CHAPTER XVIII.

ADMINISTRATION (_Concluded_).

ADMINISTRATIVE REPORTS.

In addition to financial returns showing the monthly receipts,
expenditures, and working costs, there must be in proper administration
periodic reports from the officers of the mine to the owners or
directors as to the physical progress of the enterprise. Such reports
must embrace details of ore extraction, metal contents, treatment
recoveries, construction of equipment, and the results of underground
development. The value of mines is so much affected by the monthly
or even daily result of exploration that reports of such work are
needed very frequently,--weekly or even daily if critical work is
in progress. These reports must show the width, length, and value
of the ore disclosed.

The tangible result of development work is the tonnage and grade
of ore opened up. How often this stock-taking should take place
is much dependent upon the character of the ore. The result of
exploration in irregular ore-bodies often does not, over short
periods, show anything tangible in definite measurable tonnage,
but at least annually the ore reserve can be estimated.

In mines owned by companies, the question arises almost daily as
to how much of and how often the above information should be placed
before stockholders (and therefore the public) by the directors. In
a general way, any company whose shares are offered on the stock
exchange is indirectly inviting the public to become partners in the
business, and these partners are entitled to all the information
which affects the value of their property and are entitled to it
promptly. Moreover, mining is a business where competition is so
obscure and so much a matter of indifference, that suppression
of important facts in documents for public circulation has no
justification. On the other hand, both the technical progress of
the industry and its position in public esteem demand the fullest
disclosure and greatest care in preparation of reports. Most
stockholders' ignorance of mining technology and of details of
their particular mine demands a great deal of care and discretion
in the preparation of these public reports that they may not be
misled. Development results may mean little or much, depending
upon the location of the work done in relation to the ore-bodies,
etc., and this should be clearly set forth.

The best opportunity of clear, well-balanced statements lies in
the preparation of the annual report and accounts. Such reports
are of three parts:--

1. The "profit and loss" account, or the "revenue account."
2. The balance sheet; that is, the assets and liabilities
statement.
3. The reports of the directors, manager, and consulting
engineer.

The first two items are largely matters of bookkeeping. They or
the report should show the working costs per ton for the year.
What must be here included in costs is easier of determination
than in the detailed monthly cost sheets of the administration;
for at the annual review, it is not difficult to assess the amount
chargeable to development. Equipment expenditure, however, presents
an annual difficulty, for, as said, the distribution of this item
is a factor of the life of the mine, and that is unknown. If such
a plant has been paid for out of the earnings, there is no object
in carrying it on the company's books as an asset, and most
well-conducted companies write it off at once. On the other hand,
where the plant is paid for out of capital provided for the purpose,
even to write off depreciation means that a corresponding sum of
cash must be held in the company's treasury in order to balance
the accounts,--in other words, depreciation in such an instance
becomes a return of capital. The question then is one of policy
in the company's finance, and in neither case is it a matter which
can be brought into working costs and leave them any value for
comparative purposes. Indeed, the true cost of working the ore
from any mine can only be told when the mine is exhausted; then
the dividends can be subtracted from the capital sunk and metal
sold, and the difference divided over the total tonnage produced.

The third section of the report affords wide scope for the best
efforts of the administration. This portion of the report falls
into three divisions: (_a_) the construction and equipment work
of the year, (_b_) the ore extraction and treatment, and (_c_)
the results of development work.

The first requires a statement of the plant constructed, its object
and accomplishment; the second a disclosure of tonnage produced,
values, metallurgical and mechanical efficiency. The third is of
the utmost importance to the stockholder, and is the one most often
disregarded and obscured. Upon this hinges the value of the property.
There is no reason why, with plans and simplicity of terms, such
reports cannot be presented in a manner from which the novice can
judge of the intrinsic position of the property. A statement of
the tonnage of ore-reserves and their value, or of the number of
years' supply of the current output, together with details of ore
disclosed in development work, and the working costs, give the
ground data upon which any stockholder who takes interest in his
investment may judge for himself. Failure to provide such data
will some day be understood by the investing public as a _prima
facie_ index of either incapacity or villainy. By the insistence of
the many engineers in administration of mines upon the publication
of such data, and by the insistence of other engineers upon such
data for their clients before investment, and by the exposure of
the delinquents in the press, a more practicable "protection of
investors" can be reached than by years of academic discussion.