The Life Cycle of a Gold Mine
Humans have been mining gold for around 7,000 years, according to archaeologists. The valuable metal still takes a lot of effort to bring to market. It can take 10-20 years from the discovery of a gold deposit to the development of a mine. Production could last from several years to many decades.
Gold mines still have a lot of work to do. No one knows for sure how much gold is left underground, but one Goldman Sachs analyst says there’s enough to mine for the next 20 years. Here’s how gold mines get to that payoff.
How Does A Gold Mine Work?
Gold mining is a complicated process that can take years. It typically involves five steps, from discovery of a mining site to returning it to its natural state once mining is complete.
Stage 1: Exploration
This step is challenging and extremely complex. Considerable time, money and expertise in everything from geography to geology, chemistry and engineering are needed. Interestingly, less than 0.1% of explored areas sites and just 10% of deposits will bring about a productive mine to justify development.
Stage 2: Development
This logistical endeavor involves securing permits and licenses before construction can start. After approval, the mining company moves on to the planning and building of the mine as well as roads and associated buildings. This stage usually takes a few years, depending on where the site is located. The mining firm also needs to consider how it can provide long-term support for local communities.
Stage 3: Operation
Rock and ore are extracted and turned into a metallic alloy called doré, typically containing between 60-90% gold. If gold prices are high, low-grade ore is mined as higher prices help finance the higher costs of extracting and milling greater amounts of ore. However, when costs rise or the price of gold drops, the extraction and processing of higher-grade ores may be profitable.
Stage 4: Decommissioning
When the ore body is depleted or the remaining deposit is unprofitable to continue to mine, the focus switches to decommissioning. Infrastructure must be dismantled and the land rehabilitated. The mining firm must monitor the mine site long after the mine has been closed to ensure there is no environmental damage.
Stage 5: Post-closure
After decommissioning, a mining company may manage the site for as long as 10 years. Mine owners must clean, replant and endure long-term environmental stability of the former mine site.
How is Gold Mined?
Although mining has become largely mechanized, there are several different techniques used around the world. Here are some of the most common.
| Panning | This is the classic prospector technique. In it, gold is separated manually from other materials, usually in stream beds. Large, shallow containers are filled with sand and gravel from areas suspected of having gold. The pan is placed in water and shaken, causing the denser gold to drop to the bottom of the pan. Although gold panning is the easiest and quickest technique for finding gold, it is usually far from commercially viable for extracting large deposits, although this depends on labor costs and if there are considerable gold traces. |
| Placer Mining | If gold is built up underground in a spot where tunneling is difficult, placer mining is used to extract the metal. This involves using water to excavate, transport, concentrate and recover the metal. |
| Sluicing | This involves water that is used to extract gold in a small-scale mine and in prospecting. A sluice box is created for water to pass through. Small obstacles in the box makes gold elements fall out of the flow while the less dense material continues to flow out of the box. |
| Dredging | Only a small part of gold mining is carried out this way today. Suction pipes pull materials up from a riverbed for sorting. This method has a small environmental impact, which protects vegetation and recycles all the water. |
| Rocker Box | A rocker box is a high-walled box to bring out gold fragments. It’s like a sluice box, but it uses less water, which is appropriate where it is less available. The box is then rocked back and forth to separate the gold from other material. |
| Byproduct Gold Mining | Sometimes, gold is recovered when a different mineral is being mined. For example, the large Bingham Canyon copper mine in Utah often recovers significant amounts of gold and other metals. Some sand and gravel pits may recover small amounts of gold during their operations. |
| Hard Rock Mining | The main way to mine gold is hard rock gold mining, which extracts gold within. The most prolific gold mines are underground operations with deep shafts and tunnel systems. The deepest hard rock gold mine in the world is 12,800 feet underground in South Africa. Hard rock gold mining can also take place at open-pit mines, such as at the Fort Knox Mine in Alaska. The Barrick Gold Corp Goldstrike mine property in Nevada is one of the largest open-pit gold mines in North America. |
How Long Does a Gold Mine Last?
A gold mine can operate from five to 30 years, and some are still going after many decades. The United States and South Africa each have two of the world’s 10 largest gold mines in terms of size of gold reserves, while the others are in Indonesia, Russia, Papua New Guinea, Chile, Australia and the Dominican Republic.
The South Deep gold mine in South Africa has the largest gold deposits in the world at 32.8 million ounces, and produced 157,100 ounces of gold in 2018. Operations began in 1961.
The Grasberg gold mine in the Papua province of Indonesia contains 30.2 million ounces of reserves and produced a massive 69 million ounces in 2018.
As for the American mines – the Carlin Trend and the Cortez — are both in Nevada. Carlin Trend is the sixth largest, with reserves of 12.46 million ounces and produced 927,000 ounces of gold in 2018, while the Cortez mine has 8.7 million ounces of reserves and produced 1.7 million ounces of gold in 2018.
Where Is Gold Mined?
According to the World Gold Council, the leading global authority on the gold industry, the 2016 breakdown for production of newly-mined gold is as follows:
- China produced about 14%
- The rest of Asia produced 23%
- Africa’s production was 19%
- Central and South America produced around 17%
- North America supplied around 16%
- The Commonwealth of Independent States produced about 14%
Large-scale production in the United States began in 1848, with the start of the California Gold Rush.
Arizona also has a rich history of gold mining. The most popular locations for prospecting are the Wickenburg Mountains, the Hassayampa River, the Cave Creek area, the Agua Fria River, the Bighorn Mountains, Prescott (Lynx Creek, Stanton), Rich Hill and Black Canyon City.
Learn More About Gold
Despite the difficulties in finding and extracting the precious metal, gold retains its attraction as a safe haven for investment. When there’s uncertainty in stocks and other assets, including the dollar, gold is the only investment because you can trust as a store of value.
Connect with Republic Monetary Exchange to discuss your investment options with a knowledgeable precious metals expert. Call (602) 955-6500 today. And to learn more about gold and the latest developments in the industry, visit our Resource Center.