Document JjO5w6MMxN0MR525Vo9jK39O
FILE NAME: RT Vanderbilt (RTV)
DATE: 1972 Jan
DOC#: RTV162
DOCUMENT DESCRIPTION: Grantham Proposition Prepared by Celite Division, J-M Products Corp.
. GRAJMTHM-l.p r o p o s i t i o n .
prepared Toy Celiie Division Johns"Manvi1ie products corporation
January 1272
The Celitc Division proposes that tfohns~Manvxle enter.the
talc business. We propose to clo this by;.
'
1) Buying (for stock or cash) from the Louise Grantham
Trust and the minority holders, the assets or the l,ouise
.
4 '
Grantham corporation (and subsidiaries) and the Trust's
.and others8 interests in mining claims.
The principal assets are mines at Warm. Springs Canyon,
California,'and a talc grinding mill in Los Angeles.
2) Buying grinding and loading facilities at Dunn Siding, California from the Pfizer corporation.
3) Expanding production facilities at Dunn and Los Angeles.
4) Installing environmental control facilities at L o b ' Angeles, Dunn' and the mines.
Our investment would be:
% /'/[//v iy ir '; v,-> 1 ) 2)
A ssets - T ru st and; m in o rity h o ld ers P fizer `fa c ilitie s :
W#Tvt?-L*' 3 )
^fhstrs >-j
a -j / r- '
Expansion
*
Environmental control
Total
$3,900,000 500,000
1,400,000 ' 500,000
$6,300,000
-'t
CRMC-HT-TALC-000224
.Talc Industry
Talc is a, natural mineral, generally magnesium silicate, mined a n d .processed throughout the world. Principal operations in the United States are in- New' York, California, Montana and Vermont. So-called ''eastern1' talc tends to he fibrous, 'while "western" talcs are softer, whiter, and have a platey
structure. For lew grade applications, either can he used and
business'is divided geographically, .For applications requiring high brightness and low abrasiveness, western talc is preferred, and high quality grades are marketed on the east coast.
In 1971, total market was 875,000 tons, and nearly $25,000,000.
During the 1360 decade, ton sales increased at a rate of about
4%; dollar sales at a rate of 5 ^ .
'
Major uses are in ceramics, paint, paper, plastics,-insecticides and roofing, Paint and paper applications have shown the greatest recent growth -- up 54% and 112% respectively in the last decade.
Growth, has been most rapid in highly'processed, highest priced specialty markets, particularly in the past few years.
Talc Quality
-
processed (ground) talc in general has commercial utility as
an inert filler/extender pigment because of
... color (whiteness)
.
... low abrasion (relative)
CRMC-HT-TALC-000225
chemical purity
... fibrous or not
...
Dosortalc is' -recognized -world-wide/as one of the brightest. '
Desertalo'is recognised world-wide as having low abrasion index
and this relates to good chemical purity. Besertalc is' non
fib rous, and as such has application where fibrous talcs are
deficient.
'
Grantham i n 'the Industry t Grantham sales are 45,000 tons and $2,300,000 of ground talc,*
6%. of tons and 9% of the dollar market.
Grantham also sells 25,000 tons ($700,000) of crude talc to the United Sierra Divisi.on 'of Cyprus Mines.
Reserves -
The "opened" talc mines at Warm Springs number three. Two
are b e i n g 'worked at this time. Based upon geological data
furnished by Grantham, together vrith J aim a--Man vi11 e mining
surveys, there -are
Estimated recoverable -.first ..aver -- 1.2 million tons '
Estimated recoverable - second layer - 1.5 million tons^
;'.
-
T'OtS.1
- 2.7 million tons
On a gross basis there are ' Estimated - -first layer Estimated ~ second layer Total
- 2,1 million tons - 2o5 million tons - 4.6 million tons
CRMC-HT-TALC-000226
Some portion of tonnage between gross and, recoverable may be mineable. A drill program.wowId dictate.action to be taken. At current and forecasted withdrawal rate, reserves are assured for in excess of,25 years.
Clay reserves at Mohave, California, are estimated in excess
of one million mineable tons. At current and' forecasted annual
withdrawal rate, the reserves are -ample for in excess of
50 years.
