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UBC Theses and Dissertations

The gold mining industry of Canada, with special reference to mining costs Detwiller, Lloyd Fraser 1940

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LCr 507. /; THE GOLD MUTING INDUSTRY OF CANADA WITH SPECIAL REFERENCE TO MINING COSTS by Lloyd Fraser Detwiller A Thesis submitted in Partial Fulfilment 0f The Requirements for the Degree of H&STER OF MTS in the Department of ECONOMICS The University of British Columbia April, 1940 AOKETOWLEDGMEHT In preparing my essay I wish gratefully to acknowledge the assistance of Professor G.F.Drummond for his constructive advice and encouragement. TABLE Off CONTENTS Chapter 1. Introduction Pafe • • ® • • •••••*•««« • e JL. Chapter 11. The Financial Outlook of the New Gold Mining Development in Canada. 13 Chapter 111. The Statistical Procedure of the Analysis of Mining Costs 19 Qkapter IV. Analysis of Mining Costs 2 7 Chapter V. Financial Organization of the Industry 39 Chapter 71. Conclusion 4 6 LIST PIT TABLES Following Page Table No. 1 Gold Production for the World.. 9 Table No.11 Shipments of gold to the mint at Ottawa ... 5 Table Mo.Ill Significance of the Gold Industry in CSiHctdcl « " Q Table No. IV Industries of Canada .. 10 Table No * V Principal Statistics of Auriferous Quartz Mining Industry in Canada,.... 11 Table No. 71 Operating and Financial Data on New Canadian Mines 12 Table No.Vll Results of Canadian New Mne Development . 12 Table No.VI11 Mines included in Group A 19 Table No. IX Mines included in Group B .. 19 Table No. X Number of Mines reporting each Year 19 Table No. XI Number of fears each mine reported ...... 19 Table No. Xll Territorial Composition of pearly Sample. 19 Table No.Xlll Mean Total and Direct Costs of producing one ounce of gold for Groups A & B mines 27 Table No.XIV Cost of Milling one ton of ore ......... 27 Tables XV &XV1 Profits or Losses of Group A Mines .. 39 Table XVII Lake Shore Mines - Capitalization and Amount of Profit or Loss 43 Table No. XV111 Profit or Loss - Taxes - Dividends ... 43 Table XIX Taxes and Profits as a percentage increase since 192.9 . 44 LIST OF CHARTS „. - Following page Figure 1 Goid Production for the World .... . 2 Figure 2 World Prices and World Gold Production . 3 Figure 3 Canadian Gold Production by Sources .... 4 Figure 4 Canadian Gold Mines 19 Figure 5 Canadian Gold Areas ... ... nq Figure 6 Master Card No. 1 1 9 Figure 7 Easter Card Jfo. 2 : 1 9 ^Figure 8 to 18Yearly cost curves for the Group A mines 26 • Figures 19-22 Cumulative curves for Group A mines ..,, 26 - Figures 23-83 Yearly cost curves for Group B mines ... 26 Figures 34-35 Yearly average Direct and Total cost of producing one ounce of gold for A Mines 27 Figures 36-37 Nearly average direct & total cost of milling Mentori of sore .for.Group.B .Mines 27 k Figures 38-39 Yearly percentage increase or decrease in the mining costs of Group A mines ....... 31 "Figure 40 Yearly proportionate cost of producing one ounce of gold for Group A mines 32 y Figure 41 Fixed assets, liabilities and dividends of the Group A Mines ....... 32 • Figure 42 Fixed assets liabilities and dividends of the Group B Mines «... ** Figure §3 Gold production of the Group A mines ... 34 Figure 44 Value of the bullion produced by the Group A mines 34 Charts - continued following page Figure 45 Tonnage treated by the Group A Mines ... 34 Figures 46-47 Low grade ore mining 3 5 ^Figures 48-58 Profit or Losses of Group B Mines 35 -'Figure 59 Dividends, profits and taxes as a percentage of mining costs for.the Lake Shore Mine 4 4 Figure 60 Percentage increase of profits and taxes as a percentage of mining costs ........ 44 PLAN Chapter 1. Introduction 1. Early uses of gold. 2. Ancient mining methods. 3. Eras of World Gold production. 4. Gold Mining in Canada. 5. Period of Study. 6. Source and limitation of material. 7. Relative significance of the Gold Mining industry in Canada. ghggtglj^The financial Outloolc of the New Gold Mining Development in Canada. 1. Source of data. 2. Explanation of sub-classifications. 3. Results of the new mine development. 4. Conclusions as to future development. Chapte^JJ^The Statistical Procedure of the Analysis of Mining Data. 1. The two separate studies of raining costs and the reasons for this division(Group A and Group B). 2. The sample and the statistical measures derived therefrom. 3. Computations based on the annual mine reports. 4. The method of transcribing the tabulated data to t* punch card. Chapter IV. Analysis of Mining Costs. 1. The cost curves for the two groups of mines,A ffi B. 2. Conclusions as to the resons for the rise in mining costs from 1928 to 1938. 3. Organization and operation of the industry from 1928 to 1938 conclusions," 4. Detailed analysis of Group A mines. 5. The mining of ore of a low grade. Chapter V. Financial Organization of the Industry.. 1. Effect of the rise in the price of gold in 1933 on the mines producing at that time, 2. Explanation of the rise in the mining costs by the application of the income tax laws. 3. Detailed examination of the Lake Shore Mine in showing the relation between the taxes paid and the profits realized. Chapter VI. Conclusion. 1. The new mine development. 2. Taxation as applied to gold mining. 3. The future outlook of the Canadian Gold Mining industry. CHAPTER 1, Introduction THE GOLD MINING INDUSTRY OP CANADA With Special Reference to MINING COSTS Chapter 1 Introduction In early times gold was probably first used for ornamental purposes. Its distribution, though fairly wide-spread in different continents, was yet rare enough in certain places to give it special value as soon as its utility for ornamental purposes was appreciated. Its bright yellow colour, its malleability and its resistance to corrosion no doubt gavl it special attractiveness compared with other metals as inorganic substances. Its utility as a personal ornament, or even as a substance for the manufacture of utensils and decorative effects gave it utility in exchange. As a medium of exchange gold had to compete, of course, with other metals such as silver and copper and with other measures of value according to the culture and resources of the primitive group. As the wearing of gold ornaments became recognized by primitive peoples, their use began to be an indication of ' chieftanship and . .prerogative of the powerful, gradually becoming linked with the idea of divinity - with priest and king regarded as the representatives on earth of divine authority. The earliest positive trace we have of this practise is found am°n® t h e a n c i e n t ^ptians who used to adorn their temples profusely with gold. 2 The earliest records of gold mining are in Egypt where we gain our information from pictorial rocks dating hack as early as 2500 B.C.; this depicts the washing of gold from aur-iferous sands in basins of hollowed stone. The separation of -gold from deposits of solid rock would undoubtedly come later .than the winning of it from-gravela. According to the writings of Piodor-UB, the Sicilian, hard rock mining was well establish -ed in Egypt in 59 B.C. and he says that the methods,he de-scribes were very ancient even at that time. The rock contain-ing the gold was first broken with hammers and then ground;into a powder by hand, after which it was placed on tables and the waste rock washed away by a stream of water. What was left was melted with a flux and lead in a crucible to purify it. Probably the first great advance in the primitive metallurgy of gold was the employment .of mercury as an aid in separating it from the waste rock. The origin of this method is not known but it has been mentioned by writers" at" the -beginning of the Christian era. There are few references made to the use of mercury in the metallurgy of gold during the Middle Ages. -Various contrivances for the crushing and amalgamation process appeared in the sixteenth century; one of the earliest being introduced into Aweemig, for the treatment of gold ores as-early, as 1557. The first process by which gold was extracted chemically from the rock and then regained by precipitation, was the chlorination process introduced in 1848. This process, now almost entirely replaced by the cyanide treatment, was at one time used quite extensively, mostly in Australia. Table No. 1 am* Production for Wnrld Since the Discovery of America Year Russia Transvaal fine ounces fine ounces 1493 1600 • • * • • » » .9 • • 9 • 9 9 * 9 9 1601 — 1700 ® e e e © » 9 • 9 9 9 • 9 • • 9 1701 % 1800 0 0 • • 0 0 9 9 9 C O 0 0 0 9 9 1801 — 1840 9 9 9 9 O 0 O 0 O O O .0 0 0 0 • 1841 1850 • 6 • e 9 9 9 9 0 0 0 0 © 0 0 0 1851 _ 1860 0 0 9 • 8 0 0 9 9 0 1861 1870 O ft « • 0 9 9 0 0 9 0 • 6 0 0 O 1871 1881 1880 1890 e • 0 0 0 • « © 9 - 9 9 9 « • ft 9 9 « 9 e 0 0 9 * 9 1,070,651-1891 1895 9 0 0 © © 0 0 9 9 9 9 6,870,158 1896 mo 1900 0 0 0 0 • O It 9 0 9 © 12,578,869 1901 as» 1905 « e o « s 9 0 0 -9 .9 9 15 ,632,908 1906 9 0 0 0 0 9 9 9 9 • • 5,792,823 1907 1908 0 t • « 4 9 • e • ® 0 9 « • « 9 9 9 9 9 © © 6,450,740 ' 7,056,266 1909 • » e o 0 0 9 9 9 9 7,295,108 w ' 1910 ;_9.,«..9 o ® 9 9 0 9 9 0 7,527,108 OB 1911 e e « o e '0 0 0 9 0 0 9 8,249,461 1912 « e • • • 0 9 9 9 9 9 9,107,512 < 1913 « • o e A 1,583,677 8,798,336 KS 1914 « e e o o 1,733,914 8,394,322 1915 6 • • • 6 1,382,450 9,093,902 OB 1916 » o e o © 1,089,885 9,296,618 1917 Y c « ^ © .871,265 9,018,084 1918 o « e « « 554,588 8,418,292 1919 • o • • a 173,610 8,331,294 „ 1920 e 9 o o « 73,945 8,158,226 1921 0 0 9 0 0 65,907 8,128,681 1922 e « « e e 191,614 7,009,767 — 1923 0 9 0 9 0 305,425 9,148,771 1924 • « o « t 546,550 9,574,918 i 1925 • 9 9 © 9 632,390 9,597,573 — 1926 9 9 9 9 9 760,605 9,954,762 — 1927 9 9 9 • 9 688,492 10,122,459 „ 1928 • t 9 • 9 385,800 10,354,157 - 1929 9 9 9 9 6 707,300 10,412,326 - 1930 • 9 9 9 ^ 1,501,083 10,716,349 1931 9 9 9 9 • 1,655,725 10,877,708 - 1932 9 9 9 9 9 1,938,000 11,557,858 - 1933 « 9 - 9 9 9 2,700,000 11,012,340 » 1934 9 9 9 9 9 3,858,000 10,479,194 1935 9 9 9 9 O 4,784,030 10,773,041 1936 9 9 9 » « 6,500,000 11,355,094 - 1937 9 9 9 9 © 5,900,000 11,734,553 - 1938 9 , 9 9 9 9 5,800,000 12,161,375 TOTAL • • • 340,091,604 ounces Table Ho. 1 Sold Production for the \7orld Sin™ the Discovery of America United State, Canada Since lass T ^ l l d i s c o v e r y • . ^ ^ S S S P . . ^ o u n c e s 24,266,820 ••• 29 ,330,445 61,088,215 1,187 170 20,488,552 ' ' ^ A* * 17,605,018 58 279 77A t 64,482,933 ??'pll lll 61,098 343 1 ^ 8 0 8 ' ™ 22f»?93 55 670 618 ig'lOe'fiS ^S,4'102 51 280 184 ' 15,728'57? , 291,564 39 412 825 19 393 72? M a o ' Z S 62,234,698 19,595,722 4,592,261 78,033,650 556,415 19,471,080 pp qq'i 01 a 405 ,517 19,977,260 ^22,993,218 476,112 21,422,244 453,865 21,965,111 A tan r\x.x 493,707 22,022,180 I'SZ'Siq 473,159 22 397 136 iila'lll 611,885 22,605,068 I'lll'q?! 802,973 22,556 347 J ' f l M S 7?3,178 , 21,652 883 t1?9S057 ' 22,846:608 930,492 pp Q3p KAP 738,831 20,346,043 699,681 18,588 127 766,764 17,339 679 A l t ' on* 765,007 16,146 830 I'ttl*00* 926,329 15,997 692 , 926,329 15 997 692 ^ O ^ M P li?63i§64 15,496 859 2,502,632 1,233,341 17 845 349 2*528,900 1,525 382 18 619 481 2,411,987 1,735 735 181673 178 I'lf^tl 1,754,228 19 11773:568 I'llZ'll* 1,852,785 19,058,736 1,890,592 18,885,849 2,208,386 1,928,308 19,207 45? I'^'fSS 2,102,068 20 903,736 2^95,878 2,693,892 22,284 290 2,449,032 3,044,387 24,098 676 ' f' 2,949,309 25,400,295 ^ n a ' o S 2,972,074 27,372,374 J'SSS'IS 3,284,890 29,999,245 f'257,394 3,748,028 32,930 554 4,096,213 54,740 055 5,106,109 4,725.117 37,942,685 249,850,780 ! 65,131,533 T ^ W ^ M SourceThe Gold Mining Industry of Canada, Ottawa, 1938 Figure 1. drdmiction qc r,OLn IN THE PRODVC/V& r.HUNTRlE* nrTHE UP* m l*4Q-mo-1840 ISSO IB&0 1870 I860 /g</0 1900 !<t/o 1910 1930 19+0 The cyanide process was first used successfully in the Rand in the year 1890. Its introduction proved to "be so successful that within a few months its use extended to nearly all parts of the world where gold was mined;. Today it is the most important method used for the extraction of gold from its ores; and were it not for the cyanide process it would be impossible for most of the world's largest gold mines to be ?rorked at a profit. Bras of World Gold Production The long time trend of gold production could,until quite recently, be represented by an upward curve,with minor fluctuations up and down which would represent the discovery of new gold/fields and the depletion of old ones. The definite upward swing of gold production since the World War has not been so much the result of the discovery of new fields as the increased demand of the world for gold since that time.(See Pig. l). We have little information on the magnitude of gold production previous to the discovery of America but probably it was small in proportion to that of recent years. The first great era of gold production of which we have record,to ok place when the gold from the New World poured into Spain and unbalanced the economic and political structures of Europe for a time. The next period of noticeable production increase came after the discovery of the rich placers in California and Australia between 1850 and 1875. The third period began about 1890 when the successful application of the cyanide Figure 2. 4 process to the Rand ores in Africa made it possible to work at a profit the world's largest known deposit of gold. During this period other important discoveries were made in the Yukon Alaska, Nevada and Colorado, resulting in the peak of annual world production up to that timejnamely, 22,718,154 ounces which were produced in 1915. The production dropped from 1915 to 1922; then there was a gradual increase due chiefly to increasing production in South Africa and Canada, and in the year 1932 the 1915 peak -fne was passed. Since then„annual production of gold has "been increasing each year^ At present we are in a fourth period of intensified gold production; this fourth rise in gold product-Br/Porn v' e/»rra<t 'sr*res ion probably results from^leaving the gold standard in 1931 and 1933 respectively and the subsequent guarantee of a new price of #35.00 per ounce by the United States. It is apparent from Pig. 1 that South Africa produces by far the largest amount of gold of any continent, over one half of the total world production since 1920. Canada ranked third in the pro-duction of gold in the world from 1918 to 1934 and fourth from 1934 to the present, being passed in production by Russia in 1934.(See Fig.l). Gold Mining in Canada Gold is.said to have been discovered first in Canada in the valley of the Chaudiere River in the provinee^Quebec as early as 1823 or 1824 but it was not mined until nearly 25 years later. Important discoveries of placer deposits were made in 1858 in British Columbia and in 1862 lode deposits Figure 3. 5 were found in Nova Scotia. Up to 1895 the greater part of the gold produced in Canada came from the British Columbia placers® In 1896 there "began the second period of intensified gold production in Canada with the discovery of rich.gravels in the Yukon. Between 1898 and 1905, gold to the sralue of • $100,000,000' is said to have "been taken from the creeks of that region. Moreover, during this period the rich lode gold deposits of Rossland, Southern British Columbia and the Lake of the Woods district in Ontario were discovered. The peak of production in this second period was reached in 1900, when Canada's gold out-put reached "1,350,057 ounces, the largest annual output recorded up to that time. Between 1900 and 1907 production decreased to 405,517 ounces in 1907. In 1909 the Porcupine gold camp was discovered and three years later in 1912 the Kirkland Lake area was opened up,these two discoveries marking the entrance of Canada upon her third important stage of gold mining activity. Today Ontario is still by far the largest producer of gold, producing over 75% of the total gold mined in Canada,Quebec and British Columbia ranking second and third respectively.(See Pig. 3). The success of these two mining camps led to intensified prospecting, not only in Ontario, but in Quebec and Manitoba as well. Discoveries made in Manitoba in 1911 and 1924 brought that agricultural prov-ince to the fore as one of Canada's important mining areas. In British Columbia during this period the Premier and Pioneer mines were brought into production. 6 Table go. 2 Fine Gold Content of Shipments to the Royal Canadian Mint at Ottawa From Fine ounces of gold Northwest Territories 4,455.32 British Columbia 309,947.11 Alberta sundries 32.05 Saskatchewan Sundries ................ .... Manitoba 99,715.19 Ontario 2,840,980.67 Quebec 944,161.06 gova Scotia 26,399.29 Vancouver Assay Office (x) .. 