The Business of Mining
A BRIEF, NON-TECHNICAL EXPOSITION OF THE PRINCIPLES INVOLVED IN THE PROFITABLE OPERATION OF MINES
BY ARTHUR J. HOSKIN, M.E., 1912
CONSULTING AND GENERAL MINING ENGINEER; WESTERN EDITOR, "MINES AND MINERALS"; FORMERLY PROFESSOR OF MINING, COLORADO SCHOOL OF MINES; MEMBER, AMERICAN INSTITUTE OF MINING ENGINEERS; MEMBER, COLORADO SCIENTIFIC SOCIETY
THE BUSINESS OF MINING
There is probably no line of human activity that is not beset with malicious and ignorant intruders. The fact that any occupation or business is really legitimate seems often to stimulate the operations of these disreputable persons.
Mining does not escape the application of this postulate. For ages, the industry has afforded most fertile opportunities for the machinations of the unscrupulous and the erring. Somehow, there weaves throughout the history of mining a sort of magnetism rendering us unduly susceptible to the allurements which are presented with every mining proposition.
It is not, however, always intentional deceit that is perpetrated upon the unwary. Often, mining failures result from actual ignorance of the business upon the part of those entrusted with its conduct, or if not from actual lack of knowledge, then from erroneous conceptions with the consequent misapplication of honest endeavor. A victim of such misplaced faith is perhaps more leniently inclined than is the person who has been duped by a "shark," but the effect upon the great industry is hurtful in either case.
The purpose of this short monograph will be served if the author can feel assured that his readers will finish its perusal with the belief that mining may be followed as a business with just as much assurance of success as attaches to any one of the many lines of industrial activity. Many persons who have sustained losses in mining ventures deserve no sympathy whatever, since they have not exercised even the simplest precautions. So long as men—or women—will take as fact the word of any untrained or inexperienced individual concerning investments, just so long will there be resultant financial losses, no matter what the line of business. Because there have been elements of chance observed in the records of mining, this business appeals to the speculative side of our human natures, with the result that untold numbers of individuals have had ample reason to regret their ventures. But, as will be found in the text matter, mining can be relied upon with precisely as much assurance as can any other business.
Nothing of a technical or engineering sort has been attempted herein, the sole aim of the writer being to establish the reliability and the credit of the mining industry as a whole by pointing out the lines of conduct which should be followed by those who enter its precincts as business people. When investors of small or large means will put their money into mining projects with the same precautions that they would exercise in placing their cash in other enterprises, they will be rewarded with corresponding remuneration. In this firm conviction, then, this little work is dedicated to the intelligence of American laymen in mining matters.
- What is a mine?
Before entering into a discussion of the economic features of the mining industry, it will be well to be sure that we understand, definitely, what is meant by mining. As one investigates the question, he is bound to run across varying shades of meaning for the words Mine and Mining, and so we must pause long enough to define these words according to the best usages.
- What is mining?
Mining is the art or practice of operating mines. Mining is carried on only when ore is being produced. Ore is a natural aggregation of one or more minerals from which useful metal may be profitably extracted. Mines are excavations in the earth from which ore, coal or gems are taken.
- The Antiquity of Mining
Mining is believed to have been one of man's earliest occupations. In historical writings, many of which date back into antiquity, there are allusions, as well as direct statements, concerning the art and tasks of obtaining valuable metals from Mother Earth. We are told that the very ancient Egyptians made common use of metals and that they possessed knowledge of certain metallurgical and metal-working processes.
- Mining's Place in Commerce
It is said that upon two of the world's commercial industries, every other form of activity depends. These two fundamental industries are agriculture and mining. Statisticians prove the above statement and the further fact that these two dissimilar branches of civilization's business are so closely related as to be quite inter-dependent. Strides are made by one of these industries only when advance is noted in the other. While it may not be possible to explain just why this is so, it is worth our attention to consider some brief figures that show this condition of affairs.
- The Finding of Mines
Mines are discovered in many ways. One hears much about prospecting, and since this is a practice which is rapidly changing from a mystical to a scientific basis, a few considerations will here be in order.
- The Opening of Mines
The word "exploitation" is used by many mining men and engineers to signify a plan of so opening up ore deposits as to render the contents removable. The same persons use the word "mining" to mean the operations involved in the actual extraction of the ore exploited. It is sometimes difficult to draw any line between the meanings of these two words for, as handled by different men, with varying shades of intention, they are sometimes synonymous.
