244 VALUATION, DEPRECIATION AND THE RATE-BASE 
“ What rate of excess return the mine must yield is a matter of 
the risks in the venture and the demand of the investor. Min- 
ing business is one where 7 per cent above provision for capital 
return is an absolute minimum demanded by the risks inherent 
in mines, even where the profit in sight gives warranty to the 
return of capital.” 
Mr. G. A. Denny, an English engineer, says: 
“ A normal mining risk stated in terms of interest may be 
taken at 10 per cent per annum on the capital expended plus a 
rate for the redemption of capital.” 
John Hays Hammond { expressed his views on this question as 
follows: 
“ In many mines persistency of the ore deposits and, therefore, 
the reliability of the mines as dividend payers, justified the in- 
vestment upon a basis in some instances as low as 8 per cent, 
dividends to which, of course, must be added a certain per- 
centage to provide for the amortization of the capital. Gener- 
ally speaking, however, investments in mining securities are not 
to be regarded as attractive unless they return from ro per cent 
to 15 per cent in dividends, in addition to the profits to be set 
aside for amortization.” 
Price of the Mineral Product. — Because of wide fluctuations 
in the prices that minerals bring in the market, the use of the 
current market price of such a product in measuring the value 
of a mineral deposit is not proper for valuation purposes in 
general. No hardship would be forced on the owner or operator 
if, for taxation purposes, valuations were made annually based 
on the current price of the mineral produced. This method, 
however, results in a valuation fluctuating in amount from year 
to year and because of the constant changes required, does not 
seem to be practical. 
The “normal” price of a mineral may be defined as the aver- 
age market price over a certain definite period of years. Periods 
of time five or ten years in length are in general use. The 
* G. A. Denny, Mexican Mining Journal, July, 1910. 
t John Hays Hammond, Engineering and Mining Journal, Jan. 1, 1910.