The question of the value of the mine as affected by the volume of output becomes very prominent in low-grade mines, where, if equipped for output on too small a scale, no profits at all could be earned, and a sufficient production is absolutely imperative for any gain. There are many mines in every country which with one-third of their present rate of production would lose money. That is, the fixed charges, if spread over small output, would be so great per ton that the profit would be extinguished by them.

In the theoretical view, therefore, it would appear clear that the greatest ultimate profit from a mine can be secured only by ore extraction under the highest pressure. As a corollary to this it follows that development must proceed with the maximum speed. Further, it follows that the present value of a mine is at least partially a factor of the volume of output contemplated.

FACTORS LIMITING THE OUTPUT.

Although the above argument can be academically defended, there are, as said at the start, practical limitations to the maximum intensity of production, arising out of many other considerations to which weight must be given. In the main, there are five principal limitations:—

1.Cost of equipment.
2.Life of the mine.
3.Mechanical inefficiency of patchwork plant.
4.Overproduction of base metal.
5.Security of investment.

Cost of Equipment.—The "saving of fixed charges" can only be obtained by larger equipment, which represents an investment. Mining works, shafts, machinery, treatment plants, and all the paraphernalia cost large sums of money. They become either worn out or practically valueless through the exhaustion of the mines. Even surface machinery when in good condition will seldom realize more than one-tenth of its expense if useless at its original site. All mines are ephemeral; therefore virtually the entire capital outlay of such works must be redeemed during the life of the mine, and the interest on it must also be recovered.

The certain life, with the exception of banket and a few other types of deposit, is that shown by the ore in sight, plus something for extension of the deposit beyond exposures. So, against the "savings" to be made, must be set the cost of obtaining them, for obviously it is of no use investing a dollar to save a total of ninety cents. The economies by increased production are, however, of such an important character that the cost of almost any number of added units (within the ability of the mine to supply them) can be redeemed from these savings in a few years. For instance, in a Californian gold mine where the working expenses are $3 and the fixed charges are at the low rate of 30 cents per ton, one unit of increased production would show a saving of over $10,000 per annum from the saving of fixed charges. In about three years this sum would repay the cost of the additional treatment equipment. If further shaft capacity were required, the period would be much extended. On a Western copper mine, where the costs are $8 and the fixed charges are 80 cents per ton, one unit of increased production would effect a saving of the fixed charges equal to the cost of the extra unit in about three years. That is, the total sum would amount to $80,000, or enough to provide almost any type of mechanical equipment for such additional tonnage.

The first result of vigorous development is to increase the ore in sight,—the visible life of the mine. When such visible life has been so lengthened that the period in which the "saving of fixed charges" will equal the amount involved in expansion of equipment, then from the standpoint of this limitation only is the added installation justified. The equipment if expanded on this practice will grow upon the heels of rapid development until the maximum production from the mine is reached, and a kind of equilibrium establishes itself.

Conversely, this argument leads to the conclusion that, regardless of other considerations, an equipment, and therefore output, should not be expanded beyond the redemption by way of "saving from fixed charges" of the visible or certain life of the mine. In those mines, such as at the Witwatersrand, where there is a fairly sound assurance of definite life, it is possible to calculate at once the size of plant which by saving of "fixed charges" will be eventually the most economical, but even here the other limitations step in to vitiate such policy of management,—chiefly the limitation through security of investment.

Life of the Mine.—If carried to its logical extreme, the above program means a most rapid exhaustion of the mine. The maximum output will depend eventually upon the rapidity with which development work may be extended. As levels and other subsidiary development openings can be prepared in inclined deposits much more quickly than the shaft can be sunk, the critical point is the shaft-sinking. As a shaft may by exertion be deepened at least 400 feet a year on a going mine, the provision of an equipment to eat up the ore-body at this rate of sinking means very early exhaustion indeed. In fact, had such a theory of production been put into practice by our forefathers, the mining profession might find difficulty in obtaining employment to-day. Such rapid exhaustion would mean a depletion of the mineral resources of the state at a pace which would be alarming.