified by a ball mill-cyclone combination, is often required to treat a feed comprised of a variety of minerals of differing properties. Usually, the individual behaviour of the minerals is not assessed, a procedure which requires sizing and metal or mineralogical assaying of each size fraction. Further, sizing is frequently by screening to perhaps 325 mesh meaning that detail on the important -44 um fraction is unavailable. It is well appreciated that minerals can exhibit both individual classifying and grinding behaviour. Recognizing that cyclone classification results from differential centrifugal settling and acceleration rates, then minerals of differing specific gravity will exhibit individual mineral cyclone performance curves. If the minerals have differing grindabilities, then individual mineral rates of breakage may be expected. When treating an ore containing minerals of a range in specific gravity and/or grindability, individual mineral behaviour in the closed-circuit grind could be notable and perhaps important to the overall concentrator performance. An example is a lead-zinc ore, as shown by Kelsall et al.(1,2) This paper describes the individual mineral cyclone performance curves at sizes down to ti 10 um for the four major minerals at two lead-zinc concentrators; the Sullivan concentrator at Kimberley, British Columbia, and the Pine Point Mines concentrator at Pine Point, North West Territories, both operated by Cominco Ltd. In addition, individual mineral grinding behaviour for the four major minerals at the Sullivan concentrator is presented.

Jan 1, 1977

By Mark C. Williams, Shunsuke Managi, Noriko Hikosaka Behling

Particle processing is a key to using solid particles in fuel cell applications. Selectivity with regard to reactivity, impurities, etc. is an important feature and the treatment of particle surfaces could greatly impact the performance of direct carbon fuel cells. Solid fuel particles will become increasingly important in the future. Present energy conversion systems for solid fuels are too inefficient. New energy conversion systems for solid fuels with higher energy conversion efficiencies are possible. Fuel cell technology is a key technology in these new conversion systems. The direct carbon fuel cell (DCFC) operates on carbon particles obtained from a variety of solid fuel feedstocks. The DCFC is the only fuel cell designed to directly oxidize carbon particles in a special anode chamber. The particles are generally graphite structure with high purity. The electrolyte used is the high temperature solid oxide, molten carbonate, or hydroxide electrolyte. Since a pure stream of CO2 is produced, the stream can easily be sequestered and disposed. Pure carbon dioxide produced as a by-product would also have a market in many industries. A well-defined technology roadmap identifying key research and development (R&D) issues is necessary to provide a framework for the development of these systems and to prevent entrenchment in inherently inefficient technologies. This review paper describes the direct carbon fuel cell and its system, how it works, the developmental status, the characteristics of the carbon particles needed, and the research and development issues for the technology

By M. Sandin

According to the world bank1, the mining industry consumes up to 11 percent of global energy use. In comparison, 70 percent of mining projects from the six largest mining companies operate in water-stressed regions. To steer the direction of the process industries toward more sustainable practices, more than 40 governments have adopted a price on carbon. This measure includes additional taxes on the use of fossil fuels, trade programs, new standards for renewable energy, energy efficiency mandates, more stringent emissions regulation, carbon offsets, etc. This emphasis is also supported by investors shifting their priorities to reduce risk by focusing on long-term plans, including environmentally friendly operations. The metals and mining industry is at the core of the green energy mix and electrification of vehicles. This new trend creates an astronomical increase in demand for minerals. Under a 2-degree scenario, according to the latest analysis from the world bank, as new energy technologies continue to grow, it is expected that all minerals to double in demand, and the distribution of these materials will depend on their application. • Solar panels, will account for 87% of the aluminum demand, and more than 95% of silver • Wind turbines and geothermal plants will require 98% zinc and 64% titanium. • Solar and wind energy alone will demand more than 74% of the global supply of copper, and this is without considering wiring or other infrastructure to connect the grid • Battery storage accounts for 100% of the graphite and lithium demand. (Hund, 2020) • Other materials, such as nickel and steel, are also projected to more than double in demand as they are cross-technology minerals. These materials require a manufacturing process that is accountable for the emissions proper of the transformation process. It requires that these processes move from a hindsight mode focused on reporting to a forecasting mode based on run-time measurement of GHG emissions. This is a critical first step in companies realizing an economic return for doing the right thing for the environment and their communities.

Feb 1, 2023

By Qingwen Shi, Brijes Mishra

The abstract discusses the use of numerical simulations to investigate roof fall in underground mines. It highlights the advantages of the discrete element method (DEM) in simulating large strain problems and fracturing processes, while acknowledging its computational limitations for large-scale problems. The study presents a 3D numerical model coupling the finite difference method (FDM) and DEM to simulate laminated roof failure in a coal mine. The model represents the laminated roof with bonded particles and discontinuities, while the surrounding rock is represented by continuum zones. The research analyzes the fracturing of the laminated roof as the entry advances, demonstrating the coupled method's ability to reproduce laminated roof failure.

