HOW TO SUCCEED IN A SMALL MINE A Case History - 1990-2000

By Dr. Ralph E. Pray Originally Published in May, 2001

The first requirement for a successful mine operation is a market for the product, metallic or nonmetallic. The second requirement is to deliver a quality salable product to that market for payment in an amount exceeding the cost of the operation. There are a vast number of mineral products, literally from A to Z, and there are an infinite number of ways to get them out of the ground and delivered in a form acceptable at the marketplace. One may start by looking at what a particular industry needs, such as silica for glass or cement manufacture. Low-iron silica is desperately needed for making glass, and at least one California cement company would dearly love to see a prospector walk in the front door with samples from his nearby silica

claims. Another example, also nonmetallic, is bentonite clay, the water impervious material commonly mandated to line the floors, walls, and caps of landfill disposal sites. This material, which swells when wet, is extensively used in oil drilling mud. Bentonite frequently occurs along earthquake faults and it was along the Garlock Fault in Kern County that Joe Mathewson, a Los Angeles area resident, searched for the commodity in the 1980s. He found a suitable deposit on land next to Red Rock Canyon State Park east of Mojave. The swelling-type calcium bentonite clay was tested by independent laboratories and was determined to meet the low permeability specifications for landfill use. Mathewson purchased the land, which had been actively mined during its preWWII years as the source of Old Dutch Cleanser kitchen and bath scrubbing powder. Over 120,000 tons of white, high-quality pumicite had been mined underground. The bentonite occurs as a layer over the pumicite, in places very close to the surface. The exposed edge of the clay overlooks Last Chance Canyon for thousands of feet. The layered beds in this portion of the Ricardo Formation dip twenty degrees northeast and plunge beneath Highway 14 to the north. Mathewson had the pumicite tested for a variety of uses, such as an abrasive, a filler product, a pesticide carrier, and as a Portland cement additive. Investigations performed at the Mineral Research Laboratory, with the assistance of the Materials Testing Laboratory at California State Polytechnic University at Pomona, showed an increase in concrete strength using pumicite, but at an unacceptable cost. Applications for a conditional use and operating permit for surface mining were submitted to Kern County and State of California officials in 1988 and after several revisions were approved in 1989. The Kern County Department of Planning and Development Services issued a Conditional Use Permit containing 46 major conditions required before, during, and after operating on the property. For several years truckload shipments of pumicite were sent to an eastern market, but interest was weak. Meanwhile, the owner, determined to avoid capital expenses for equipment, located a contractor who would perform the necessary stripping and reclamation operations as needed, and truck the raw product to a distant mill for fine grinding. Removed overburden had to be carefully spread to conform to the existing topography and ground surface characteristics. In order to meet landfill specifications another

contractor was hired to dry, crush, and screen the bentonite on-site using a portable plant. Mathewson set prices on his calcium bentonite at $35 per ton for pit run, $45 per ton for minus 10-mesh material, and up to $80 per ton for finely ground and screened product, truck-loaded at the mine. Fine material was also supersacked on-site. His direct costs for minus 4-mesh were about $22 per ton, leaving a profit of $15 per ton. Existing roads were used for all transportation across BLM land to the highway. His overhead costs, with no equipment, labor, insurance, or office help, were minimal. He had minor legal, travel, product research, and permit fee expenses. Mathewson notified all Southern California landfill contractors and city/county offices involved in landfill administration that his bentonite was accepted and available for landfill sealing against seepage. Twenty-one separate sales contracts were awarded between 1991 and 2000 for a total of 20,000 tons of bentonite. Surface mining and processing at the rate of up to 100 tons per day with large equipment meant that the mine operated for an average of only about 20 days each year for the life of the operation. As sales and mine operations were based solely on demand and landfill activity, there was no production during 1996 and 1997. A listing of the production times and tonnages shows how versatile the operator had to be in order to accommodate his buyers if he wanted to stay in business.
YEAR 1991 1991 1991 1991 1991 1992 1992 1992 1993 1993 1993 1994 BUYER Orange Inyokern Inyokern Inyokern Houston Riverside Tehachapi Moreno Valley Santa Fe Springs Irvine Scottsdale Carson TONS 1.25 272.08 137.44 26.45 268.83 25.815 648.51 25.815 1,142.48 65.53 22.5 796.13 BENTONITE INVOICE $111 $22,582 $11,000 $2,194 $20,969 $2,168 $43,396 $2,000 $94,825 $2,924 $2,002 $34,418