157,663.06 Total Primary 4,383,353.75 Other Foreign Gold Coin 11.11 Jewellery and scrap 14,489.84 -TOTAL - AIL RECEIPTS 4,397,854.70 (x) Largely from Yukon. Source- Gold Mining Industry of Canada, Ottawa, 1938 The beginning of the fourth and most important period of gold production in Canada may be dated from 1931 when Great Britain went off the gold standard. Since that time the rise in the price of gold has given an added impetus to an unpre-cedented activity in the industry. Of the total recorded pro-duction of gold in Canada from 1858 to 1934, nearly 73^ tee-7 has been won since 1909, the Porcupine and Kirkland Lake camps in Ontario "being by fiar the most important producers. Not only is there increased activity in the producing mines, but also extensive surveys are being carried on in search of new and richer gold fields. Along with the increase in the value of the gold produced there has been a marked increase in the % total number of ounces produced.(See Pig.l & 2).Prom the rapid pace of development which shows no signs of any letup, it appears that the gold mining industry of Canada has a promis-ing future."*" Period of Study The statistical work in this study has been confined to the progress of the gold mining industry in Canada since 1928 as the information necessary for the research work on costs was not available for previous years. The discussion will be confined to the auriferous quartz branch of the industry entirely, which has. produced about 97 to 98^ of the total gold produced in Canada for the past few years. There are many phases of the industry which could profitably be studied. A complete history of the Gold Industry in Canada would afford an excellent opportunity to relate the movement of peoples to the discovery of new gold areas. A study of mining technique extending into the fields of engineering and chemistry would be an excellent field for a graduate engineer. A thesis on the problems of taxation in Gold Mining would be l.Data on the History of Gold, adapted from "Gold."in^ "Canada"" by A.H.A Robinson,Dept. of Mines,Canada, Ottawa- 1935. 8 very acceptable at this time and it is to be hoped that in the near future this research work will be done. The purpose of the present study is to present a review of the industry in general-with, particular emphasis on the costs of mining in the more important sold producing mines of Canada. It was originally the ob.iect of the author to trace the development of the industry from the decade prior to the rise in the T)rice of gold in 1933, ivo to the present day. A comp-arison was hoped to have been made between the two 0ds of time showing the increase in the capital invested, the increased production, mining costs a*d etc. A comparison be-tween lines of trend fitted: for different, factors for the two periods should have revealed some interesting facts as to the theory of costs and marginalism. Unfortunately it was not possible- to obtain the. necessary information for a study of this types* Up to 1937 the «Statistics Act* forbade the government,which had most of this information on record, to show the costs of individual mines to any outside source, though in the past f.ew years several of the larger mines have given the government permission to do so. Source of Material The statistical information in the thesis has been obtained entirely from the balance sheets and annual reports of some 42 gold mines in Canada. As this is the first time that this information has ever been computed and tabulated, the obtaining of the data was by far the most difficult part of the completed work. Some figures on the production of gold in ounces for the individual mines were obtained from the 9 government reports as very few of the annual reports of the mines stated their annual gold production in ounces, Also, for the past three or four years, mining costs have been published for certain mines throughout Canada by the Dominion Bureau of Statistics but a difference was found between these costs and the costs based on the information contained in the original mine reports. This discrepancy might be explained by the difference in the methods of calculating the costs, but on the other hand, the difference might be due to propaganda purposes, the costs as given to the Bureau of Statistics by the mines themselves being lower generally than those computed on .ths original data. Bone of the government figures w u s e d in this report. The methods by which the various costs were obtained will be dealt with in Chapter 111. Limitation of Material. 1 As stated previously, the data which are published on gold mining in Canada are confined to the last decade and for this reason we are not able to make a conclusive comparison of the ..structure of the industry before the change in the price of gold,to that after it. To complicate the situation still 'further., some mines are continually changing hands and it is difficult to trace their development for a period of many years. Many of the owners of small mines and some of the directors of the larger ones refused to divulge any information whatsoever, possibly fearing that this survey was perhaps in-stigated by some commission or holding company which might buy them out or dispute some of their new mining property rightse The information on the mines which were depleted previous 10 to 1934 wasjnot filed with the government and so it is imposs-ible to present a completed picture of the industry for the years previous to that date. However we are fortunate in having information on some 18 mines from 1928 to 1938 which should give us some idea of the changes which took place in the structure of these mines, due to the rise in the price of gold in 1933. Prom thi s 1 believe we might draw some conclus— ions as to the effect of the rise in the price of gold on the industry as a-whole-.' Relative Significance of the Gold Industry in Canada Table Ho. ill Summary of lain Branches of Net Value of Production 1936 1937 of Percentage total Net Value Agriculture .'. ... $679,541,000 #678,955,000 22.86^ Forestry ... 284,504,031 9.58 Fisheries ..... .. ' 54,234,063 34,439,481 1.16 Trapping 10,477,096 0.35 Mining(Total) . 291,972 ,359 372,796,027 12.55 Gold Quartz .. 88,210,233 97,961,278 3.30 Other mining . .. 203,762,126 274,834,749 9.25 Electric Power ... 133,561,387 140,963,914 4.75 Construction .. 135,851,162 1-76,029,679 5.92 Custom and Repair 70,930,000 79,055,000 2.66 Manufactures,: . -.1,041,378,120 1 ,193,399,282 40.17 GRAEDATDTAIj $2,628,419,977 2 ,970,617,510 100.00 1. General Statistics Branch,Dominion Bureau of Statistics, (1937 Survey of Production Report.) Table No. 1Y Statistics Relating to Certain Specified Canadian Industries,1925. 1928, 1954, 1957 & 1938 Industry Electricity Employees Salaries & Wages Purchased 1925 1928 1934 1957 1958 1925 1928 1954 1957 1938 1923 1928 1954 1957 1958 1925 1928 1954 1957 1938 1923 1928 1934 1937 1938 1925 1928 1954 1937 1958 • © • « ' 9 9 • 9 Total Mining Industry | 5,861,740 667952" ® 9,072,075 11,510,481 16,135,702 89,448 73,505 105,414 Data not available 91,554,877 115,954,022 88,126,186 144,292,584 Auriferous Quartz Mining Industry 922,258 5,524 8,961,434 2,002,062 9,066 14,615,990 5,091,147 17,762 27,156,887 5,031,691 29,140 48,219,318 5,355,427 . 29,647 50,462,092 Pulp and Paper Industry 4,270,911 29,234 12V143:;874^  33,614 15,229,289 26,993 18,607,852 33,205' 16,763,659 50,945 Automobile Industry 125,000 97305 244,807 16,749 140,245 9,674 231,424 14,946 261,583 14,872 Chemical Industry 1,439,909 15,149 2,043,950 16,150 2,145,555 17,150 3,106,557 21,968 21,829 38,382,845 47,322,648 35,307,043 48,757,795 42,619,511 14,998,267 29,548,114 12,938,935 22,158,991 20,995,362 18,433,679 20,290,417 20,919,740 28,612,719 29,338,144 Primary Iron & Steel Industry 722,770 6,049 1,251,820 9,057 1,148,554 7,400 2,287,761 14,054 Data not complete 10,816,201 15,470,836 9,009,512 19,926,498 Source. The Gold Mining Industry of Canada, Ottawa, 1938 11 On examination of Table 111, the auriferous quartz branch of the gold mining industry of 0andda, when taken by itself, ranks eighth in the net value of production of all Canadian industries, being 3.30% of the total net value of production of all industries in 1937. Table IV indicates that the aur-iferous quartz gold industry for the same year ranked third as a consumer of electricity for the group of industries so considered,and fourth in the number of employees engaged; and fourth again in the total amount of salaries and wages paid in comparison with the main industries -of Canada. The number of Canadian gold mining firms reporting mining operations in 1938 totalled 535 as compared with 631 in 1937, 80 in 1929 and 65 in 1923. During the year under review there were 550 properties in operation as compared with 659 in 1937; in 1938, 226 mines reported production as, against 189 in 1937 and 33 in 1923.(See Table T)9 The gross value of the output for the entire industry including the value of- all recover-able metals, gold, silver etc, totalled #143,146,911 in 1938 as compared with ^122,676,105 in 1937. Employees in the lode mining gold industry totalled 29,647 as compared with 29,140 in 1937 and 5,524 in 1923. Salaries and wages paid increased from a total of $48,219,318 in 1937 to #50,426,092 in 1938 and fuel and purchased electricity consumed by the industry during 1938 amounted to #7,494,573, while the cost of explos-ives, drill steel and other process supplies used in the same period amounted to #18,314,500. (See Table V). Canadian gold mining companies paid over forty millions offl dollars in 1937 for consumable stores, equipment,electric Table go. V Principal Statistics of the Auriferous Quartz Mining Industry in Canada No. go. go. of Salaries Cost of of of Capital employ- & fuel & Year Ops. Pits. emplo^ed- ees Wages electricity 1923 1 QO/l 65 65 77 ,574 ,'976, 5,524 8,961 ,434 1,497,197 1925 1 QOfl 52 52 84,964,062 7,052 11,931 ,948 1,836,050 1927 72 76 118,381,468 8,022 12,935 ,719 2,222,085 1928 98 100 147,693,710 9,066 14,615 ,990 2,554,657 1929 80 85 135,166,105 8,660 14,258 ,733 2,579,481 1930 54 56 119,758,057 8,401 14,034 ,620 2,364,103 1931 68 69 109,933,164 9,636 16,467 ,165 2,700,326 1932 100 100 58,167,335 10,442 17,686 ,584 3,031,494 1933 214 216 158,599,931 12,823 20,536 ,012 3,330,137 1934 408 416 214,068,359 17,762 27,156 ,887 4,249,296 1935 377 384 193,728,802 19 , 834 31,523 ,907 5,002,274 1936 580 607 256,018,578 25,097 39,826 ,742 6,076,365 1937 631 659 269,195,649 29,140 48,219 ,318 7,345,401 1938 g.S. 22 22 1,466,958 508 507 ,806 83,714 Que.® 168 169 47,027,201 5,471 8,407 ,383 1,525,816 Ont. 184 188 167,836,682 18,528 32,855 ,073 4,760,388 Man. 12 12 6,753,690 744 ' 1,269 ,044 235,780 Saske 5 6 556,786 210 358 ,005 90,244 B .C. 128 137 23,594,496 5,879 6,494 ,431 -.686,023 g.W.T . 15 15 3,966,489 304 569 ,660 ' 112 j 608 Yukon 1 1 1,500 3 690 « • 0 CANADA 535 550 251,203,802 29,647 50,462,092 7,494,573 • , Table No. V Principal Statistics of the Auriferous quartz Minim, Industry in Canada C.ost of Process Supplies 11,591,757 13,806,419 16,230,722 226,186 2,859,264 11,756,920 425,765 71,542 2,684,212 290,211 400 Value of Smelter & Freight Refinery Paid,one. Costs 480,090 658,614 2,889 76,649 113,310 8,257 388,164 838 11,401 438,177 1,160,724 43,789 618,709 2,825 Gross value of bullions ore,etc #25,021,837 35,035,361 37,452,995 36,655,330 37,275,986 39,771,739 49,144,578 48,645,772 69,151,535 83,761,440 91,714,805 108,093,017 122,676,105 937,504 20^315.^407 99,364,867 3,653,893 18,635,187 240,053 Net Value of bullion ores,etc ' 85,120,774 88,210,233 97,961,278 613,314 15,415,501 81,573,525 2,940,302 (-161,786) 14,258,079 (-166,429) (-400) T8,314,b00 by0,lU7 2,276,625 143,146,911 114,472,106 Source - The Gold Mining Industry of Canada, Ottawa, 1938, power,fuel.,freight and insurance according to a special survey recently completed "by the Mining,Metallurgical and Chemical branch of the Dominion Bureau of Statistics at Ottawa. It is an increase of AO?- when compared with the figure for 1935,the last year in which a similar survey was made. This is a fair indication of the rapid rate at which the industry is expand-ing. There has been a sharp increase in the number of active operators and in the number of operating plants since 1933 when the price of gold was raised. Prom 1923 to 1932 the number of plants operating remained fairly steady with only a slight rise in 1928, but there was an increase from 100 in 1932 to 216 in 1933 rising to 659 in 1937 and falling off to 550 in 1938. The same spectacular advance is apparent in the capital employed in the induBtry, rising from s?58,167,335 in 1933 to $158,599,931 in 1934 up to $269,145,679 in 1937. The increase is not so marked in the number of employees or in the wages paid, but it is apparent in the cost of fuel and electricity consumed by the industry and the value of the bullion produced.(See Table V). On examination of the above figures there appears to be little doubt but that the increase in the price of gold in 1933 was the most important factor in placing the Canadian gold industry where it is today." CHAPTER 11 The Financial Outlook of the Ie?r Gold Mining Development in Canada Table No.VI OPS RATING & FINANCIAL DATA ON NEW CANADIAN MINES Pro-Recent duct-Ore Reserves Tons ion Tons(000) $ Per Per $ Per Name As of Date Ton Day Ton Algoma 227 $ 2.88 Argosy 12/31/37 105 15.00 Arntfield 139 5.00 260 3.44 Bankfield 11/30/38 79 13.33 133 13.56 Beattie 12/31/38 4,541 4.-87 1 , 671 3.97 Belleterre 3/31/38 234 9.88 170 8.13 Bidgood Kirkland 12/31/38 33 10.93 145 13.41 Big Missouri 12/31/38 670 3.22 Bralorne 600 18.48 500 19.95 Buffalo Ankerite 12/31/38 494 8.21 993 8.21 Canadian Malartic 12/31/38 380 5.32 660 5.10 Cariboo Gold Quartz 12/31/38 302 15.33 285 13.60 Central Patricia 12/31/38 373 16.28 304 15.48 Cline Lake 6/37 412 11.30 200 11.00 Con. Group 100 35.00 Darwin 3/31/38 45 17.48 Delnite 21(2) 5.88 227 7,10 East Malartic 727 4.40 Eldorado 12/31/38 88,886 s386(2) 63 59.00 Francoeur 9/38 , 139 9.20 150 6.30 Gods Lake 12/31/38 148 10.50 190 10.98 Gold ielt 6/38 83 21.95 152 14.83 Gold Eagle 10/37 40 11.50 129 8.08 Golden Gate 10/12/37 24 19.70 50 18.00 Gunnar 12/31/38 67 13.36 146 11.33 Gurney 12/31/38 74 12.60 132 12.60 HalInor 11/ 5/37 3.20 320 38.50 Hard Rock 170 11.50 175 9.76 Hedley Mascot early '37 318 17.00 180 13.13 Island Mountain 12/31/38 56 13.65 126 13.90 Kerr Addison 12/31/38 1 n 728 6.31 583 6.64 Kootenay Belle 4/30/38 72 16.45 130 13.80 Laguna 12/31/38 11 18® 03 88 18.64 Lamaque 12/31/38 742 11.20 1,060 12.09 Lapa Cadillac 1/26/38 145 8.24 203 Leitch 12/31/38 67 26.37 88 22.16 Little Long Lac 12/31/38 394 17.92 271 16.34 Macassa 12/31/38 344 15.78 332 15.37 MacCleod Cockshutt 9/30/38 304 8.99 407 7.59 Madsen Red Lake 12/31/38 343 6.16 329 7.99 Matachewan 12/31/38 249 6 « 23 430 5.40 McKenzie Red Lake 164 15.69 McWatters 12/31/38 53 10.60 85 9.85 Moneta Porcupine 3/31/38 176 21.75 147 18.57 OPERATING- & FINANCIAL DATA OH NEW CANADIAN MINES Total Reported Earnings To Date (000) I (§00) Cost of Pre-Production Development Present Plant 12/31/38 12/31/38 12/31/38 12/31/36 10/31/38 12/31/38 6/30/38 12/31/38 12/31/38 12/31/38 3/31/38 12/4 31/ 3 8 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 12/31/38 9/30/38 12/31/38 12/31/38 12/31/38 3/31/38 (d) 163 720 347 193 495 421 2,171 243 2,435 1,107 581 329 50 5,400 347 1,091 2 j 19X 1,618 523 494 773 1,157 414 759 1,832 ' 312 670 (d) 24 343 406 (d) 6 402 154 856 549 1,344 126 529 659 522 485 393 615 217 919 470 470 - 225 559 235 221 494 567 326 147 282 322 3,283 1,003 1,828 237 81 254 153 281 1,965 235 723 2,663 293 570 149 321 148 48 174 192 174 424 135 129 310 556 202 296 134 383 386 Table Ho. VI t?TMC JAL DATA H I H B S Ore Reserves Same As of Date Morris Kirkland Hew Golden Rose northern Empire O'Brien Omega Pamour Porcupine, -Perron Pickle Grow Powell Rouyn Privateer Raven River Ross St. Antony Sand River San Antonio Shawkey Sheep Greek Sigma Mines Sladen Maiartic Stadacona Rouyn Straw Lake Beach Sturgeon River Sullivan Cons. Thompson Cadillac Waite Amulet Wesko Ymir Yankee Girl Young Davidson 12/31/37 9/. 1/38 10/ 1/38 3/31/38 12/31/38 12/31/38 3/31/38 12/31/38 12/ 38 12/31/38 12/31/38 12/31/38 7/31/37 5/31/38 12/31/38 12/31/38 3/31/38 12/31/37 12/31/38 12/31/38 12/31/38 12/31/36 48 220 128 515 1,749 300 705 68 25 590 33 344 77 86 637 327 177 19 34 192 17 •47 253 3,500 Pro-Recent duct-Tons ion Per Per $ Per Ton Day Ton 93 $ 5.72 9.45 103 9.29 12.81 159 1S»27 16.80 • 154 24.44 5.72 4944 4.94 5.57 1,505 7.28 10.09 340 10.47 321 23.59 5.95 555 5.75 30.80 80 70.00 7.00 66 8.21 7.95 94 6.02 14.00 100 12.35 319 8.81 13.76 152 16.74 7.65 668 7.85 4.44 . 