Circular 41
THE MAKING OF A MINE
By JOHN ELIOT ALLEN
Economic Geologist
New Mexico Bureau of Mines and
Mineral Resources
1956
STATE BUREAU OF MINES AND MINERAL RESOURCES
NEW ME XIC O INS T ITUTE OF MIN IN G AND TECHN OL OGY
SOCORRO, NEW MEXICO
THE REGENTS
Members Ex Officio
The Honorable John F. Simms
M r s. G e o rg i a L. Lu s k
Governor of New Mexico
Superintendent of Public Instruction
App o in te d M e mbe rs
Robert W. Botts
Holm 0. Bursum, Jr.
Thomas M. Cramer
J o h n N . M a t h e w s, J r.
Richard A. Matuszeski
Albuque rque
Socorro
Carlsbad
Socorro
Albuque rque
THE MAKING OF A MINE
T h e pro s p ec to r a n d t h e in v e s ti n g pu bl ic m ay not a l w ay s b e fu ll y aw ar e of t h e
co m pl e x s t ep s u su a ll y f ou n d n ec e s s ar y in tr an s for m in g a m in e r al d i sco v ery i nt o a
profitable mine. Whole libraries of books and articles in periodicals are available
on all aspects of mineral discovery and development, but it was thought that a
brief statement of the various steps and the possible costs involved might have some
v a l u e fo r t h e l a ym a n who i s in t e r e st e d in g et t in g in to th e m in in g b us in e s s .
The us efulne s s of the pro sp ector with rudim ent ary train ing in th e recognit i on
of valuable minerals has been demonstrated amply in the intensive search for uranium
ores still in progress. True enough, many prospectors quickly acquire professional
skills in the use of instruments such as the geiger counter or the scintillator in the
search for uranium, or the ultraviolet lamp in the search for tungsten, and in their
abil ity to r ecogni ze an d f ollow favor abl e form ation s which ha ve be en pointe d out in
geological maps and reports. Nevertheless, blind chance has led to notable
discoveries, owing in part to large numbers of prospectors fanning out over wide
areas without waiting to find out the best place to look. Also, the mineral industry
still needs the cowboy or Indian who brings in a "funny-looking rock" to a
s t a t e su r v ey l a bo ra to r y fo r t e s ti n g.
T hou gh th e p ro s p ec tor ma y m a k e t h e di sc ov e r y, th e t ech nic a ll y tr a in e d g eo lo gi st
and engineer, and later the metallurgist or the testing laboratory, commonly play
m a jo r ro l e s in t h e succ e ed i n g st e p s that lead to pro fitab le e xp loi tatio n o f a min eral
deposit. Even many discoveries of uranium have been made by the skilled and
experi ence d geolo gist or engin eer, an d i t ha s b een point ed out th at for man y othe r
materials the easily discoverable deposits have been found. Nevertheless, most
minera l de posi ts ar e se gr eg ate d in r ather r estr icte d geolo gical en vironment s, wheth er
they be certain rocks or certain structures or certain stratigraphic horizons.
Therefore, s tat e and fe de ral geolo gical su rv ey s car ry on geolo gical ma p ping pro gram s
and basic studies which, though they may not result in the immediate discovery of ore,
e v e n tu a ll y w il l p ro v e u s ef ul to th e pr o s pe cto r who m ay b e loo k in g f or mi ne r a l s wh ich
today have no value. Scientific research, even of the long-range or "long haired"
variety, almost invariably is found eventually to have practical dollars-and-cents
v a l u e. Th i s h a s b e en po in t e d ou t so o ft e n th a t i t i s un n ec e s sa r y t o b e l a bor th e
point.
The subject which does require emphasis, however, deals with the steps which
must be taken before an initial descovery can be transformed into a profitable mining
e n t er p r i se . I t i s he r e th at mo r e fo rt un e s, e v en in t h e bon a nz a d a y s, h a v e b e e n lo s t
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than have perhaps been won! Unless certain logical steps are carefully followed,
e v e n t h e m o s t f a v o r a b l e- a p p e a r i n g m i n e r a l d e p o s i t m a y p r o v e a f a i l u r e , w i t h d i s c o u r a ge m e n t t o t h e o p e r a t o r a n d , p o s s i b l y , t r a g e d y t o t h e i n v e s t o r . U n l e s s a l l t h e
factors of value of the ore, cost of beneficiation, availability of market, permanence
of mark et, di stanc e of tr anspor tation, and man y o thers ha ve b een ta ken in to consid era tion by those interested in developing the deposit, that deposit may prove to be a
f a i lur e an d a d i s a p poi ntm e nt .