1995 1995 1995 1995 1995 1998 1999 2000 2000

Livermore Irvine Irvine Irvine Irvine Santa Monica Terra Bella Terra Bella Terra Bella TOTAL

500 14 1,501.2 11,178.54 1,427.67 1,886.3 5 24 24 20,000

$32,500 $490 $52,542 $569,086 $49,965 $160,338 $805 $3,840 $3,840 $1,113,945

The total tonnage removed in ten years by Mathewson was about the same as that mined in the entire State of California in 1987. Wyoming, by comparison, produced over two million tons of swelling bentonite in 1987. Mathewson's mine operated sporadically for only a few weeks at a time, sometimes for only a day, definitely qualifying it as a small mine. The owner had a full-time job and spent some of his vacation time at the mine. In addition, he networked with officials and contractors in the business he was selling to. Other small bentonite operations on the same formation, to the west, had taken place as far back as the 1920s. Martin Engel, the old assayer at nearby Cantil, described to the author in 1969 how the wet clay was used for facial cleansing mud by the "ladies of the night" in Mojave during the rip-roaring mining days of the 1930s. In 1970 the Mineral Research Lab mined and chemically modified a shipment of Red Rock Canyon bentonite to produce high-temperature grease for testing by the National Grease Institute. The test was a success but the sales effort lacked Joe Mathewson's drive to get the wheels of progress rolling. Marketing is a big part of any business. "The second requirement is to deliver a quality salable product to that market for payment in an amount exceeding the cost of the operation." That is pretty much the main guideline for any successful business. The majority of miners hoping to get into business are principally interested in gold. If you intend to

become an independent hardrock gold miner you have to have something like two-ounce per ton rock three feet wide these days. That would keep good tires on the pickup and the old lady in party dresses. But there isn't any twoounce rock to speak of. If the search is healthy and enjoyable away from your daytime job, that may be all you need. If you decide you must have a salable hardrock product or property, to mine or to lease out, the gold business is probably not a good idea. There is, however, a valuable mineral commodity for just about every letter in the alphabet. And our American West has most of them. The serious hardrock prospector might do well to put gold on the back burner and look at industrial minerals. If you're itching to get out in the boonies and break some rock, think nonmetallic! If you don't know exactly how to look for it in the field, go anyway. Get started. This prospector went along the Garlock Fault on a rainy Sunday in 1969 looking for bentonite clay without any idea about its appearance, what it looked like in the ground. No one could have been more poorly informed. But I knew it was slippery when wet. Walking down a gray-colored hill in the drizzle I slipped and fell. The long streak of freshly-uncovered bentonite was immediately staked as the Rainy Day claim. This was the source of material for chemical modification to high-temperature grease. Finally, for this article, a last look at Joe Mathewson, the small mine operator who could and did. Now he's involved with acquiring and permitting a wide variety of minerals, including limestone, dolomite, magnesite, dimension stone, zeolite, diatomaceous earth, iron ore, granite and colored clay, all located on the public domain.

Small Scale Mining Info

Generally, the beginning and the end of most small scale mining attempts, is the prospecting phase. This is because most prospectors are not geologists and have not had the experience and education required to comprehend the nature and origin of mineral and metal deposits in the earth.

I have seen too many so called "mines", particularly gold mines, that had a "lot of gold" based on a hand full of rocks sent to an assay lab. Generally, these "mines" turned out to be rock collections, and the assay lab a bunch of quacks or Frauds, pretending to be assayers. The second rule of prospecting is if the deposit is not economically viable, it is a Rock Collection. Economic viability simply means that it costs less to extract the valuable mineral or metal than the value of the mineral or metal extracted. Without the knowledge of a mining engineer and a metallurgical or process engineer, the determination of mining and processing a deposit is somewhat of a Wild Guess.