313 5.63 5.60 400 5.42 20.17 55 7.99 12.00 74' 17.27 10.75 153 13.66 199 4.881 (§) 420 96 10.41 115 :ii.60 960 3.44 (1) Company reports broken ore only, (2) Ho tonnage reported. (3) Waite Amulet is included in the above in spite of its " record of production in 1928-30, because the discovery of new ore bodies in 1938 has in effect cteatedd a new mine. The grade of the new ore is reported as 6.24 per cent copper, 4.65 per cent zinc,1.62 oz. silver, and 0.05 oz. gold, (d) Deficit. OPERATING MITOS Total Reported Earnings To Date | (oooj - I (000) Cost of Pre-Production Development Present Plant .10/1/38 3/31/38 12/31/38 12/31/38 12/31/38 3/31/38 12/31/38 12/31/38 ,12/31/38 12/31/38 7/31/37 5/31/38 12/31/38 12/31/38 12/31/37 12/31/38 12/31/38 7/31/38 1,275 35 2,179 560 3,752 51 255 (d)'34 2.072 (a) 5 579 705 161 163 (d) 3 758 (d)218 431 942 533 139 140 266 669 757 1,362 366 847 177 445 166 149 7.26 219 245 316 87 995 1,532 378 230 895 130 292 699 3/31/38 928 819 Ta.-hlft No. VII RESULTS OF CANADIAN NSW MINE DEVELOPMENT "1-933-1939 First Class Mines No. of : Mines Development Total preproduction development cost ... 25 Preproduction development cost per mine 25 Preproduction development cost per present daily ton • • • • • 2 5 Plant Total cost of plant 25 Cost of plant per mine 25 Cost of plant per present daily ton •••• 25 Total Capital Investment Total preproduction development cost plus plant cost 25 Preproduction development cost plus plant cost per mine 25 Preproduction development cost plus plant cost per present daily ton .... 25 Production Total daily tons capacity 28 Average daily tons capacity per mine . 28 Average grade per ton 25 Gross dollars per day . ... ....... 25 Gross dollars per year 25 Average dollars per day per mine .. • 25 Earnings Total earnings to date 21 Total earnings to date per mine 21 Total current earnings per month .... 22 Average current earnings per mine per month 22 Average current earnings per ton of ore .......... 21 Market Valuation Total market valuation .. .. Average market valuation per mine ............ 27 27-RESULTS OP CANADIAN HEW HIM! DEVELOPMENT 1933-1939 Pirst-Class Mines Item 10,343,000 414,000 825 Second-Class Mines No. of Mines Item 19 19 18 6,860,000 379,000 1,570 20,508,000 820,000 1,540 19 19 18 6,939,000 366,000 1,490 3QQ851Q000 1,240,000 2,365 19 19 18 13,799,000 730,000 3,060 14,045 502 #11.03 131,000 45,800,000 5,210 72 72 32 32 32 32 11,965 165 #7.50 50,400 17,650,000 1,580 28,479,000 1,350,000 1,227,000 56,000 3.99 20 20 3,829,000 191,500 $223,000,000 8,750,000 47 47 ^44,000,000 945,000 • Data not available continued Table ¥o«. Vll RESULTS OTLCASMMJElEa® • 1953^1939. First-GlassMines NoT~of r, Mines Total Earnings Ratios 20 20 19 Total earnings to date per dollar of P r o -duction development c o s t * • Total earnings to date per dollar of present Tota^earnings' U ' teti' P^' doii«' of' T l u c t ! o S development cost plus present plant cost.. iforVP.t Valuation Ratios M a r k e t ^ I S t l ^ of Production 2 5 rfpvelonment cost .. + ™ valuation per dollar of present plant ^  _ _ _ _ _ ^ jfertS ;;iu;Uo;'p;;'d;ii;r';i"p;eproduetio„ development cost plus present plant cost .......... HaSltvSuation per dollar of current annual ^ earnings ontinued' RESULTS OF CANADIAN NEW MIKE DEVELOPMENT 1^53-1939" — — First Class Mines Second-Class Mines No. of Hera Mines Item $3,48 14 #0.30 1»49 14 o . 4 1 14 0.15 #20.60 15 3 o 4 5 10.55 15 3,23 7.35 15 1.70 15.40 • . ® Bata not available Chapter 11 The Financial Outlook of the New Sold Mining Development in Canada The material for this chapter has been taken from research work carried out by Mr. Jesse L. Maury, Mining Engineer, The Lehman Corp. Hew York City; Associate A.I.M.E. His article on the financial results of the Gold Mining Industry of Canada which has been published in the Mining and Metallurgy magazine, is well worth a close scrutiny by anyone interested in the industry. Since 1933, there appears to have been some 162 new gold mines developed and they have shown sufficient promise to warrant the proposal orr construction on each property of a mill of 50 tons or more daily capacity. 59 of these mines how-ever, have been failures, and it is the remaining 103 mines W h i c h h a v e b e e n u s e d this study. These mines have been divided into two categories;First-Class and Second-Class. Roughly speaking, the First-Class mines are those with a present worth in excess of #3,000,000 or which promise to attain such a value. The First-Class group includes 28 mines, the Second-Class group contains 75 . Unfortunately complete Information was not available for each of the mines. In discussion, calculations based on any information which was incomplete were noted and the missing factors were indicated. Table VI indicates data obtained for 72 of the First-Class and Second-Class mines and were sufficient to indicate the 14 extent and character of their operations, "Cost of Preproduct-ion Development" is the balance sheet item usually shown as "Development" as reported at the nearest date to the beginning of production."Cost of Present Plant" is the balance sheet item ordinarily given as "Plant and Equipment" at the latest date available and without deductions for depreciation; that is the gross investment in the plant to date. The cost of the property is not included. In Table 711 are listed the conclusions drawn from the assembled figures. The more diagnostic of these conclusions are described by the writer as follows,-Total Hew Producing Mines 162 mines have shown sufficient promise to warrant the proposal or construction of a mill. Of these .... First-Class 28 17 per cent Second-Class .... 75 ... 46 « » Failure ...... 59 ... 37 " » It must be remembered that these figures do not include many new prospects which never reached the mill stage, Preproduction Development Expense It was possible to obtain this information for 44 mines and at the date production began this expense totalled $17,000,000 or $390,000 per mine, First-Class Second-Class Cost per Mine $414,000 $379,000 C0st per daily ton present cap. 825 1,570 These figures uphold the criterion that low development costs per ton are essential for a First-Class mine. Plant Cost The present gross plant cost of 44 mines is 15 $27,500,000 or $620,000 per mine. Fi'rst-Class Second-Class Cost per mine $820,000 $366,000 Cost per daily ton present capacity 1,540 1,490 The author explains the higher cost per First-Class mine by reference to the higher average tonnages listed below, Preproduction Development Plus Plant Cost The combined capital investments for 44 mines totalled $44,500,000 or $1,010,000 per mine. First-Class Second-Class fgpital investment per mine $1,240,000 $730,000 Capital investment per ton daily cap. 2,365 3Q060 Production One hundred of the mines have a present total capacity of 26,000 tons a day, or an average per mine of 260 tons per day. The ore produced by the 57 of them averages $9i75 a ton;to gross an average of $3,200 a day each or a total of $63,500,000 a year. First-Class Second-Class Average daily tons capacity 502 165 Average grade $11.03 $7.50 Average gross per mine per day 5,210 1,580 In general 500 tons a day of $11.00 ore appear to constitute a highly profitable mine; 165 tons of $7.50 ore are a marginal mine. 16 Earnings forty-one of the mines have earned a total of $32,500,000 or #788,000 per mine.Twenty-two if these(all in the First-Glass group) are earning currently,#1,227,000 a month or-#56,000 per mine per month. Twenty-one of these First-Class mines are earning an average of $4.00 per ton of ore. Total earnings have been divided as follows,-First-Class Second-Class Total earnings to date $28 479 nnn #3,829,000 Earnings per mine x 3 5 0 o n n J.,3t)U,000 191,000 Market Valuation Market valuations for 74 of the mines have been created which total #267,000,000 or #3,610,000 a mine.Separated the figures are First-Class Second Class Total market valuation ftp?-* nnr> nnn a.. ^3,uo0,000 $44,000,000 Valuation per mine 8 750 onn o, /ou eU00 945,0 00 Dividends Fifteen of the Jirst-Class mines have paid dividends totalling $17,500,000 or #1,179,000 per mine. Total Earnings Rating The ratios of total earnings to date to the indicated investment accounts are listed next. The last eolu™ actually applies t 0 o n l y n i n e t 4 e n , l r a t . 0 l M B m.nea a n d four_ teen Second-Class Mnes, instead of the 20 and 14 indicated. Total Earnings tn pa-he per Dollar It is interesting to note here that the First-Class Mines have already "-paid ont* ,• y paia out capital investment plus twenty per cent. 17 Preprodue t i on development cost 34 mines 20 First-Glass 14 Second-Glass 2.16 3.48 .30 Present plant cost # 1.05 1.49 .41 Reproduction development plus present plant c o a t • 77 1.20 .15 Market Valuation Ratios Forty-two of the mines have market values averaging $13.50 per dollar of preproduction development expensesj or $8.68 per dollar of present plant cost. Forty of the mines have market valuations averaging $5.53 per dollar of preproduction development plus present plant. Analysed Preproduction development cost Present Preproduction plant development cost cost plus present plant cost 7.35 1*70 25 First-Glass Mines $20.60 $10.55 15 Second-Class * 3.45 3.23 The ratio of market valuation to current annual earnings of the First-Class mines is 15» Independent of dividends of nearly $100,000,000 annually, and of purchases of supplies of about the same amount, the Canadian Mining Industry has a reservoir of working capital represented by an excess of current assets over current liab-ilities of more than $220,000,000 according to a survey completed by the "Northern Miner" in September 1939. Although these figures do not take/account of the great number of prospects that never become mines, or that have not yet come to definite development, the conclusion that the 18 recent Canadian mine development on the whole had "been prof-itable is inescapable. It seems reasonable to hope that the rewards gained in the more valuable quarter of the successful mines will provide a stimulus to prospecting and exploration for years to come. Canada had entered her fourth period of activity in the gold mining industry and it s£>pears that it will by far surpass any previous development. CHAPTER 111 The Statistical Procedure of the Analysis of Mining Costs 19 Chapter 111 The Statistical Procedure of the Analysis of Mining Costs In this chapter we are interested primarily in an analysis of the costs of gold mining, endeavouring to reveal whether or not the costs of gold mining have varied appreciably during the period of 1928 to 1938, Furthermore, if there has "been any significant change in the costs of mining gold, what has "been the effect of this change on the gold mining industry as a whole? The data which have "been assimilated for this report are excellent material for numerous studies ih statistics and economics .Tests of variance "between samples of mines and the correlations between various types of of financial organiz-ations and their profits and losses, open fields which students in statistics and economics may well investigate in the future. In the study of costs in this work, the data hav.e been divided into two groups,i.e. A and B, Group A includes eight gold mines(See Table Vlll) which have been operated continuously from 1928 to 1938, during which period the price of gold rose in 19S3 from #20.67 to $35.00 per ounce. The object of treating these eight mines separately is to determine whether or not the new price of gold aff ectec/their costs appreciably .Did their mining costs rise, and if they did was it due to mining poorer ore or simply because there was less need for preventing waste and maintaining high efficiency? Table No. Vlll Mines Included in Group A Mine Number Name Province 3 Sylvanite Ontario 4 Teck-Hugh.es Ontario 6 ...... Wright-Hargreaves.... .. Ontario 1 0 Dome Ontario 11 Hollinger Consolidated .. Ontario 1 3 Kirkland lake .. Ontario 14 ... . ., Lake Shore .. Ontario 18 ....... Mclntyre Porcupine Ontario Table No. IX Mines Included in Group B Name of Mine Pickle Crow St. Anthony Sylvanite Teck-Hughes Toburn '..!!!!! Wright-Hargreaves Buffalo-Ankerite — . . . . . . . . . . . Central Patricia Coniarum D o r a e — Hollinger Consolidated ..... How§y Kirkland Lake ! Lake Shore Leitch !!.'."!!!!•! Little Long Lac .......... !. ' Macassa Mc In tyre Porcupine . i!.'.'.'.'! | McKenzie Red Lake Moneta Porcupine Pamour .. Omega Paymaster Consolidated* !...! Arntfield Beattie Canadian Malartic 1! i! .**' * Lamaque McWatters O'Brien Perron Sigma ! i! Siscoe Sullivan God's Lake . . Gunnar Gold San Antonio .....!. Bralorne Cariboo Gold Quartz Hedley Mascot Island Mountain Kootenay Belle Pioneer Province Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Ontario Quebec Quebec Quebec Quebec Quebec Quebec Quebec Quebec Quebec Quebec Manitoba Manitoba Manitoba British Columbia British Columbia British Columbia British Columbia British Columbia British Columbia Figure 4 . MAP OF C A N A D I A N GOLD MINES Figure 4 . YUKON T £RRjtoj BRITISH COLUMBIA ALBERTA SASK, MANITOBA ONTA\RIO QUEBEC MAP OF CANADA Showing Locations of the PRINCIPAL GOLD MINES Prepared by Statistical Dept. - Nesbit Thomson St Co. Ltd COPYRIGHT >*» Each black dot represents the .0 SHOW thc ^  * •ttittssttzstt ' — *> ~ - *«— I 49 Star Lake 50.6em Lake 5 (.Central Manitoba 52_Rice Lake (San Antonio) 53Jsland Lake 54.6o ds Lake 5S_tfelcosko lake (Herb Lake) S6_Elbow I_8ke 57-Shembt-6ordon*. 58-Flin Flon* Mandy* BSLAmisk Lake 6CLLake Athabasca |61:Yelow Knife Bay 2^-Nahannl Riyer P-MfLeod River a^lchewan River kCreek 66_Rossland * S7_Hedley 68_Copper Mountain® 69.Tulamesn 7.0_Bntannia* 71 _Bndge River 7Z_SurF inlet 73.Gordon Lake 74.Premierj Bi^  Missouri 75_Graham island 76_Fraser River 77_Cartboo 7S_0mineca 79-Cassiar 8CLSbkine River 8l_AtIin 82J<lon<Jike 8 3-Sixty Mile 84.Forty Mile 8 5.Mayo 86.B)£S8lmor? 87_K)uane 88.Carmack 89. Outpost Island 90-Zebalo? River 91-Lac la Ronge l6.Li^ itnirt4River 17-Munro 18-Porcupme I3_KirKland Lake 2CLLarder Lake 21-Boston CreK 22_Mafcachewan ,.. Q-WestSNnin^jtr©® 36.fort Hope 24_Peterborough to Lanark 37.Pickle-LakefCrcwRiver C? area. Cordova, etc, 38_SavantLake 2S_Sudbury*f Lon£ Lake 39-Stur£eon LaKe 26-Wanapitei 4Q_Ardeen(MossMne 27.ShakespearefHown'C* 4.I_Schreiber,Bi£DucK LaKe • 28.0phiror Havilah Mine fJackfish Lake 29.Parry Sound ,4j*5achifa River 32-Swawre • -33.LitkfeLon4 Lake 34_Stur£eon River . . - L ^ 35.Kowtesh,Tashota fOraran 42_Abkokan or Upper Seine River qr Fnni- u— 43-East Shoal LaKe or Lower Seine River (Mine Centre) 44_Ea£le LakeJ^  .ManitoufSe 45.LaKe of the Wods j-VfestSbo;' 46 VoiTian Lake,Narow Lake . f Confederation Lake 47.Birch LaKe-47? Uchi Lake 48.Red LaKe _ 48? Echimamish 20 Group B includes all the mines of Group A and those mines which operated spasmodically or only came into production after 1928.(See Table IX). The object here was to get as large a sample as possible of the mining companies of Canada and to see (1) whether the stimulation afntheinewpgoldiprice kept some of the poorer gold mines in operation and (2) whether the mining costs of these marginal and new mines were above those of the mines included in Group A. Profits and Losses It is true that the new price of gold gave very large profits to the industry- On the other hand, with the expansion of the industry, anal the inclusion of the near marginal mines that would otherwise ISvTnot been able to operate except for the higher price/did the characteristic emergence of losses begin to occur after a year or two! The Sample As stated previously, all the information on which this section of the thesis is based was taken from some 250 balance sheets and annual reports of 42 mines throughout Canada. The. compiling and tabulating of the following data we,e hy far the most difficult part of the thesis. The mines dealt with were taken from the more important gold fields in the Dominion,(See Pigs. 4 & 5) and were chosen to represent a fair sample of the auriferous quart, industry of Canada. Table X.ll gives the distribution of the mines by provinces and years. As it was impossible to obtain information for the ' Table Bo., x dumber of Mines Reporting dumber 1928 . 8 3 9?Q • • • • • • » . . 9 1 9 3 0 11 1951 11 1932 14 1933 16 1934 . . . 20 1935 ...» 34 1936 • • t » • 38 1937 41 1938 42 Table Ko. XL " dumber of Years Mine Reports ]^ffiker_£f_Years Vs^ss^josss^ssortim for tM« p.,-,^ 11 8 10 * 1 Q * • • » • • 2 a ° 0 7 • • 2 2 5 - ••»•••..............., 5 4 ... 15 'Z 3 2 • • 3 1 1 42 Table No. Xll Territorial Composition of Yearly Sm^i (Group B. Number of Tiin^ o) Province 1928 1929 1930 1931 1932 1933 1934 Ontario 8 8 10 10 10 11 13 19 Quebec 1 • 1 1 1 2 2 8 Manitoba 1 1 1 . 