Gold Production
from Beginning to End
Gold mining is arguably one of the most misunderstood industries in the field of investing. Many investors lack a basic understanding of how gold is produced and have unrealistic expectations about how long it actually takes. They are confused when mining companies encounter hurdles that must be overcome. Some seem to think that starting a mine is like turning on a switch. As a result, the prices of gold mining stocks are subject to wide volatility.
DEPOSIT TYPES
This book covers different types of gold deposits, including how they are found and classified. No two deposits are alike. These differences determine how they are going to be mined and processed into gold. Some ores are easy to process and others are difficult.
MINING METHODS
You will learn about differences between open pit and underground mining. Then, you will learn about various underground mining techniques such as room-and-pillar, sublevel stoping, and block caving. They are all different. You will be pointed to videos describing these methods in greater detail.
EXTRACTION CHEMISTRY
Other topics include how various chemical processes are used to obtain desired results during production. For example, during leaching, gold is dissolved into liquid form. Then, to extract it from the leaching solution, a different set of chemicals is used.
REFINING PROCESS
You will learn how refineries obtain gold from the mining companies, and how they refine it first into 99.50 percent gold bars, and then, into 99.99 percent gold bars.
Overview of the Book
The purpose of this book is to educate you about the gold mining business by teaching you the basics. With this knowledge, you will be able to pick up an annual report from any gold mining company and actually be able to read and comprehend it.
Exploration
Gold exploration is the riskiest part of the entire gold production process. Geologists use various methods to narrow down their search for where to drill for possible gold deposits. After enough holes have been drilled, the companies get a pretty good idea of what lies beneath the surface. To communicate their results to the public, they engage a third-party engineering firm to write an NI 43-101.
Mining
After finding a deposit, gold mining companies have to figure out the best methods of extracting it from the ground so that the entire operation is profitable. Different mining methods are used for different deposit types. For example, deposits close to the surface are mined one way while deposits deep inside the earth are mined another way. Choosing the proper mining method is extremely important because a great deposit with a bad mining technique is a bad deposit.
Processing
Processing involves the separation of gold particles from the ore. If all deposits were identical, then they would all need the same processing technique. However, this is not the case. Some ores are easy to process because they do not contain minerals that inhibit various chemical reactions. The hard-to-process ores are problematic. They are more expensive to produce operationally and require huge capital expenditures.
Refining
This is the last step of gold production. The rough-looking doré bars are transformed into shiny and beautiful pieces of art that are traded on physical and futures commodity exchanges. There are two main processes that refining companies use to refine gold. One process yields 99.5 percent pure gold bars while the other raises the purity to 99.99 percent. The chemistry behind their methods is very intriguing.
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“Well done. I really enjoyed reading the book. I like the homey, simplified language that is very easy to follow.“
Peter J. Hawley, Scorpio Gold Corporation
Manuel Gomez Rubio, CFA, Horizon Asset Management
“Congratulations. I found it very useful. I will never invest in gold miners again without having consulted the details of all the variables that affect my investment. This book is a must.”
“Awesome. This book is really awesome! I’ve invested in some miners over the past few years, but there is a lot of information that I didn’t know. I liked that this book explained confusing concepts in a readable way. It is definitely a good source for investors who want to learn about gold mining companies and how they operate.”
Roger Dabdab
Robert Baldock, CEO of Monument Mining
“I’ve enjoyed Mariusz’s work. The book is a very good summary in brief to inform “non-mining people” such as new investors to the market or people who just want to dabble a bit in the industry and want or need to get some understanding in a 101 pages, not thousands. I am impressed that Mariusz took this trouble to write it.”
About
the Author
Mariusz Skonieczny
He is the author of two other books, Why Are We So Clueless about the Stock Market? and The Basics of Understanding Financial Statements. He is also the editor of Ultimate Value Finder, a monthly investment newsletter.