The Costs of Gold Mining

The true costs of gold mining can be staggering, but mining has the potential to be extremely profitable. Experts believe that the world contains more than 3 billion ounces of gold and only 50 of the world’s leading gold mines contain 33-percent of gold reserves. This leaves a substantial amount of gold up for grabs, which is why humankind has suffered from gold fever for several centuries.

The leading areas for gold mines include Africa, North America, South America, Australia, Asia and Europe. Of these, it’s most economical to mine gold in North America as it costs approximately $598 an ounce. In contrast, it costs nearly $957 per ounce in Africa and $715 per ounce in Australia.

With North America being the most cost effective geographic location for gold mining, Nevada is home to 50-percent of the 12 gold mining operations on the continent. South America is one of the most expensive areas to mine, as their mines are extremely deep beneath the earth’s surface.

Gold companies once used a “Cash Cost” approach to determine the costs of mining per ounce. However, this method is extremely inaccurate and outdated, which has led many companies to adopt the “All in Sustainable Cash Cost” reporting system. This system highlights gold prices versus gold production costs, allowing mining companies to understand overhead costs and how these directly impact profits.

Gold is a rare commodity, which is what makes it so valuable. Gold is graded and the top mines average a grade of 5.3 g/t. To obtain gold that is equivalent in size to a golf ball, mines must move nearly 9.39 tons of dirt.

The future of gold mining is rich and highlighted below are several large deposits, as well as their contribution levels in ounces. Their current production levels are highlighted in percentages.

• North America – Pebble Deposit, Alaska (107,300,000 ounces) and KSM Deposit, BC Canada (63,979,000 ounces) combine to make up 46% of current production levels.
• South America – Pascua-Lama Deposit, Chile (25,810,000 ounces) and Cerro Casale Deposit, Chile (32,587,666 ounces) combine for 40%.
• Europe – Rovina Valley, Romania (6,960,000 ounces) and Rosia Montana, Romania (18,500,000 ounces) combine for a total of 90%.
• Africa – Akyem, Ghana (7,684,000 ounces) and Kibali, DRC (10,920,000 ounces) combine to make up 4%.
• Asia – Natalka, Russia (58,950,000 ounces) and King King, Philippines (11,943,000) combine to make up 26%.
• Australia – Mt. Todd, Australia (9,036,000 ounces) and Golpu, Papua New Guinea (19,300,000 ounces) combine to make up 9%.

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