Back to Top Now for the first rule of prospecting, Finding a Ore Deposit. In the Gold Rush years, Geologists and Prospectors had similar results in finding gold and silver deposits, because for one, geologists of a hundred or so years ago, did not have the knowledge and understanding of today's geologists, and two, there were many, many more prospectors roaming the mountains and deserts. Quite often, a nugget, or a large rock with gold in it was discovered lying on the ground or in a stream, and Eureka, the rush was on. The land was covered with a swath of humanity, looking in every nook and cranny for gold or silver. No wonder they found some. However, we only hear about the five or ten that actually found the Motherload, not the tens and hundreds of thousands that found Rock Collections.

So, what does this have to do with prospecting today? Today, most prospectors actually think they can find gold the same way the gold rushers did. It will simply be lying at their feet. Some good advice, purchase a lottery ticket, it has better odds of hitting the Jackpot. If, however, you enjoy the outdoors and digging around in streams mountains and deserts, try to absorb as much geologic information and mining historical information in the area targeted for prospecting as possible. The Department of Mines and Geology of the state is a good place to look for information. Geologic maps published by the US Geologic Survey is another. Professional Mining organizations also generally have published books and material available for purchase. Stay away from "Bob's Gold Prospecting Book", because Bob probably never saw any gold either, and hasn't the foggiest notion of finding it, but is all too eager to "share" his knowledge, for a price, of course.

Back to Top

If you are not discouraged already, then read on. If gold panning or recovering gold from a stream is what you are thinking of, then realize that water flows Downhill. If there is or has been gold mining and gold deposits at higher elevations in the watershed of the stream, then there is a good chance that some gold has washed down from those mountains, and will be in the stream. So you not only have to be concerned with the immediate area, but most likely, the areas upstream are more important.

If you are looking for Vein ore, then you have a much more complex problem. The rocks or the strata of the earth was mineralized in very many different ways, and how, or more importantly, If, the strata was mineralized, will determine where to look. Most prospectors do not possess the professional knowledge to delve into these scientific facts of geology, and should concentrate on a very oversimplified model. Gold, and silver were generally deposited by either volcanic, or molten metal laden material flowing up through the fissures of the earth, or in some cases by hydrothermal "steam" flowing from deeper in the earth. Both carried the metals and minerals towards the surface, or deposited them along the way. Hydrothermal deposits tend to have very fine particles of gold disseminated throughout a somewhat fractured or porous rock formation. You will find few, if any nuggets here.

How does this relate to looking for a vein? Well it is not easy, unless the vein actually "outcrops", or has a portion exposed at, or near the surface. Even then, most gold is not really visible to the eye, many geologists will admit to rarely seeing nuggets in the largest gold mines. So what do you look for? Well, most gold and silver is found in quartz or igneous deposits. Some gold is found in various sedimentary deposits, as well, including igneous intrusions into sedimentary deposits called "dikes", carbonaceous rocks, silts, even in limestone. However for the purposes of simplicity, ores have many other minerals, like magnetite, rutile, ilmenite, garnet, etc. in them, and these minerals tend to color the ore dark. Sulphide ores tend to be gray in color, while oxide ores tend to be tan to light brown in color. Visually, the gold bearing ore will generally be darker than the barren ore, due to the other minerals and metals present. These minerals could be called "indicator minerals" if their presence signals the presence of gold or silver.

Back to Top So generally speaking, the darker colored rock formations stand a better chance of having gold. Silver is found at much higher concentrations than gold, that it is usually visible to the eye (if it is native silver (Ag). However, silver can be found in high concentrations in a complex form and not be visible. The average prospector need not concern themselves with this, since they would not be able to identify it in the first place. One of the highest grade silver ore specimens I saw was from Australia, and it truly glittered (almost 100 ounces per ton).

Very High Grade Oxide Gold Ore, Assay 5-15 Oz/Ton

When one locates a promising vein or mineralized formation that may be ore (as opposed to rock), the next step is to take some samples of the formation. Again, a prospector without professional training of geology will have difficulty in determining where to take the samples, because they will not have the fundamental knowledge of the rock formations, how they were mineralized, and the statistical theories of sampling to obtain a probable representative sample. Most prospectors will take a few samples from one or two spots and have them analyzed, if nothing is there, they will move on to another site. Most mineralized formations have barren areas (containing no material of value), and the mineralization can be in a pattern, widely distributed, or very random and sporadic. One method of reducing the chances of missing the valuable minerals in the formation, is to use a good sampling technique. For most small scale prospectors, drilling is out of the question due to cost factors, so they must rely on field samples from trenching, channeling, of chipping away a section of an exposed outcrop. In general, more samples from varied locations is better than fewer samples. The vein, or mineralized orebody should be identified, first, and uncovered or exposed so samples may be taken. Samples should be taken across the cross section of the vein of orebody, and they should be marked with the location (handheld GPS devices are ideal for determining the location of the sample spot) and placed on containers for processing later. Small scale prospecting means concentrating on a small area at a time. This requires less man hours and is manageable by a few people.

