Global Gold Mines and Deposits Ranking 2012
Connect with us

Mining

Global Gold Mines and Deposits Ranking 2012

Published

on

gold-1gold-2-fadedgold-3-fadedgold-4-fadedgold-5-faded
Gold Mine Deposit Rankings 2012
Thanks to Roy Sebag and Natural Resource Holdings for having us involved in this project. Roy’s team did some excellent research to see how truly rare a 1 million oz+ gold deposit is and our job was to capture the data using visualizations. See the full 30 page report here.

Introduction

Following on the success of last year’s report we have decided to make the ranking of the world’s gold deposits an annual endeavor highlighting trends in future mine supply, depletion, discoveries, and in-situ grades.

As far as we know, there has not been a similar effort to compile a comprehensive database of the world’s gold mines and deposits. Nevertheless, we rose to the laborious challenge as we knew that the industry reliance on risk capital via public markets presented an opportunity to data mine regulatory filings which would result in a high quality database.

With this research our goal was to provide quantitative answers to some of the questions we kept asking ourselves as investors in the space. Questions such as:

How many ounces of in-situ gold exist?

How many gold mines exist in Canada?

How rare is a 1.0 million ounce undeveloped deposit?

The report answers these questions and more while providing insight into the scarcity of mines & deposits. Additionally, having a granular view of the supply mix is useful as it allows market participants to ascertain the long-term supply and demand fundamentals of the metal.

We have made some important changes this year to the methodology of the database adding grade, tonnage, and government owned mines/deposits. We also partnered with Visual Capitalists, an investor website that provides rich visual content, to assist in visualizing the data we compiled. The report is free for usage and distribution with acknowledgment of the author.

Sincerely,

Roy Sebag

Changes to Methodology

This year we implemented some important changes to our methodology leading to a higher quality database that is more comprehensive:

A)      Introduction of Grade and Tonnage in grams per tonne providing a more qualitative analysis of each respective deposit.

B)       The inclusion of Government owned deposits such as Murantao and Sukhoi Log.

C)       The inclusion of South African mines and deposits.

D)      The inclusion of Australian listed companies as well as Polyus, Anglogold Ashanti and Newcrest, companies that are harder to compile due to the opacity of their mineral resource disclosure.

While we still have serious reservations relating to what portion of delineated resources can actually be extracted in the South African deposits we felt that they warranted inclusion in order to provide readers with an all-encompassing database. That same logic led us to include government owned mines even though we are somewhat skeptical of their reported grades and often relied on an outdated technical report.

Methodology

We started with a list of 1,892 publicly traded companies that are in some way involved in gold production, exploration, or development of over 7,000 geologic anomalies. Our goal was to find an undeveloped gold deposit or producing mine that hosted over 1 million troy ounces of in-situ resources under a globally respected mineral definition standard such as CIM NI 43-101, JORC, or SAMREC.

In an effort to provide the most comprehensive database and due to the fact that every proven or probable ounce starts of as inferred, we aggregate all resource categories into one figure (refer to last year’s report for a discussion relating to aggregating all resource categories). Where there are reserves and resources we will most likely use the inclusive resource figure. When a cutoff grade is recommended by a geological consultancy we will rely on that cutoff grade unless the report was outdated and we felt a lower cutoff grade was warranted. It is important to stress that resources are not necessarily indicative of future mine supply given that metallurgical recovery rates and economic pit outlines are not applied. In the “Potential Mine Supply Exercise” section we discuss this further.

When it came to copper/gold porphyries it was difficult to draw the line as to what was a gold deposit vs. a copper deposit. In this year’s report we included deposits such as Reko Diq and Galore Creek because we felt their global contained ounces were too large to disregard even though they are primarily copper deposits.

2012 Result Summary

From an initial list of 1,896 companies we were able to identify 212 entities (Public, Private and Government Sponsored Corporations) that own 439 gold deposits hosting over 1,000,000 ounces in all categories representing a total of 3,015,542,164 ounces of gold.  The complete list can be found at the end of this report.