In the field of metallic ores, such as those of gold, silver, copper, lead, zinc,
and many others, these carefully thought-out stages in development are of importance,
o f c o u r s e , b u t i t i s i n t h e f i e l d o f de v e l o p m e n t o f t h e n o n m e t a l l i c o r i n d u s t r i a l m i n e r a l s
and rocks, with which modern industry is becoming more and more concerned, that
careful consideration of each of these steps bec omes imperative. Most nonmetals are
low-cost products, hence the margin of profit may be very slight indeed. The differe nc e of a f ew c e nt s in the m a r k et pric e a nd th e d if f er e nc e i n a f ew m i l e s of tr a n s por t a tion may mean the difference between red and black in the ledger. Comprehensive
appraisal of these factors in mining has been obscured only too often by the lure of the
bo n a n z a . I n t h e s e d a y s o f " u r a n i u m f e v e r " e s p e c i a l l y , w e m u s t r e m e m b e r t h a t m i n i n g
is a tough bu sine ss an d that only one out of a t housand cl aim s will e ver be a mine!
The successful enterprise today must be thought out and run like any other business,
w it h t h e g a m bl in g f acto r r e d uc e d t o a mi ni mu m.
Perhaps the modern definition of "ore" will give us a start on this analysis.
"Ore" is any rock or mineral substance which can be mined, treated, and sold
a t a pr o f it . Wh a t m a y no t b e o r e to d a y m a y b eco me o r e to mo rro w; th e m ain f acto r h e r e
is supply and demand. Y esterday the uranium deposits of the Colorado Plateau were
not ore. Many of them were known and passed over, since there was no market for
uranium. Conversely, what is ore today may not be ore tomorrow. When the United
S t a t e s w a s u n a b l e du r i n g W o r l d W a r I I t o o b t a i n q u i c k s i l v e r f r o m t h e m i n e s i n S p a i n
and Italy, many deposits in the West became ore, and mines were developed. When
t h e w ar wa s ov e r an d w e a g a i n i m por t e d ch e a p qu ic k s il v e r, t ho s e m in e s c lo s e d dow n.
The first step in the making of a mine is, of course, discovery of the deposit.
T h i s m a y b e a c c o m pl i s h e d b y t h e p r o s p e c t o r , b y a s t a t e o r f e d e r a l s u r v e y , o r b y
private-company operations. The discovery may have cost a few hundred dollars,
or it may have cost many thousa nds of dolla rs; it may have taken only a few weeks,
o r i t m a y h a v e ta k e n m an y y e ar s .
Some of the items to be considered seriously in a prospecting campaign, aside
from locating the deposit, are, of course, the status of the land to be examined
(each different category of land ownership may involve entirely different kinds of
l e ga l a p pr oa ch an d d e gr ee o f e x pen s e ) a n d th e l aw s w hic h a p p l y t o th e loc a tio n of
new d epo sit s and to th eir dev elopm ent ( diff erent i n many s tat es - a pro pos ed new
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Texas law is designed to prevent aerial prospecting without permission from the
owners of the land:).
On the chart is indicated the "cost" in terms of "units," which may vary
considerably with the type of deposit. For small, high-grade ore deposits which
r e qui r e li tt l e o r no mi ll ing , tr e a tm en t, o r b en e fic ia t io n, suc h a s lo d e go l d, ch ro mi t e,
and p egm atit e m iner als, the unit ma y b e a s low a s $5,000; for lar ge r, low er gra de
de po s i t s , i t m a y b e $ 1 0 , 0 0 0 - $ 5 0 , 0 0 0; f o r t h e g r e a t p o r p h y r y c o p p e r s , i t m a y a m o u n t
t o h a lf a m il l ion do l l ar s or mo r e.