Trenches along a vein should be dug about every 50 feet, until the extent of the vein is uncovered. The dip of the vein (angle the vein is to the surface) and the general strike (general trend or direction the vein goes) should be determined as trenching progresses. This will help determine where the next trenching goes, and help locate the vein or formation on a map.

Core drilling is the best method to explore a formation for minerals or metals. This method is usually too expensive for small scale prospectors, however if trenching proves the deposit to have enough value, this should be the next step in exploration before mining is considered.

Once the samples have been collected, marked and stored, it is time to take them to either a commercial laboratory, or prepare them for assay in a field lab setting. They should be crushed in a jaw crusher, then pulverized, using a pulverizer to 100 mesh or finer. Then one of the most important steps is splitting the sample to obtain a 30 gram sample to send to the assayer for each sample of ore. The

initial sample size may be 50 - 200 pounds. But assayers generally test 30 grams. All of the sampling is wasted if the pulverized samples are not accurately split, to obtain a representative sample for assay. Simple Jones type riffle splitters will give descent accuracy for field work. It is laborious, but the 50 pound sample is split 50-50, and one half is split again, reducing it to 25 pounds, then 12.5 and so on until a 30 gram sample is reached. It is probably desirable to only split the sample to 100 grams or so in the field and have the assayer split the 100 gram sample to extract the 30 gram for assaying, when working in the field. Once the assay splits are obtained, they should be sealed in plastic bags, marked with identifying information, and stored for sending to the assay lab.

Back to Top Selecting a Reputable Assay Lab is very important, since some studies have shown that about 50% of the assay labs in the West are either incompetent or dishonest. In either case, you pay the price. A lot of prospectors like to hear good news that they have 2 ounces of gold per ton and some labs will tell them this to keep them coming back, until they go broke, wasting their money trying to mine a rock garden. So, by all means, select a reputable assayer. If in doubt, generally the Department of Mines in the state can give some recommendations. I can give severa:

Dr. Ralph Pray Mining & Metallurgy 805 S Shamrock Ave Monrovia, CA 91016 Telephone: 626-357-6511 Fax: 626-358-8386 ALS Chemex 994 Glendale Avenue, Unit 3 Sparks, Nevada, 89431-5730 Phone: (1) 775 356 5395 Fax: (1) 775 355 0179

SUCCESSFUL MINERAL PROPERTY PROMOTION

By Ralph E. Pray, DSc, Metallurgical Engineering

Before you invite anyone to look at your mining claims, whether it's to find yourself a partner, to secure operating capital, or to interest a mining company, there are rock-bottom, basic requirements to consider. These are: 1. Proof of ownership 2. Government land status 3. Bona fide technical evidence of values You may have other priorities, such as a road to the claims, or residence on the property. But the three basics listed above are minimum needs. Proof Of Ownership Ownership is by federal and state location recording or through historical patent. Assignment is by lease or option. Complete documentation is necessary to satisfy legal requirements. This includes copies of recorded annual affidavits from state and federal agencies. Ownership problems or lease conflicts must be resolved before inviting business visitors. Persons listed as locators on a mining claim location notice must be of one mind when an outside party is brought in. Where multiple locators are listed, one locator may accept notarized assignment agreements from all other locators. This simplifies later negotiations and presents a unified ownership to business venture capital. Government Land Status Government land status is critical to initiating mine activity. Many valuable mineral areas are closed to mineral entry (location). For example, the wide galena surface vein concentrate near Curia Dome in San Bernardino County, California, assays 1,200 opt (ounces per ton) silver, but the land is withdrawn for recreation. Only a few people know about either the rich silver vein or the impossible recreation site. Struggles to rescind the withdrawal have been fruitless, par for the course all over the West and Alaska. Other off-limits areas cover the western U. S. and Alaska like giant shades drawn by blind wall painters. Where the land is not withdrawn there may be ridiculous restrictions on what you can do on it, or public officials so adamant against free enterprise on those claims that life becomes one big headache. Mining claim operators who file a Plan of Operations with Interior or Agriculture on valid claims and are denied approval must respectfully request reconsideration. Rejections must be politely refused where the creation of new wealth is sought under our free enterprise system. Don't roll over! That didn't used to be the toughest part of this business. Now it is. Technical Evidence Of Values Where you do have your hand on the wheel is in obtaining technical evidence of values. You're the driver. There are two major groups of technical evidence. One is hard rock; the other is placer. Each has a bunch of sub-groups like geology, geophysics, reserves, hydrology, climate, assays, and metallurgy. Let's look at hard rock first. In an underground or surface hard rock mine the most important single factor is the assay. What is the rock worth per ton? Suppose it's a gold property. Now comes the biggest problem in the small mine business. Almost half the independent assayer's in one part of the country are magicians - half-assayers. If you don't believe this, and are the least bit suspicious, send a sample in from your backyard or the playground sand box.

