For a second year in a row, we have worked with Roy Sebag of Natural Resource Holdings to produce an in-depth report of all gold deposits hold be public, private, and government backed companies.
We were able to identify a total of 580 deposits that have over 1,000,000 ounces of gold for a total of 3.72 billion in-situ ounces. The average grade of all deposits is 1.01 g/t Au.
These deposits are owned by 312 entities including public, private, and government sponsored corporations. 261 of the deposits were owned (or partially owned) by independent junior miners.
2013 vs Previous Years
It is our belief that this is by far the most comprehensive report yet. That said, those that compare this report to 2012 will notice significant differences in the final metrics. Most notably:
- Total deposits over 1 million oz increased from 439 to 580 worldwide.
- Total ounces have increased from 3.02 billion oz to 3.72 billion oz of Au.
- Average grade has increased from 0.82 g/t to 1.01 g/t Au.
The chief difference is that this year we decided to include all African deposits and mines, including projects that we believe will never be mined because they did not meet our thresholds of grade or depth. However, by including these projects, which add up to about 350 million oz alone, we believe the report is much more encompassing.
Trends in Size and Grade
The project economics of gold deposits are mostly dependent on two major factors: size and grade. Without a sizeable ore body, a mining operation cannot acquire the economies of scale to bring down the cost of production. Likewise, a project without grade may not have the margins for each ton of ore processed to justify production.
The average grade differed significantly between producing and undeveloped deposits. The average grade of all producing mines is 1.18 g/t Au, which is 32.6% higher than the average of all projects still in the development phase (0.89 g/t Au). This has significant implications on future gold production. In the near term, with significant volatility and the gold price at a three-year low, many of these projects are simply not economically feasible. In the medium to long term, unless major discoveries are made, either gold production must decrease (with a focus on only higher grade deposits) or the price of gold must rise to make these projects economical.
A key take home point of this report each year is the rarity of large, high-grade projects. There are only 51 (8.8%) projects in the world that are more than 5 million oz and have an average grade of higher than 3 g/t Au. Of these, there are only 21 that are not yet in production.
While North America shows the largest amount of contained gold, Africa continues to be home to some of the highest grade (and highest risk) projects on the planet.
The highest grade deposits in the world are in countries such as South Africa, Tanzania, DRC, Mali, Russia, Ghana, Ivory Coast, Ecuador, Kyrgyzstan, and Papua New Guinea.
The Future of Gold Supply
Our figure for in-situ ounces that we have provided (3.72 billion oz Au) is a comprehensive view of what is below ground in terms of reserves and resources.
However, to come up with a clear picture of what is actually recoverable, the reality is that there are several limitations to the amount of gold that will actually become part of the future supply chain:
- Economic pit outlines have not yet been applied.
- Metallurgical recovery rates have not yet been applied.
- Inferred resources have been included in global contained ounces.
- Undeveloped deposits with no clear path towards permitting remain included.
To project an accurate figure, we need to take our 3.72 billion oz number and apply some math:
Total in-situ ounces in database:
70% of total become mines:
70% metallurgical recovery rate:
This number, 1.82 billion oz, becomes really interesting when we look at annual extractable supply. Averaged over 50 years, the supply is equal to 1,134 tonnes (36,464,480 oz) of gold per year.
This figure is equal to only 42.0% of the 2,700 tonnes (86,807,016 oz) of worldwide gold production in 2012.
Led by countries such as Russia and China, central banks have recently become net buyers of gold. Meanwhile, ETF gold outflows have been a temporary source of supply this year, but obviously this cannot persist. It’s also unreasonable to assume that recycling will make up a significantly greater piece of supply without the price of gold increasing substantially.
With the grade of current producing gold mines being 32.6% higher than undeveloped deposits, it makes the supply scenario even more clear. Not only is the current yearly mine supply difficult to sustain, but future mines coming online will be challenged by grade and margins to be economical at today’s prices.
