All the world over, the operation of winning from the soil and rendering
marketable the many valuable ores and mine products which abound is
daily becoming more and more a scientific business which cannot be too
carefully entered into or too skilfully conducted. The days of the
dolly and windlass, of the puddler, cradle, and tin dish, are rapidly
receding; and mining, either in lode or alluvial working, is being more
generally recognised as one of the exact sciences. In the past, mining
has been carried on in a very haphazard fashion, to which much of its
non-success may be attributed.
But the dawn of better days has arrived, and with the advent of schools
of mines and technical colleges there will in future be less excuse for
ignorance in this most important industry.
This chapter will be devoted to Company formation and working, in which
mistakes leading to very serious consequences daily occur.
It is not necessary to go deeply into the question why, in the mining
industry more than any other, it should be deemed desirable as a general
rule to carry on operations by means of public Companies, but, as a
matter of fact, few names can be mentioned of men who mine extensively
single handed. Yet, risky as it is, mining can hardly be said to be more
subject to unpreventable vicissitudes than, say, pastoral pursuits, in
which private individuals risk, and often lose or make, enormous sums of
However, it is with Mining Companies we are now dealing, and with the
errors made in the formation and after conduct of these Associations.
The initial mistake most often made is that sufficient working capital
is not called up or provided in the floating of the Company. Promoters
trust to get sufficient from the ground forthwith to ensure further
development; the consequence being that, as nearly 99 per cent of mining
properties require a very considerable expenditure of capital before
permanent profits can be relied on, the inexperienced shareholders who
started with inflated hopes of enormous returns and immediate dividends
become disheartened and forfeit their shares by refusing to pay calls,
and thus many good properties are sacrificed. In England, the companies
are often floated fully paid-up, but the same initial error of providing
too little money for the equipment and effective working of the mine is
usually fallen into.
Again, far too many Companies are floated on the report of some
self-styled mining expert, often a man, who, like the schoolmaster of
the last century, has qualified for the position by failing in every
other business he has attempted. These men acquire a few geological and
mining phrases, and by more or less skilfully interlarding these with
statements of large lodes and big returns they supply reports seductive
enough to float the most worthless properties and cause the waste of
thousands of pounds. But the trouble does not end here.
When the Company is to be formed, some lawyer, competent or otherwise,
is instructed to prepare articles of association, rules, etc.; which,
three times out of four, is accomplished by a liberal employment
of scissors and paste. Such rules may, or may not, be suited to the
requirements of the organisation. Generally no one troubles much about
the matter, though on these rules depends the future efficient working
of the Company, and sometimes its very existence.
Then Directors have to be appointed, and these are seldom selected
because of any special knowledge of mining they may possess, but as a
rule simply because they are large shareholders or prominent men whose
names look well in a prospectus. These gentlemen forthwith engage a
Secretary, usually on the grounds that he is the person who has tendered
lowest, to provide office accommodation and keep the accounts; and not
from any particular knowledge he has of the true requirements of the
The way in which some Directors contrive to spend their shareholders'
money is humorously commented on by a Westralian paper which describes
a great machinery consignment lately landed in the neighbourhood of the
"It would seem as if the purchaser had been let loose blindfold in a
prehistoric material-founder's old iron yard, and having bought up the
whole stock, had shipped it off. The feature of the entire antediluvian
show is the liberal allowance of material devoted to destruction.
Massive kibbles, such as were used in coal mines half a century ago, are
arranged alongside a winding engine, built in the middle of the century,
and evidently designed for hauling the kibbles from a depth of 1000
feet. Nothing less than horse-power will stir the trucks for underground
use, and their design is distinctly of the antique type. The engine
is built to correspond—of a kind that might have served to raise into
position the pillars of Baalbec, and the mass of metal in it fairly
raises a blush to the iron cheek of frailer modern constructions. The
one grand use to which this monster could be put would be to employ it
as a kedge for the Australian continent in the event of it dragging its
present anchors and drifting down south, but as modern mining machinery
the whole consignment is worth no more than its value as scrap-iron,
which in its present position is a fraction or two less than nothing."