2 British 2 2 4 5 Columbia Pioneer Gold Mines of B.C. Limited (Non-Personal Liability) Tenth Annual Report For the Year Ending March 31st, 1938 Pioneer Gold Mines of B. C. Limited (Non-Personal Liability) Tenth Annual Report For the Year Ending March 31st, 1938 LOCATION OF MINE Cadwallader Creek, Bridge River, B. G P. O. Pioneer Mines, B. C. HEAD OFFICE 605 Rogers Building Vancouver, B. C. DIRECTORATE COL. VICTOR SPENGER - . - , , President} ALFRED E, BULL - Vice-President and Secretary-Treasurer HOWARD T. JAMES, M.E., PH. D. - 4 Managing Director DR. R . B. BOUCHER DR. FRANCIS J. NICHOLSON M A J . - G E N . D . M . HOGARTH, T o r o n t o THOMAS FORTUNE RYAN, 3RD, San Francisco CHAS. D . KAEDING, T o r o n t o \ All of Vancouver, B.C. Auditors RIDDELL, STEAD, G R A H A M fe? HUTCHISON Vancouver, B. C. Registrar and Transfer Agent THE C A N A D A PERMANENT TRUST COMPANY Vancouver, B. C., and Toronto, Oht. Transfer Agent THE MARINE MIDLAND TRUST COMPANY New York Registrar IRVING TRUST COMPANY ' . New York Solicitors HARRIS, BULL, WILSON 6? BULL Vancouver, B. G. PIONEER GOLD MINES OF B. C. LIMITED (Non-Personal Liability) DIRECTORS' REPORT To The Shareholders of Pioneer Gold Mines of B. C. Limited (N.P.L.) Your Directors herewith present the Tenth AnnualReport accompanied ^ ^ ^ ; Sheet, Profit and Loss Statement and'Surplus Account, for the Fiscal Year ending March 31st, 1938, and the Auditors' Report. The details of mine work done during the year and present condition of the property are embodied in the Managing Director's Report herewith. During the year 151,547 tons of ore were mined, but as against this of new ore wCre^developed during the year, so that the t o t a l ore reserves on the S l s ^ 1938, were estimated at 568,488 tons, having an average grade of .422 ounces per ton. Approximately 13.5 per cent, of the 151,647 tons mined and hoisted was discarded ^ ^ s o r t i S S T S h e remainder 130,701 tons were crushed and milled, and produced $2,127,889.35 in gold. The amount recovJred from ore mined and milled equalled $14.22: per ton, as against $14,49; per ton last year. Before the end of the Financial Year it was decided to sink a shaft a further three levels, from the 26th level to the 29th level, and this work is now being carried on. After payment of all expenses of operations, the dividend of 40c per share, and providing for income taxes to both Dominion and Provincial Governments the g ^ ^ n d l e c S h $147,166.14 to its surplus profits account -banging the same u t o ^ l , S 2 E M ^ the rag position of the Company at the end of the year has increased to $1,291,54^0 as against $1,084,083.85 the previous year. The Company has staked claims and taken options on other p r o p e r t i e s ^ Zeballos Area, Y a n « ^ i S S near Alberni, in the Salmo District,.in the Card.oo near Barkervik , and m Yellowknife District N. W . T. Prospecting is being done on two of the properties in the Z e K D ^ r i S S i the other properties will be prospected as soon as the snow conditrons permit it. The Directors take this opportunity of expressing their appreciation of the work done S T h e * « Thompson; and the other office, mill and underground staff. Dated the 6th day of M'ay, 1938. . By Order of the Board) , " VICTOR SPENCER, President. A L F R E D E. BULL, Secretary-Treasurer. : PIONEER GOLD MINES OF B. C. LIMITED (Non-Personal Liability) MANAGING DIRECTOR'S REPORT The President and Directors, Pioneer- Gold Mines of B. C. Limited, 605 Rogers Building, Vancouver, B. C. Sirs:— M i NE—Development. Development footage for the year amounted to 19,725.8 feet, and included 14,663 8 feet of 391 ; I > e e t ° f C r 0 S S C U t t i n ^ 2,336.1 feet of raising and an equivalent drift footage °f 391 feet of shaft stations and pockets in connection with No. 4 Shaft which is to be sunk from the 26th to the 29th level. In addition 14,732 feet of diamond drilling was completed^ during Of the total drift footage, 78.5%, or 11,505.4 feet was on the main vein chiefly below fourteen level, and 40.4% of this footage was in ore. The greater amount Ji T r ^ L s t Z done m the central section of the vein, which to date has been the most productive n he lower section of the mine. Twenty level is the only level below fourteen which has been iTfirrJrift aiehfUlhlerh °f the Vdn- T° the eaSt n° COmmerdal 0re - " - S 817-feet of drift, although the vein was strong to within about 150 /eet of the hanging wall argil ites. Above fourteen level some very valuable ore bodies have been found in thfs secrion of the vein, and it is proposed to explore the whole east end section again on twenty-five level during the coming year. At the west end of twenty level, in a footwall branch of the mam vein, high erratic values have been found over narrow widths for a length of 300 feet At present twenty-one level is being driven towards this section of the vein with the hope of hnding more consistent values. 1 A little over 3,000 feet of drifting has been done on seven branch or parallel veins but none o f t h i s work was successful in disclosing any important commercial possibilities. About twenty-five per cent, of this work was on the "J" vein, which at one time was thought to have possibilities of becoming an important producer because of its structural similarity to the main vein. Development results, however, have been so disappointing, both- in drifting and diamond . drilling that no further work on the vein is contemplated. The Countless vein has also received a considerable amount of attention on five level, but without finding any indication of commercial ore. On the footwall vein, and "27" vein, small amounts of marginal ore have been found, but m both of these, tonnage possibilities are small and the grade of ore marginal Other secondary veins have failed to give any indication of commercial possibilities. Although considerable drifting remains to be done above twenty-six level, the present bottom level of the mine, work has been started on an internal shaft which is to be sunk from the 26th to the 29th level. The shaft is being collared immediately to the hanging wall of the mam vein on twenty-six level, and will pass through a non-commercial section of the vein at about twenty-seven level. PRODUCTION. During the year 151,647 tons averaging .417 ounces per ton were mined. Allowing^for waste sorted on. grizzlies- and correcting for ore in transit, H ^ s o f t ^ v ^ M ^ the surface and delivered to. the coarse ore bins. From ore hoisted, .19,037 tons of waste averaging 02 ounces per ton were discarded in the picking plant and : back fill leaving 130,602 of .480 ounce ore as the amount delivered^to the mill bins, Shghtiy o v 2 19% of the tonnage mined was from development work, 7% was from sills and the remaining tonnage was from stopes. Since opening up the lower levels it has. been found necessary to make a change in our mining m e t L s ^ a r t i c u l a r l y in the east end of the mine below 14 level. In the past essentially a T r f has been mined by the shrinkage stope method, and only in rare instances has tt been ; necessary to resort-to cut and fill methods because of local ground conditions. Below fourteen ^ d W ver, particularly at the east end of the mine where the vein is m greens o n , , the wills are not trong endugh to permit shrinkage stope mining without- excessive dilution and it has been found L e s s a f y to mine with-filled rill s t o p ? . This is + of mining on a per ton basis, but the cost per ounce of gold is lower than it would be by mining an excessive tonnage of lower grade material in shrinkage stopes. ORE RESERVES. The estimated ore reserves, as at M a r c h 31st, 1938, amount to 5 6 8 , ^ ^ hav ing^g average grade of .422 ounces per ton. T h i s c o m p a r e s with estimates of 597,481 tons of -.4/5 ounc^ ore of a year ago, but at that time only^386,466 was regarded as in the present estimate 532,805 tons is fully developed ore, and only 36,683 tons is_m the £ b £ b l e P class. Although ore reserves are 28,993 tons les* than a year ago <3ur ^ t i o n ha been 151647 tons which means that 121,654 tons has been developed during the year. Tins. is a c m & a S e showing since, as pointed out in last year's report, credit was taken at thM tone L a C ^ r t of " h e o r ; w h L was- to be expected within the central and most productive; part of the main vein above 24 level. , MILL. : No appreciable changes have been made in mill operation during the past year, a M ^ -•this is the first M l year in which the new crushing and sorting plant has been m-operation. S t a u s e Of S e finer product resulting from two stage crushing, and the reduced tonnage going to the ball mills because of ,sorting, it has been possible to shut down a ball mill m No. 1 Unit and do all the primary grinding m No. 2 Unit. -' Approximately 13.5% of ore hoisted Is discarded in the picking plant, and the remainder is .crushed and delivered to the fine ore bins. Mill results were as fol lows:— Ore Milled : - - ^ ^0,701 T o n , .;,; Average Heads Ore Milled . - — 0.48a Ozs. per d o n Average Tails Ore M i l l e d — - - - - - - - — O . U i M , , 96.80 Per Cent. Percentage. Recovery - - - -Total Recovery—Gold — — -60.654.491 O x , ' - - ? 2,122,891.07 Total Recover -Si lver .1 11,383.800 " - . 4,998.28. ; . ; S 2.127,889.35 CAPITAL EXPENDITURES—Plant and Equipment. Capital expenditures on plant and equipment amount to $62,628.11 as listed below I V ^ " t S S r V T ben"h n°-th °f thC SHaft ^ -auction oTtwen ; nouses, at a cost of $43,054.31 is the largest item in this account. Sundry camp building and equipment include 26 garages which are rented to employees, a new w a r e h o ^ c a Z ^ h " additions, to the central heating plant and various additions to bui ldi^s t d equipment _ The relatively small amount spent on mine equipment was for necessary pumps and motors mine cars, ventilation and other small incidentals. motors, Additions to mill buildings and equipment include a new fine ore bin in No 1 Unit and a magnetic pulley on the feed to the primary crusher. - A general distribution of these expenditures is as follows: Mine Plant and Equipment : $ 2 552 68 Mill Buildings and Equipment 1504 12 Power Plant ' -Vn . 0 ' ' _ 165.69 Sundry Camp Buildings and Equipment 14 9 0 i 31 -New Townsite , I l l 43,504.31 $62,628.11 No. 4 Shaft _ As mentioned above, a new internal vertical shaft is being sunk from 26 to 29 level Exnense incurred to date, amounting to $12,210.36 is for work above 26 level, such as ra l g t h e T a f to the sheaves, cutting stations, ropeway and pocket raises. : : . : g Outside Exploration and has m ^ f n ! ^ ^ ' ^ b e e ° ^ ^ C 1 W d i n a s e a r c h new properties toir Ont T C T e X a m m a t l o n s i n B r i t i s h Columbia, the Yukon and North West Terri tones Options have. been secured on two properties in the .Zeballos area on Vancouve Island and a number of additional claims have been staked in the same district. F a v ^ ^ e ™ ^ . h a s j s o . b e e n secured in the Yellowknife area, N. W. T. and in , h e southern p ™ o f V a n c o u ^ A small crew has been at work all winter on the Friend Group in Zeballos but nothing- his been done as yet on other properties under option because of s n o l conditions g Expenditure for the year on Outside Exploration amounts to $17,370.63. C o n s I k i n r M e t T 1 1 " ? ^ the staff and employees, and of Mr. Spry, S K ^ T ? g r 7 a c k n o w l e d ? e d ' a n d I wish to thank all members of the Board of Directors for their never failing and helpful advice during the year. Respectfully yours, April 30th, 1938. H. T. JAMES, Managing Director. ASSETS CASH ON HAND and IN BANKS—Schedule 1 : -GOLD BULLION—ON Hand and In Transit, at Market Value -PIONEER GOLD MINt f (Non-Per'.ji;'1'1 VANCOUVEillTl Balance Sheet as a at $ 321,898,89 177,140.48 INVESTMENTS—Government and Other Securities at _ Cost-Schedule 2 (Market Value $1,194,630,00)..-.- $1,227,580.35 Interest Accrued thereon — . — - • • _ . j £37 155 iq : . '. $1,736,194.47 LOANS and ACCOUNTS RECEIVABLE, at Boole Value $ ^ ^ L e s s Reserve for Doubtful Accounts ' 6,220.03 SUPPLIES and M A T E R I A L S ON HAND, at Cost, as per 119,952,36 ^ Certified Inventories - - - - S£.862,3^66. W. PROPERTIES and DEVELOPMENT, at-Cost, •: Pioneer Mine Property and Development $1,719,^4.0/ Options and Exploration Expenditure - - - , 15 910 ()-? Timber License - - - . — . — - "$1,754,44^^ PLANT, BUILDING, MACHINERY and EQUIPMENT, at Cost—Schedule 3 • Mine Plant and Equipment - - - - - - - - $ ' S ' ^ n S V Mill Buildings, Plant and Equipment — • ' 1 Power Plants and Equipment — — - - — — — - I S u n d r y Camp Buildings and Equipment 1 267 697 02 : I . ' - 3.022.139:42,; W - J 25,247.20 ctt): DEFERRED CHARGES . „ : $4,909,753.48. ( J ) \ VICTOR SPENCER, Director. A. E. BULL, Director. 1 # B. C. LIMITED ,VE|I!TISH COLUMBIA 'search 31st, 1938 LIABILITIES S U N D R Y C R E D I T O R S Salaries and Wages Payable S19;970.06 Provincial Minerals Tax • 12 03417 • D i r e c t o r s ' Fees Payable I I I I 9 ' 0 0 0 0 0 Sundry Accounts Payable 4853147 $ 89,535.70 R E S E R V E F O R I N C O M E T A X E S 1 7 9 9 4 1 l g 175,175.00 $444,651.88 (K). D I V I D E N D P A Y A B L E — A p r i l 1st, 1938 R E S E R V E S Depreciation on Plant, Buildings, Machinery and Equip-ment Depletion of Mine PropertieZI"IZ"IZIZZIZ 1,444''175 92 — ' ' — 2,016,522.76 U ) . S H A R E C A P I T A L Authorized $2,500,000.00 divided into 2,500,000 Shares of $1.00 each. Issued, fully paid, 1,751,750 Shares $1,751,750.00 P R E M I U M ON S H A R E S S O L D 2 5 , o „ o , ) o S U R P L U S , as per Surplus Account attached 6 7 1 g 2 g g 4 2,448,578.84 $4,909,753.48 R E P O R T TO S H A R E H O L D E R S = = = = = a n d f - P r 0 f l t a n d L o s s Surplus state-company during: the year under review, subject to t h e r w & a X*}? - 9 ^counting: consistently maintained bv the information ?5 ( , t o t l ,e*h , b lf a a n d view of the state of the C o m ^ v - W - 0 " c a I c u l a t e ( J Somated ore information and the explanations given to us and L ii, t Oompimy s affairs according- to the best of our i c cumulafeTr '^ 0 " f ° r r e s £ r v e s ^ ^ e c i a t i o n ^ n d d e p l l u o n ^ u r f n S 0 ? ^ Company. are of thfoSfnion accumulated reserves as shown in the Balance Sheet arPe 'sufficient under the circuMtaSSSs' l d e Q U a t e ' a n d t h a t ®»<* Vancouver, B. C. t>tt-.t^ April 26th, 193S. UIDDBLL, STEAD, GRAHAM & HUTCHISON, Chartered Accountants. I PIONEER GOLD MINES OF B. C. LIMITED (Non-Personal Liability) VANCOUVER, B. C. Qi p r o f i t a n d l o s s s t a t e m e n t For the Year Ended March 31st, 1938 Production from 149,639 Tons Hoisted: Gold Bullion — — Miscellaneous Income—Schedule 4. -$2,127,889.35 60,063.16 $2,187,952.51 Cost of Production * Mining and Development — — — Provincial Minerals Tax Ore Transportation — - - " Milling - * Refining ,-<• Marketing ---- -Administrative and General Charges-Schedule 5 $637,601.52 39,277.68 43.942.05 143,561.86 6,167.51 28,369.50 (O-rlD. //nc /- unt/tt-la). Management Salaries and Directors' Fees $16,200.00 i - a j^ircciui» - - - -—- 20 703 34 Vancouver and Mine Office Salaries and Expense - - - ^ ^ Transfer Fees and Expense 4^709.77. General Expense—Sundry - — -Total Cost of Bullion Produced Profit before Depreciation, Depletion and Income Taxes 92,160.96 991,081.08 $1,196,871.43 Deduct: Depreciation Depletion .— $112,245.92 72,574.92 184,820.84 Profit before Income Taxes - -Deduct: Dominion and Provincial Income Taxes —• - - •---;-•" N E T P R O F I T for the Year ended March 31st, 1938, carried to Surplus Account $1,012,050.59 164,184.45 $ 847,866.14 C9). (/f). (>7). C/iJ. s u r p l u s a c c o u n t as at March 31st. 1938 1937 By Balance, carried forward as at March 31st, - Add Net Increase in Surplus Account for the year ended March 31st, and Loss Statement - """" 1938, as per Profit $ 524,662.70 847,866.14 $1,372,528.84 D e d u c t Dividends declared during year : „ . 1 0 , 7 ,$175,175.00 Dividend No. 26 at rate of 10% paid July 2nd 1937 - - - - - - - - - J7J. Dividend No. 27 at rate of 10% paid October 1st, 937 - 175,175.00 Dividend No. 28 at rate of 10% paid January 3rd 1938 - - - - - - - — " ^ 7 5 1 7 S i 0 0 Dividend No. 29 at rate of 10% payable April 1st, 1938 - - . . — — - - - - - - _ _ _ _ _ 700,700.00 B A L A N C E A T C R E D I T OF SURPLUS A C C O U N T as at M a r . h ^ l s t . ^SS. as shown in attached Balance Sheet -----$ 671,828.84 0 21 mines-which had become depleted before 1937, the .years previous to that date are not complete for Group A.(See Tables X & XI). However, as the number of mines operating in those years was also considerably less than the number operating today, assumptions based on the early years of the study should not be too incorrect. The ratio of the size of the sample to the total universe treated is approximately the same as for most of the years. There is a discrepancy in that Ontario and Quebec are the only provinces represented in the early years until the entrance of British Columbia in 1932, as\there were mines operating in British Columbia and in the other prov-inces from 1928 to 1932 but it was not possible to obtain any information on them. (See Table Xll). Calculations After determining which mines would be included in the survey, the next step was to obtain the annual reports and balance sheets of each individual mine for as many years as possible. These were obtained by mail, by personal interviews and from various mining publications.