Forget Bre-X! That two billion dollar gold scam involved world-class but partially un-seeing assayers. The samples were salted -- 14,000 of them. Until you get to know your assayer send him a blind sample, real Leaverite. Or, split a sample into two bags with separate numbers. Don't settle for a Disneyland assay. Be suspicious of assay reports not your own. Copy machines are turning out some 2.0 opt beauties with great assay labs in the letterhead. Real tragedies have resulted from this. The shadow cast upon the hobby and small mine industry by half-assayers does not fall on, or even close to, the professional fire assayers employed by major gold mining companies in the western U.S. These technicians are, in fact, the world's best and busiest fire assayers. Assay samples can be small or large. Sampling methods are described in many books. Multiple samples tied to sketch maps and honest assay's are the most effective calling cards to introductory mine promotion. The promotion of a prospect generally falls within certain guidelines. For example, a small gold prospect with a four-foot vein assaying around 1.0 opt average has the potential to make a mine. A ten-foot vein may run 0.2 opt and make it. As the mineralized zone gets larger, and daily throughput increases, the opt can go down. The lowest ore grade is in the 0.025 opt range in Kern County, California, a large open pit with no crushing, heap leaching with cyanide -- running at a profit. These numbers are just guidelines for hard rock deposits, not the final word. Placer Deposit Evidence The other major group of technical evidence comes from a placer deposit. Now the fire assay almost disappears as evidence. It's unimportant, even misleading. The only time the fire assay applies to placer work is in the purity test of the free gold and in testing heavies for hidden values. What does that tell you? Placer gold in the Mother Lode can be 900 fine, 90.0% pure, by fire assay. The same size gold particles from Marble Canyon, Inyo County, California, assay 800 fine. A short trip from there to Oriental Wash, Esmeralda County, Nevada, gives you the same size gold assaying 625 fine, with 20% bismuth and the remainder silver. The assay on the recovered metal is important, since you get paid for gold based on those fineness numbers. But you need to know bank in values, dollars per cubic yard recoverable by gravity. The raw gravel samples cannot be reliably fire assayed. That's no news to placer operators. You must see the gold. Faith doesn't count here. If you can't see it, and the concentrates don't fire assay, drop it. The best methods for taking placer samples below 20 feet for the small operator may be by bucket drill in dry ground where bedrock gravel is under four inches; by cribbed test shafts in coarse, dry bedrock; and by dragline in very wet ground. Sample evaluation methods are described in dozens of books. Seismic work to establish bedrock contours is often of great value in testing a placer, and in discussing the property with potential backers. One certainly shouldn't forget the magnetometer in placer testing. Magnetite with placer gold is an immediate and true indicator and was used as early as the 1940's ahead of the gigantic Alaska gold dredges. (The same portable magnetometer w as perfected to detect submerged German U-boats from Allied scout aircraft early in WW II) Economic guidelines for domestic placer gold mine sizes are more a matter of personal effort than of any formula. One person may do well on a gravel washing plant where another would give up in despair. There probably is not a single known placer deposit of over one million yards in the lower 48 states having plentiful water nearby that runs $4.00 or better per cubic yard from surface. Alaska does have these resources, remotely situated. A quick look at success stories should give every reader a boost. Of course most operating mines were found by prospectors. What's seldom realized is that surrounding claims taken up by latecomers frequently make mines. Also, old prospects often show up better with new approaches or price increases. Millions have been produced from these old prospects in the Mojave Desert alone in recent years. Several of California's largest operating open pit gold mines were residual desert placers until the 1980's. Now they are world-class bullion producers.

