Document RrD55JGrw4ammq7RjNj1mn0n

FILE NAME: Talc (TALC) DATE: 1972 Jan DOC#: TALC432 DOCUMENT DESCRIPTION: Grantham Proposition .-GRA2TTHAM -PROPOSITION. prepared liy Celite Division Johns-Manvilie products corporation January 1272 f i f. The Celi.te Division proposes that Johns-Man.ville e n t e r .the tale business. We propose to do this by:- 1) Buying (for stock or cash) from the Louise Grantham Trust and the minority holders the assets or the I,ouise Grantham corporation (and subs:tdiaries) and the Trust's and others8 interests in mining claims. - The principal assets are mines at Warn Springs eanyon, California,and a talc grinding mill in Los Angeles. 2) Buyi-n9 grinding and bonding facilities at Dunn Siding, California from the Pfizer corporation. ' 3) Expanding production facilities at Dunn and nos Angeles. 4) installing environmental control facilities at Los Angeles, Dunn and the mines. . . Our investment would be: J ,. 1) Assets - Trust and; minority holders %' O ' f ' ' 2) Pfizer'facilities : 3) Expansion t by r . ' . * ' ` . 4) Environmental control Total 1 i. Jp\ r'X s $3,900,000 500,000 1,400,000 500,000 $6,300,000 CRMC-HT-TALC-000224 x-.'s* .Talc industry ' . - . . ' Talc is a, natural mineral, generally magnesium silicate, mined and.processed throughout the world, principal operations in the United states are in-'New York, California, Montana and Vermont. So-called ''eastern" talc tends to he fibrous, 'while "western" talcs are softer, whiter, and have a platey , structure. For low 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 I960 decade, ton sales increased at a rate of about 4%; dollar sales at a rate of 5JgS. . ' ' 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 lash 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 fiiler/extender pigment because of ... color (whiteness) .' ... low abrasion (relative) CRMC-HT-TALC-000225 . . . 1 ... 'chemical -purity - . , . ;,,. fibrous_or not _ . ' , ' Dosortalc i s r e c o g n i s e d w o rld -v .a d e . as one of tnc bxxgntc. Dcscr u l c is recognised world-wide as having low abrasion in* ana tills relates to good chemical purity, pesoitaic is non fibrous, and as such has application whore fibrous talcs are ; deficient. _ li . cyanthan i n 'the Industry # ' Grantham sales are 45,000 tons and 02,300.000 of ground talc, y- 6%. of tons and 9% of the dollar marhet. ._ . Grantham also sells 25,000 tons ($700,000) of crude talc to the United Sierra Division 'of Cyprus Minos. Reserves . . . - ' ' . The "opened" talc mines at Warm Springs number three. T. are being'worked at this time. Based upon geological data furnished by Grantham, together with uohns-Manville mining 'surveys, there -are . ,. . lav^'r Estimated recoverable -.fxr-t ' " ipvpr Estimated recoverable - second laye . ' _ T-0.tal ' - l -2 million tons . . - 1-5 million tons/ ---- ' -- - 2 . 7 million tons On a gross basis there are ' Estimated - -first layer . Estimated - second layer Total 2,1 million tons 2 o5 million tons. 4.6 million tons CRMC-HT-TALC-000226 Some portion of tonnage between gross and, recoverable may bo mineable. A drill program.wowId dictate.action to be baton. 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. . ' 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 *Rorman B. Scheffel - Sales : - .Age 43 . .Daniel B. Ta-sh - LA plant supt. ` Age- 53 * Nov; oh 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, taic businesses. We plan also to have, a five--year consultant Contract with V-. B- Gran than', for .$60,000 per year. CRMC-HT-TALC-000227 5 Mines ^ a r m springs Canyon talc mining operation includes 80 lodo claims. Not all are being r k n d . Those that etc not a adjacent to or contiguous with those that are worked. By virtue of the "hpex Law" as related Sy Grantham mining engineers, - '- ^ -Tri^ind-d The Apex basis is that any ore additional claims are included. m e ap . , ' -iri-hrid claim'is considered to body continuous beyond an-establisncd d.a. have common ownership. # . ' . . >bhe Warm Springs operation is m myo. . n-si !fornia (lower "^ ^ ' Death Valley) and is , ' ' . ' \ ' raii head'(Field or Dunn Siding, , 130 miles to Union pacific iaii \ Fornia) 140 miles to Las Vegas, Nevada 300 miles to Los Angeles T-he Warm Springs operation includes . - Diesel-operatear reiiiecrctt-rriiccadl Generation g-* (n.o outside .pov/er) , , .. , ^ v m p . ^ 0 living and recreation facilities, Well equipped pase-^amp u v u y . including outside swimming pool- , -. . An ampile source of' csnp-rriirntgcr-tfewd fLr-es:h water supply; ' E & R facilities. . Ore is hauled by contract carrier from warm spring- to r d l Mi n ina is all underground, using room and pillar method. Canyon, Kern .County, Ca1iforn The clay operation is- at Jaw Bone From mine to rail head (Southern pacific Cantei, California) CRMC-HT-TALCD00228 6 - .11'v,tiles. , . Ovo is contract mined, and hauled, contract included in tu "Grantham package" calls for availability until "mins is exhausted." Mining is all open pit.. . Dunn Option ' .... ' ` . . . . Johns-Manville has option to purchase plant, auxiliary buildings and land (approximately 280 acres) from'Pfizer- The