(See Bibliography). Facing this page is the Annual Report for 1938 of the Pioneer Gold Mine which contains the basic data from which all the information pertaining to that mine for that year may be calculated. Below are the data which were noted or calculated •frern r e p o ^ T s for each mine„ similar to this one.(See Figs. 6 & 7 for the fields into which the master card was drawn). 1. Tear 1938 (Taken from Annual Report, Page l). 2. Mine Number —-42 (See Table IX). Mines coded numerically. Figure 6. Master Card. No. J. Check Type of Corner Out Wanted SZVX Left Right Left Right • L J • • If ail Corners to be Square Check Here. • What is Present Form No May We Scrap Old Electro? C D O If Old: Electro is Not Scrapped, Note on Margin Below Reason For. Maintaining Type. Is Card to Have Stub? • • IsConsecutive Prepunching Required? Q Q Is Repetitive Prepunching Required? • • Is Prenumbering Required ? [ ~ ] Is Padding Required? [~~| Are Proofs Desired? C H O I Is Card to be Interpreted? If so Please Indicate. 45-Numerical 6 0 - Alphabetical [ ~ j 80-Print ing Punch j ~ j Figure 7 . Master Cord Mo. Z. 4 5 . 6 5 5 5 6 6 6 3 3 3 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 5 5 5 5 6 6 6 6 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 5 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 9 9 9 9 9 9 9 9 9 9 9 9 9 9 1 c 6 7 8 8 10 11 12 13 1 14 15 16 17 18 18 20 21 22 23 M m n n „. J LICENSED FOR USE UNDER P4TFNT 1 77•> , 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 SCALE APPROXIMATELY DOUBLE S I Z E - A C T U A L CARD SIZE J I x ^ ^ ^ ^ 7 ^ ^ Customer Name „ ~ IMPORTANT -Da te Industry -Code No..  Order Nn. -s • Check Type of Corner Cm W . n t ^ [ / % { / K i L£ft Right [_eftL°WeRight •«« • • • [5 if all Corners to be Square Check Here. • IMPORTAMT i i r- •» i k M— • 1 Is This a Revision of Form in Use? Q Q What is Present Form No.. May We Scrap Old Electro? O C H If Old Electro is Not Scrapped, Note on Margin Below Reason For Maintaining Type. Yes No • • Is Card to Have Stub? IsConsecutive Prepunching Required? Q Is Repetitive Prepunching Required? [ ~ [ |—| Is Prenumbering;Required? |—| |—j Is Padding Required? [—| Are Proofs Desired? j—] J—] Is Card to be Interpreted? If so Please Indicate. 45-Numerical Q ] 60-Alphabetical 8 0 - Printing Punch Q as 3* The Total Tonnage Treated by the Mill During the Year, 130,602 tons. This figure was obtained by taking the tonnage hoisted(page 4 of the Report) and subtracting the waste(19,037 tons) from it, leaving a total of 130,602 tons milled for the year, 4. Average Recovery per Ton of Ore Milled #16.29. This was obtained by taking the total value of the bullion recovered (#2,127,889,. page 4) and dividing it by the number of tons milled(l30,602 tons, from Part 2 above) giving the average recovery per ton. In this case the value of the silver bullion was not sufficiently large to warrant any correction for it. 5. The Number of Ounces of Gold Produced 60,654,491 02« This figure was taken from page 4 of the Annual Report. Direct Mining.Costs per Ton of Ore Milled 6. Development Work The expenditures for these two operations were combined in this 7. Mining report under the heading of BMining and Development" giving a total expenditure of |637,601,52(page 8), This figure when, divided by the tons milled gave us a cost of #3.48 per ton of ore milled. Also included under this heading was the expense entitled "Ore Transportation®(143,942.05,page 4) which when figured on a per ton basis came to 36 cents. 8. Total The total direct cost per ton of ore milled was obtained by adding the two "per ton" figures above togather, 23 giving.us a total direct mining cost of $5.21 per ton of ore milled. Costs -per Ton of Ore Mllad 9.General Expense. The expenditurea taken under this heading were those coming under the heading "Administrative and General Charges1* (page 8), and totalled $92,160.96. Dividing by the number of tons milled, a figure of 70 cents for the cost per ton under this category was obtained. " lO.Millinft Cost. This figure(#143,561.85.page 8) was divided by the tons milled to give a cost per ton milled of #1.09 1 U T-0- 1^ ^ rect Operating Cost. On adding the figures under the headings 6, 7, 9 and 10 the direct cost per ton of ore milled was #7.00 12. Overhead. Under this heading the expenditures entitled "Refining" and "Marketing"(page 8) were included and brought to a per ton basis, they gave an overhead cost per ton of 26^ 13* T°*al ^ rect Costs Including Obtained by adding the figures in Sections 11 and 12, giving a total direct cost of #7.26 per ton of ore milled. 14. Development Work. There was no expenditure for development work in 1938. 15. Depreciation. This expenditure was #112,245.12(page 8), and dn.a per ton basis was 86 cents per ton. 16. Taxes. The amount paid in taxes in 1938 was #164,184.45 (page 8) and on a per ton basis was #1.55 per ton. 17' B*Penditures Including Depletion- This item was for depletion only and amounted to #72,574.92(page 8). On a per ton basis it came to 54 cents per ton. 24 18' ^ ^ ^ ^ The value for this section was obtained by adding the figures in sections 13,14, 15,16 and 17. For this year the total cost per ton of ore milled was #10.22. •°£st,..per Ounce of Gold Produced In order to arrive at the production cost per ounce of gold it has been necessary to work out the ratio between milling costs per ton of ore and the gold recovery value per ton of ore. The ratio of gold recovery per ton in terms of dollars divided into the fixed or selling price of gold gives the ounce recovery per ton. In this way the cost of production per ounce of gold is thereby determined. (a) Market Price per ounce of gold Value of gold recovery per ton This ratio gives in ounces the production of gold per ton of ore. The cost of producing one ton of ore may then accordingly be equated with the ounces(or fraction thereof) of gold recovered per ton of ore milled, (b) Market Price per ounce of gold x Cost of producing one ton of ore Value of gold recovery per ton Cost of producing one ounce of gold,? 24 -a-19. Direct Cost per Ounce of gold Produced. This figure was obtained by taking the figure in Section 13(the direct cost of mining,including overhead) and multiplying it by $35.00(the price of gold). The product was then divided by the average recovery per ton and the result was the direct cost of pro-ducing an ounce of gold, (e.g.) Cost per ounce of gold produced -cost of producing a ton of ore x the price of gold average recovery per ton The result for this calculation came to $15.60 per ounce of gold produced in 1938. 20. Total Cost per Ounce of Gold Produced. The same procedure was performed as in Section 19,only substituting the Total Cost of producing a ton of gold(Section 18) in place of the direct cost(Section 13). (e.g.) Cost per ounce of gold produced • total cost of producing a ton of ore x the price of gold average recovery per ton The result of this computation was a total cost of $21.97 per ounce of gold produced. 21. Value of Bullion Produced during the Year. This value was obtained from page 4 of the report — $2,127,889.35.(As there 25 were too many figures to punch all the information on one punch card, the data were divided into two parts. The Second Set of Data were Numbered Alphabetically. A* Y e a r a n d ¥ d n e Number. Obtained from the report. B. Dividends paid. The value was obtained from page 8 of the report. Jor 1938 they amounted to #700,000. 0. Profit or Loss. This section was included to indicate whether the mine made a profit or loss on each ton of ore . milled. On the tabulating card a "one" was punched if a profit was made and a "two" was punched if a loss was incurred. ^ of Profit or Loa* ?pr This result was obtained by subtracting the total cost M S ^ S a r t S T ' 4). The amount for this year was #6.06 per ton. E-! ?£°-fit °r L o s s f o r the Year. This section was included to perform the same function as Section G. On the tabulating card a "one" was punched if the mine made a profit for the year and a "two* if it made a loss. The Amount of Profit or Lonn f o r the Year. Shis figure was obtained from page 8 of the Annual Report and the profit for 1938 was #847,866.14. The Balance Sheet. All of the information for this section was taken from pages 6 and 7 of the Annual Report. G. Current Assets. Under this section were included the following items| (a) Cash on hand (b) Gold bullion (c) Investments (d) Loans and Accounts receivable (e; Supplies and materials on hand These items gave us a total of current assets of #1,862,366.86 H. Deferred Assets. Deferred charges were included under this I. See Instruction Book. 26 section and amounted to #25,247.20 I." Fixed Assets. The following items were taken as fixed assets (a) Properties and development(Properties at actual co (b) Plant, "building,machinery and equipment. These items gave a total of fixed assets of #3022,139.42, J. Total Assets,. These amounted to #4,909,753.48. K. C u i ™ ^ ^ Under this section were included the items, - (a) Sundry Creditors Reserve for Income Taxes (c) Dividends payable. The total current liabilities amounted to #444,651.88. L" A£<?rual3 or Deferred Li.vn i ^  . This included the "Reserves.® The amount was $2,016,522.76. ^iMdli^ilities. This item was taken to represent the fixed capital and so only included the £hare capital issued and came to #1,751,750. The results of the above calculations were tabulated on accounting paper and were then transferred to -punch or tab-ulating cards'* by the use of the International Business Punching Machine . The data were then in a form ready for use in the statistical machines. Figures.*indicate, the fields into which the two master cards were divided for this survey. For a complete description cf the tabulating card and the use of the International Business Haines in this survey see the accompanying book of instructions. CHAPTER IV Analysis of Mining Costs Figures 8 to 22 inclusive relate to the data of the Group A Mines. ( 8 mines ) 900 800 700 • ro t> § 600 o O m 500 o o o d •H 400 •> o p) 300 ® 0 a< <D 200 100 The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1928) Mean Direct Cost. $ 11.55 _ _ Mean Total Cost, $ 13.46 _____ H-(t) CC to M • to CM • in 03 • to C\2 tn M tn N in C\2 in w in w CT> <H 0 01 r—1 N 01 w CO W W in « • - W r-w in in to in 01 ca 01 w 9 • • • 00 a> o H 01 01 to to to N W co 900 800 700 600 500 400 300 200 100 The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1929) Mean Direct Cost. $ 11.12 Mean Total Cost, f 13.45 to CM tn CM in in tn in in LO in CM CM CM CM CM CM CM « • • • • e . H CM to tn to C--H r-i H H H H H in CM CO H M LO in in in CM CM CM CM CM • « ® • ® CR> o H CM tn r-i CM CM CM CM to in CM CM in CM CM in CM <X> CM in CM EN CM ID CM 00 CM in CM in CM <y> o CM CO in in CM CM H CM CO CO H* 0*1 p hi ® VO Dollars & Cents. ( Costs.) 800 The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1950) Mean Direct Cost. $ 10.75 Mean Total Cost. $ 13.16 A in 03 . in « • m c\j . in M ® m 03 • in 03 • in 03 in 03 m 03 in CvJ in OJ in 03 in 03 in 03 m 03 in OJ ts H CO H CT> rH O 03 H 03 03 03 co 03 03 in 03 <0 03 EN 03 CO 03 05 03 • o tn rH to 03 co Cost s.) 900 oo The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1951) Mean Direct Cost. $ 10.90 Mean Total Cost. $ 14.27 _ _ 1 ffl t-J M cn CO H rH tO Dollars & Cents. ( Costs.) in H IO 02 . in 03 • in 03 . in 03 e in 03 « in OJ • in 03 in 03 in 03 in 03 in 03 in 03 in 03 tn 02 to 03 in 03 CN rH 00 H 05 H o 03 H 03 03 OJ CO 03 03 in 03 t o 03 CN 03 00 03 05 03 o" co • H CO • 03 CO 900 800 700 600 500 400 300 200 100 in m in in in in CM CM CM CM CM CM • • • • . CO C7> o H H rH CM H m CQ •to H in in in in in CM CM CM CM CM ® • * • in 00 H H H H H Dollars & Cents. ( costs.) The,Total and. Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1932) Mean Direct Cost. $ 11.32 Mean Total Cost. | 14.72 ____ to CM cn H in w . o CM in CM H CM in CM CM CM in <M CO CM in CM CM in M in 03 in CM <o CQ m CM t> CM in 03 00 01 in CM 0i CM in CQ o CO in in CM CM H CM co to CO <B o O o o o >> o p) <B FH N 900 800 700 600 500 400 300 200 100 in in in in in in in CM CM CM CM CM CM CM • e « » * • o CO CD o RH H H CM rH 3 The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines,(1933) Mean Direct Cost, f 13,75 Mean Total Cost. # 17.67 _____ in CM in CM m in in CM 03 H C--H in CM CO in CM 05 H in CM o CM in w CM in CM CM CM in in CM CM « • CO -TF CM CM in CM in CM in in CM CM tO CM CM in CM CD CM in CM cr> CM H» hi © W in CM O co Dollars & Cents.. ( costs. in in CM CM H CM co to ra <D O Vt O O o o S>» o fl CD & © fH 900 800 700 600 500 - 400 300 200 100 in m in in in in 03 03 03 03 03 OJ . • • • a • tN CO CT> O H H rH 03 H in 03 CO in w H in CV3 in H in 03 <o r-i in 02 m 03 CO H Dollars & Cents. ( Costs.) The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1954) Mean Direct Cost. $ 12.96 Mean Total Cost. | 17.75 in in in in in in in in in in in in 03 02 03 03 02 03 03 03 O? 03 03 03 • • 9 • • « . • . . cn o H 03 CO in CO I> CD o rH 03 03 02 03 03 03 03 03 03 02 CO in m 02 03 . . H 03 co to The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1935) Mean Direct Cost. $ 14.16 Mean Total Cost. $ 18.35 _____ 900 800 m ® o § o <tH o 700 600 o o o rt •H a tD & ® 500 400 300 200 100 to 03 lO w 00 in 03 in w in 03 O H H i—t in in in in in in in 03 03 03 03 03 03 03 « . • « . » . 03 3 in to CD H H H H rH «H Dollars & Gents. ( Costs.' The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1956) Mean Direct Cost. $ 14.62 Mean Total Cost. | 19.62 _____ m 03 o w in 03 H 03 in 03 02 03 in 03 to 03 in 03 ® W in 03 in 03 in 03 to 03 in 03 « D-03 900 800 700 600 500 400 300 200 100 m w in CM co in CM in 03 o H in 03 in m in in in in in 03 CM 03 03 CM 03 03 ® 9 ® 3 to in to c- m rH H rH rH H H Dollars & Cents.( Costs. The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines.(1937) Mean Direct Cost. $ 15.37 Mean Total Cost. # 20.92 _____ k in in in in in in in in M in 03 CM CM 03 03 03 CM 03 CM 03 • • • a . « . . . • CT> o H 0 3 co in to EN CO rH 03 0 3 03 03 03 CM CM CM CM 900 800 700 600 500 400 300 200 100 0 IAl The Total and Direct Costs of Producing One Ounce of Cold for Eight Canadian Gold Mines.(1958) Mean Direct Cost. $ 15.78 Mean Total Cost. $ 20.22 A ; t 1 to CM • in CM • in CM . in CM . in CM « in CM . in CQ • in 0 3 • in CM • in CM e in CM m CM in CM in CM m CM in CM in CM in CM to CM in CM m CM in CM in CM in 03 in CM in CM CO O H H H OS H to H H in rH t£> H £> H CO H o> H o CM H CM CM 03 to CM CM in CM to CM • CN CM CO 03 • CM • o to . rH CO CM to Dollars & Cents. ( Costs.) 1600 ™ 1400 o o o o o d •H O ci ® & 0) u 1200 — 1000 800 600 400 — 200 0 hij H-otj g CD M Mean Direct Cost. Mean Total Cost. o O O O O o o O O o • © • • • £N CD cr> O rH H H O O . O O • O O • O O 0 o o o o O O O O O O O O O O O O 03 H co H H m <—i to H rH CD ' rH CD H o 03 H 03 03 03 to 03 o o o o o o o o « • * * ^ LO <X) C-03 03 03 N Dollars & Cents. ( Costs.) CUMULATIVE CHART OF THE DIRECT AM) TOTAL COSTS OF 03 © O o o o o t» o a ® 3 & 0) u PR 1 4 0 0 200 H' m % © ro o Mean Direct Cost, Mean Total Cost. o o o o CO o o o o o H o o o o CM H o o . O O ® O O » O o • O O « O O o o O O O o O o O O O O O o o o O o to rH rH ID H <0 rH rH 00 rH CT> H o CM H CM CM CM to CM CM • in CM . ID CM c-CM Dollars & Cents. ( Costs.) ECONOMIC CirflJIATIVE CHART 07 THE DIRECT AND TOTAL COSTS OF PRODUCING ONE OUNCE OF G VLD FOR EIGHT GOT.n MINES.! 23 — 21 03 Si I t rH O 03 -P 03 o o 19 17 — 15 13 11 Mean Direct Cost. Mean Total Cost. o o o o o o rH CM CO O O O O o o in to o o ts o O o o o o & S S ° ° o H H H Frequency, ( in 000's of ounces.) o o o o o o o o in to is rH rH rH O o CO H o o o o cn o H CM EC0N0T1C CUMPIATIVE CHART OF THE DIRECT AND TOTAL COSTS OF PRODUCING ONE OUNCE OF GOID FOR EIGHT OOP) TTTTMRR. 19/Sfl. 25 23 21 _ 19 to FH cd i—i H O •d •H m •p ro o o 17 15 13 11 9 — Mean Direct Cost. Mean Total Cost. H. N ro o o N H o o o o CO ^ H H O O LO O O O O <X> C-iH rH O O O O O CT> O H 0 3 Frequency, ( in 000's of ounces.) Figures 23 to 33 inclusive relate to the data of the Group B Mines. (8-42 mines) The Total and Direct Costs of Producing One Ounce of Gold for Eight Canadian Gold Mines,(1928) Mean Direct Cost. $ 11.55 Mean Total Cost. $ 13.45 o O O o o o o o to LD t o to lO to to to . * « c • . • » c- CT) TH CO to o- CT> rH CM CM CO t o CO w to The Total and Direct Costs of Producing One Ounce of Gold for Nine Canadian Gold Mines.(1929) Mean Direct Cost. $ 11.19 Mean Total Cost. $ 13.50 o O O o o in in in in in a • » • • tN CD H co in OJ W to co to o o o O o O m in in in in in . . • • • IN CT5 H 3 in CN CO CO 900 800 o O O O O in in in in in . • . • • co w IN cn H H r-i rH H M Dollars & Cents.