Mathematically, unless we have high-grade, high ounce deposits that are being fast tracked online, it will be very difficult to find a way to get supply to match demand.
A Brief History of Jewelry Through the Ages
Jewelry has been coveted for centuries by many different cultures. Here’s a look at the history of jewelry, and how it’s evolved into a $348B industry.
Jewelry has been an integral aspect of human civilization for centuries, but it was the discovery and subsequent spread of precious metals and gemstones which really changed the game.
In today’s infographic from Menē, we visualize how the uses and symbolism of jewelry have evolved across time and space to become the industry we’re familiar with today.
Antique, Yet Ageless
There isn’t a single corner of the world that’s untouched by the influence of jewelry.
- Ancient Egypt
Gold accompanied the affluent into the afterlife – the famous 1922 discovery of King Tutankhamun’s tomb was filled to the brim with gold jewelry.
- Ancient Greece and Rome
Jewelry was used practically, and as a protection against evil. The gold olive wreath design was highly popular during this time.
Both men and women in the Sumer civilization wore intricate pieces of jewelry, incorporating bright gems like agate, jasper, or lapis lazuli.
The aristocracy in Aztec culture wore gold jewelry with gemstones to demonstrate their rank. The jewelry also doubled up as godly sacrifices.
- Ancient India
The Mughal Empire introduced the combination of gemstones with gold and silver. Today, pure gold jewelry is often gifted to new brides for financial security.
- Ancient China
Both rich and poor wore jade jewelry for its durable and protective properties. Pure gold jewelry is making a fashion comeback, doubling as a form of investment.
Modern Jewelry: At a Crossroads
Today, jewelry is at once the very same and vastly different from what it used to be.
The industry is worth upwards of $348 billion per year, and it’s not hard to see why. As an alternative asset, jewelry has grown 138% in value over the last decade – only outperformed by classic cars, rare coins, and fine wine.
However, perceptions of jewelry vastly differ. It’s not a stretch to say that Western jewelry buyers are enamored with diamonds, given their enduring association with special occasions – but it’s interesting to note how that ideal was fabricated.
The Invention of Diamonds
The De Beers Group is well known for making diamonds great again. In the early 1900s, the company had already monopolized the diamond trade and stabilized the market, but they faced the challenge of marketing diamonds to consumers at all income levels.
The average American considered diamonds an extravagance, preferring to spend money on cars and appliances instead. The concept of engagement rings existed, but weren’t widely adopted. The #1 slogan of the century – “A Diamond is Forever” – transformed all that.
Even as more companies like Tiffany and Co and Cartier entered the playing field, De Beers had set a successful industry standard. But there’s a catch – diamonds are actually:
- Not all that rare in nature
- Intrinsically low in value
- Easily replicated in a lab
- Decreasing in sales
Despite these caveats, the popularity of diamonds illustrate how Western consumers do not approach jewelry in the same way as Eastern economies, where its function as a store of wealth persists.
The Eastern Gold Standard
In Eastern economies, jewelry often takes the form of pure gold. The reasons behind this difference are surprisingly pragmatic: gold is considered a secure and innate store of wealth that maintains its purchasing value over decades, allowing families to pass wealth from generation to generation.
The rich history of the precious metal has made it a sought-after commodity for centuries, and China and India drive more than half of global gold jewelry demand every year:
|Year||Share of Demand (India + China)||Total Global Jewelry Demand (tonnes)|
Source: Gold Hub – Values have been rounded up to the nearest tonne.
Why are Eastern cultures so attracted to the properties of pure gold?
Part 2 of this series will show why gold is the world’s most incredible metal, and why it’s coveted by billions of people.
The Future of Gold Exploration is Under Cover
Gold exploration has seen diminishing returns for years, but exploring through cover could be a way to unlock the world-class deposits of the future.
The Future of Gold Exploration is Under Cover
Over billions of years, extraordinary amounts of gold and other metals were deposited and spread throughout the Earth’s crust. Humans have been searching for these rich deposits for centuries, and advances in geoscience and technology have helped us become more adept at finding them over time.
