The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1922-11-09

enough money to prove up the prop
erty and to give it measurable valu,
greater than the contract price thel
! the transaction is reasonably SAT,
within itself, for. even though the frs
investors may not be able to raise tn,
purchase price, there is always a mar.
ket for developed and proven mining
properties.
The Usual Procedure.
Usually in a prospect mining propo-
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
property and thus make all the stool,
valuable. The prospective investor
should inquire as to the proportion
of the issued stock which the owner
receives, and also what part certain
Intermediates. 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 property, but the amount and all
conditions should be always critically
considered
Other primary points in a prospect
mining deal relate to the capitalization
of the company, and the amount of the
stock in the treasury. If one is pur-
chasing mining stock which is not
from the treasury of the company, he
is simply making a trade. If he pUr-
chases stock from the company's
treasury his money goes to his COM
pany and is, or should be. used in
making his property more valuable;
consequently, other things being equal,
it is more advantageous to buy treas
ury stock than individual stocks, a
matter often overlooked. The number
of shares in the treasury is vitality i'm
portant, for if there is but little treas
ury stock, the company may have diff
ficulty in raising the money needed for
the development and purchase of the
property, and TO borrow on company
notes or bonds is ordinarily for evil
dent business reasons, not practicable
in the case of prospect companies
and guise of commissions to the stock
statesmen, brokers and Intermediates
for raising the funds, often accompany
flotations so this point should
be scrutinized always. Often the in
vestor considers the stock on its 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 raising money for
mining enterprises has been from so to
30 per cent of the money raised-a
condition obviously and glaringly |
wrong from a business standpoint and /
a forerunner of failure of the enter /
prise saddled with such incompetency /
Or dishonesty.
The Customary Method.
In financing a prospect mining COM
oany it is customary to pool the own
sr's and the promoters stock. The stock |
INVESTOR should usually insist on such |
IN arrangement and should know of |
he details of the pool agreement If |
he owner and the promoter cannot sell /
my of their stock until the mine is |
profitable. they are likely to have a
lively and continued interest in the /
success of the undertaking, and such /
/ plan makes them carry the full risk |
llong with the man who furnishes the /
money The pooled stock, too is taken
IF the market and thus the financing /
S easier and surer.
&c of
by the eminent respect
lbility and high standing of the board
# directors, but he should bear in
mind that sometimes bankers,
awyers and others lend their names
0 mining corporations without first
iaving thorough knowledge of the nm
and that they sometimes do
lot given the attention to the business
which is, morally at least, incumbent
pon company officers. Not infre
uently fine feathered directors have
zen given their stock free for the
se of their names.
Should Be Accompanied by Report.
A mining stock offering should al
yays be accompanied by a report
rom a disinterested mining engineer ,
r other competent person. State T
lents by the owner or the agents
hould be designated as vendors re-
Orts," as is the British practice. Min
lg reports are not infallible, either as
, competency or integrity. The repu-
alton and experience of the man MAX 7
lg the report is always a wise and
roper subject for inquiry. Most re-
orts on prospects are opinions aud
hould be taken as such. The pros =
ective stock buyer should study the /
eports and weigh the facts and con- h
Iusions in all their bearings himself, :,
)r manipulation of reports of over
ealous vendors is one of the tricks
f the business. If the technical parts \
f the report are beyond the knowl- b
1ge or experience of the investor, he T
Mould consult a friend with mining .
Experience, or better he should seek .
irectly the advice of a mining en-