In estimating the total reserves in a mine, geological considerations nearly always play a large part. An ore body may in some few cases be completely blocked out by underground work or drilling, eliminating the necessity for inferring conditions beyond those actually seen; but in the huge majority of mineral deposits the reserves are not so definitely known, and it becomes necessary for the geologist, through knowledge of similar occurrences, through study of the structural features of the deposit, its origin, and its history, to arrive at some sort of an estimate of reserves.
In estimating the life of a mineral deposit it is necessary to start with the figure of total reserves, and from a study of conditions of mining and of markets to estimate the number of years necessary to exhaust the deposit. This is a more nearly commercial phase of the problem, in which the geologist takes only part of the responsibility. Perhaps more estimates of value have gone wrong because of misjudgment of this factor than for any other cause. If the physical conditions are satisfactory, it is easy to assume a rate of extraction and life based on hope, which experience will not substantiate.
The choice of the interest rate to be used in discounting future receipts to present worth likewise is a financial and not a geologic matter. Again, however, the geologist must give consideration to this factor, in view of the fact that the interest rate must be varied to cover the different degrees of hazard and doubt in the geologic factors. For instance, to the extent to which the estimate of ore reserves is doubtful, it is necessary to use a high rate of interest to allow for this hazard. In a large, well-developed mineral deposit, with the geological factors all well known and the demand and market well established, it is reasonable to use a lower rate of interest. In general, the mineral industry is regarded in financial circles as being more hazardous than many other industrial lines; and money is put into the industry with