T h e s econ d s t e p i s th e pr e l im in a r y e x am in a ti on of th e d e po s it . Th i s i s d i vid e d
usually into two parts designed to determine, first, the presence of potentially
valua bl e m iner al in amounts sufficient to justif y fu rther inv esti ga tion, an d s econd,
whether that mineral can be mined and treated or beneficiated at a profit. The
geological or mining expert makes an examination in the field and samples the
acces sib le parts of th e depos it for a ss ay, ma ps th e outlin es of th e inferr ed ore bod y,
and f rom th es e dat a m ak es tent ati ve e stim at es of the valu e of the ore. He t hen consi der s
t h e econ om ic f ac to r s wh ich a ff ec t t h e p o s si b l e va lu e , s uch a s d is t anc e to m a r k et , co st
o f m in in g, th e n e e d o f t re a t m en t t o e nr ich th e ma t e r ia l, an d a mu lt it u d e o f ot h er
f ac to r s wh ich mu st h av e a f a vo r ab l e b a la nc e t o jus t i fy fu rt he r in v e st m en t a n d e x p en d itu r e
As early as possible the composition and nature of the prospective ore should be
determined, as well as its amenability to treatment and recovery of the potentially
valuable constituents. In this phase cooperation between the geologist, engineer,
and metallurgist is necessary. Assays reveal only the presence and amount of the
element for which the test is made. The ore-dressing and metallurgical laboratories
must de term ine if th e va l uabl e m ate ria l i s in a for m for which economical r ecover y i s
possible. Some potential ores contain other elements which may prove to be valuable
by p r o d u c t s . O n t h e o t h e r h a n d, a l l e x a m i n i n g e n g i n e e r s a n d g e o l o g i s t s a r e f a m i l i a r
w it h t h e p ro s p ec to r who h a s s ecu r e d an an a l y si s o f h is or e an d ha s c a lcu la t e d th e v a lu e
o f ea ch i t em , i ncl u di n g th e s il ico n an d t h e c alc ium : Som e m et a l d e po s it s, s uc h a s th o se
of copper, may be weathered to a considerable depth, and a zone of secondary sulfide
e n ri chm e nt m ay l i e b etwe e n th e w e a th er e d a n d unw e a th e r e d or e . E ach of t h e s e t hr e e
classes of copper ore may require radically different treatment methods, all of which
have a pronounced effect on the economic conclusions as to the exploitation of the
de po s i t . F o r d e p o s i t s o f i n d u s t r i a l m i n e r a l s a n d r o c k s , s u c h a s l i m e s t o n e , t h e p r e s e n c e
or absence of impurities or deleterious constituents may be critical. Material which
cannot meet specifications cannot be exploited. It is obvious that the earliest possible
determination of these factors may save useless subsequent expenditure.
The e xamin ing en gine er or g eologi st not only mus t an aly ze the d e posit it se lf,
but should take into consideration such business factors as supply and demand,
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competition, market location, labor conditions, government policy, tax structure,
tariffs, etc., before he can decide whether this particular deposit contains "ore."
U s u al l y a r e po r t of th i s so rt , i f f a vor a b l e an d m a de b y a r e pu t a bl e e x p er t, t h en c an b e
u s e d to int e r e s t th o s e wh o ca n f in anc e fu rth e r ste p s . T h e co s t of th i s s t ag e i n t h e
de velo pment of a giv en depos it rang e s from a few thousan d doll ars to t ens of thous and s
of dollars, and may be accomplished in a few weeks to a few months. If the decision
is favorable, and it is decided that all these conditions seem to allow a reasonable
profit on further inv e stm ents, st ep thr ee then ma y be ta ken.
This step consists of preliminary development of the deposit by surface trenching,
di a m o n d d r i l l i n g, d e t a i l e d g e o l o gi c a l m a p p i n g o f t h e d e p o s i t i t s e l f , a n d p e r h a p s
geophysical or geochemical prospecting, all to determine the outline and borders and
probable total available tonnage in a preliminary way. This step usually is financed
by a pa r tn er s hi p, s y nd ic at e , or m in in g co m pa n y, or b y s a l e of s toc k i n a com p a n y fo rm e d
to develop the deposit. It may take from 6 months to 3 years to complete such
pr e l im in a ry d e v e lo pm e nt , a n d ma y c os t f ro m $1 0,0 00 to a s m uch a s a m il l io n d ol l ar s .