- Mine Openings
In every new mining project, there is much to be considered concerning the expediency of opening up through shafts, inclines or adits. More attention has lately been given to this subject than formerly. There are very good reasons for the selection of any one of these kinds of mine openings.
- Types of Ore Bodies
Because of the laxity in type differentiation which has prevailed among miners and writers, the same geologists who have framed definitions of ore, have also defined the various types of ore bodies. The definitions, having been accepted by the leading mining geologists and engineers of the present day, it is well for us to fall into line and to agree with the authorities in such matters.
- The Questions of Depth and Grades of Ore
The prevailing belief of a few years ago that ore bodies always improve with depth has been discredited. Not a single mining geologist will longer maintain such a notion. The evidence of many thousands of mines has refuted this older belief and it has been proven that quite the opposite view is the correct one concerning changes of value with depth. Values, instead of getting better, do actually, in the majority of cases, grow poorer as depth is gained.
- Valuation of Mining Property
Whenever a piece of mining property is to change hands, it is the proper procedure to employ an expert engineer to investigate the ground and the improvements and so arrive at some estimate concerning its intrinsic value. Nobody is infallible and it is a trite saying that "nobody can see into a mine farther than the last drill hole." But there is a great difference in the reliabilities of reports made by trained and by untrained men.
- The Mine Promoter
With the thought that has justly been given to the place occupied (or that should be occupied) in the world's financial and economic affairs by legitimate mining, there has developed a well-founded stigma upon the operations of a class of persons who have styled themselves by what was formerly considered a worthy title, that of "promoters."
- Incorporation and Capitalization
Let us consider the legitimate financing of a new or a reorganized, worthy, mining proposition. It is the universal custom to own and work a mine under the laws that govern a corporation and, for this reason, the mining man of the day is familiar with the practices of incorporating.
- Mining Investments
One should be able to establish, in his mind, a distinction between the value of investments in operating mines and in prospective mines; and he should likewise be competent to fix some difference in his attitude when purchasing the stocks in these dissimilar projects. One should invest in an established mine with the same business precautions that would guide him in buying an interest in a mercantile establishment.
- Mine Equipments
There is a constant tendency toward the adoption of machinery for the performance of every mining act which, formerly, was done by manual or animal labor. There are good reasons for this tendency. Good, trained labor is scarce; wages are slowly but gradually rising; ores of lower grade must be mined, and the tonnages must be correspondingly greater. The increased economy in production can be brought about by the adoption of devices that will supplant, and even excel, muscular effort.
- Prices of Metals
There is only one product of mines that has a constant market value, viz., gold. The precious metals, gold, silver, and platinum, are sold by the Troy ounce: the base metals are all handled and dealt with on avoirdupois weights. Copper, lead, zinc, tin, and nickel are quoted in cents per pound avoirdupois. Iron and manganese are curiously sold by mines to smelting companies on the ton of ore basis.
- Mine Accounting
While there has been a great deal of attention given to the matter of keeping systematic mine accounts, both in the main offices and those at the works, there still is a lack of uniformity in practice. In the bookkeeping of manufacturing and mercantile institutions, uniform practices or systems have become a feature. But there have been good reasons for the absence of similar methods in mine offices.
- Investment in Mining Stocks
As a feature of investment in mining stocks, there has always been a more or less open lure. Generally much larger returns are promised or are expected than in other kinds of investments. There may be absolutely no intention on the part of the seller to create this impression; but there does, somehow, exist in the memories of people accounts of wonderful fortunes that have been made in mining.
- The Men of the Future in Mining
The mining of the future will probably be largely in the hands of young men. To arrive at any conclusions concerning the probabilities of success, therefore, we are obliged to recognize the dual conditions. In other words, there is to be an interdependence between men and mining. Up to this point in our discussion, we have dwelt upon the probabilities as viewed from the standpoints of natural resources and of human capability. In a certain degree, we have already covered the ground of this present chapter; and yet there are some points that must be given special consideration.
- Miscellaneous Considerations
There are regions producing ores that are too refractory for the simple treatments that might be given by company plants located at the mines. There are districts that have many small gold and silver mines with ores that do not yield to simple milling processes and which must therefore be shipped to custom smelteries. Even were the ores amenable to milling of some sort, it is often the case that the mines are not of sufficient magnitude to warrant the maintenance of their own treatment plants.
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