Mar 17, 2022

By R. Washnock, P. James

"INTRODUCTION Abstract Tankhouse iron control through application of new treatment technology to mitigate conventional bleeding losses is considered. Implementation is discussed and the treatment economics explored. A representative case is assessed. Treatment benefits and application drivers for specific scenarios are noted. Background Hydrometallurgical ore processing has become a significant metal extraction/production avenue in recent decades. In copper mining; the focus for this examination, around 25% of global primary copper production and nearly 50% of US production result from various hydrothermal leaching extraction approaches coupled to Solvent Extraction/Electrowinning (SX/EW) metal production. Generally such processing is favored over pyrometallurgical processes for lower ore grades and as such is finding growing use and is expected to remain a key processing route looking forward with average world-wide ore grades falling as known ore reserves become exhausted. Target Problem And Motivation In hydrometallurgical processing the production circuit may be thought of as a chain of interlocked recirculation loops (Figure 1). Leaching dissolves the target metal from the ore along with other ore components which contaminate the Pregnant Leach Solution (PLS). Iron is a common component in copper ores and, as a result, occurs fairly ubiquitously in copper Pregnant Leach Solutions (PLS) generated by leaching. Leached components migrate through the production circuit from left to right (Figure 1) through a net combination of chemical and mechanical transport mechanisms. Selectivity at the recirculation loop interfaces tends to retard rejected component migration through the production process. As a result, overall relative contaminant migration fluxes are slower than the target metal (copper) and the contaminants tend to build up relative to copper in the more upstream portions of the processing circuit over time with iron often being a significant contaminant. Further, while copper is continuously removed from the system in appreciable amounts, little contaminant exit occurs and the absolute contaminant amounts and concentrations also increase throughout the EW circuit over time."

Jan 1, 2018

By Robert Stefanko

13.1-SUBSIDENCE AND GROUND MOVEMENT ROBERT STEFANKO 13.1.1-SUBSIDENCE AND FAILURE This treatment of subsidence and ground movement will be confined to subsidence control for limiting surface damage by assessing the significant parameters affecting ground movements during mining to optimize mining techniques. The material will be equally applicable to evaporite mining as well as coal but will not deal with block caving or similar systems where failure is deliberately induced and surface protection is not necessary or provided. When an underground opening is established, the original equilibrium is disturbed with resultant stress concentrations. While many factors are involved in opening stability, the span (W) undoubtedly is one of the most important factors in failure. Assuming it is relatively small, the overlying rock strata can bridge across the opening and little if any movement or convergence of top and bottom will occur. However, as the span increases, a point is reached where the stress in the overlying rock strata exceeds some strength value of the rock, and the top breaks. If the opening span is limited to some subcritical value (-We) and/or is at great depth (D), a pseudo-arch will form, achielring stability before rupture occurs to the surface. The boundary of this arch is thought to approximate an ellipse in form with the major axis vertical and equal to four times W, although there has been little field research to substantiate this theory. However, if the width of this opening is increased at this horizon to some critical value (W,) or the same span is created in a shallower seam, the overlying strata ill progressively rupture to the surface and the characteristic subsidence trough is formed (Fig. 13-1) The area of the surface affected is much greater than the area of the seam extracted, depending on the "angle of draw" (a), which is the angle between a vertical line from the edge of the opening and another line extended to a point at which subsidence tails out to zero. This angle has been found to be about 35° in Europe but is rather academic, being a function of instrument precision in detecting subsidence. Since the subsidence effect is so small at any point beyond n 25° angle, this latter may be considered the practical limit of subsidence. Further- more, indications are that the angle of draw varies with depth and nature of the strata.' In a field study over a 1,000-ft-deep potash mine in New Mexico, the maximum angle of draw was found to be 51.5°.2 So far, only a single opening has been considered. However, the width of the excavation applies to any complex mining system of entries, rooms and longwalls as long as the seam has been fully extracted and the width represents the distance from one solid rib to another. It will be noted that the amount of vertical displacement varies from point to point on the surface (s), but the maximum subsidence for a given trough occurs at the center (S). This latter value may not he equal to the maximum possible subsidence (Sm) which occurs only if a critical or super- critical (+W,) width has been exceeded (Fig. 13-1). Substantial surface damage can result when subsidence occurs. Factors affecting the amount and type of ground movement are: thickness and properties of the seam, angle of draw, width of excavation, depth and type of overburden, inclinations of strata and surface, and the amount of support left in the gob. In Europe,

