Mohave County miner and our mineral wealth., 1922-09-22
investing in Mining Prospects


 investors may not be able to raise the purchase price, there is always mar ket for developed and proven mining properties.
 Usually in a prospect mining prop sition the owner takes a part of the stock of the company in exchange for his property, the remaining stock go- ing mostly into the treasury of the company, to be sold to develop the pro- perty, and thus make all the stock val uable. The prospective investor should inquire as to the proportion of the is sued stock which the owner receives, and also what part certain intelme- diaries, called promoters or stock agents, acquire as their profit. There is no set rule or guide as to how much stock should be issued for the pro perty, but the amount and all condi- tions should be always critically con- sidered. 4 -
 Other primary points in a prospect mining deal relate to the capitaliza- tion of the company, and the amount of the stock in the treasury. If one is purchasing mining sock, which IS not from the treasury of the com pany, he is simply making a trade. If he purchases stock from the com pany's treasury, his money goes to his company, and is, or should be, used in making his property more valuable; consequently, other things being equal, it is more advantageous to buy treasury stock than individual stocks, a matter often overlooked. The number of shares in the treasury is vitally important, for, if there is but little treasury stock, the company may have difficulty in raising the money needed for the development and pur- chase of the property, and to borrow on company notes or bonds is ordin- arily, for evident business reasons, not practicable in the case of prospect companies. .a
 Extravagant impositions in the form and guise of commissions to the stock salesmen, brokers and interme- diaries for raising the funds,' often accompany mining locations; so :, this point should be scrutinized always. Often the investor considers the stock on it's own merits, without inquiring as to what part of the dollar which he pays goes into his property. In some notorious cases the cost of rais- ing money for mining enterprises has been from 50 to 90 percent of the money raised-a condition obviously and glaringly wrong from business standpoint, and a forerunner of fail ure of the enterprise saddled with such incompetency or dishonesty.
 In the financing a prospect mining company, it is customary to pool the owners and the promoters stock. The stock investor should usually insist on such an arrangement and should know of the details of the pool agreement. If the owner and the promoter cannot sett anyaaof their stock until the mine is profitable, they are likely to have a lively and. continued interst in the success of the undertaking, and such a plan makes them carry the full risk along with the man. who furnishes the money. The pooled stock, too, is talk en off the market and thus the if nancing is easier and surer.
 Tho mining stock investor is often influenced by the eminent respecta- bility and high standing of the board of directors, but he should bear in mind that sometimes bankers, lawyers and others lend their names to mining corporations without first having thor ough knowledge of the undertaking and that they sometimes do not give the attention, to the business which is, morally, at least, incumbent upon company officers. Not infrequentiy fine-feathered directors have been giv- en their stock free for the use of their names. "A