Mining Cutoff Grades

[dj_420]

I am new to both this forum and trading in general. I have been heavily researching the commodities area but am getting confused with different grades of different metals. I am wondering if anyone knows what cut-off grades are for each particular metal and the difference between the low and high grades. metals of particular interest are

zinc
copper
lead
aluminium
uranium
gold

if anyone has any thoughts or input would be appreciated. im sure there are a few other begginers who would appreciate this as it would help greatly in assessing the value of mining companies interests.

 

[rederob]

I am new to both this forum and trading in general. I have been heavily researching the commodities area but am getting confused with different grades of different metals. I am wondering if anyone knows what cut-off grades are for each particular metal and the difference between the low and high grades. metals of particular interest are

zinc
copper
lead
aluminium
uranium
gold

if anyone has any thoughts or input would be appreciated. im sure there are a few other begginers who would appreciate this as it would help greatly in assessing the value of mining companies interests.

A cut off grade defines what you will mine for a profit.
It will vary for every mineral, for every location, and reflect geological conditions and prevailing metals prices.
For example, you can mine surface gold grading much less than a gram per tonne and make a profit, but you would not touch 2 grams per tonne a few kilometres down because it would be too expensive.
As the prevailing metal prices rise, the cost of extracing metals from lower grade ore bodies becomes less of an issue.
As a result, copper mines that were once too expensive are now being opened up, while nickel ore bodies that would never be touched at $15,000/tonne are now being mined at $20,000/tonne.
You need to do a fair bit of homework on every company, and then every mine, to determine what's good and what is not - I have not discovered any short cuts in the last 5 years, so if there is anyone who has a better idea, please come forward.

 

[dj_420]

I found this article on the World Gold Council website
http://www.gold.org/value/markets/faqs/index.html

This section of the article is relevant to this thread regarding gold grades

What is the average cost of mining per ounce?
The world average mining cost per troy ounce was around USD 235.00 in 2002 (based on figures published by Gold Field Mineral Services). These costs include depreciation and amortization but to get a true estimate one should add between 30 and 40 USD/ounce to cover exploration, head office costs and so on. However, costs vary widely between companies and the mines themselves.

How much gold is still underground?
According to the consultancy company Beacon Advisers in a study published in 2002, known resources associated with current mines were around 1,227 m oz or just over 38,000 tonnes. If all of this could be extracted economically this would amount to around 15 years production at current production rates. In practice the amount of known resources remains fairly constant over time since the results of new exploration finds replace those resources that are exploited.

What is the average gold mining grade?
The grade of ore refers to the proportion of gold contained in the ore of a particular mine and is quoted in grams per tonne (g/t). The type of mine depends on the depth and grade of the ore. At a rough estimate, the larger, better quality South African underground operations are around 8-10g/t (Anglogold), while the marginal South African underground mines run at around 4-6g/t. Many of the operations elsewhere in the world are open pit mines, which run at lower grades, from as little as 1g/t up to around 3-4g/t. A more significant piece of information than average gold mining grade is cost per ounce, which is a combination of grade (grams/tonne) and operating costs (USD/tonne).

Where is gold mined?
Gold is mined on every continent, barring Antarctica. For more details, please see Mine Production.

How much gold has been mined?
The best estimates available suggest that the total volume of gold ever mined up to the end of 2002 was approximately 147,000 tonnes, of which almost 60% has been mined since 1950.

What is the WGC?
The World Gold Council (WGC) is an association of the world’s leading gold producers dedicated to the promotion of gold. "

So in regards to a decent gold grade it depends on type of mine and cash cost of extracting the gold.

For an open pit mine grades as >1 g/t is profitable. So an open pit mine with 3-4 g/t would be significant.