How to Calculate Their Values
No investments present such vicissitudes of fortune as mining ventures. There is scarcely a man in our country who has not at one time or another purchased mining shares in the hope that he might secure an investment comparable to those glittering examples of success so industriously advertised by the promoter. Yet mining is a good business, and it is desirable that investors should purchase mining stocks.
It is difficult for those not infermed in regard to the technicalities of mining to exercise good judgment as to what they should and what they should not purchase, and, unfortunately, very few are sufficiently informed to know even what points should be examined, and what questions asked, in order to form an opinion on mining investments.
The following statements, calculations and tables represent an effort to bring together material which may be a guide to the proper understanding of the risks and opportunities in mining ventures. Certain facts, given below, should be borne in mind when considering this class of investment.
1. There is no middle ground in a mining investment; it is either a total loss or a profit. In other enterprises a reduced rate of interest or even losses may be recovered later by better business; but if mine does not pay it is a total loss.
2. There is no mine so great it cannot be exhausted, consequently, all mines must be worked out in time, and each ton of mineral taken out brings the property one ton nearer to the point where all the mineral will be exhausted, leaving an empty shell of stopes and shafts from which no further returns can be expected.
3. The all important question is not the dividends a mine may be paying, but the quantity of mineral remaining underground from which dividends can be earned.
4. Mining, because of the possibility of rapid changes from nothing to discoveries resulting in enormous wealth, becomes an absorbing passion. Hence the miner frequently loses his judgment in his hopes like the gambler expectant of good fortune.
5. When enthusiastic statements are made about a property to encourage investments one should not be skeptical of the miner's honesty, but should make careful inquiry and consult the tables herewith presented for estimating the average risk, then, if the results seem favorable, {he investment may be considered.