Next, a man to manage the mine has to be obtained, and some one is
placed in charge, of whose capabilities the Directors have no direct
knowledge. Being profoundly ignorant of practical mining they are
incompetent to examine him as to his qualifications, or to check his
mode of working, so as to ascertain whether he is acting rightly or
not. All they have to rely on are some certificates often too carelessly
given and too easily obtained. Finally, quite a large proportion of the
allottees of shares have merely applied for them with the intention of
selling out on the first opportunity at a premium, hence they have no
special interest in the actual working of the mine.
Now let us look at the prospects of the Association thus formed. The
legal Manager or Secretary, often a young and inexperienced man, knows
little more than how to keep an ordinary set of books, and not always
that. He is quite ignorant of the actual requirements of the mine, or
what is a fair price to pay for labour, appliances, or material. He
cannot check the expenditure of the Mining Manager, who may be a rogue
or a fool or both, for we have had samples of all sorts to our sorrow.
The Directors are in like case. Even where the information is honestly
supplied, they cannot judge whether the work is being properly carried
out or is costing a fair price, and the Mining Manager is left to his
own devices, with no one to check him nor any with whom he can consult
in specially difficult cases. Thus matters drift to the almost certain
conclusion of voluntary or compulsory winding up; and so many a
good property is ruined, and promising mines, which have never had a
reasonable trial, are condemned as worthless. But let us ask, would any
other business, even such as are less subject to unforeseen vicissitudes
than mining, succeed under similar circumstances?
It is now very generally agreed that to the profitable development of
mining new countries, at all events, must look mainly for prosperity,
while other industries are growing. Therefore, we cannot too seriously
consider how we may soonest make our mines successful.
What is the remedy for the unsatisfactory state of affairs we have
experienced? The answer is a more practical system of working from the
inception. Although it may evoke some difference of opinion I consider
it both justifiable and desirable that the State should take some
oversight of mining matters, at all events in the case of public
Companies. It would be a salutary rule that the promoters of any mining
undertaking should, before they are allowed to place it on the market,
obtain and pay for the services of a competent Government Mining
Inspector, who need not necessarily be a Government officer, but might,
like licensed surveyors, be granted a certificate of competency either
by a School of Mines or by some qualified Board of Examiners. The
certificate of such Inspector that the property was as represented,
should be given before the prospectus was issued. It is arguable whether
even further oversight might not be properly be taken by the State and
the report of a qualified officer be compulsory that the property was
reasonably worth the value placed upon it in the prospectus.
Probably it will be contended that such restrictions would be an undue
interference with private rights, and the old aphorism about a fool and
his folly will be quoted. There are doubtless fools so infatuated
that if they were brayed in a ten hundred-weight stamp-battery the
"foolishness that had not departed from them" would give a highly
payable percentage to the ton. Yet the State in other matters tries by
numerous laws to protect such from their folly. A man may not sell a
load of wood without the certificate from a licensed weighbridge or a
loaf of bread without, if required, having to prove its weight; and we
send those to gaol who practise on the credulity and cupidity of fools
by means of the "confidence trick." Why not, therefore, where interests
which may be said to be national are involved, endeavour to ensure fair
Then with regard to the men who are to manage the mines, seeing that
a man may not become captain or mate of a river steamboat without some
certificate on competency, nor drive her engines before he has passed an
examination to prove his fitness, surely it is not too much to say that
the mine manager or engineer, to whose care are often confided the lives
of hundreds of men, and the expenditure of thousands of pounds, should
be required to obtain a recognised diploma to prove his qualifications.
