Arizona republican., 1904-03-05
CROSS vs. NET VALUE OF A MINE

The process of properly sampling and valuing mine is one involving an amount oe labor and responsibility on the part of the engineer. or other per son making the estimate, which is pro- portional to the development of the mine and the value involved. As mines may be bought though possibly not be-
 ing offered in the market, there are two sides of the question of the value of the property-the owner and the buyer. Each side may be represented by orc or several persons, or each side may be a corporate company. In any case the position of either side is essentially similar. The owner or his engineer blocks out the mine, samples every ac- cessable portion of it, and all samples are assayed. The result. comprising tn" number of feet or inches in width or each sample taken, and the value, and the value obtained by assay Of each sample. is plotted on a mine mao. Each block of ore. which is several samples. widths and values, is figur..i separately. and from this data the val ue of the nfc as represented by tEc sum or GN tre blocks, is calculated. This is the gross vdlue and if the work of measurement, sampling and assay ing has been carefully done. valuable information has been secured. upon which the owncr may fix his own idea of the net valuation of his property There are many instances where tho owner and prospective buyer may, ana GO, arrive at the gross valuation of mine-actual, probable and possible but the harmonizing of She ideas of neJ value is often a difficult and sometimes an impossible thing. Tho owner net urally figures as closely as he can oH the expenses and investment and az rived at figures representing the net value of the property from his point of view. but which figures are greatly at variance with those of the possible purchaser, who is not prone to under estimate. The owner may figure a stated amount for mining and reduc- ton and deduct these from the gross assay value. and find a large net profit in the property.
 The wOuld-be buyer may O. may not he willing to accept the figures of the seller as to working costs-p-eA suming that they have already agreed upon the gross value The buyer ar gucs that it is improbable that the oTs can lie worked closer than 90 per cent of its assay value and it may not yield this much. He also figures that tha getting of the metal (base or other wise) to market or mint will cost some thing. He estimates the cost of equ:1- ment. if the mine is not already equipped, or extensions and necessary changes in plant. and also adds an in terest charge of capital invested. all of which may have been omitted or -r- hH- ha ho h-Yx figures for net results, the seller fo1 all he can get, and, owing to these con- Acting views, many sales. after ex- pensive investigation and long con tinued negotiation, fail and are never consummated. A favOrite argument of the seller is the mine has produced so many thousands or millions" as the case may be, when in reality this is q poor argument for the seller as the mine can never reproduce those mill ions, though other millions may still remain. In the earlier years of mining in the west, investors took desperate chances. and large fortunes were lost in consequence, though here and there were exceptions so notable as to prove a strong incentive to others to have venture. Tn days Of excitement min ing deals are easy Of accomplishment; bat when the days of adversity come as they always do where extravaganza and unsuitable methods have prevail ed. these must give place to economy and scientific practice. and men then learn to judge the real merit of a mine and fancy prices fall. The investiga- ton and valuation of mining property has been reduced to a science, in which the element of common sense plays an important part Nearly every factor in the valuation of a developed mine can be arrived at with most certainty. Why then should there be a conflict of opinion as to the actual value of any mine? If this can be satisfactorily ad- justed between the two sides to a deal. the prospective value may also be fixed in . way which should be satisfactory to both sides
 Owners commonly overrate not only the net but also the gross value of their property. A mine may possess large val"e when measured on a basis of tons in sight and values as deter mined by samples and still. while in- surfing a profit, be incapable of being worked on a scale commensurate with it's magnitude. for vario IS reasons situation, climate, etc. In some Europ- can countries mines are in operation today which have heen worked for T century, or possibly several centuries In the western United States similar mines would have been exhausted in less than fifty years. The element n@ time is important and the buyer in- cIudes this with other facts in deter mining the net value of mine. The owner argues that the value is there and time is not a matter for consider ation. Often the expense of equipment