i.atter acquired the .total' facility in 1967. from Kennedy Minerals, including talc mines. Pfizer had at the time milling facili-ie; at Victorville, California, and a second plant was soon consider excess,, The Dunn plant has been operated off and on during the past few years. Lompoc -plant engineers 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 lat e ,February 1972. Financial projection - 5 years . Sales .. ' Grantham's sales, limited by capacity, are $.0 million -- - S% of the market. Using Grantham's high quality talc and on r sales force in our markets, we plan a vigorous expansion to $5.2 million sales in 1976, attaining 14% of the market. CRMC-HT-TAI.C-000229 Earnings We plan $280/000 of earnings.the first year (current level), growing to .or^a?--$'SQ, 600 by 137 o. M b'j ""^ . Tax depletion is V e r y 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 Have used 35%' after that. ' . Investment and cash Flow ------- : --- ( ...Acvr* ' ; ... Of the $6.3 million requested,^ $5,,d million will be. spent now. In the next few years, we schedule $9j30rOSOmore . with present forecasts, most of this i n -1975 and 1976. , . . Mr i? -. ; . At the end of the first year we will be out million in cash flow. In the next few years we expect to pay for the future expansion and generate a positive flow of $ 2 < T m i l l i o n . , 4 ' - , . We do not pretend to hnw the long-run future of talc or our participation, but'we 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 J A y C on this venture. ' , . . ' . ' ' ' CRMC-HT-TALC-000230 Talc ' . . . , ., ' . . . ,, goring Formavicn - Geologically, Grantham talc xs xn.tho Cry-tal elr 9 . . v - n w i nf the panaminu (part of the Pahrump Group xn Deatn W i l e y ) o, t . . Ra,,c,e. There are three principal layers of ore bodies, 'fhero are^outoroppings.of the ore bodies, and portals are located at these points..- ore strata are separated by d o l o m i t e , drabas.e \r f n m a t i o n There are faults in the deposit and volcanic rock formation. - . wToiiqhcd in terras of-quarrying procedures, which have been esrablishea in H ^ . h-, m i n i s feet in thickness and lie v;itn The mineable ore beds are 10.-15 feet m , . dip of 9 to 20 generally* ..... , . Chemically, the talc is essentially magnesium silicate* Minor composition is calcium carbonate, sodium carbonate and potassium . ' +--nn ;cj oxide of aluminum, iron, titanium, oxide. Trace compositron is _ . manganese and coppe,. - -- . ' ' . is manor; tremolite small or minor; calcite petrographically, talc is .U-- - trace to small * ' .- . The following points are significant: x) Grantham'talc vs. eastern talc is softer, platey-lxbe, m d current and projected uses other than in cosmetxcs and food products. < . .. ' 2) NO health cases are on record with working people - h u m rsr other rotated to dust or 'other exposure, - ' * i ',1 , iinifr.'1 <;Wrn-Division, R-sportcdly other (particularly v n x i -- -- 3) Cyprus Mines andt ,Vrandeix.-.D-VJs-;.ilbM} iniaavvee had. no cases relate.d to environmental exposure. Clay - ' ' . Grantham clay (or* contract at ownership) i geologically/c emxca, a claystone highly: siiiceous in composition. Minor compositxon Is aluminum and potassium oxide; trace is onide of iron, . calcium/ magnesium and sodium, She composition m a he considered an aluminum silicate hut not kaolxnxc xn type. in terms of health hazards, it is conjectured that environmental., "treat as a nuisance dusu. . CRMC-HT-TALC-000232 F l M C I h L DiV (M's) Sales . Net Earnings Cash Flow Investment 1972, 3600 -280 -5000 do 5410 1973 3900 370" ' -VXo t&60 n Ocj 1-00 1974 1975 1976 4300 4-50" .~ {-lb O 4.-860 W-o . _-40 4700 "> vr .400'" +0^ > 0 -290^ 5200 u-t' 4 V 10. +34tr _f"K> 460 lotal 6300 Rate of yield . i-. CRMC-HT-TALC-00023 3 TALC MARKETS (000 Tons) Talc ind. Grantham- c/.C' . Cclite - Ceramics 246 ' paint 166 paper ' 55 Insecticides 54 Rooinq 30 ` Rubber Cosmetics 24 . -.12 plastics' Other r 238 IS - 12 . 5 0 0 0 1.5 2.5 ?* * 7.5 ;7.5 9.5 0 - . o. 0 11 m ? .x X X . X X X 5. S r p oo too paint industry customers includei . 'celanese Coatings - Desoto ' Glidden National Lead ' Sherwin-Williams . . . paper industry customers Include; American Can : . Georgia Pacific , . Kimberly-Clark . oxford paper .' ' II Westvaco . . ' Weyerhaeuser CRMC-HT-TALC-000235 Utiii 'fi li '!!,U. L Reference: Formula No. 5 GSQOS'G 1 E.l. DuPont de Nomours h Company, Inc. . . Pigments Department ' . Wilmington, Delaware 19893 .. formulation , INGREDIEN TS POUNDS GALLONS d is p e r s io n Wcter Carbitol . Daxad 30 . Igepa! CA360 . Ti-Pure titanium dioxide R-960 Talc ' Mica 325 mesh waterground CE LITE 281 Colloid 581-B . . ^ - . . . . 150.0 30.0 5.0 ' 5.0 175 0 116.0 30.0 50.0 1.0 18.03 3.51 0.52 - 0.57 5.32 4.83 1.27 . 2.60 0.15 REDUCTION Gellosize WP-44Q0 {2% solution) 118.0 1.0 14.10 0.15 Colloid 581-B . . 4.0 G.48 Witco912. 432.0 48.00- Elvacet 1454 . . . 2 amino-2 methyMpropanol . . ' 4.0 0.51 . . 10.0 . 1.23 Super-AG-lt . . . 1,131.0 101.32 ; ...... -- --------- . - ` Pigment Voiume Concentration " . ' h ; ; - Viscosity (overnight) 7Q-7o 'Disperse in high speed disperser . . '. : ''.St. 58