The examinations might be made comparatively easy at first, but
afterwards, when by the establishment of Schools and Mines the
facilities have been afforded for men to thoroughly qualify, the
standard should be raised; and after a date to be fixed no man should be
permitted to assume the charge of a mine or become one of its officers
without a proper certificate of competency from some recognised School
of Mines or Technical College. The effect of such a regulation would in
a few years produce most beneficial results.
In New Zealand, whose "progressive" legislature I do not generally
commend, they have, in the matter of mine management, at all events,
taken a step in the right direction. There a mine manager, before
he obtains his certificate, must have served at least two years
underground, and has to pass through a severe examination, lasting for
days, in all subjects relating to mining and machinery connected with
mining. In addition, he must prove his capacity by making an underground
survey, and then plotting his work. The examination is a stiff one,
as may be judged from the fact that between 1886 and 1891, only 27
candidates passed. Then the conditions were made easier, and from that
date to 1895, 19 passed. Of the 46 students who gained first-class
honours, 30 have left for South Africa or Australia, in both of which
countries New Zealand certificated men are held in high estimation.
But returning to the formation of the Company, care should be taken in
appointing Directors that at least one member of the Board is selected
on account of his special technical knowledge of mining, and others for
their special business capacity. The ornamental men with high sounding
names should not be required in legitimate ventures. Also, it is most
important that the business Manager or Secretary should be a specially
qualified man, who by experience has learned what are the requirements
of a mine doing a certain amount of work, so that a proper check may
be kept on the expenses. The more Companies such a Secretary has the
better, as one qualified man can supervise a large staff of clerks, who
would themselves be qualifying for similar work, and gaining a useful
and varied experience of mining business. An office of this description
having charge of a large number of mines is, in its way, a technical
school, and lads trained therein would be in demand as mine pursers, a
very responsible and necessary officer in a big mine.
With respect to the men to whom the actual mining and treatment of ores
and machinery is committed the greatest mistakes of the past have been
that too much has been required from one man, a combination not to be
found probably in one man in a thousand. Such Admirable Crichtons are
rare in any profession or business, and that of mining is no exception.
Men who profess too much are to be distrusted. Your best men are they
who concentrate their energies and intellects in special directions.
The Mining Manager should, if possible, be chosen from men holding
certificates of competency from some technical mining school and,
of course, should, in addition, have some practical experience, not
necessarily as Head Manager. He should understand practical mine
surveying and calculation of quantities, be able to dial and plot out
his workings, and prepare an intelligible plan thereof for the use of
the Directors, and should understand sufficient of physics, particularly
pneumatics and hydraulics, to ensure thoroughly efficient pumping
operations without loss of power from unnecessarily heavy appliances.
Any other scientific knowledge applicable to his business which he may
have acquired will tell in his favour, but he must, above all things,
be a thoroughly practical man. Such men will in time be more readily
procurable, as boys who have passed through the various Schools of Mines
will be sent to learn their business practically at the mines just as we
now, having given a lad a course of naval instruction, send him to sea
to learn the practical part of his life's work.
But, of course, more is wanted on a mine than a man who can direct the
sinking of shafts, driving of levels, and stoping of the lode. Much
loss and disappointment have resulted in the past from unsuitable,
ineffective, or badly designed and erected machinery, whether for
working the mine or treating the ores. To obviate this defect a
first-class mining engineer is required.
Then, also, day by day we are more surely learning that mining in all
its branches is a science, and that the treatment of ores and extraction
of the metals is daily becoming more and more the work of the laboratory
rather than of the rule-of-thumb procedure of the past. Every mine,
whether it be of gold, silver, tin, copper, or other metal, requires the
supervision of a thoroughly qualified metallurgist and chemist, and one
who is conversant with the newest processes for the extraction of the
metals from their ores and matrices.
