The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1920-08-05
POINTS FOR INVESTORS
IN MINING PROSPECTS
CONDITIONS GOVERNING TIL
CHANCES FOR SUCCESS
PURCHASE OF STOCK.

its first stages, are greater than in
the later stages, when the undertake
ing Is established and perhaps earn
ing a profit. This is true with mining
ventures to a greater degree than with
most other commercial or Industrial
undertakings There are, too, certain
features in connection with all mining
investments, increasing this risk, often
not duly considered by the prospective
investor who, at the time of invest
ing. is likely to be under the spell OF
the mine vender or the stock sales
man and self blinded by the promise
of a large gain in the transaction.
It is seldom that mineral deposits
are found which can be determined
without much expensive labor to be
of sufficient commercial value to JUS
tify "a mining operation. A mineral
deposit the extent and value of which
are improved is termed a prospect
An obvious designation. The value
OF a prospect is difficult TO measure,
and its profit possibilities, if there be
any. are latent II is in this prospect
stage that money is lost in mining,
not only by investors but by skilled
and experienced miners and engineers.
The Risk of Investing in a Mine
Prospect.
A prospect mining venture is essen
TALLY and inherently hazardous The
mining engineer and the mining man
will not deny this; in fact they rec
ognize it by Offering TO the investor
a large interest at a low figure or by
associating with others in the cost of
the development, so as to divide the
risk. This great risk is evidenced.
also, in the low price of the shares in
prospecting and developing companies
There is chance either of a failure
and total loss or of a success which
may mean many-fold gain for all.
If the investor goes into prospect
mining with his eyes open to the risks,
which risks he takes for the chance
of the great gain expected. no blame
should be attached to anyone if a loss
ensue. However, because of the great
physical risks in mining prospect,
proper business precautions should be
taken.
Securing Clear Title Essential.
The FIRST consideration is the title.
II should hardly be necessary to men
tion such an elementary matter. but
the fact is that mining stock investors
often have no knowledge of and make
no inquiry as to the title under which
the company holds the property. Min
ing property in the western United
States and in Mexico may be held
under location" or announcement
that is. the title is in process Com
panies frequently offer stock when the
title to their properties is in this stage
Ordinarily. this is reasonably safe. but
there is a chance of the full title fail
ing to issue on a technicality or an
iuegularity. Therefore. it is best for
the investor to insist upon the pro-
lection of fun fee title to the property,
or upon guarantee or to hold a
Stirring" on his money until the title
is perfectly ordinarily a matter of
few months.
Many stocks are sold by companies
which hold their properties under a
form of contract. customary in the
mining business. known as a lease
and bond" The owner gives to the
company, or to the promoter a lease
with the right to develop and operate
the property for a given period. us
ually one or two years and an option
10 purchase for stipulated price and
terms during the period of the lease.
Of 10 &c
self evident. The purchaser Of the
property has opportunity TO prove to
his satisfaction that it is worth the
price.
Ordinarily, it is stipulated that de-
velopment and exploration shall be
done This form of contract is sound
and is usually resorted to by expert
enced men in negotiations for unde-
veloped and unimproved properties
On the other hand. the mining investor
is often unfamiliar with the business
risks involved in a lease and bond
proposition. The investor often does
not know that the property. encourag-
ing reports of which may be before
HIM. does not belong to the company
oltlllE Niln us SUM- anu AiAo AttNt
is sometimes not impressed upon him
duly He does not know that should
the expensive work that is necessary
part of which he is to pay for, prove
the property to be of value. the COM
pany must then pay many thousands,
or a million or more. for the property;
and he does not consider that if the
should prove to be very val
liable. his associates in the transac-
ton may not be financially able 70
the deal or the conditions of /
the negotiation may be such that the /
money to purchase the property can /
not be raised.
The investor who goes into a COM /
oany which owns only contract or a /
ease on a mine should recognize that /
lside from taking the usual physical /
'isks of mining, he is taking, also 4
treat business risks in respect to the /
Utility of his company. or of its back
RS. to carry out the terms of the con-
ract and acquire the property for the