Modern Mine Valuation

MODERN MINE VALUATION - PREFACE - MINING is essentially an industry, and its economic justification, like that of any other commercial under- taking, must ultimately depend upon whether it can be made to yield an adequate financial return on the capital sunk in it. But as this depends upon whether the mineral deposits warrant tlie expenditure necessary for their exploitation, it is evident that the real basis upon which sound mining operations must depend is sound valuation. In the present work it has been tlie authors object to afford the means of making this valuation by introducing therein the principal con- siderations governing accuracy. Incidentally, also, it affords a means of ascertaining whether a given valua- tion is sound and checking the data upon which it is based. By a large section of the public mining is regarded both as a speculation and as one which is often more than usually speculative. But the element of chance enters into other industries as well, and may be reduced in mining almost to a minimum, if the valua- tion be rightly conducted. The author has been at pains to point out to what extent speculation may, in this particular industry, be regarded as legitimate, and to what extent it may degenerate into a Inere gamble. He has, therefore, written his book as much for the guidance of investors as for that of tlie engineer, and although he has assumed his readers to be possessed of seine lrnowledge of the subject, lie has written it, as far as possible, also from the stand- point of an educated member of the public desirous of ascertaining the nature of the securities he is being invited to acquire. It, Inay be added that the book is the expression of over twentyyears of mining and esanlination practice in some fifteen different countries, and the main con- clusions come to may be sumlnecl up as follows - cc The most comniou cause of serious loss of capital in mining enterprises is due to a neglect to apply ordinary business principles and illethods in setting the terms of purchase wlieil acquiring pro- perties and that no sound valuatioil is possible vhich ignores these factors. This neglect is thought so radical a defect in our present practice that precedence is given to the discussion of the econonlic priilciples which should govern terms of purchase. b The next most fruitful source of loss is the failure to set appropriate values on blocks of ore in clifferent stages of clevelopnlent. In other words, to give practical recognition to the nailifest fact that the risk varies with the uncertainty. A nlethod and some twenty tables for such allowances are offered both for application to blocks of ore arid for share valuation. The tables incorporate not only the actuarian calcula- tions incidental to the life, but to the delay and risk incidental to realising upon each block of ore. c It is also thought that a large proportion of mining failures would have been avoided had engineers felt obliged not only to collect but to submit tlle fullest field data -vitli their reports. This refers more especially to a graphical repiesentation of sampled faces, giving as well plottecl ancl detailed assay values. A systeni of stzcli graphical presentation is given, wit11 a closed transverse method of checking sample section measurements. d As part of a consultiilg engineers work calls for the valuation of mining shares, ten tables have been worked out to meetthe varying rates for risk from 0 per cent. to 20 per cent., as well as life, wllicli the engineer may wish to assign. e Consulting engineers having constailtly to recom- mend or depend upon others for work abroad, they are frequently at a loss to linow if ssuch are adequately groundecl in the basic principles governing the selec- tion and setting out of field data. Hence tlle boolr shotlld be foullcl a useful guicle to subordiiates as setting out definitely what inay be expected of them...