However, even with today’s advancements – almost all early-stage prospecting methods are still based on the same key principle: trying to find areas of exposed bedrock, called outcrops, that indicate an orebody is near.
But such outcrops only form in certain circumstances – and what happens when a geological system doesn’t come in contact directly with the surface?
The Problem of Cover
Today’s infographic comes to us from Nevada Exploration, and it identifies the problem behind finding these “hidden” deposits that do not leave a helpful trail of clues on the surface.
Instead of having outcrops where rocks can be readily sampled, these deposits are trapped underneath large amounts of soil and gravel. Geologists call this a covered setting, where they must first find a way to “see through” the cover in order to identify what geological systems really exist below.
Seeing through cover can be expensive and difficult to do, but it also has big potential upside.
There is no reason not to assume as much gold still exists as has been mined in the past, but prospectors, explorationists, and geologists have found the easy gold.
– Dr. Richard Goldfarb, Ph.D., United States Geologic Survey
In fact, many geologists think that the next game-changing gold deposit could be found under cover.
For explorers, it is no secret that the cost per discovery is going up dramatically over time. The reality is that traditional exploration methods are achieving diminishing returns, and as a result companies are settling for lower grade deposits, more complex geological settings, and politically questionable jurisdictions.
Minex Consulting says that between 2007-2016, there has been $65 billion spent globally on gold exploration with only $30 billion worth of discoveries to show for it. Those aren’t exactly inspiring economics for future gold explorers.
But for every industry problem, there is often a precedent to be found elsewhere – and an interesting situation that is analogous was faced by the oil exploration industry years ago. They had reached diminishing returns with shallow water deposits, and developed technology to go deeper. Suddenly, monster deposits were being found again.
Experts involved in mineral exploration see the same thing happening with cover.
With the transition to under cover exploration, the minerals industry is undergoing a transformation much like the petroleum industry transformed to deep sea exploration some decades ago.
– Cam McCuaig, Principal Geoscientist, BHP Billiton
In other words: whoever can figure out how to explore under cover could be reaping big benefits.
In the world’s most prolific gold jurisdictions, there are massive amounts of land that have not yet been explored because of cover. In Canada and in Australia, over 70% of land is covered. In Nevada, which produces the most gold ounces per square kilometer, about 55% of land is covered.
Interestingly, Nevada has produced 225 million oz of gold to date, but the majority of these discoveries have come from outcrop clues on the surface. Imagine what gold could be hidden under soil and gravel within the valleys of the state.
Global data so far suggests that deposits discovered under cover tend to be 2-4x bigger.
Exploring Under Cover
While the idea of unlocking this potential is extremely exciting, it also poses a significant technical challenge.
Conventional tools are poorly suited to covered settings, and existing techniques for systematic exploration don’t work. The end result is high-risk, high-cost exploration.
To successfully explore through cover, companies need:
- New technology to see through cover
- A way to lower the costs of testing targets
- A way to directly test covered bedrock
So far, a few ideas have been pioneered for seeing through cover – and it will be interesting to see what results they bring in.
Biogeochemistry: In Australia, explorers are using biogeochemistry as a hint to see what lays beneath the soil. Plants accumulate pathfinder elements in them, or even tiny amounts of gold, which allows explorers to get a hint at what lies deep below.
Hydrogeochemistry: In a place like Nevada, there are massive valleys in the middle of prolific gold districts that have remained unexplored because they are covered with hundreds of meters of gravel. Testing groundwater might be the key, because groundwater flows by gravity from mountains to deep in the valley centers. On the way, this water interacts with bedrock – and any gold deposits that are hidden beneath the surface.
Explorers are looking at other ideas as well, ranging from regional-scale mapping to adapting other oil and gas industry techniques. If any of them are able to unlock the secret of exploring through cover, it could be the catalyst for industrywide change, as well as the discovery of the monster deposits that will meet our mineral needs of the future.
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