The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1910-11-02
SOME THOUGHTS ON
MINING FINANCE
Mining Journal Discusses the
Extensive Financing of New
Copper Companies.

The Engineering and Mining Journal OF
October 20 has the following editorial
which is OF western Interest:
The substantial improvement in the
market for copper and in tho general
stock market quickly inspired courage III
the ranks of the promoters OF new mining
enterprises To invite the public to con-
tribute the additional sums required for
these undertakings. But why this never
ending financing? This is something
upon which investors may pause and re-
feet.
We have lately seen the Miami COM
pany make It's fourth call for money. and
Bradcn It's third. Inspiration has Just
raised $1,000. U0U by sale OF treasury stock
and Ray Consolidated is making a bond
issue or $1,000. 600. Before long Chino
will have To be financed Inspiration has
raised only n part Of the money that IL
VIII require and we may reasonably eN-
pcct that the history OF Chino Will be a
repetition OF the experience that began
with Utah Copper company and Nevada
Consolidated.
Why is it that the promoters OF these
enterprises do not provide sufficient
money in the first place? OD Is 1t that
the engineers are Incapable Of estimating
accurately the requirements? 60, Or
are the promoters afraid TO ask at once
for the huge sum that they know will be
required? t3) Or is the gradual eNpan-
sion Of capital account really due TO pro-
grcsSlvc enlargement OF plans? OF course
the answer of the promoters will be af-
lirmatlvc TO the last inquiry, Our own
answer Is affirmative TO the three In
quirics. without. however, implying that
all OF these conditions exist In all cases
We may take the history OF Miami as
illustrative OF the experience of these
companies and in making this selection
We look at the best face of modern cop
per financing, inasmuch as II has been
ono of tho soundcst developments and
cert aiplV the most I1nIcst Whom first Of
fered to the public. 100000 shares were
sold at 81 per share. Tho promoters
doubtless realized that this would fetch
insufficient money and relied upon such
development OF the mine would en-
able the remaining 100 000 shares Of
treasury stock 10 be sold at $40 per
share. That was done. Subsequent de-
velopmcnts were so favorable that the
mana cement considered itself justified In
increasing its plans from the basis o.
1000 tons per day To 1000 per day, This
ncccssitatcd moro money and bond Is
sue of 81 .0O0.0 .000 was made.
The mining and milling of 1000 tons OF
orc a day is almost ridicuously modest
as things so with the ''porphyry mines.
However, the engineering estimates fell
short, largely because OF the cStraordi-
nary sum put into The underground de-
vclopmcnts of the mine. which I'm fact
have anticipated future mining costs TO a
noteworthy extent, and It became nee
cSsary TO increase the capital of the COM
pany and sell more stock. BY the time
that production Is inaugura ted, the de-
velopmant and tho equipment OF Miami
will have cost nearly 81 600. 900 Now
we have IuSpirati ton with capital OF
000, 600 shares and $1,000. 600 Just re-
ceived from the sale Of It's treasury stock.
planning TO build a milling plant OF 5000
tons daily capacity. For such a capacity,
the development and equipment may rea
sonably be expected To cost something
like twice that of the Miami. Obviously.
the Inspiration will later on be compelled
to do more financing. We refer TO this
company simply because II Is just start
ing on the road that Ray Consolidated
has Travelled half way.
We are not going TO crlticise any man.
aScment or group of promoters for de-
ficicncics in this respect. We shall sim
ply point out to investors that they must
do their own estimating as to probable
capital requirements. The promoter est-
mates that. let us say, he is going 10
produce 90. 600. 900 pounds of copper at
profit OF cents per pound. or s.. 900. 900
per aunum. or 81 per share II there be
| 900 900 shares, But II the capitaliza-
tion is TO be Increased TO 1.250,0o0 shares
ny an issue of convertible bonds. or 9TH
crwlse, the profit per share will be di-
uted TO 81 go, The stockholder needs TO
know not only the tonnage, grade and
production cost OF the ore. but also how
long will be the time before contemplate
cd production will be made and what will
be the capital stock Of the company, or
other organizations at that time.