Jan 1, 1973

By George S. Barnett

The Equis and El Roble projects are located in the Cordillera Occidental of Colombia. The Equis vein deposits have sulfide ore reserves of 95.9.5.5 mt (105.770 st) grading 8.51 g/mt (0.248 oz/st) gold and 12.4 g/ml (0.36 oz/st) silver with 0.94 % copper. 1.10 a lead and 11.06% zinc. Ore reserves at El Roble are estimated as 1.1% Mmt (1.21 million st) grading 4.89% copper and 3.39 g/mt (0.099 oz/st) ,old. Geologically possible reserves at Equis may total 1.6.Mmt (1.76 million it). El Roble has the potential to contain several tens of millions of metric tons. Exploration included diamond drilling, trenching, channel sampling, rock and soil geochemistry, geophysics and tunneling. Erratic high grade samples affect the weighting of channel and drill core samples. Secondary reconcentration of gold is also a factor. Sample maps and graphs show the distribution of values to be highly variable. Geostatistical treatment of some of these data gave important guidelines for parameters such as sampling densities, drill hole spacing and confidence limits.

Jan 1, 1984

By G. H. Lewis

This work was completed in a 440 KW pilot-scale combustor in preparation for a 50,000 Kg/hr industrial steam boiler limestone injection test program. The main objectives of the work were to: (1) identify the variables which affect sulfur capture, (2) determine the maximum sulfur removal, and (3) determine the effect of limestone addition on furnace operability and heat transfer. The variables which were identified as being important in sulfur capture were: Ca/S molar ratio, flue gas temperature at the limestone injection location, and limestone particle residence time. The maximum sulfur dioxide removal was 72%. The addition of limestone increased the particle deposition rate in the combustor; however, all deposits were easily removed by an air lance.

Jan 1, 1985

By J. F. Allan

The main conditions which affect investment in mineral exploration and development are compared in five countries currently considered attractive for mineral investment - Canada, the U.S., Australia, Brazil and the Philippines. The primary parameters - the probability of occurrence and discovery of mineral deposits and the short and long term viability of mineral development - are evaluated and compared on a relative basis by a form of factor analysis. This analysis indicates that of the five countries studied, Canada is second only to the United States in degree of favourability for mineral exploration and development.

Jan 1, 1976

By H. J. Hutson

BRS, Inc. has utilized Carlson's Natural RegradeTM software to design the reclamation and stabilization of abandoned open pit uranium mine spoils, AML Project 16N, located in the Gas Hills Uranium District in central Wyoming. This work was completed for the State of Wyoming's Abandoned Mine Land Program (AML) on preSMCRA (Surface Mining Reclamation and Control Act) sites for which no reclamation obligation existed. The project successfully stabilized an eroding spoil dump, enhanced the local view shed, created habitat diversity and provided a significant source of fill material for open pit highwall hazard mitigation efforts. Additionally, the project served to evaluate innovative reclamation design methods, engineering software and grade control technology. This project was nominated for a National Association of Abandoned Mine Land Programs award by the State of Wyoming. The results of this project will be presented as a case history of the Natural RegradeTM approach to surface mine reclamation. Based on the successful application of this new mine reclamation technology on the AML 16N Project, reclamation designs for spoils associated with planned underground uranium mine operations at the Velvet Mine in the Lisbon Valley Uranium District of Utah for Uranium One USA, Inc have been prepared and will be presented. Critical elements will be the encapsulation of unsuitable materials, long term hydrologic stability, and sequencing and staging of ore and mine waste for final reclamation surface construction. The goal of the Uranium One Velvet Project will be to apply best available technology to reclamation planning and fully integrate the reclamation design with the mine planning. Benefits of the approach should include improved public and regulatory perception of the project, facilitate mine permit approvals and the eventual timely release of reclamation bonds, as it is anticipated the stable landform created through this process will result in more rapid stabilization of the site to pre-mine geomorphic conditions. NATURAL REGRADETM CASE STUDY AML Project 16N, D-9 and K Pit Reclamation Project, is located in an intensely disturbed area of the West Gas Hills Uranium Mining District in Fremont County, Wyoming. The overall design calls for the placement of approximately 7 million cubic yards of backfill materials in the D9 and K Pits, imported from adjacent mine spoils including the Central Spoils, and from local highwall excavation. Figure 1 shows the location of the Central Spoils excavation area, as well as the D9 and K Pits fill area. The entire project is located on public lands administered by the Bureau of Land Management, Lander, Wyoming District Office. No access controls are in place at the abandoned mine sites. The public lands are administered under a multiple use land policy including grazing of range land, public recreation, active mining and exploration, and oil and gas. The project site is located along Fremont County Road No. 5, which is a moderately well traveled road. Reclamation of the numerous and large abandoned open pits in the Gas Hills Uranium District has reduced the risk of death or injury to the public. Site History and Background The Gas Hills Uranium District was mined by multiple companies during the period from 1955 to 1981. The uranium was hosted in the Wind River formation, a sequence of soft sedimentary layers of interbedded sandstone, clayey shales, and conglomerates. Uranium was precipitated out of ground water in classic roll front deposits, which are found from very near surface to depths greater than 400 feet. Prior to the enactment of the Surface Mining Control and Reclamation Act of 1977 (SMCRA), very little reclamation work was performed when mines were abandoned or closed. The State of Wyoming Abandoned Mine Lands Program has worked to mitigate hazards associated with large open pits, control migration of unsuitable materials and restore watershed functionality of lands in the district. Additional reclamation is being performed by mining companies on bonded lands. Figure 2, Gas Hills Uranium District aerial photograph, shows the extent of the mining disturbance in the district. [ ] Project Hazards and Concerns The purpose of AML Project 16N is to mitigate hazardous conditions and risk to the public associated with open pit highwalls and toxic, acid forming, and /or radioactive mine waste materials. The D9 and K Pits are contiguous open pits characterized by an 8,800 foot long hazardous highwall that averages over 200 feet tall. In addition to the physical hazard presented by the highwall, the project addresses

