The final object of gold prospecting is the benefit and profit for the client for whom the field work is done. Agreements and prices are aspect to be analyzed. A great majority of mining examinations lead to unfavorable reports. This is owing to the fact that the demand for good gold properties greatly exceeds the supply, and to the great difference between the points of view of the owners of mining properties and the examining engineers. The owners generally suffer from extreme optimism, and many engineers from excessive professional timidity, and neither is willing to meet the other halfway. Owners of gold prospects are usually brought to their senses after repeated unfavorable examinations, but many engineers never make a favorable report because of the risk of personal reputation.
Without any doubt, gold mining is a risky business, and the prospector who declines to accept some risk will not make money for his clients. No engineer should expect to find a gold mine having ore of a greater net value than the purchase price asked, unless the mine is admittedly bottomed, and has no possibilities beyond the ore already developed; this is a rare case, and most developed mines in addition to their ore reserves hold a certain promise for further tonnages of payable gold ore; each case must be considered on its own merits, and how much to allow for the value of prospective ore will differ with every engineer.
Experienced gold prospectors consider that 60-65% of the purchase price should be represented in net value of ore reserves, with the lower levels still looking well. On the basis of 65% the purchase price to be represented in ore reserves; most sales are made at too high a figure, which is borne out by the fact that most gold mining ventures are not profitable, the balance being established by the occasional large success that repays its capital many times over. These considerations apply chiefly to the sales of properties in an advanced stage of development and not to prospects, with which this work chiefly treats.
It has been noted that in the exploration of gold prospects should be expected that many ventures will prove failures, as the exceptional success will more than repay a number of unsuccessful ventures. The exploration of gold prospects should be undertaken only when the operators have abundant capital, and the pertinacity to acquire and explore several properties successively. In such a campaign it is evident that the costs of each exploration should be kept as low as possible, and that exploration should cease as soon as the chances of success are reduced below the apparent chances when the property was acquired for exploration; persistency beyond a certain point is a failing. In order to keep the costs low, cash payments should not be made on gold prospects, nor should expensive machinery be installed, as such expenditures in an enterprise of this sort must be charged against the footage of work done.
It is always advisable at the start to follow the gold ore, and with as cheap temporary equipment as will answer the immediate purpose. While it is true that the speculative chance held by a good looking prospect has a certain cash value, only in rare cases should a cash payment be made; a monthly rental to the owner, during the period of exploration, frequently offers a convenient compromise. If gold prospecting is to be made in an established district, a search of references of the of the district has great importance as preliminary examination. Written statements are more likely to be accurate and conservative than spoken statements, and important data are frequently obtainable. If the library is well indexed, a search of this kind is not a long undertaking