It has then been stated that to ensure effective working each mine
requires, in addition to competent directors, a business manager,
mining-manager, and assistants, engineer, chemist, and metallurgist,
with assistant assayers, etc., all highly qualified men. But it will be
asked, how are many struggling mines in sparsely populated countries
to obtain the services of all these eminent scientists? The reply is by
co-operation. One of the most ruinous mistakes of the past has been that
each little mining venture has started on an independent course, with
different management, separate machinery, etc. Can it then be wondered
at that our gold-mining is not always successful?
Under a co-operative system all that each individual mine would require
would be a qualified, practical miner capable of opening and securing
the ground in a miner-like manner, and a good working engineer; and
in gold-mining, where the gold is free in its matrix, a professional
amalgamator, or lixiviator. For the rest, half a dozen or more mines may
collectively retain the services of a mine manager of high attainments
as general inspector and superintendent, and the same system could be
adopted with respect to an advising metallurgist and an engineer. For
gold, as indeed for other metals, a central extracting works, where the
ores could be scientifically treated in quantity, might be erected at
joint cost, or might easily be arranged for as a separate business.
A very fruitful cause of failure is the fatuous tendency of directors
and mine managers to adopt new processes and inventions simply because
they are new. As an inventor in a small way myself, and one who is
always on the watch for improved methods, I do not wish to discourage
intelligent progress; but the greatest care should be exercised by those
having the control of the money of shareholders in mining properties
before adopting any new machinery or process.
We have seen, and unfortunately shall see, many a promising mining
company brought to grief by this popular error. The directors of mining
companies might, to use an American saying, "paste this in their hats"
as a useful and safe aphorism. "LET OTHERS DO THE EXPERIMENTING; WE ARE
WILLING TO PAY ONLY FOR PROVED IMPROVEMENTS." I can cordially endorse
every word of the following extracts from Messrs. McDermott and
Duffield's admirable little work, "Losses in Gold Amalgamation."
"Some directors of mining companies are naturally inclined to listen to
the specious promises of inventors of novel processes and new machinery,
forgetting their own personal disadvantage in any argument on
such matters, and assuming a confidence in the logic of their own
conclusions, while they ignore the fruitful experience of thousands
of practical men who are engaged in the mining business. The repeated
failures of directors in sending out new machinery to their mines ought
by this time to be a sufficient warning against increasing risks that
are at once natural and unavoidable, and to deter them from plunging
their shareholders into experiments which, in ninety-nine cases out of a
hundred, result in nothing but excessive and needless expenses.
"It is certain that new machines and new processes are, and will be,
given attention by mining men in proportion to their probable merits;
but the proper place for experiments is in a mill already as successful
as under known processes it can be made. In a new enterprise, even when
the expense of an experiment is undertaken by the inventor, the loss to
the mine-owner in case of failure must be very great, both in time
and general running expenses. Directors should not believe that a
willingness to risk cash in proving an invention is necessarily any
proof of value of the same; it is only a measure of the faith of the
inventor, which is hardly a safe standard to risk shareholders' money
"The variety of modifications in approved processes ought at least to
suggest the desirability of exhausting the known, before drawing on the
unknown and purely speculative. It should also be borne in mind that
what might appear at first sight to be new processes, and even new
machinery, are, in fact, often nothing but old contrivances and
plausible theories long ago exploded among practical men.
"Many mining companies have been ruined, without any reference to their
mines, through men deciding on the reasonableness of new process and
machinery who have no knowledge of the business in hand. It is assumed
often, that if an inventor or manufacturer of new machinery will agree
to guarantee success, or take no pay if not successful, the company
takes no risk. In actual fact a whole year is wasted in most cases,
failure spoils the reputation of the company, running expenses have
continued, and further working capital cannot be raised, because
all concerned have lost confidence by the failure to obtain returns
promised. All this in addition to the regular, unavoidable risks of
mining itself, which may, at any moment during the year lost, call
for increased expenses and increased faith in ultimate success. To the
mining man who makes money by the business, the natural risks of mining
is all he will take; it is sufficient; and when he invests more money in
machinery he takes good care that he takes no chances of either failure
"The following are rules which no mining company or individual
mine-owner can afford to neglect.