Jan 1, 2009

By Donald W. Gentry

Introduction The mining industry is perhaps best characterized by the numerous and abnormally high risks associated with the business of mining and by its most basic assets - ore deposits, people and technology. At the most fundamental level, it is the quality and effective utilization of these basic assets that determine a mining company's ability to compete efficiently in the international market place. The gold industry has received much attention in recent years and especially in recent months, for good reason. This commodity serves as an excellent platform for the subsequent discussion of these three basic assets and their role in mining's future. Facets of the gold industry The fate of this noble metal in recent times illustrates some of the various risks associated with the mining industry and the importance of high-quality assets, whether they be ore deposits, people or technologies. The following comments pertaining to the gold industry help place proper focus on subsequent discussions. All monetary amounts given are in US dollars. Throughout 1997, falling gold prices broke record after record: first hitting three-year lows, then a 12-year low in July and finally an 18-year low at year's end. From Jan. 1 through Dec. 31, 1997, the price of gold fell by more than $2.57/g ($80/oz), or some 22%. The decline in gold-mining profitability and stock prices was even more dramatic. At the beginning of 1997, the 20 largest gold producers in North America had a market capitalization of approximately $44.5 billion. At year's end, this market cap had fallen to $26.2 billion, a reduction of 41%. The total market cap of all the world's gold companies fell from $71 billion to $46 billion, a 35% drop (Serwer, 1998). Analyses suggest that, at a spot gold price of $9.65/g ($300/oz), only one, or possibly two, North American gold-producing companies can make money when break-even or "total costs of production" are considered. While strong hedge positions mitigate this situation in the short term, clearly, this is an industry in desperate straits. For example, write-downs for North American producers in 1997 were approximately $2.5 billion. Speculative short positions in 1997 were near historical record highs and generally exceeded long positions by factors of 9:1 or 10:1. Much of this is driven by some US commercial banks, hedge fund managers and commodity speculators who can significantly move gold prices sharply over short periods of time by selling gold they do not own in the expectation they can buy it back at a lower price before they have to deliver. These signifcant short positions are likely to continue as long as central banks are willing to sell or loan gold to financial institutions that in turn make the gold available to speculators who hope to capitalize on price fluctuations. The Far East accounts for approximately 26% of the annual demand for gold. Including India, the region accounts for 43% of total demand. More than 85% of the physical demand for gold is for investment jewelry in Asia and the Middle East. This demand is extraordinarily price sensitive. The fairly recent turmoil in Asian markets and economies, combined with currency devaluations throughout the region, have made gold more expensive (30% to 50% in local currencies) for those peoples most likely to treat gold as a safe investment haven. Higher interest rates also have reduced the amount of money they have to spend on consumer goods such as jewelry. All of these recent Asian events are deflationary in nature. Deflation, if coincident with rising unemployment, could result in significant dishoarding of gold. There is one key fact to remember when analyzing

Jan 1, 1999