The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1919-10-30

posits in which the geological process
of secondary enrichment is involved.
Let us suppose that a given mine has
developed an immense tonnage as
follows:
Per
cent
10000 900 tons expected to yield...,2.00
40 900 900 tons expected to yield....1.75
10000, 900 tons expected to yield....1.5O
$4,000, 900 tons expected to yield....1.25
100, 900 900 tons expected to yield....1.O0
800, 000,0 tons of average yield....l.33
Let us suppose further that this de-
post is now being mined at the rate
of 100000 tons per year. indicating
a life at that rate of so years AS
Stunning an per cent return on the
purchase price and redemption of
capital by sinking fund compound
ed annually at per cent, the indi-
Gated present purchase price of $50
worth of eventual total earnings Is
1854. Such would be the present
value indicated by the tables of In
wood, Hoskold, and others.
But if we assume that the richer
ore Is mined first and the lowest
grade ore mined last, the indicated
present value becomes $19.77, or an in
crease of 25 per cent, If In addition
we assume that the present rate or
output Of 100000 tons per year Will
be increased each year, say, by 4 per
cent, which indicates a doubling OF
mill capacity in about Is years and
TRIPPING of capacity in about 20 years
(surely a conservative assumption for
porphyry deposits), the life OF the
mine changes from go years to about
31B years. The present value or in
dieated purchase price then becomes
about $22.40 by increased capacity
alone, or about $2475 by combination
of increasing capacity and declining
grade, or respectively Al per cent and
IS per cent greater than the value in
Dictated by the tables now in general
use.
1t seems to me that the factors of
rate of production and grade of ore
will have to be given serious consid-
era ton and that statistics will have
| to be compiled that will show how
mines of various classes are likely to
change their rates of production and
how the ore that they mine Is likely
| to change in grade. Then certain
groups will have to be established to
which scale of factors indicated by
these past history statistics will have
to be applied.
| In arriving at fair market value
as of March /, 1918, one is supposed to
take into consideration only the facts
that were then known or that could
have been then known had one en-
deavored to learn them at that time.
The question may therefore arise as
to whether it is fair to arrive at a
1913 valuation by applying to the
standard present value method OF
mine valuation notifications which
have not been proposed until 1919. In
my own opinion, however, there Is
sufficient Justification for using those
notifications that are consequences
of taking into account changing grade
of ore and changing rate of produc-
ton. In arriving at valuations by the
present value method, certain OF the
data must originate with the mining
company, namely, tonnage and grade
of ore, percentage of extraction, and
cost and rate of production, for these
various factors either are direct con-
sequences of the nature of the miner
llized ground which the company
owns or are results Of the policy and
methods which the company chooses
to apply OF course, they will all be
subject to check by the engineers OF
the valuation section of the revenue
bureau. There Is one necessary fac
tor, however, which must come from
other sources than the company con-
cerned, namely, the probable selling
price of it's product over the period Of
indicated life of the property. That
the selling price is factor of utmost
consequence in the computation Of
present value has been emphasized by
previous writer's. 1t therefore seems
to me that careful and detailed re-
search must be put upon this subject
when so vital job as valuing all the
profit -mal1ing mines of the country is
to be faced.
A matter upon which all possible IL
Elimination is desired from mining en-
gineers and biologists is the proper
handling of probable and prospective
ore in the computations of tonnage
My own feeling in this connection is
that the decisions reached must be in
accord with a thorough understand
ing of ore deposition and occurrence
rather than rest on any arbitrary or
limitations and rules