"(1) The risk should be confined to mining. No body of directors is
justified in taking a shareholder's money and investing it in new
processes or machinery when the subscription was simply for a mining
venture. Directors are invariably incapable of deciding whether a
so-called improvement in machinery or process is really so or not, and
the reasonable course is to follow established precedents.
"(2) The risk of selecting an incompetent manager should be reduced to
minimum by taking a man with a successful record in the particular work
to be done. The manager selected should be prohibited, as much as the
directors, from experimenting with new methods or machinery. A really
experienced man will require no check in this direction, as he will not
risk ruining his reputation.
"(3) The only time for a company to experiment is when the mine is
paying well by the usual methods, and the treasury is in a condition to
speculate a little in possible improvements without jeopardising regular
Probably this is the best place to insert another word of warning to
directors who are not mining specialists, and also to investors in gold
mining shares. Assays of auriferous lode material are almost invariably
worthless as a guide in the real value of the stone in quantity. The one
way to decide this is by battery treatment in bulk, and then only after
many tons have been put through. The reason is obvious. First, the
prospector or company promoter, if he knows it, is not in the least
likely to pick the worst piece of stone in the heap for assay; and,
secondly, even should the sample be selected with the sole object of
getting a fair result, no living man can judge the value of a gold lode
by the result of treatment of an ounce of stone. So when you see it
stated that Messrs. Oro and Gildenstein, the celebrated assayers, have
found that a sample of rock from the Golden Mint Mine, Golconda, assays
at the rate of 2,546 oz. 13 dwt. and 21 gr. to the ton, and that there
are thousands of tons of similar stone in sight, the statement should
be received with due caution. The assay is doubtless correct, but the
deductions therefrom are most misleading.
A few words of advice also to directors of mine-purchasing companies and
syndicates, of which there are now so many in existence, may probably be
found of value. It is not good policy as a general rule to buy entirely
undeveloped properties, unless such have been inspected by your own man,
who is both competent and trustworthy, and who should have indeed an
interest in the profits. Large areas, although so popular in England,
do not compensate for large bodies of payable ore; the most remunerative
mine is generally one of comparatively small area, but containing a
large lode formation of payable but often low grade, ore.
It is worse still, of course, to buy a practically worked out mine,
though this too is sometimes done. It must be remembered that mining,
though often so profitable, is nevertheless a destructive industry, thus
differing from agriculture, which is productive, and manufactures, which
are constructive. Every ton of stone broken and treated from even the
best gold mine in the world makes that mine the poorer by one ton of
valuable material; thus, to buy a mining property on its past reputation
for productiveness is, as a rule, questionable policy, unless you know
there is sufficient good ore in sight to cover the purchase cost and
leave a profit.
One of the greatest causes of non-success of gold-mining ventures,
particularly when worked by public companies, is the lack of actual
personal supervision, and hence, among other troubles, is that
ultra-objectionable one—gold stealing from the mills, or, in alluvial
mining, from the tail races. As to the former, the following appeared
in 1893 in the London Mining Journal, and is, I think, worthy of the
close consideration of mine directors in all parts of the world:—
"No one that has not experienced the evil of gold thieving from
reduction mills can have any idea of the pernicious element it is, and
the difficulty, once that it has got 'well hold,' of rooting it out.
It permeates every class of society in the district connected with the
industry, and managers, amalgamators, assayers, accountants, aye, even
bank officials, are 'all on the job' to 'get a bit' while there is an
opportunity. To exterminate the hateful monster requires on the part
of the mine proprietors combined, stern and drastic measures undertaken
under the personal supervision of one or more of their directors, and
in many instances necessitating the removal of the whole of the official
The writer narrates how about twenty years ago he was led to suspect
that in an Australian mine running forty head of stamps, in which he
held a controlling interest, the owners were being defrauded of about a
fourth of the gold really contained in the ore, and the successful steps
taken to check the robbery.