A 1998 Success Story There have been hundreds of mining success stories over the past thirty years in both metallic and nonmetallic mineral ventures. Many of them are the result of individual efforts. The most recent came out this past November in California when John Massari, a film composer in Hollywood whose hobby is prospecting, signed a 50-page Mineral Lease Agreement with Glamis Rand Mining Company. John staked his claims in the vicinity of a ` working open pit gold mine following a thorough study of the location opportunity and land status. He sampled the surface on a grid pattern and concentrated his samples to a heavy fraction containing visible gold. These sample assays constituted his technical evidence of values. John Massari's application of the three basic requirements outlined above resulted in a twenty-year lease with substantial monetary reward. He admits there was some luck involved, and he paid for a mining consultant during negotiations. But this was after some years of serious desert digging. His success, culminating just two months ago, should inspire every hopeful miner. The basic requirements are not new. They are the same ones Christopher Columbus tried to put before Queen Isabella when requesting funds for his second trip. "The land is ours. We can do anything we want with it." He had no trouble with the first two basics. It was the third one he stumbled over. "I just know there's gold someplace over there."

Information on Small Scale Copper Mines

SX/EW In 1,200 Ton/Month Copper Mines (Tons of Copper) The application of Solvent Extraction/Electro Winning (SX/EW) technology to copper processing improved the quality of the product, made the processing more cost effective and efficient. The leach process is similar to that for gold, except that low cost sulphuric acid is used to leach the copper. Recovery involves concentrating the copper sulphate solution and removing impurities through the SX process, followed by precipitating the copper on the cathode in the electro winning (EW) process. The copper cathode is better than 99% pure and may be sold on commodity exchanges, as is. It commands a higher price per pound of copper than concentrates, requires handling and offers the option of receiving a guaranteed price through the futures markets. Small Scale Copper Leach/SX/EW Operations. Typically, a Small Scale oxide copper deposit will contain a minimum of 100 million pounds of copper. This will be mined at a rate of about 30 million pounds per year and a production cost of less than $USD 0.50 per pound. Using contract mining to reduce capital costs, the total start up capital cost of such a project is around $15-20 million. With Copper prices fluctuating between $0.85 to $0.95/pound (Oct - Nov 2000) it is feasible, but certainlly more profitable at $0.95/pound copper prices. There has been much interest in copper in the last 10 years, in Chile. More recently, small copper mining companies have found success in small scale leaching/ SX/EW copper operations in Chile. Most major (US/Canadian/British) companies in Chile require huge massive copper deposits to justify the Billion USD required to open a large copper mine. This has left the small, but copper rich deposits to languish, waiting for the small scale, but technically savy, copper

mining companies to exploit them. Quite often, this is accomplished by a joint venture with a local mining company. Major criteria that these small companies must meet are similar to those of major companies (1) must be cost conscious, margins are lower. (2) Must have good exploration staff, plan and ability to carry out exploration operations successfully. (3) Must have connections to acquire mining rights, permits, meet all local regulations. (4) Must have source for quality Management, Engineering talent, and ability to obtain quality local mining talent. It is possible in Chile, for a small copper operator to bring a exploration site into production within 1 to 1.5 years, with proper capitalization. In the last 5 years or so, it has become more common for some small scale copper producers to explore and mine small but good grade copper reserves in South America. These mines survive when the copper prices remain above $0.80/pound, but will have trouble breaking even at lower prices, typically. **Update On Small Scale Mining In Chile** Monday, July 28, 2003 Chile announced today that the government had plans to provide assistance ( financial $8,000,000, and other non specified) to small and medium sized mining companies. Once this size of company was plentiful in Chile, but now the mining industry is dominated by a few very large mining companies (including the largest copper mine in the world). The Mining Minister of Chile said they were looking to provide capital for some viable small to mid scale mining projects in Chile.