{ costs.) The Total and Direct Costs of Producing One Ounce of Gold for Bleren Canadian Gold Mines.(1930) Mean Direct Cost. $ 11.08 Mean Total Cost. $ 13.65 o o o o o o o o o o o ^ i n i n i n i n i n t n i n i n i n l n • * * . . . . . . . m c m c o c o c o c o c o ^ - ^ ^ ^ 900 800 700 600 500 400 300 200 100 o in o in •cn o O O o o O o o in in in in t o in in tn . . • e s . H t o in IS cr> H co i n i—1 H rH H H CQ CQ CQ Dollars % Cents.( Costs.) The Total and Direct Costs of Producing One Ounce of Gold for Eleven Canadian Gold Mines.(1931) Mean Direct Cost. f 11.10 Mean Total Cost. $ 14.03 9 9 ° o o o o o o o o i n t n i n m i n m i n t n i n t n m • • • . . . . . . . . r - c r > H c o m i > 0 > r - i £ Q t n c " -N C Q C O c o c o c o t o ^ ^ 900 800 700 600 500 400 300 200 100 o in o in CT> o O O O O o o o in m in in in in in in . • . • . • . . H to m cr> rH tn in rH rH H H H 03 03 03 Dollars & Gents. ( Costs, The Total and Direct Costs of Producing One Ounce of Cold For Fourteen Canadian Gold Mines.(1952) Mean Direct Cost. $ 10.77 Mean Total Cost. $ 15.15 _____ o O o o o o o o in in in in in in tn tn . . • 0 « . . . o Oi H eo m c - o rH M OJ t o tn CO tn CO The Total and Direct Costs of Producing One Ounce of Gold for Sixteen Canadian Gold Mines.(1953) Mean Direct Cost. $ 14.23 Mean Total Cost. $ 18.51 L ^ U M V i I 1 M o sr> o O O o O o o o o O O O o m in in in in in in in in in in in in . . • . • 6 • « . * • • . •—i CO in !> o> rH CO in CN CTJ H CO in i-H rH <—i i—1 rH W Oi CQ CO co CO o to cs CO Dollars & Cents.( Costs.) o CO cr> CO o in r-i o o o in in in • . • co in w ® o o o o o tf •H o ® ® u N 900 800 700 600 500 400 300 200 100 The Total and Direct Costs of Producing One Ounce of Gold for Twenty Canadian Gold Mines,(1954). Mean Direct Cost. $ 14.94 Mean Total Cost® $ 19.13 _____ i V N b U - . l 1 I ! I j -1 J o in o o O O o O in in in in tn tn . • • . . . CD H CO in EN cn rH H H H H o in t—i CM O in to CM O in in CM o in EN CM O O o o o o o o m in tn in in in tn in • • • • • • • . CD rH CO in I N CD rH CO CM CO co CO CO CO Dollars & Cents. ( Costs. o in . m o in EN H* ro tD ra <D O § o o o o o o a ® & (D u 900 800 700 600 500 400 300 200 100 0 The Total and Direct Costs of Producing One Ounce of Gold for Thirty-Four Canadian Gold Mines. ( 1935). Mean Direct Cost. $ 15.54 Mean Total Cost. $ 23.25 o o in in a « is a> o o O o O O in in in in in in • • • . . . H CO in o- CT> rH rH H H rH H O O o o in in in in • • 9 9 to in t-N N w w ( Costs.) o in rH CO o in to to o in in CO o in c-to o in en to o in rH o o o in in in • • . in IN H-CHi n CD W O The Total and Direct Costs of Producing One Ounce of Gold for Thirty-Eight Canadian Gold Mines. ( 1936 ), Mean Direct Cost. $ 15.55 Mean Total Cost. $ 21.51 LA o o o in m m • * • C-- 01 H H o in o in • o in . O in • O in O in o in o in O in O in o m o in to H in rH c-H CT> H H 03 to 03 in OJ o 03 cr> 03 • H to » to to in to O in c*-to o m a to o O o o in in m in » • • • H to in Dollars & Cents. ( Costs.) m ® o o o o o t>  o a CD & ® fH N 900 800 700 600 500 - 400 300 200 100 \A The Total and Direct Costs of Producing One Ounce of Gold for Forty-One Canadian Gold Mines. ( 1937 ). Mean Direct Cost. $ 15.37 Mean Total Cost. $ 20.89 ^ I / N l i / N o o o in in m o in • o in • o in . O in 6 O in • o tn * o in o tn o in o tn o in o in o in o in o in o tn O in o in 3 in rH t> rH o> rH rH CM cn OJ in w ts CM o> CM rH CO CO co in CO tN co a> tn rH CO in . o •sh Dollars & Cents., ( Costs. 900 800 700 600 500 400 300 200 100 0 The Total and Direct Costs of Producing One Ounce of Gold for Forty-Two Canadian Gold Mines. ( 1938 ) Mean Direct Cost. $ 16.80 _ _ Mean Total Cost. #21.81 o in o in o O O o in in in m • • ® • rH CO in IN H rH H H O O O O in in in in . • * CT> H to in H CM CM CM o in I N (M O m cn 01 o o o o in in in in . • ® . rH to in IN CO CO to CO Dollars & Cents. ( Costs.) o o O o o m in in in in • • • • * Ol H CO in I N to Chapter IV Analysis of Mining Goats •Direct and Total Costs of Mining. On examination of Figures 8 to 33, it is apparent that the direct and total costs of mining have increased during the period studied from 1928 to 1938. This increase is indicated in the cost curves for the two groups of mines which have been. treated separately; Group A is composed of eight mines and Group B of all the mines for which information was obtained. . The cost curves, instead of being regular,are discontinuous and show the wide variation in the costs of gold mining within the industry. Were it possible to include in this study all the gold mines in Canada, would smooth cost curves be obtained. Woo lot Athe gaps in the continuity of the present ones be.. filled in by the included data? In the event of this, the"smoothing9 of the present frequency curves would be justifiable, but whether this is the case or not is 'difficult to determine. Since the eight mines included in Group A are such large companies and produce a large proportion of the total gold recovered in Canada, their inclusion in any study is bound to weight the results of that work. Because there is such a large dispersion in the costs of these major producers,the practice of "smoothing" the frequency curves is not justifiable in this ' case. However, as these mines are responsible for such a large part of the total gold produced in Canada, it is reasonable to assume that even if all the producers were included, the Table Ho. Xlll One Ounce of Gold Group A — Eight Mines Year Mean Direct Cost Standard Mean Total Deviation Cost Standard Deviation I 2.47 1928 $ 11,55 1 2.41 113.45 1929 11.12 2.88 13.45 2.58 1930 10275 • 2.49 13.16 2.63 .1931 10,90 2.48 14.27 4.36 1932 11.32 2.99 14.72 3 o 5 9 1933 13.75 2.88 17.67 2.67 1934 12.96 3.40 17,75 2.85 1935 14.16 3.87 18.35 3.76 1936 14.32 3.57 19.62 4.56 1937 15.37 3.06 20.92 4.11 1938 15.78 3.09 20.22 3 $ 32 Group B — All Mines 1928 11.55 2.49 13.45 2.47 1929 11.19 2.95 13.50 2b87 1930 11.08 .. 3.09 13.65 3.47 1931 11.10 2.72 14.03 3.74 1932 10.77 3.34 15.15 4.04 1933 14.23 3.78 18.51 4.44 1934 14.94 4.47 19.13 4.50 1935 15.54 4.84 23.25 4.83 1936 15.55 4.62 21.51 5.25 1937 15.37 3.87 20.89 4.62 1938 16.80 3.85 21.81 4.70 Year 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 Table No. XIV Costs of Milling One Ton of Ore Group A -- Eight Mines Mean Direct Standard Mean Total Standard Cost Deviation Cost Deviation # 4.75 1 .95 & 5.59 # 1.32 5.19 1.31 5.92 1.63 5.06 1.03 6.21 1.54 4.84 .86 6.15 1.01 4.73 .69 6.41 1.05 4.73 .92 6.43 1.26 4.74 .94 6.70 1.58 4.93 •83 7.36 1.69 5.05 •82 6.87 1.41 5.43 •77 7.17 1 e 28 5 .27 .82 7.04 1.11 Group B — All Mines 4.75 .95 5.59 1.32 4.70 1.30 5.94 1.65 5.07 8 69 6.48 1.54 5.13 •98 6.21 1.06 5.05 <.92 6.70 1.67 4.86 •91 6.83 1.82 4.95 1.43 7.09 2.26 4.50 1.54 8.07 2.70 5.58 1.53 7.78 2.34 5.83 1.47 7.00 2.69 5.50 1.55 7.47 2.21 YEARLY AVERAGE DIRECT AND TOTAL C03TS OF PRODUCING ONE OUNCE OF GOLD FOR EIGHT CANADIAN MINES. (1928-1958). 05 w 1928 1929 1930 Mean Direct Cost. _ 1931 1932 1933 1934 1935 _ _ _ "Mean Total Cost. <r, 1936 <r, _ 1937 1958 YEARLY AVERAGE DIRECT AND TOTAL COSTS OF PRODUCING ONE OUNCE OF GOU FOR SEI^CTED CANADIAN MINES (1928-1958). CD u cd o "d •3 CO -p S3 O O 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 1931 1932 1933 1934 1935 Mean Total Cost. 1936 <r, 1937 1938 0 1928 1929 1930 Mean Direct Cost. 6 ro W Cn 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 Mean Direct Cost. f Mean Total Cost. <T >x| H-0>5 cr> ro fH cd iH rH O m •G o o 900 10 / / / / \ y y' y / X v \ \ y ' ** p —--p y y — ** -1 • _ - - "" • _ - ^ y / * y y' y y y 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 Mean Direct Cost. <f Mean Total Cost. f H* Os n ® NJ 28 statistical measures derived, therefrom would not vary appreciably from those derived in this study. The cost curves in Figures 8 to 18 for Group A and Figures 23 to 33 for Group B shift to the right each year, showing the amount of increase annually for each group. The dispersion of costs for Group B,(Figs. 23-33) shows a marked increase to-wards the end of the period in comparison to the beginning,5 This increased dispersion might be explained by the inclusion in Group B of many new mines whose development costs would be above normal. The rising secular trend of the costs of these two groups is best shown in figures 34 and 35, in which the mean direct and total costs of mining one ounce of gold have been plotted. The standard deviation(amount of dispersion) of the costs are, plotted for each year as dotted lines, because of the inclusion in Group B of many new mining properties whose development costs are usually high, the total increase in the mean total and direct costs for Group B is greater than that of Group A. The mean total and direct costs of milling a ton of ore have also been computed. In this survey the costs per ounce of gold produced will be dealt; with solely.As they are based on the cost per ton of ore milled,the ratio increase of the two groups of data will be identical. The former was computed for comparison purposed with data issued by the different mining companies. The "T" test was applied to the .arithmetic means for the different years from 1928 to 1938 for both groups of mines. This test indicated whether the samples .treated have been 29 drawn from the same or from different universes « X. "1 T - where S X1 i s the mean of the first sample and is the number of cases in the first sample; is the mean of the second sample and Ng is the number of cases in the second sample. S is the average standard deviation of the two distributions. In all cases it was found that the differences in the means calculated for the in ines of Group A and those calcul-ated for Group B were not statistically significant. That is, the discrepancy in the values of the two means could "be attributed to errors in sampling. The mean total and direct costs of producing one ounce of gold for the eight mines of Group A were not judged significantly less than for the country as a whole being compared to Group B. The two samples apparently came from the same homogeneous parent population. Proceeding on the assumption that the data has been taken from the same parent population, we may now set limits within which the true mean costs of the mining industry as a whole will fall. Talcing 1928 as an example, the mean direct cost of producing one ounce of gold for the mines of Group A is $11.35 1. See llills,Statistical Methods, JJ.Y. 1938, Henry Holt & Go. page 606. 30 and the. mean total cost is $13.45. Within what limits would the mean direct and total costs fall if all of the gold mines in Canada were included in the summary? Given the formula S where H M i s t h e standard deviation of the mean(which we are calculating). S is the standard deviation of the sample we are using; IT is the number of cases included in the sample, the standard deviation of the mean direct cost of producing one ounce of gold in 1928 is ^M = 2°41 s * -91 ( S e e Tahle 13 for S & F). V 8 - 1 « « r For the total,of producing one ounce of gold the standard deviation is Ar - 2.47 M ~ • - $ .94 r 8 - 1 Therefore, for 1928 we may assume that the chances are 68 out of 100 that the true mean direct cost of producing one ounce of gold for all the mines in Canada lies between #12.46 and 110.64. Also for the same probability, the true mean total cost for that year lies between $14.39 and $12.51. By using the above formula limits may be set for every year within which the true mean mining costs of all the mines in Canada lie. From 1928 to 1932, the mean direct and total costs of the two studies remained fairly constant. The fact that up to 1932 the sample B is composed mainly of the mines of Sample A 31 would explain the similar trend of costs for these two separate studies. As the eight mines constituting Group a are by far the most important producers of gold in Canada, they will weight Group B in which they are included,in proportion to their total production of gold. Their costs etc will be reflected in the final results of that study, From 1932" to 1938 the secular trend of the mean and total costs of both series is upwards, being fairly regular in each case. The sudden rise in the total costs of Group B in 1935, (See Fig. 35), is the result of the inclusion in the sample of that year of some 14 new mining properties whose high develop-ment costs came under this division. Figure 6 indicates the items included under total and direct costs and those of dev-elopment and exploration, depletion and depreciation which are always high for a new mine, fall within this category. The fact that there is no rise in the direct costs apprears to substan-tiate this hypothesis. There has been an increase in the direct and total costs of mining gold in Canada from 1928 to 1938. This increase has been shown to have taken place in the study of eight gold mines, (Group a)which have operated continuously during that period." These costs are also shown to have increased for Group B which includes samples of from 8 to 42 gold mines, depending on the year studied. The increase in costs has been gteater for Group B than for Group A. The question is now raised as to why this increase took place. In analysing the increase in the costs of production the data used were those pertaining to Group A, as the mines Legend for Mining Costs, Chart (a). (1) Mine development. — (2) Mining costs. -(5) Total direct mining costs.. — _ _ (4) General expense. .  (5) Milling costs. ______ (6) Total direct operating costs. (7) Overhead. (8) Total direct operating costs plus overhead. Chart (b). (1) Development costs. . (2) Depreciation. ____ (3) Taxes._ _ _ _ (4) Extra expenditure including depletion. (5) Total cost per ton of ore milled. _ _ (6) Total direct cost per ounce of gold produced. (7) Total cost per ounce of gold produced. o o 03 W <y> -p Pi ® o h ffl PM 800 700 600 500 400 300 200 100 0 (a), >4 o<a © W CO 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 YEARLY PERCENTAGE INCREASE OR DECREASE IN THE MINING- POSTS OF EIGHT CANADIAN GOLD MINES. ( 1928 - 1938). (b). YEARLY PERCENTAGE INCREASE OR DECREASE IN THE MINING COSTS OF EIGHT CANADIAN GOID MINES. ( 1928 - 1958.) 118 includedin the yearly sample were the same in each case. Thus any discrepancy due to the inclusion or exclusion of different .mines was avoided. On examination- of Figures 38 and 39 this rise in mining costs may "be attributed mainly to two items,- taxation and general overhead. Taking 1928 as the base year, the percentage increase or decrease of each item composing the total cost of production of gold has been plotted for each year from 1928 to . 1938. Taxation shows by far the largest proportional increase, rising until 1937 when the taxes paid in that year were 1,003^ of the taxes paid in 1928. The rise in overhead expense is not so drastic, rising to. 460^ in 1935 and dropping to 440# in 1937, of the proportion expended in 1928 for this item. It must be remembered however in interpreting these charts that these percentage figures are the relation of the amount paid out for each item in a given year, say 1937, to the amount paid out in the base year of 1928. It is not the proportion which each item composes of the total costs of mining for each year, but it is the percentage increase in the item over fchdrgeriod studied. For this reason, the magnitude of their increase is not reflected proportionately in the rise of the total and direct mining costs as a whole® The relationship of the individual items composing the total costs is shown in Figure 40 which indicates the ratio of each cost item to the total cost for each year studied. It is apparent that these two items, overhead and taxes(mainly taxes), are by far the most important factors in bringing about the increase in mining costs in the industry. In 1928 together they lOC/fo 75 io 50% 25% 1928 1929 H-P >-i ® o 1934 1936 1937 1938 YEARLY PROPORTIONATE COSTS OF PRODUCING Offl OUKCE OF GOID FOR EIGHT CANADIAN GOID MINES.