"We first of all dispensed with the services of the general manager, and
then issued the following instructions to the mine and mill managers,
I remaining at the mine to see them carried out until I substituted a
practical local man as agent, who afterwards carried on the work most
"(a) Both of these officials to keep separate books and accounts; in
other words, to be distinct departments.
"(b) The ore formerly was all thrown together and put through the mill.
I subdivided it into four classes, A, B, C, and D, representing deep
levels north and upper levels north, deep levels south and upper levels
south, and allotted to each class ten heads of stamps at the mill.
"(c) The mine manager to try three prospects, forenoon and afternoon
of each day, from the dumps of each of the four classes and record in a
book to be kept for that purpose the estimated mill yield of each one.
"(d) The mill manager was required to do the same at the mill and keep
"(e) There were four underground bosses in each shift, twelve in all.
I had a book fixed at the top of the shaft in which I required each of
these men, at the expiry of every shift, to record any change in the
faces of the quartz and particularly in regard to quality.
"(f) Having divided the ore into four classes I instructed the
amalgamators, of which there were two in each shift, six in all, that I
required the amalgam from each to be kept separate, with the object of
ascertaining what each part of the mine produced.
"(g) I procured padlocks for the covering boards of the mercury tables
and gave the keys to the amalgamators with instructions that they were
not to hand them over to any one except the exchange shift without my
written authority, and instructed them that they should clean down the
plates every three hours, and after cleaning down the amalgam, buckets
to be placed in the cleaning room, which I instructed to be kept locked
and the key in charge of the watchman night and day.
"(h) The whole of the amalgam taken from the plates during each
twenty-four hours to be cleaned and squeezed by the two amalgamators on
duty every forenoon at nine o'clock in the presence of the mill manager,
who should weigh each lot and enter it in a book to be kept for the
purpose, and the entry to be signed by the mill manager and both
amalgamators as witnesses.
"(i) Every alternate Friday the mortars (boxes) to be cleaned out; the
work to be commenced punctually at eight A.M. by the six amalgamators in
the presence of the mill manager, assisted by the three amalgam cleaning
room watchmen and the four battery feeders on duty, prohibiting any of
them from leaving until the cleaning up was finished, and the amalgam
cleaned, squeezed and weighed, and the amount entered by the mill
manager in the record look and attested by the amalgamators.
"I think the intelligent readers (particularly those with a knowledge
of the business) will see the drift of the above regulations, viz., for
there to be any peculation the whole of the battery staff—fourteen in
all—would have to participate in it, and the number was too many to
keep a secret. Formerly the amalgam cleaning room was sacred to the mill
manager, and on announcing to that official the new instructions he at
once tendered his resignation in a tone of offended dignity, immediately
followed by that of the mine manager. It is a significant fact that
shortly afterwards these two officials purchased a large mill and other
property at a cost of ten thousand pounds, and that the mine yielded
for the following three years during which I was connected with it an
average of over 17 dwt. to the ton, as against formerly 10 to 12 dwt.
"The reader must draw his own conclusions. I used to make it a practice
to visit the mine daily and prospect the ore, and having the mine and
mill managers' daily prospecting as a guide as well as my own, every
man at the mill knew it was impossible for them to thieve without my
detecting it; moreover, I made it a rule to discharge any of the mill
employees that I discovered were interested in any small private claims.
"The crux of the whole thing is having a practical miner at the head of
affairs, and it is impossible for him to thieve if the work is carried
out in the manner I have described."
To bring the whole matter to a conclusion. It may be taken as a safe
axiom that to make gold mining in the mine as distinct from mining on
the Stock Exchange really profitable the same system of economy, of
practical supervision, and scientific knowledge which is now adopted in
all other businesses must be applied to the raising and extraction of
the metal. Then, and not till then, will genuine mining take the place
to which it is entitled amongst our industries.