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A vacuum exists in the gold mining and refining industry today. The high fixed costs of today's large-scale smelting processes necessitate a relatively high volume of "non-complex" ore as feed for the mill. This in turn makes an economic return to the miner, particularly to the smaller operator, dependent on finding ore that fits the mill's requirements - not the other way around. In the past, pre-1960, several precious metals refineries were operating and available as a market for the miner. In those days, the miner could decide where to send his particular ore based on his shipping costs, grade and/or complexity of his ore, payment schedules from various mills, etc. As the mills (and their feed requirements) consolidated, the miners' regional market for his output disappeared - followed the miners themselves.
Gold Discoveries and Production Economics
The sizes of gold deposits occur with +10 million ounce deposits as the most glamorous to small deposits of less than 100,000 ounces. Almost always the smaller gold deposits are much higher in gold content per ton of ore than the larger deposits. Historically, gold deposits have been produced that were small, pipe-like bodies of ore comprised of as little as 10,000 tons of ore. In fact, a few were so rich as to be measured in percentages of gold rather than fractions of an ounce per ton. This is in part why during the first half of this century thousands of small mines produced gold, making profits for thousands of miners and investors.
Large gold deposits of less than .1 ounce per ton can support the geological studies, the engineering and the massive amounts of permitting, mine and mill development costs just to become an operational entity. Another cost, often unseen to the public, is the cost of long-term money to the developer of a large mine. Since a major mine might take five or more years to develop, the early money invested becomes far more costly. Small, quickly developed gold deposits, on the other hand, can be much more profitable on a per ounce basis. What prevents their development is they are not large enough in gross values to support massive infrastructure support facilities, and they are therefore left behind by the "big player" prospectors as worthless.
The gold, however, is still out there.
Historically, milling, concentration, smelting and/or chemical refining processes have been uneconomical on a smaller, regional and/or custom milling basis, due to the fact that ore characteristics vary so much from area to area of discovery. The chemistry of each deposit can be quite different from the one next to it. The wrong ore feed to the mill and long processing times, high and costly chemical consumption, low recovery of the gold and silver and the production of toxic byproducts will occur. However, recent developments in extractive metallurgy will drastically change the economics of this situation. In laboratory tests and pilot plant operations, highly efficient, low-cost, chemical leaching processes have been developed which work extremely well with a variety of "complex" ores tested from the Colorado Front Range, Utah, Canada, Africa and Central America as well as other areas. Results, with few exceptions, show excellent recoveries of precious metals.
The combination of high recovery rates and low costs mean that a refinery operator will be able to offer attractive payment schedules to miners; this in turn provides incentive for developers and operators to pursue otherwise uneconomic prospects, being assured of a market for their output. Ores can be purchased as mill feed or in concentrates. Ores with too much distance to the purchasing facility may have to be modestly pre-concentrated to reduce shipping volumes of waste rock in order to pay transportation service to the purchaser. Good-paying mining and refining jobs will be created, and significant returns will be delivered to investors.
The Outlook
Today, deposits of gold with gross values less than $100,000,000 are being discarded and dropped. Smaller deposits, possibly hundreds of them, are potentially sources of almost unlimited streams of revenues. All they need is a qualified customer specifically armed to process their production and return to them a reasonable profit. The miner will not have the huge impact studies as a prerequisite to permitting as the current law already helps small producers in this regard.
The first production-scale precious metals refinery using these new techniques is currently being considered. Its quite a large undertaking and will require plenty of cooperation between the miners and the investor community. At first the most attractive of these target deposits will become active; later some of the lesser prospects will be attractive as well. With custom ore purchasing of gold ore available, an average mine from prospect to production will cost less than $1,000,000. Payouts for some will be quick.
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