( From 1928 to 1938.) H-m ® 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1958 THE FEJ5D ASSETS, LIABILITIES AND DIVIDENDS OF EIGHT CANADIAN GOLD MINES. ( 1928-1938.) Fixed assets. Fixed liabilities. Dividends paid. .33 composed approximately of the total costs and rose steadily until in 1938 they composed approximately 21% of the total mining costs. The overhead expenses increased from 1% in 1928 to 6% of the total mining cost in 1938.and the expenditure for taxes increased from 2% in 1928 to 2Vfo in 1938. This would seem to substantiate the claim of the average mining man for less taxation, claiming that it would result in increased mine development. It would appear that this increase in the proportion expended for taxes and overhead of . mining costs as a whole, is the pertinent question, not that of a slight increase of approximately 8% in the to$al mining costs The increase from 5% in 1928 to 27^ in 1938 of the percentage expended f or taxes and overhead, would explain the riseppfr.iihe 8% in the total cost of gold mining. Though these are not the only items which increased, they account substantially for the slight rise during this period^ Organization and Operation of the Industry from 1928 to 1938 Figure 41 which shows the total fixed assets of the eight companies included in Group A indicates that there was no change in the fixed assets of these companies when the price of gold rose in 1933. In view of the fact that there was no expansion in the capital equipment of these mines along with the rise in the price of gold, the economic theory of margin-alism appears to be upheld. Instead of the existing producers expanding the size of their plants to meet and take advantage of the increased value of bullion, they continued to operate at their present capacity and new mines were established which took advantage of the increase in the price of gold. Some of 1,750 CO cd H H O -cJ Vi o o o o t» o p) (D <D U P-4 1,000 7,500 6,500 5,500 4,500 5,500 -2,500 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 THE FIXED ASSETS, LIABILITIES AND DIVIDENDS OFSEIECT CANADIAN GOLD MINES.(1928-1938) Fixed assets. Average value per mine.) Fixed liabilities. Dividends paid. H-C2 P ffi N 123 these mines, as mentioned previously, were sub-marginal producers, but with the increase in the price of gold they could be operated at a profit. Others were not marginal mines but were new developments resulting from the increased prosp-ecting activity initiated through the revaluation of gold. There is however, a modification to be made in stating that the mines in Group A did not increase their production in 1933, Figure 44 indicates that the tonnage treated increased slightly from 1933 to 1938, This might be explained by the fact that the mines were not operating at full capacity previous to 1933 and this slight increase in the tonnage treated brought their operations up to the point where they were running at full capacity.' A large proportion of the 162 new gold mines in Canada which were studied in Chapter 11 have been new mine developments. Group B includes many of these new mines in its yearly sample and in chart 42 the average value of the fixed assets per mine for this group from 1928 to 1938 is plotted. It is apparent that the average value per mine for this item decreases each year and may be attributed to the inclusion of the new mining properties in the sample treated, the fixed assets of which would undoubtedly be on a small scale during the first years of production. The same secular trend is shown in the fixed liabilities (capital stock) of the two groups studied. There is no increase in the issue of stock for the eight mines included in Group A. (See Fig. 41). There is a decrease in the average value of the o 19,400 17,400 to CD o 13,400 o o o 9,400 <>» o d CD ffl u ptf 5,400 1,400 1,850 — 1,800 — 1,700 1,600 1,500 1,400 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 THE GOLD PRODUCTION OF EIGHT CANADIAN' G0U3 MINES. ( 1928 - 1938. Cumulated Actual Production. fij H* (K M 625 65 w h ctf I—I H o t> Vl o o o o o" o o >> o a (D & <D 475 — 55 325 45 175 35 25 25 h" Otj £ 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 THE VALUE OF THE BULLION PRODUCED BY EIGHT CANADIAN OOID MIKES. ( 1928-1938.), Actual value of bullion. Cumulated value " 1938 800 CO o -p Vl o o o o cT o o • H o a <D CT1 (D SH N 43 23 H-(ft cn 1928 1929 1930 1931 1932 1933 1934 1935 1936 THE TONNAGE TREATED BY EIGHT CANADIAN OOID HEMES. ( 1928 - 1938. ). Actual tonnage treated. Tonnage cumulated. 1937 1938 35 stock per mine for group B (See Pig. 42). The reasons for this decrease are identical to those set forth in the previous paragraph explaining the decrease in the average value of fixed assets per mine for Group B. The dividends paid by the mines in group A show an increase for this period(See Fig. 41'). However when all the mines are included as in group B, the average dividend.paid per mine decreases(See Fig. 42). Again this phenomenon may be explained • by the inclusion in the sample for group B of the new prop-erties. It is unlikely that these new mines would pay any dividends for a few years as any profits would probably be used to further development work or set up depletion reserves. Detailed Analysis of Group A Mines In Figure 43 the actual and cumulated gold productions of the eight mines included in group A are shown. From 1931 to 1932 the actual production of gold in ounces increased sharply and was probably the direct result of an increase in the tonnage treated during that year(See Fig. 45). Also the value of the bullion for that year increased.proportionately(See Fig. 44). From 1932 to 33 the gold production decreased and this may be attributed to two factors. In the first place the tonnage treated during this year decreased slightly from the previous year and as a natural result we would expect a decrease in the amount of gold produced. On the other hand, the decrease in the number of ounces was far greater in proport-ion to the decrease in the tonnage milled and this decrease in gold produced might be exp^Lned by the mining of ore of a lower grade(i.e. less gold content). From Figures 43,44 and 45 Figure 46. The mining of lower grade ore. '(a). The paying vein of the mine. (b). Ore removed in the mining process and which under the old price of gold wasddisca-Med&as waste. With the new price of gold it is refined and the gold content is removed. (c).w^sQs which is removed in the mining process. Figure 47. (a). The paying vein of the mine. (b). Ore removed in the mining process , all of which was treated for the gold content at the old price. (c). Under the new price of gold this additional ore is mined for the gold content is now of sufficient value to pay the expenses necessary for recovering it. 36 it is apparent that the gold production, the tonnage milled and the value of the bullion produced all increased, and from 1933 on it appears that the eight mines in group A continued to mine low grade ore with satisfactory results. The Mining of Low Grade Ore The practise of mining lower grade ore when possible is carried out by most mining companies and is done in order to prolong the life of the gold mine. The rise in the price of gold in 1933 enabled many mines to develop and mine large bodies of ore which otherwise could not be handled at a profit because of their low gold content. In general there are two methods in which the marginal ores are utilized depending upon the type of deposit in each case. If a mine is operating successfully on a deposit which is of the type shown in Fig. 46, "the majority of the rock which is removed in the tunnelling process is discarded as waste. It has not sufficient gold content to cover the expenses necessary for its recovery, but still it is necessary to blast and remove this rock in order to extract the ore of the paying vein. Uo larger tunnel or shaft is constructed than is necess-ary to ennable the miners to work and removed the high grade mineralized rock. With the rise in the price of gold this ore which had previously been discarded, has a gold content which is now of sufficient value to cover the expenses of the milling etc necessary to recover it. As a result, most of the rock which is removed in the tunnelling process is put through the mill and the gold removed. In most cases it is profitable to mill the waste rock which had been discarded previously 37 asut is no longer a submarginal ore. This ore and that v/hich is removed from the mine itself may be treated very econom-ically as the facilities necessary for its handling are already installed for mining the higher grade ore. Possibly this in-crease in the tonnage handled will realize greater efficiency from the equipment through full capacity operations which the treatment of the additional ore might entail. The other typ® of gold deposit is illustrated in Figure 47. . The present paying vein is in the centre of the tunnel and all of the rock which is removed in the tunnelling process is of sufficient gold content to warrant its refining. However, the rock which composes the ceiling, floor and walls is not of sufficient gold content to warrant its treatment and so the tunnel is maintained at its present size. These are the assay marginal ores of a gold deposit. In the first illustration they did not extend to the walls and floors of the tunnel but were ... j! . i * . , _ . ffie ores tM/fh no v a S t / " T " mined during the tunnelling andAwere discarded as waste. With a rise in the price of gold, this ore,which previously lay outside the assay margin, ha* a gold content which is now of sufficient value to cover the expenses incurred in the mining and refining necessary to obtain it. The walls of the tunnel are made wider and the floors and ceiling are extended to a point where the ore becomes marginal. That is, the value of the gold content just covers the expense incurred in recovering it. As in the previous illustration this operation may be carried out very economically for the facilities necessary for the work are already installed. It would appear from the previous conclusions that operations. 38 of this type have "been carried on "by the eight mines of group A since 1933, Their tonnage has shown a steady increase since that year but their actual gold production in ounces has8 on the whole, remained fairly constant. The life of a mine is prolonged by this operation and it would appear that these mines are reserving their higher grade ore to be mined in the future CHAPTER y Financial Organization of the Industry Chapter Y Financial Organization of the Industry In the previous chapter it was shown that with the increase in the price of gold in 1933, the mines operating at that time(Group A) instead of continuing the mining of rich ore, "began to treat ore of a lower grade. As a result a smaller production of gold was obtained but the new value of this de-creased production was still appreciable. For the eight mines included in Group A the value of their total bullion production rose from forty-seven and a half million dollars in 1933 to sixty-seven and three quarter million dollars in 1938(See Fig.44 The number of ounces of gold produced in 1933 was approximately one and six-tenths million b0«c«. • and in 1938 it had only risen to about one and three-quarter millions. It would appear then that although mining lower grade ore, the increase in the value of the bullion produced would warrant an expectation for these mines of increased profits which is the case as is shovra in tables 15 and 16. Figure 41 indicates that with this increase in the value of the bullion produced there was an increase in the amount of dividends paid out during these years. In 1933 the total amount paid by these companies amounted to eighteen million dollars and rose to approximately twenty-seven million dollars in 1938(See Fig. 41). The amount paid by each mine for the period 1928 to 1938 is indicated in Tables 15 and 16. It is rather interesting to note that there has been a constant ratio between the number of mines which have shown a loss, after dividends have been paid and those which have shown a profit. .-Table*. XV.-:' ( Data listed by mine.) Mine number. Tear. 2 a ay 3 u 3 i J 2 3 3 3 4 3 b 3 6 3 7 3 8 Amount of profit or loss for the year, dividends not paid. 1 5 8 0 8 1 9 5 4 7 4 y S 6 t) 5 1 >9 9 9 9 4 a s H o 3 y a 0 1 9 2 3 1 0 5 9 4 1 5 7 a 3 4 4 3 8 7 5 1 1 6 9 4 5 6 9 5 1 0 . 2 1 4 1 7 Amount of dividends paid each year. b 5 y 9 0 13 19 8 0 1 6 4 3 7 5 1 6 4 9 7 5 8 2 4 8 7 5 6 5 9 9 0 0 ' 6 5 9 9 0 0 8 2 4 8 7 5 8 2 4 8 7 5 1 - Profit 2 = Loss. 1 1 1 1 1 '1 1 1 1 1 Amount of profit" loss after the payment of the dividends.' - 1 5 a U 8 1 9 5 4 7 4 2 6 6 9 5 to 8 0 1 4 y 3 0 fa 4 3 6 9 4 8 ' . « 3 4 5 4 0 6 5 4 3 a i 5 a i e i a o H a o l 9 i> s 4 a a y 3 o 3 i 3 a 3 J 3 A J> b 3 to 3 7 3 8 3 B 8 Y a 5 4 5 3 0 5 3 3 5 5 S 3 4 8 4 3 a a 9 a 7 r, 9 2 3 3 6 a 4 - 3 a a 2 O 3 1 D 0 4 5 6 3 oia 3 a 6 9 4 8 9 3 3 0 10 1 4 1 UH8 3 6 0 3 9 a 1 8 9 5 2 8 6 0 2 8 6 6 2 8 7 2 3 1 1 8 2 8 8 4 2 8 8 4 2 6 4 3 19 2 2 2 1 to 3 2 4 0 3 2 1 to 3 2 8 6 2 8 to 2 8 6 1 4 3 2 8 6 2 8 6 9 2 9 8 5 8 2 15 5 7 2 2 15 4 2 7 2 7 7 .321268 18 110 0 4 3 4 8 l) 5 ' 6 O O 6 4 7' 3 4 4 7 2 4 1 4 5 2 1 2 4 1 4 U 3 0 -2 i j . 9 1 4 5 2 0 0 1 8 1 5 5 8 - 3 2 0 2:8 3 0 e> i 3 2 3 3 3 4 J 5 3 to 3 7 3 f i 4 8 7 8 1 8 t 4 4 i1 Jl ii • 5 1 4 4 8 9 1 1 8 2 4 3 7 1 6 4 0 7 0 3 1 9 3 y 2 7 2 3 8 3 1 1 3 2 3 8 4 6 0 4 6 3 9 4 3 3 0 y 3 9 4 5 5 9 2 , 61 13 0 2 8 2 5 o 0 0 8 2b 00 0 9 .6 2 5 0 0 , 1 6 5 3 U 8 8 ' 3 0 4 U b 0 2 3 3 0 81 6 0 3 3 2 - 0 5 6 1 3 8 5 4 4 9 2 3 8 5 0 0 0 3 . 3 y j L . t -5 1 4 I o 9 jy/ij? 6 7 8 2 0 3 .2 8 .5 .3 8 4 7 9 0 5 3 0 ' 5 3 7 8 b r, . 6 2 2 7 , 4 H ' 9 1 1 u 0 2 2 to 3 0 2 2 8 2 9 3 O 3 1 3 2 3 3 3 a J> 5 3 b 3 7 3 8 1 4 7 0 8 3 7 1 7 7 B 2 5 1 8 5 7 1 0 9 9 0 8 3 5 9 - 5 8 3 3 7 2 9 1 9 6 5 7 3 .7 5 9 0 a s 3 7 1 9 7 2 0 4 1 2 4 0 6 2 3 1 4 3 '4 to 8 4 0 5 5 1 5 3 -9 5 3 3 3 4 9 5 3 3 3 4 9 5 3 3 3 4 9 5 3 3 3 4 1 2 3 9 3 3 4 17 16 0 OT 3 3 3 6 6 "6 9 3 8 1 3 3 3 6 3 6 7 3 3 3 6 4 3 8 0 0 0 3 3 8 9 3 3 3 6 5 1 7- 5 0 3 : 8 2 4 9 1 7 8 to 7 6 2 4 3 7 4 9 1 4 8 0 9 9 7 1 2 0 3 6 5 6 4 2 2 '3 5 6 9 3 6 1 6 2 5 0 7 2 6 1 2 3 t- 5 3 5 1 to ] 8 17 2 8. 2 9 3 0 3 1 3 2 3 3 3 4 3 b 3 to 3 7 3 8 4- o 1 5 3 6 3 8 3 9 to 3 3 5 0 8 3 9 6 2 5 7 3 7 6 5 0 5 5 0 4 9 5 7 9 8 5 2 8 3 5 to 5 2 3 0 9 6 0 6 7 2 8 2 0 4 8 8 5 1 7 6 3 6 3 5 0 2 7 4 4 3 1 0 9 3 - 2 2 1. 1 1 1 1 1 '1' 7 y 6 6 9 1 4 4 O to O 6 5 1 9 7 2 8 - 6 4 2 0 4 2:,? B 885 1 5 5 5 1 7 6 3 8 2 6 3 7 b 2 1 5 0 2 3 8 to 7 ' 4 4 1 2 . 8 6 9 0 2 4 0 9 3 2 a 8 a y 3 0 -3 1 3 2 3 3 3 4 3 5 3 to J, 7 3 8 9 say 8 6 1 8 9 0 1 0 , a o 3 o 5 i 1 3 7 2 1 4 14 172 0 1 6 3 5 1 3 1 6 6 7 3 o 1 6 1 0 0 3 5 1 8 2 8 0 7 1 1 2 7 8 1 5 7 1 7 4 1 5 7 1 7 4' -318975 4 7 9 4 0 2 5 3 2 6 7 0 ' 1 .1 1 1 1 1 1 1 1. 1 9 2 2 9 8 6 1 8 6 o i o 2 0 3 0 5 1 1 3 7 2 1 4 14 17 2 0 6 3 3 9 9 5 5 6 1 5 5 9 7 3 ' 3 H 8 7 8' 1 7 8 6 0 8 2 8 2 9 3 0 3 1 -. 3 2 3 3 3 4 3 b to 3 7 3 . 8 8 0 8 8 1 ' 2 5 4 0 1 6 0 2 7 2 8 9 8 5 3 9 0 5 6 0 1 6 5 9 1 0 1 1 1 3 2 1 5 1 9 3 1 0 1 4 5 7 0 5 7 2 3 7 8 9 1 9 7 5 9 6 0 0 6 3 8 4 7 9 2 9 7 3 2 4 1 7 2 0 0 0 0 0 0 2 8 0 0 0 0 0 3 0 0 0 0 0 0 4 8 O 0 0 0 o •6 0 U 0 0 0 0 to 0 0 0 0 0 0 7 0 0 0 0 O O 8 0 U o 0 0 0 0 0 0 0 O U 0 a o o o o u o 8 0861 5 4 0 1 6 0 5 2 8 9 8 5 9 0 5 to o 1 1 7 y 7 O 1 1 7- 2 1 5 1 9 3 4 1 4 5 7 0 5 a 3 7 8 <l 1 1 7 5 9 to 0 0 -3 8 1 - 5 2 0. 8 2 2 o 7 5 8 3 2 - 9 3 U . 3 1 3 a 3 3 3 4 3 b 3 to 3 7 3 8 1 1 6 1 0 4 1 i 4 1 2 9 1 7 7 2 6 4 4 0 3 3 1 2 4 1 8 5 0 1 5 1 4 0 6 4 7 3 9 8 1 to 6 0 3 3 -4 «• 4 8 2 0 9 1 7 9 4 y 4- 1 5 0 4 0 3 0 6 4 5 2 3 3 3 8 8 3 7 7 9 8 0 o o 'f y 8 0-0 0 7 -9 8 0 0 0 - 7 - 9 8 0 0 0 -9 9 7 5 0 0 1 4 9 6 2 -5 0 1 5 9 6 0 0 0 1 5 9 8 0 0 0 1 5 9 6 0 0 0 15 9 6 0 0 0 1 5 y to 0 0 0 1 1 1 1 1 .1 1 1 • 1 1 1 J II A O 4 Y : 2 4 . 5 9 - 8 1 3 4 8 6 0 3 4 9 5 , 4 8 4 7 -8 0 7 0 9 - 1 .1 4 b 5 4 4 2 4. 4 3 4' 1 5 1 5 3 2 4 o 3 3 2 1 4 6 4 5 ' 3 4 2 5 3 3 3 3 b 8 .8 8 3 7 Table m . ( Data listed by year.) Sflne Amount of profit or Number. loss for the year, dividends not paid. Amount of dividends paid each year. 1 = P r o f i t 2 ~ Loss Amount of profit or loss after the payment of the ' dividends. a 8 0 3 - -1 5 8 0 8 1 4 3 a 8 7 5 o 3 b 4 8 7 8 1 8 1. 0 1 4-7 0 8 3 7 1 1 4 b 1 5 3 0 9 1 3 9 2 2 9 1 4 ' 8 0 8 B 1 1 8 1 1 6 0 6 4 7 2 1)6 0,2 8 1) 8 a fa 0 0 O y 5 3 3 3 4 5 4 1 3 0 0 0 YilBODO . 1 b 8 0 8 1 4 2 7 2 7 7 . 3 3 7 1 8 2 b 1 Y b 0 3 -Y y • j <-> y i sa a 9 B o H 8 i 3 6 2 6 J 7 10 l i 1 3 1 4 1 B y 5 4 Y 4 2 5 4 5 0 1 8 4 4 4 9 3 5 1 7 7 8 2 b 1 3 b 3 0 6 u 6 - . 8 6 1 8-2 5 4 0 1 S 0 1 a 4 3 9 B 1 2 0 6t) 2B 6 9 5 3 3 3 4 3 : 1 9 B 0 0 0 2 0 0 0 0 0 0 7 9 8 0 0 0 9 b 4 7 32121. 8 4-4 4 9 3 5 " 8 3 4 9 1 7 4 . 4 0 . 6 0 ( 5 8 6 18 . b 4 0 1 ' 6 0 2 4 -5 9 8 1 0 3 9 2 6 8 5 6 5 9 9 0 1 4 ' 3 0 5 3 3 8 6 ' 2 8 7 2 2 8 6 : 1 b 5 1 4 4 8 9 1 1 b ' 8 5 7 1 0 9 6 3 3 3 4 , ' 1 1 - 3 9 6 3 7 a -8 . 3 4 : 4 . 4 0 0 : 0 . . - - , - X 1 3. - '' 9 0 . 1 0 . 1 1 4 .. • 2:7 a 8 9 8 5 - 2 2 0 0 0 0 0 . ' •'..•• 1 1 8 • •• 1 1 4 6 6 0 3 ' .: 7 9 8 0 0 0 ' ' :1 a «r> a-s ' I R I 1 1 0 O b 1 4 4 a 9 b o 7 f. a 4 b 1 v 7 n ..bull) 3 4 8 6 0 3 • ,b 10 11 1 3 1 4 1 B 1 9 9 9 9 4 3 5 5 a 9 4 8 1 1 8 2 4 3 7 9 9 0 8 2 5 3 5 O B 2 0 4 2 0 3 0 6 1 3 9 0 5 6 0 1 l a y 3 4 B 4 13 19 8 0 3 1 I B 1 4 3 .. ti a s o o o 9 5 3 3 3.4 3 4 4 .4 I) O 0 3 0 0 0 0 0 0 -7 y B 0 0 0 b B 0 1 4 4 3 4 8 0 5 . 3 5 7 4 5 7 . 3 7 4' y 1 6 4 a-o 4 'a O 3 0 b 1 y o b ><) o l 4 9b"u-i i o i l 1 3 1 4 1 8 a S 8 0 3 9 3 4 8 4 9 3 3 1 6 4 0 7 0 3 9 5 8 3 3 7 3 9 6 2 .8 B 5 1 3 7 2 1 4 6 5 9 1 0 1 1 1 7 7 8 2 0 9. 