The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1919-05-01

J mine had reserves equal to s6.llS,00
, gross, but the value of II lay largel
in the good prospect OF the furthe
finding of rich ore, without sinking a
the sequel proved. for the Camp Bir
has produced s20,000,000 since Their
although poor in depth. Please par
don these "reminiscences of time, 2
years ago, when ! was a mining en-
gineer, not journalist 1 give then
because personal experience is direc
evidence
In 1911 NJ. H. Bunham contribute,
series of articles .on sundry princi
pies underlying the finance of mining
enterprise, more especially the risl
rate. He insisted rightly that tn,
buyer OF mines or shares in mines
should expect not only bank rate o
interest on his capital, but as muct
more as will cover the additional risl
inherent in the business of mining. If
as l suggested at that time, he bough,
| into the Goldfied Consolidated, in Ne.
vada, then the most productive gold
mine in the world, but with a reserve
of ore so small as compared with Its
annual production as to ensure the re-
turn of only a small part of its mar
ket value, he. the sane Spectator
ought to expect dividend of IS pei
cent per annum, or 81 per cent more
than the 4 per cent bank rate, that Is
the mine should be valued on the ba
sis of a three years purchase. This
famous mine Is now in the hands OF
lessees; its story has been told and
you can ascertain how nearly right
was my diagnosis OF the position
However, it is only mentioned as an
example On the other hand. mine
like the New Modderfontein in South
Africa or the Homestake in South Da-
kota might show a life and a stand
ard of production justifying low es-
much smaller return, say, per cent
more than the bank rate. 1t amounts
to this, that after an engineer has ex-
amined a mine and measured its ore
reserves, he must determine the risk
rate at which his clients capital may
be used in the purchase of that par
ticular property. This risk rate will
be based upon the past history, the
present condition, and the future
prospects of the mine.
The sampling of mines has been al
lowed to obscure the need for good
judgment. 1t is also another phase
OF the attempt to make an investment
out of a speculation. The ore in re-
serve in a mine should be regarded
chiefly as an indicator of the proba-
bility of being able to find and develop
more ore of the same grade. The ex-
pectation of profitable venture
should be based not upon the extrac-
ton of the known ore, but upon the
chances of further intelligent search.
A so-called 5 per cent investment in
a metal mine is an unwise use of
money because the interest is too
small for the risk, whereas a 20 to rs
per cent speculation in a metal mine
is sagacous, if the probable risk is
compensated by the probable gain. AS
Mr. Hoover says, there is an inher-
ent speculation in mining, and 1t is
this speculation that attracts" 1t at
tracts those that understand. 1t is
h. ir;+ re hot
lates the best kind of mining. For
instance, the controllers of the Home
stake mine have spent Is million dol
lars in Is years on the Cerro de Pas
co; they have received their money
back and 100 per cent added thereto,
equal to about per cent in the Is
years and now they have proved ore
sufficient to last for 20 years. That
is what I call fine adventure.
The speculative side of mining has
all attractiveness that is at the bot
tom Of the energy with which it is
followed, and when you bring it to the
dead level of a steady investment you
will find that the man of ordinary
shrewdness saves time by going
straight to his broker and buying
bonds or consols. This does not mean
that one is justified in playing the
fool and expecting miracles to hap
pen. The risk Of mining should not
be increased needlessly by human
aberrancy. Mining enterprises come
to grief often not so much on account
OF the failure to attain an investment
basis, but because they are not put on
a business basis. Even if the occur