The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1922-11-09
SOME RULES REGARDING
INVESTING IN MINING
Use COMMON SENSE IN INVEsTI-
eating MANAGEMENT AND
LOOK TO. DETAILS.

kirby Thomas, Mining Engineer il
Mining Congress Journal.)
The risks of investing in any bust.
ness enterprise at it's inception. or il
its first stages, are greater than they
are in the later stages, when the I'M
dertaking is established and perhaps
earning a profit. This is true with
mining propositions to a greater de-
cree than with most other CONNER
cial or industrial undertakings. There
are too, certain features in connec-
ton with all mining investments in
creasing this risk often not duly con
sidered by the prospective investor,
who, at the time of investing, is likely
10 be more or less under the spell of
the mining vendor or the stock sales
man and self blinded by the promise
of very large gain in the transaction.
Prospects Value Difficult to Place.
It is but seldom that mineral de-
posits are found which can be de-
termined to be of sufficient CONNER
cial value to justify a mining opera
ton without much expensive labor A
mineral deposit, the extent and value
of which is unproven, is termed
"prospect"-an obvious name. The
value of a prospect is difficult to
measure, and its profit possibilities, if
any, are latent. 1t is in this prospect
stage that much money is lost in
mining, not only by investors, but by
skilled and experienced miners and
engineers.
A prospect mining proposition is es-
sentially and inherently hazardous.
The mining engineer and the mining
men will not deny this; in fact, they
recognize it by offering to the investor
a large interest at a low figure, or by
associating with others in the cost of
the development to divide the risk
This great risk is evidenced also in the
low price of the shares in prospecting
and developing companies There is 4
chance either of a failure and total
loss, or of a success, which may mean
many-fold gain for all.
If the inventor goes into prospect
mining proposition 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 any,
one if a loss ensues. However, be-
cause of the great physical risks in a
mining prospect great business pre- |
cautions should be taken.
The first consideration is the title /
It hardly seems necessary to mention |
such an elementary matter but the |
fact is that mining stock investors |
often have no knowledge and make no |
inquiry as to the title under which the /
company holds the property. Mining |
property in the western United States |
and in Mexico may be held under 10
cation" or "denouncement''-t is |
the title is in process. Frequently, |
companies 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
failing to issue on a technicality or ir-
regularity. Therefore, it is best for
the investor to insist upon the pro
lection of full face title to the prop
erty or upon a guarantee, or to hold
a string on his money until title is
overwhelmingly a matter of a
few months. Many stocks are sold by
companies which hold their proper
ties under a form of contract custo-
mary in the mining business, known
as a lease or bond" The owner
gives to the company, or to the pro-
moter a lease with the right to de-
veiop and operate the property for
given period, usually one or two years
and an option to purchase for a stipu-
lated price and terms during the
period of the lease. The idea of this {
negotiation is self-evident
The purchaser of the property has :
opportunity to prove to his satisfac- h
ton that the property is worth the i
price Ordinarily it is stipulated that t
development and exploration shall be t
done. This form of contract is sound /
and is usually resorted to by ex- II
perienced men in negotiations for UNI h
developed and unproven properties s
On the other hand the mining invest /
or is often unfamiliar with the bust !
ness risks involved in a lease and {
bond proposition. f
frequent Situation
The investor often does not know q
that the property, encouraging reports q
of which may be before him, does not e
belong to the company offering him its Is
stock, and this fact is sometimes not e
impressed upon him duly. He does not ID
know that should the expensive work G
part of which he is to pay c
for, prove the property to be of no t
value, the company must then pay
many thousands or a million or more
for the property; and ne does not con- g
slider that if the property should be il
proven to be very valuable, his asso- I
ciates in the transaction may not be a
able to complete the deal, C
or the conditions of the negotiations a
may be such that the money to pur a
chase the property can not be raised o