1 6 4 9 7 5 2 B 8 4 2 B 6 9 6 2500 1 2 3 9 3 3 4 3 6 9 0 0 0 0 4 8 0 0 0 0 0 9 y 7 5 0 0 y 3 O b 4 • 6 0 0 6 4 7 0 7 8 2 v) 3 . 4 B 0 9 -9 7 2 7 a H b 5 1 3 7 2 1' 4 1 Y 9 7 0 1 1 7 8 0 -7 0 9 3 5 0 3 4 b 1 0 - 1 1 1 3 1 4 1 8 2 0 1 9 2 3 3 2 2 9 0 1 0 1 9 3 9 2 7 2 2 9 1 9 6 6 7 .5 7 3 7 1 7 6 1 4 1 Y a 0 1 3 2 1 5 1 '9 3 2 64 1 7 9 4' -1 6 4 9 7 5 2 8 -8 4 2 8 6 1 6 S 3 8 8 8 171b0 0 1 4 1 6 2 0 0 0 6 0 0 0 0 0 0 1 4 9 6 2 b 0 3 6 9 ^8 3 4 4 7 2 4 2 8 5 3 L 1 2 0 3 6 5 f> 1 5 5 5 1 - 7 r, 1 4 1 7 3 0 7 2 1 5 1 9 3 -1 1 . 4 : 5 5 4 4 0 3 1 0. 5 9 4 1 5 8 2 4 8 7 b • 4 a 7 8 9 1 4 1 * 2 6 4 3 9 2 9 - b ' ' 3 0 3 1 1 3 2 ' 3 - 0 4 0 b -o a 1 0 . 3 . 7 5 9 -0 2 5 3 3 3 b b b 9 1 .1 '6 5 0 5 3 6 3 6 8 8 8 0 0 0 1 3 . .1 b 3 -5 1 3 • 1 b 7 i 7 4 1 4 1 0 1 4 5 7 OS b 0 0 0 0 0 0 1 8 4 0 3 9 4 1 5 1 b -9. b 0 0 0 2 3 4 b 4 0 1 a b a 1 2 . 7 y o 5 3 0 4 a 2 3 b 6 3 8 a b 3 7 - 6-339 4 1 4 5 Y. O 5 a 4 .4 3 4 1 5 0 ' 3 7 2 3 4 4.3 6 5 9 9 0 0 4 2 3 3 6 8 8 8 1 9 2 2 8 5 8 -b -- 3 8 4 6.0 4 6 3 3 0 0 1 b 0 1 0 . 3 7 1 9 7 2 0 3 8 1 3 3 3 6 1 '1 5 0 4 9 5 0 a 4 4 2 8 0 0 0 1 3 1 6 6 7 3 0 ' 1 5 7 1 7 4 1 4 7 2 3 7 8 9 1 7 0 OO 0 0 0 1 8 3 1 2 8 4 0 3 1 5 9 0 0 0 0 0 3 8.7 5 1 1 6 6 5 9 9 0 1) 4 2 4 3 2 3 6 0 2 1 - 6 3 2 1 5 b 3 9.4 3 3 0 9 3 3 2 0 5 6 1 X 0 4 1 2 4 0 6 2 3 8 7 3 3 3 6 1 1. 5 7 9 8 7 4 4 6 4 1 ,2 .0 0 0 1 3 1 6 1 0 0 3 3 1 6 9 7 5 1 4 9 7 5 9 6 0 0 • 8 0.0-0 0 0 0 1 a 4 1 8 0 6 4 6 1 5 9 b 0 0 0 0 3 9 4 5 6 9 b 8 2 4 8 7 5 4 . - 2 2 0 3 - 3 9 1 2 4 0 3 .5 7 3 b . 3 9-4.5 5 9 a - 3 8 5 . 4 . 4 9 2 1 0. 3 1 4 3 4 6 8 4 3 8 0 0 0 3 1 1 5 2 8 3 3 1 0 5 4 1 2 0 0 0 1 3 6 1 8 2 0 0 4 '("9 4 0 2 1 4 6 3 8 4 7 9 2 1 0 0 0 0 0 0 0 1. 8 5 0 1 2 3 3 3 1 5 9 b 0 0 0 b 3 b 4 3 4 . 1 4 0 3 0 5 3 7 8 8 6 9 3 6 1 6 . 6 2 1 5 o ' a 9 5 b b 2 3 7 8 9 1 1 6 3 2 -i o 3 a i b a i 6 a b u -j « 5 : b a a 7 4 8 a 3 o 7 a b 3 « 6 7 4 4 . . 1 b 5 l T T *a-1 7 b b b 0 0 3 2 1 4 6 4 5 l a o 8 a o a o o 1 1 , l ... 91 ino : l 2 3 6 5 3 5 ' I 2 8 b b O 3 8 8 7 8 3 6 1 o 2 O 8 > : i 4 2 6 j 3 3 u 1 0 2 1 4 1 7 4 1 0 0 4 8 9 5 b b 1 1 3 0 2 1 (>- 4 0 5 5 1 5 3 1 1 b b , 2 9 3 2 1 ^ '7 1 .. 3 7 B 1 4 y 7 3 4 1 7 1 h 5 1 4 a 8 3 7 8 -2 4 8 7 5 - . . 1 2 1 - 6 3 2 l b 2 3 8 5 0 0 0 1 3 B 9 J 3 3 6. 1 5 4 1 a, 0 0 0 1 b 3 a b Y U 1' 1 a 0 0 0 0 0 0 1 5 9 b I) 0 0 1 a 9 — b - '4 2 b b 8 J) 2 0 a a b j i j a 16 1 .8 1 7 a ' i 0 9 3 a 1 Y 8 b o 8 •< a b 7 5 o"3 > 5 H K 8 3 7 Figures 48 to 58 inclusive relate to the data of the Group B fines. (8 - 42 mines) ( •Dividends'-paid.) o ® & 0) Pq 24 21 18 1 i 1 1 i i i i M I i i i i r i i i i i i i i | Frequency Polygon of the Profit and Loss of Eisht Canadian Gold Mines. ( 1928 ). i i i i i i i i i i i • 15 12 Double scale. 9 / \ 6 / \ 1 l: i , X , 3 0 _ J _ i I I I i i 1 1 1 1 1 1 1 1 1 1 | | | •=51 H-05 •n CD CD o in o in o o • » « 0 « ^ t o t o w w Loss. IO o a « H H in ® o m o o • • O O H in o in o m o in - o * m o in o • • • • « • • . . . . . Hwoj.to to ^ in in to to c- w o in « . . O 00 CO Loss. ( in 000,000's of dollars. ) Profit. ( •Dividends'-paid.) 24 1 I ' 1; 1 1 1 1 I I I I. 1 I 1 1 1 | P 1 J | | | ; Frequency Polygon of the Profit 21 and Loss of Nine Canadian Gold 18 Mines. ( 1929 ). 15 I I 1 1 1 l | I I ; 1 | 12 Double scale. 9 A / \ fi j \ 3 0 1 1 1 1 1 1 i i i 2 ^ ^ ^ 0 « o m o ,o O ^ o to o m O LO o to o to « CO 03 03 i—l H O 8 O H H 03* 03* « w 4 J to* to ,0° c! CO 00 Loss. ( in 000,000's of dollars. ) Profit. ( Dividends paid.) 24 21 18 15 13 o m o m o ID o * • . • • . . ^ CO CO « W H H Frequency Polygon of the Profit and Loss of Eleven Canadian Gold Mines. ( 1950 ). Double scale, H* CK3 Ol O in in • o • o o o m o in o in o in o in o m o • • • . 8 . 0 . . . . . h w w w w ^ ^ in in to to is in o in . . . 'IS CO CO Loss, ( in 000,000»s of Dollars.) Profit, ( Dividends Paid.) 24 21 18 15 12 o in ID CO CO 03 03 in 9 •H in o o o in 9 O in H Frequency Polygon of the Profit and Loss of Eleven Canadian Gold Mines. ( 1951.) I I I I I | I I Double scale, in in 03 03 t o CO o 0 i n in in Loss. ( in ; 000,000's of dollars.) in in to to Profit, m o m 9 « . D- CO CO tj H»m p CD UT ( -Dividends Paid.) o rt © ® 24 21 18 15 12 0 Frequency Polygon of the Profit and Loss of Fourteen Canadian Gold Mines. ( 1932 ) J k I I 1 Double scale, o to o in o i o o r n • • . . . . . . •tf CQ fcO « 03 H H O Loss. o o in o in in o in m m . . . . . . . -. ~ ^ o in v^  UJ O H H 03 03 . fcQ CO ^ ^ in in tO to C» C-- CO CO ( in 000,000'a of dollars. ) Profit. in Ixj 0>3 P hi CD Ol ro ( •Dividends'-paid.) A Frequency Polygon of the Profit and Loss of Sixteen Canadian Gold Mines. ( 1955 ). 1 i i i r i i i i Double scale. 7 \ — i — 1 i V i :/i A i r i , -d^J. O LO « • ^ CO o in o . • • tO N C\3 Loss. in o in • • • o H H O O i n o i n o in o i n o . . . . . 9 9 . O H H W W CO CO ^ in o in o in ® . 9 . 9 •tf in in to to Q in o in . . 9 9 C-- !S 00 03 ( in 000,000's of dollars. ) Profit. ( •Dividends'-paid.) 24 21 Frequency Polygon of the Profit and Loss of Twenty Canadian Gold Minea. ( 1954. ) 18 15 !>> 0 PS 1 0) f-l 12 o in o • • to to in 9 N O « «t in o in « • a H H O O O in s o o o H m o m . . . H N Ctf O 9 to in o « » to ^ in Loss. ( in 000,000's of dollars. ) o in . » in m Profit. o in ® . t£> lO O c- i>- o o CO in co ( •Dividends'-paid.) Frequency Polygon o f the P r o f i t and Loss of Thirty-Four Canadian^ Gold Mines. ( 1935 ) >3 h" cn XJi O ID O IN O • « a • 9 ^ tn cn CM CM Loss . in o in . . . H H O O O in o m o tn o in o in o in o in • • • 9 . 9 . 9 9 . . . . O H rH CM CM CO CO in lO (O (0 o in o in 9 . . a C - 0- CO CD Loss. ( in 000,000's of dollars. ) Profit. ( •Dividends'-paid.) o 5 (!) 6 ffl u 24 21 18 15 12 Frequency Polygon of the Profit and Loss of Thirty-Eight Canadian Gold Mines. (1956). o e I ^ lO 9 t<0 O • « to lO C\3 Loss. o w in H o in e « H O O O in e o o « H in o tn o • . . W M 19 in « to ( in 000,000's of dollars. ) • o in o ^ m in in o in x£> o ® tN in »£N o in CD CO Profit. ( •Dividends'-paid.) !>> o a © CJ a1©. PR 24 1 1 1 ! ! 1 I I 1 ' i i i i i i i i i i i t i r Frequency Polygon of the Profit 21 and Loss of Forty-One Canadian Gold Mines. (1937). 18 15 1 12 -9 6 1 3 0 JtL I I I i^l M 1. I/H. 1 J 1 1 J 1 1. 1 1 IxJ H-0*5 6 <D C71 ss o •sfl m o in * « ; to CO 03 o 03 in o H in o o o in o o » H in rH O » 02 in OJ O a tn Loss. in m CO ( in 000,000's of dollars. ) o in o m « » in in o 9 to in 9 to O « IN m 9 Cs O 00 in e oo Profit. ( •Dividends'-paid.) 1 1 1 I. 1 J .J; I 1  1 1 I 1 I II III | T Frequency Polygon of the Profit and Loss of Forty-Two Canadian - | Gold Mines. ( 1938 ). j 11 J 1  i i i i i 1  Q m o i n o m o w • • • • « * « . ^fl CO CO <M W rH H O Loss. o o ^ ^ ^ » ° ^ O LQ o in o H H w CM co co ^ i n m t o t o o « IN in o in « . . IN CD CO ( in 000,000's of dollars. ) Profit. 40 This ratio is illustrated in Figures 48 to 58 and proves the fact that the shareholders of the corporations received the benefits arising from the increase in the price of gold. There have been no large accumulations of undistributed profits, the companies paying out their profits in the form of dividends after their costs have been met. As the sample treated: increases in size from 8 mines in 1928 to 42 mines in 1938 the ratio of profits to losses is maintained showing this procedure to be the practice of not only the large mining companies, but also the smaller new developments which are included in the samples df later years. Many of the large gold mining companies in Canada are owned or controlled by holding companies orjinvestment houses, but just how important a factor investment is 'in these companies is not known. The Ventures Limited have the controlling interests of Coniarium, Beattie and Canadian Malartic Gold Mines and probably many others.From 1928 to 1937 the Coniaurium Mine lost money on every ton of ore that it mined and last year for the first time it made a profit on the ore treated. On the other hand, the Beattie and Canadian Malartic gold mines have made handsome profits- over the same period. One would expect them to pay large dividends but it is generally conceded that these two mines are not paying the dividends which the richness of the properties warrant. Possibly this may be explained by the tranference by Ventures Limited of the earnings of the two profitable mines, to the unprofitable one in order to keep it functioning. This is a good example because of the complex financial structures of this type. It is possible that the real 41 effect of the rise of gold in 1933 on certain raining companies has been concealed. The statistical measure(the coefficent of correlation) employed to determine the degree of relationship between two items was applied to the following factors,-1. Average recovery per ton(in dollars)-— to the amount of profit or loss for the year. 2. The total fixed assets — to — the amount of profit or loss for the year. 3. The total cost of producing one ounce of gold -- to — the amount of profit or loss for the year. 4. The total cost of milling one ton of ore— to the total fixed assets. A coefficient of correlation as high as .968 was found to exist between the average recovery per ton(in dollars) and the amount of profit or loss for the year. This indicates almost a perfect relationship and is to be expected as the success of a mining venture depends upon^ this factor almost entirely. On the other hand there was no correlation found between the factors of the other three items which could be taken.as statistically significant. One would expect the cost of producing one ounce of gold to have some effect on the profit or loss for the year but, as was shown in Chapter IV the cost of producing gold has remained almost constant during the period studied and apparently has not has any effect on the profits realized. Possibly the lack of relationship between certain of these items might be explained by the complexity of the financial structure of certain of the companies but this 42 is a problem for a student of corporation finance and is too • large to be dealth with in this work. Taxes on Gold Hinea. There remains the task of explaining the large increase in the amount expended in 1938 for taxes as compared with the amount spent for this item in 1928. As the data pertaining to cost were only available up to 1938,the War Tax Laws imposed in September 1939 will not be discussed. In Ontario where the Group A mines of the study were located,owners of claims are required to do certain development work to retain title to their property. This however is neglig-ible; the main burden of taxation falling on the profits arising from mining operations. In 1928 the mining companies were taxed under the corporation income tax of that province on their net profits,the rate being 3^ on all profits in excess of $10,000 up to #1,000,000; on profits from #1,000,000 to #5,000,000 and 6% on the excess above $5,000,000. * T h e r e has been no change in this schedule since 1928. Mining companies also pay income taxes to the dominion Government under the Income Wax Tax Act of 19172and are subject to the same tax rates as those applicable to corporations and joint stock companies. By amendment to the Dominion Income Tax Act i n 1936,the allowance for depletion to gold and silver m i n i n g companies was lowered from 50^ to 33 l/3# of the net profits arising solely from their mining operations. L mine no l i n g e r ; has^the right to applyhall of its f i r s t two y e a r s ' 1* Canada Year Book,1928. P a g e 243. 2., Income War T a x A c t , 1 9 1 7 , 8 G e o r g e Y, c 28,s 1 . Table No . 17 Lake Shore Mine Year Capitalization (Fixed ARRA^), Amount of Profit 1928 $. 852,823 1 V/ VJL J. v X J. U f # 1,680,881 1929 817,227 7,540,160 1930 1,814,254 3,128,985 1931 1,860,965 4,505,601 1932 2,098,857 7,797,011 1933 1,597,411 7,215,173 1934 1,030,340 10,145,705 1935 545,106 8,237,891 1936 796,906 9,759,600 1937 764,052 8,384,792 1938 698,635 7,732,417 Table No 18 Lake Shore Mine Amount of Profit or Loss(Dividend not paid) # 1,680,881 2,540,160 3,128,985 4,505,601 7,797,0111 7,215,193 10,145,705 8,237,891 9,759,600 8,384,792 7,732,417 Amount Paid for Taxes as a per-centage of Cost --- not given 7.43^ 7.71 10.77 17.37 14.72 18.54 31.17 24.75 21,84 20.01 Dividend Paid I 2,000,000 2,200,000 3,000,000 4,800,000 6,000,000 6,000,000 7,000,000 8,000,000 10,000,000 12,000,000 10,000,000 Table 3STo. 19 Lake Shore line 1938 Taxes as % of Total Cost Amount of Profit or Loss % increase since 1929-100 * . , „ „ /o increase since 1929-100 100 123 177 306 284 399 324 384 330 304 Year 1928 1929 100 1930 103 1931 144 1932 233 1 9 3 3 198 1934 249 -1935 419 1936 333 1957 293 269 PERCENTAGE INCREASE (1929= 100) IN PROFITS. & TAXES (as percentage of total mining coats) OF LAKE SHORE MTNF (From 1929 to 1938.) ' 1 400 300 •s © o u © ft 200 100 t^j H* cm CD o 1928 1929 Profit. _ 1930 1931 1932 1933 1934 Taxes, 1935 1936 1937 1938 43 earnings to capital depletion. With a view to stimulating further exploration and . development of mineral resources in Canada the 1936 session of the Dominion Parliament provided that any mine coming into production -between ^  1 ) 1 9 3 6 a n d J a l m B r y 1 > 1 9 4 0 ^ ^ ^ exempt from income tax for the three fiscal periods following the commencement of production.1 With the exception of the above amendment to the Dominion • Income Tax Law in 1936, there have been no significant changes in the income taxes on gold mining ventures. Taking the example of the Lake Shore Mine(Table 18) we find that taxes have'increased out of proportion to other costs. However it is apparent that since 1929 the profits realize! by this mine have increased more rapidly than taxes(See Table 19 and figures 59 & 60). Taken as a whole the taxes of the Group A mines have -increased' from 2^ of the total mining costs in 1928 to 20% in 1938. All of this increase however may be accounted for by the . .. y n e Progressions m the income tax schedule as applied to their increased profits. 1. The Gold Mining Industry of Canada,Ottawa,1939, CHAPTER YL Conclusion 44 Chapter VI Conclusion. In conclusion it may he said that gold mining in Canada is on a very sound financial basis. The new development which has been a direct result of the 1933 rise in the price of gold appears to be very promising. The cost of mining gold appears to have risen slightly •but we may not assume that this conclusion would necessarily apply to the gold mining industry as a whole. The rise in the cost of mining, excluding ...taxes, has been negligible; the increase in the costs being the direct result of the applicat-ion of the income tax laws to the increased profits of the gold mining. When the government of United States raised the price per ounce of gold from #20,67 to $35.00 it subsidized the industry and widened the margin of economic rent. The Canadian government has taken part of the unearned increment from the mining companies by means of taxation, but it has by no means taken all of it. Due to the fact that the amount paid in taxes becomes large when high profits are realized,the producing mines do not realize the enormous profits which the new price of gold makes possible. In many cases they appear to be following the policy -of moderate returns in order to atoid high tax rates. While it was not the purpose of this paper to make an exhaustive study of the taxes levied on mining companies, it appears on the 45 surface.that the government is defeating its own ends in maintaining a tax structure which serves to restrict its income and that cf the mining companies. The government has embarked upon a policy c, stimulating new mining ventures by exempting them from taxation during the f».t years of their operation,. « present extensive surveys - e being carried on in search of new gold fields and it is to he hoped that rich gold deposits will be discovered. This study has revealed a surprising constancy of costs m the face of a resort to lower grade ores made possible by the arbitrary increase in the price of gold. Incidentally it pointed to the fallacy «:,theopopularly held belief that taxes are absorbing the profits of the industry. 1„ actuality there appears to have been a recourse to lower grade ores on which the increases in taxes did not apply. There has been'an increase in taxes only when profits arising from the subsidy granted by the government were partially returned to it by the ordinary application of the progressive income taxes. Bibliography The Annual Reports of the Mines listed in Table IX. Department of Mines and Resources, Mining Laws of Canada, Bureau of Mines, Ottawa, 1939 (Ho, 795). The Financial Post, Survey of Mines, Issues 1928 to 1939 inclusive, McLean's Publishing Company, Montreal,Canada. Mills,Statistical Methods, ANew York, Henry Holt & Co. 1938 Mining and Metallurgy Magazine, New York, September, 1939. Robinson, A.H.,Gold in Canada, Department of Mines, Ottawa Canada, 1935 

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