CHAPTER III.

Mine Valuation (Continued).

PROSPECTIVE VALUE.[*] EXTENSION IN DEPTH; ORIGIN AND STRUCTURAL CHARACTER OF THE DEPOSIT; SECONDARY ENRICHMENT; DEVELOPMENT IN NEIGHBORING MINES; DEPTH OF EXHAUSTION.

[Footnote *: The term "extension in depth" is preferred by many to the phrase "prospective value." The former is not entirely satisfactory, as it has a more specific than general application. It is, however, a current miner's phrase, and is more expressive. In this discussion "extension in depth" is used synonymously, and it may be taken to include not alone the downward prolongation of the ore below workings, but also the occasional cases of lateral extension beyond the range of development work. The commonest instance is continuance below the bottom level. In any event, to the majority of cases of different extension the same reasoning applies.]

It is a knotty problem to value the extension of a deposit beyond a short distance from the last opening. A short distance beyond it is "proved ore," and for a further short distance is "probable ore." Mines are very seldom priced at a sum so moderate as that represented by the profit to be won from the ore in sight, and what value should be assigned to this unknown portion of the deposit admits of no certainty. No engineer can approach the prospective value of a mine with optimism, yet the mining industry would be non-existent to-day were it approached with pessimism. Any value assessed must be a matter of judgment, and this judgment based on geological evidence. Geology is not a mathematical science, and to attach a money equivalence to forecasts based on such evidence is the most difficult task set for the mining engineer. It is here that his view of geology must differ from that of his financially more irresponsible brother in the science. The geologist, contributing to human knowledge in general, finds his most valuable field in the examination of mines largely exhausted. The engineer's most valuable work arises from his ability to anticipate in the youth of the mine the symptoms of its old age. The work of our geologic friends is, however, the very foundation on which we lay our forecasts.

Geologists have, as the result of long observation, propounded for us certain hypotheses which, while still hypotheses, have proved to account so widely for our underground experience that no engineer can afford to lose sight of them. Although there is a lack of safety in fixed theories as to ore deposition, and although such conclusions cannot be translated into feet and metal value, they are nevertheless useful weights on the scale where probabilities are to be weighed.

A method in vogue with many engineers is, where the bottom level is good, to assume the value of the extension in depth as a sum proportioned to the profit in sight, and thus evade the use of geological evidence. The addition of various percentages to the profit in sight has been used by engineers, and proposed in technical publications, as varying from 25 to 50%. That is, they roughly assess the extension in depth to be worth one-fifth to one-third of the whole value of an equipped mine. While experience may have sometimes demonstrated this to be a practical method, it certainly has little foundation in either science or logic, and the writer's experience is that such estimates are untrue in practice. The quantity of ore which may be in sight is largely the result of managerial policy. A small mill on a large mine, under rapid development, will result in extensive ore-reserves, while a large mill eating away rapidly on the same mine under the same scale of development would leave small reserves. On the above scheme of valuation the extension in depth would be worth very different sums, even when the deepest level might be at the same horizon in both cases. Moreover, no mine starts at the surface with a large amount of ore in sight. Yet as a general rule this is the period when its extension is most valuable, for when the deposit is exhausted to 2000 feet, it is not likely to have such extension in depth as when opened one hundred feet, no matter what the ore-reserves may be. Further, such bases of valuation fail to take into account the widely varying geologic character of different mines, and they disregard any collateral evidence either of continuity from neighboring development, or from experience in the district. Logically, the prospective value can be simply a factor of how far the ore in the individual mine may be expected to extend, and not a factor of the remnant of ore that may still be unworked above the lowest level.

An estimation of the chances of this extension should be based solely on the local factors which bear on such extension, and these are almost wholly dependent upon the character of the deposit. These various geological factors from a mining engineer's point of view are:—

  1. The origin and structural character of the ore-deposit.
  2. The position of openings in relation to secondary alteration.
  3. The size of the deposit.
  4. The depth to which the mine has already been exhausted.
  5. The general experience of the district for continuity and the development of adjoining mines.

The Origin and Structural Character of the Deposit.—In a general way, the ore-deposits of the order under discussion originate primarily through the deposition of metals from gases or solutions circulating along avenues in the earth's crust.[*] The original source of metals is a matter of great disagreement, and does not much concern the miner. To him, however, the origin and character of the avenue of circulation, the enclosing rock, the influence of the rocks on the solution, and of the solutions on the rocks, have a great bearing on the probable continuity of the volume and value of the ore.