1
people
'Grantham's current employment is approximately 65 hourly and
15 salaried employees. Key people in the latter are, and each
of whom very probably would join j-M:
'
Rolf F. Bassett
~ Finance-Management
- A g e 60
^Richard Lamar
- R&D
. Age 50 .
Earl Smith
- Sales
' -- Age 48
Richard Franklin
- Mining
.. ____ -- Age 42
*Norman B. Scheffel - Sales
- .Age43
.Daniel b . Tash
- LA plant Supt.
- Age-53
* Nov; on contract with Grantham
Included in this group are considerable talents, and capabilities related to the talc business, resulting from years of exposure in Grantham'and formerly with other western, talc businesses.
We plan alsp to have, a five-year consultant Contract with Vi- B. Grantham for .$60,000 per year.
Mines
: ','
The Warm Springs Canyon talc mining, operation includes 80 lode
claims. Not all are being worked. Those that arc not ars
adjacent to or contiguous vrith'those that arc. worked. By
virtue of th "Apex Law" as related by Grantham mining engineers,
additional claims .are included. The Apex basis is that any ore
'
body continuous beyond an*established claim is considered to
havo common ownership.
The Warm Springs operation is in Inyo county, California (lower
Death Valley) and is
.
.
`130 miles to Union pacific rail head (Field or Dunn Siding California)
.140 miles to Las Vegas, Nevada
...
300 miles to Los Angeles
The Warm Springs operation includes
~~
*
.
Diesel-operated electrical generation (no outside power);
Well equipped base-camp living and recreation facilities,
*
including outside swimming pool:
.
An ample source o f "spring-fed fresh water supply; .
E &. R facilities.
Ore is hauled by contract carrier from warm Springs to rail heac Mining is all underground, using room and pillar method.
The clay operation is-at Jaw Bone canyon, Kern .County, c a l i f c m From mine to rail head (Southern pacific - Canfcel, California)
CRMC-HT-TALC-000228 ~~~~~ .
6 ~
'.'IV.miles.
Ovo is contract mined and hauled, contract included in the
`'CUtmtham package'1 calls for availability until "mine is
exhausted.'' Mining is all open pit..
;
.
Dunn Option
e
Johns-Manville has option to purchase plant, auxiliary building
and land (approximately. 280 acres) from'Pfizer- The 3.atter
acquired the .total' facility in 1967 from Kennedy Minerals,
including talc mines. Pfizer had at the time milling facilitio
at Victorville, California, and a second plant v/as soon coriside
excess. The Dunn plant has been operated off and on during the
past few years. Lompoc -plantengineers have surveyed and
examined the D u n n .facilities and concur with the option list of
equipment and facilities in general..
Option expires in la t e ,February 1972.
,
Financial projection - 5 years Sales Grantham's sales, limited by capacity, are $3.0 million -~ S% o the market.
Using Grantham's high quality talc and our sales force in our markets, we p>lan a vigorous expansion to $5.2 million sales in 1976, attaining 14% of the market.
CRMc -h t -tALcu000229
7 -
Earnings
;
.
We plan .$,2-80,000 of earnings,the first year (current level) ,
growing t o .o.v&r-~$-SQQ7-6 0 Q by 197G,
M i?v ri" j
.
Tax depletion is very important to earnings- Grantham now has an effective tax rate of- 25%.of pretax earnings,- v/e have used this.for 3 years. On the advice of the Tax Department^ we h'ave used 35%" after that.
Investment and cash Flow
' w
ckr*'':
Of the $6.3 million requested,^- $5i million will be spent now.
In the next few y e ars, we schedule $9jlLrO0Q more ,-- with present
forecasts, most of this in-1975 and 1976.
-
Mol?
A t the end of the first year we will be out $5-s-0 million in
cash flow. In the next few years we expect to pay for the
future expansion and 'generate a positive flow of $2<2Tmillion. I1t
We do not pretend to hnow the long-run future of talc or our
participation, but v/e believe* we can eventually attain sales
of $10,000,000 and earnings of $1,000,000.. However, if we
can hold our sales and earnings after 1976, we will attain
a- DCF yield of
on this venture.
. _
CRMC-HT-TALC-000230
n
G e o log y . C h e m i c a l - Health A spects
.