The fourth step in a well-planned and conservative program consists of development
by pit s and shaft s or tun nels, or perh ap s by clos e ly sp ace d drill ing, to d et ermine mor e
definitely and block out ore reserves, and to appraise their grade and character. The
ore body i s cl as sifi ed in t hree way s: ore m ea sure d , ore indica te d, an d or e i nferre d. The
value of the mine must be sufficient in the first and second categories to amortize the
total investment. The possible profit lies in the third category. This is the step, the
omission of which so often in the past has led to grief: The mining camps of the West
are dott ed with the ruins of costl y m ill s which we r e construct ed to t re at or e th at w asn't
there. Step four is financed usually by funds of the mining company or by sale of
company capital stock. It may take from 2 to 5 years to complete, and it may cost,
depending upon the grade and size of the deposit, tens of thousands of dollars more.
This step in the development of the great new San Manuel copper deposit of Arizona
has been completed recently at a cost of over $10 million.
Now, if you are becoming optimistic about the cost of changing a rock or
m in e r al d e p o si t to a n o pe r a t in g m in e r al in du s t ry , w e co m e t o th e fi ft h a nd f r e qu en t ly
most expensive step of all, that of installing a mining and treatment plant. This
i nc lu de s t h e fu r th er d e v el o pm e nt o f t h e m in e f or m in in g o pe r at io n, pow e r a n d w a t er
supply, transportation facilities, and, in the case of large isolated deposits, the
townsite. This again may be financed as was the previous step. It will take from
2 to 3 years to complete, and its cost may be anywhere from one hundred thousand
do l l a r s t o m a n y m i l l i o n s o f d o l l a r s .
F or mi l li n g ur a ni um, it ha s b e e n e s ti m at e d th at th e c a p it a l i n v e st m en t n ec e s s ar y
pe r to n of c a p ac it y p er da y i s a bo ut $10 ,0 00 to $1 5, 000 , a n d t ha t th e sm al l e s t
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a s s u r e dl y e c o n o m i c m i l l w i l l h a v e a c a p a c i t y o f a t l e a s t 4 0 0 t o n s p e r d a y
($4-$6 mil l ion!).
T h e si xt h an d f in a l st e p, i n vo l vi ng th e p e ri o d of tu ni n g u p t h e m in e an d mi l l
a n d tr an s i tio n i nt o th e p ro d uct ion s t at e , i s l e s s cos t l y an d ma y t a k e fr om 1 t o 6
months.
You will note that all but the last step involve investment of increasing amounts
o f c api t al, a n d th a t af t er o r dur in g e ac h of th e f irs t fou r st e p s th e en t e rp r is e m a y b e
a ba n do n e d w i t h m i n i m u m l o s s , s h o u l d p r o g r e s s p r o v e a t a n y s t a g e t h a t f u r t h e r i n v e s t ment would be unprofitable. Successful businessmen today certainly operate their own
enterprises on this basis, but investors in mining enterprises still frequently forget these
pr in ci pl e s, w it h di s a s tro us co n s eq u enc e s. B ew a r e o f th e s toc k s e l l e r who i s b u i ld in g
a m i l l bu t c a n ' t g i v e a t l e a s t t h e m i n i m u m e x t e n t a n d g r a d e o f t h e o r e b o d y :
An article in the September 1954 issue of the Engineering and Mining
Journal reemphasizes, in terms of the mining of uranium, these fundamental principles
o f deve lopm ent, an d poin ts out som e n ew one s. T hey ar e summar ize d unde r s ev en
head ing s:
1. Over the long pull, the biggest profits lie in a well-planned, long-term
e x p lo r at io n pro g r am.
2. Regardless of quantity or quality of experience elsewhere, the record shows
that i t t ak es a bout two y ear s for en gine er s, p rosp ectors and g eolog ist s to
become effective in uranium exploration.
3. M a k e su r e t ha t you l e ar n b o th s ta t e an d f e d e r al m in in g l aw s, an d e qu a l ly
important, find out what is the prevailing local custom regarding the mining
laws.
4. Think of min ing in t erm s of pound s of ur anium rat her th an n eces sa rily in to ns
o f o r e b u t d o n ' t g e t t h e i de a t h a t t h i s e l i m i n a t e s l a r g e e n t e r p r i s e s .