Talc
Geologically, Grantham talc Is in.the Crystal Spring Formation .
(part of the pahrurap Group in. Death Valley) of the panamip-t
Range. There are three principal layers of ore bodies. There
are outcroppingsof the ore bodies, and portals are located at
these points." Ore strata are' separated by dolomitic, diabas.e
and volcanic rock formation.- There are faults in the deposit
which have been established in terms of quarrying procedures.
The mineable ore beds are 10-15 feet in thickness and lie with
dip of 9 to 20 generally- ' '
.
Chemically, the talc is essentially magnesium silicate. Minor
composition is calcium carbonate, sodium carbonate and potassium .
oxide. Trace composition is oxide of aluminum, iron, titanium,'
manganese and copper. ,,
.
..___ _____ ___________
Petrographically, talc is .m a j o r ; tremolite small or m i n o r ; calcite
trace to small.
.'
-
The following points are significant;
1) Grantham talc vs. eastern talc is softer, platey-like,
and current and projected uses other than in cosmetics
and food products.
'
'
-
2) No health cases are on record with working people -i-- mine or other -- related to dust or other exposure.
(;RMC-fJT- k u c - 000231
q ...
' 3)
Reportedly other (particularly United Sierra Division, k
Cyprus Mines and Vanderbilt) have had no cases related
to environmental exposure.
;
Clay Grantham clay (on contract not ownership) is goologically/chemica a elaystone highly.siliceous in composition. Minor composition is aluminum and potassium oxide; trace is oxide of iron, calcium," magnesium and sodium, fhe composition may he considered an aluminum silicate but not kaolinic in type.
In terms of health hazards, it is conjectured that environmental! "treat as a nuisance dust."
CRMC-HT-TALC-000232
FINANCIAL DATA (M's)
1972
1973
1974
1975
197S
Sales Net Earnings Cash Flow Investment
3600
>(J
J280
-- M-kV
~^eo o
J'.Pi/ 5A10
3900
37 O"
'
S60 i0o 1-00
4300
J C^
450~'.
. -{-7 bO
*060
WO
-40
4700
5200
"3, Wf !/
400-
i^b'/ SVr
vf-9
4 lio
+300-^""" --.341T
-aaa .
J'lv 470
Total 6300
Rate o yield - 1%
Y>
CRMC-HT-TALC-000233
TALC MARKETS (000 Tons)
Talc ind. Grantham-
c .' Colite
Ceramics Paint Paper Insecticides Pooinq Rubber Cosmetics Plastics' Other
246
166 ' 55
54
30
24
.-12
?"
238
18
12
5
0
0
0
1.5
2.5
O*
7.5
7.5
9.5
0 .
o.
0
11
O
?
.x
X
X
X
X
X
o o
'-HT-TALC-000234
paint industry Customers include;. 'Celanse coatings Desoto Glidden National Lead Sherwin-Williams i
papar industry customers include; American can Georgia pacific
. Kimberly-Clark Oxford Paper Westvaco . . Weyerhaeuser
Ifri a
Reference: .
. '
' Formula No. 5 65003-6' E.l. DuPont d Nemours & Company, Inc.
Pigments Department Wilmington, Delaware 19S98
FORMULATION
- INGREDIENTS
POUNDS GALLONS
. DISPERSION
Water
Carbito!
Daxad 30
.
Igepal CA360
Ti-Pure titanium dioxde R-960
Talc
'
Mica 325 mesh waterground
CELiTE 281
' Collod 581-8
REDUCTION Geliosize WP-44Q0 (2% solution) CoIJoid 581-B Witco912 Elvacst 1454
. 2amino-2methyl-1propanoi Super-Ad-lt
150.0
18.03
30.0
3.51
' '
5.0
0.52
5.0
- 0.57
175.0 116,0 30.0 50.0
5.32 4.88 1 1.27 2.60
1.0
0.15
118.0 1.0 4.0
432.0 '4.0 10.0
1,131.0
14,10 0.15 G.48 48.000.51 1.23
101.32
Pigment Volume Concentration Viscosity (overnight)
= 36.4% - 70-75 KU
Disperse in high speed disperser
E
-.'FM-
' .sc.
Vfe
58
CRMC-HT-TALC-000236