5. T h e r e i s g e n e r a l l y m o r e p r o f i t i n m i n i n g t h a n i n m i l l i n g .
6. If you ser iousl y int end t o ex plore for and mine uranium, you can get a lot of
h e l pf ul in fo rm a tio n an d s a v e y ou r s el f ti m e an d m on e y b y t al k in g wi th on - th espot AEC officials first [and one might add, the New Mexico Bureau of Mines
a n d M in e r al R e s ourc e s ].
7. I f y o u a r e g o i n g i n t o t h e u r a n i u m b u s i n e s s b y b u y i n g u r a n i u m s t o c k s , b e c a r e f u l !
It is onl y on such sound busin es s princip le s th at the min ing in dust ry, li k e an y
other industry, can hope to gain and retain the confidence of the investing public.
In recent years such confidence has been deserved by the great majority of mining
developments.
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PROSPECTOR'S ROAD-GUIDE FROM PROSPECT TO MINE
I. Discovery of ore-mineral ($1,000-$5,000)
a.
b.
If on pu blic doma in, s et up discov ery po st, fi ll out location pa pe rs, and fil e
the latter at the county courthouse (Fowler and Talmage, 1941). Set up
claim corners and dig discovery cut within 90 days.
If on private or state land, arrange lease from the owner with the help of a
competent mining lawyer.
II. Preliminary examination ($2,000-$5,000)
a.
b.
c.
Sample outcrops thoroughly (Gunther, 1932) and have samples assayed by a
competent analyst (Klahold, 1954). If favorable, have:
Examination and mapping by competent economic geologist or mining
engineer, who will give tentative outlines of the ore body and initial
c a lcu l at ion of r e s e r v e s, an d w i ll r eco mm en d e it h er a b a n don m en t o r
further development. Then make:
P r e l im in ar y c on s i de r at io n o f e cono mi c f act or s fa vor a b l e an d u nf a vo ra b l e
t o con t inu e d d e v e lo pm e nt .
T hi s i s a bou t as f ar a s the a v e r a g e pr o s p ecto r, w it hou t o ut s i d e c a pi t al, can e x p ec t
to go. The next step, that of preliminary development, will cost from $10,000 to
$ 5 0 , 0 0 0, d e p e n d i n g u p o n t h e t y p e o f d e p o s i t a n d t h e t h o r o u g h n e s s o f e x a m i n a t i o n .
Financing a mine is not an easy step (Bailey et ul, 1953), and the prospector usually
l e a s e s or s e ll s hi s p ro p ert y a t t hi s po in t, r et a in in g a s m a ll ro y al t y o r in t e r es t . Mo s t
pr o s pect or s ar e n' t i nt e r es t e d in g oin g b e yo n d t hi s p o in t a n yw a y:
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R E CO M M EN D ED R E AD IN G
Bailey, C. C., Raymond, L. C., and Boericke, W. F. (1953) Financing domestic
mining adventures, pt 1, Problems of mine financing; pt 2, Sources of capital
funds, Min. Eng., v 5 (J une, July), 584-5 88, 679-684.
Clawson, M. (1950) Locating mining claims on the public domain, U. S. Bur.
M i ne s Inf. Ci rc. 7535, 13- 21 .
Kn oe rr, A., and Lu tje n, G . (1954) U 308 - Fo rmula fo r p ro fits, Eng. M in. J o ur. ,
v 155, 87-118.
Fowler, C. H., and Tal mage, S. B. (1941 ) Mining , oil and min era l laws o f
N ew M e x ico, New Me xi co S ch oo l o f Mi ne s, S tate Bur. M ine s and Mine ral
Res. Bull. 16, 244.
Gunther, C. G. (1932) The examination of prospects, Am. Inst. Min. Met.
Eng., New York, N. Y., McGraw-Hill Book Co.
Klahold, B. R. (19 54) La boratori es th at make fire ass ay s, an aly s es, and tests of
ores, minerals, metals, and other inorganic substances, U. S. Bur. Mines Inf. Circ.
7695.
Leith, C. K. (1938) Mineral valuations of the future, Am. Inst. Min. Met. Eng.,
York, Pa., Maple Press Co.
Parks, R. D. (1949) Examination and valuation of mineral property, 3d ed,
Cambridge, Mass., Addison-Wesley Press, Inc.
Von Bernewitz, M. W. (1943) Handbook for prospectors and operators of
small mines, 4th ed, revised by Harry C. Chellson, New York, N. Y.,
M cG raw- Hi ll Bo o k Co .
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