Summary of Findings:

Total Mines & Deposits in over 1 million ounces in-situ: 439

Total In-Situ Ounces: 3,015,542,164      Total Tonnage & Grade of Database: 113.9 Billion Tonnes @ .82 g/t

Total In-Situ Ounces & Avg. Grade Producing Mines: 1,556,265,676 oz.  @ 1.06 g/t

Total In-Situ Ounces & Avg. Grade Undeveloped Deposits: 1,459,276,488 oz. @ .66 g/t

Global In-SITU Ranking

Mines & Deposits over 3 million Oz: 228                                        Mines & Deposits over 5 million Oz: 148

Mines & Deposits over 10 million Oz: 74                                        Mines & Deposits over 20 million Oz: 33

Producing Mines over 3 Million Oz: 120                                         Undeveloped Deposits over 3 Million Oz: 108

Producing Mines over 5 million Oz: 82                                            Undeveloped Deposits over 5 million Oz: 66

Producing  Mines over 10 million Oz: 43                                         Undeveloped Deposits over 10 million Oz: 31

 

HIGH GRADE GOLD SUMMARY

Mines & Deposits over 1mm oz and 3 g/t: 136                              Mines & Deposits over 1mm oz and 5 g/t:  81

Mines & Deposits over 1mm oz and 10 g/t: 26                              Mines & Deposits over 1mm oz and 15 g/t: 11

Producing Mines over 1mm oz and 3 g/t:       76                           Undeveloped Deposits  over 1mm oz and 3 g/t: 60

Producing Mines over 1mm oz and 5 g/t:       49                           Undeveloped Deposits  over 1mm oz and 5 g/t: 32

Producing Mines over 1mm oz and 10 g/t: 14                            Undeveloped Deposits  over 1mm oz and 10 g/t: 12

For full results and tables of deposits, view the full report PDF. 


2012 Results Discussion

This year’s results confirmed both the scarcity of gold deposits as well as the lower-grade production trends facing the industry. Even with our generous thresholds allowing inferred resources to be included in the database, we were able to identify only 439 mines or deposits containing over 1 million ounces of gold.

In our view a mine or deposit is an asset no different than a farm, commercial property, or financial security. Yet when it comes to gold, there are only 439 assets that meet the industry perceived economic threshold of 1 million ounces.  Last year, we compared this figure to the tens of thousands of commercial real estate properties in the world or the nearly 72,000 financial securities. While the crustal abundance of gold is fixed, and discovery grades continue to decline, there is no limit to the creation of financial securities and plenty of land and building materials to construct more property. Simply put, a gold mine or deposit with over 1 million ounces is a very rare asset. This is especially true when viewing the geographical distribution of the mines & deposits:

Independently Owned Undeveloped Deposits

Another data point we found fascinating was that out of 439 mines or deposits, 189 are in fact producing mines owned by companies with an average market capitalization of $1.8 Billion. This leaves us with a universe of undeveloped deposits over 1 million ounces of just 250. Of course some of these 250 deposits are owned by miners (84) while just 166 are owned by independent junior companies, private companies, or government sponsored enterprises. Investors seeking leverage to gold should focus on these companies as they provide the best exposure to a rising gold price environment.  We have attached a table with these deposits and companies at the end of the report titled “Undeveloped Deposits over 1mm oz owned by Independent Juniors”.

It is interesting to note that in Canada we were able to find only 59 undeveloped deposits over 1mm ounces owned by 49 companies (41 Independents). In the United States we found only 33 deposits owned by 26 companies (23 Independents).

Internally, the purpose of this report was to identify potential short-comings in the theories employed by leading thinkers in the gold industry. After reviewing nearly 2,000 companies in the space we can objectively say that are no such red flags. Annual discoveries in 2011 lacked the gravitas required to move the needle on the aggregate in-situ figures after incorporating depletion. This was surprising to as historically high gold prices have provided nearly unprecedented capital to gold exploration companies and we had assumed that after tallying up the year’s discoveries there would be a significant nominal gain in ounces.  Another important data point was observed with regards to the grade of producing mines vs. undeveloped deposits with grades for undeveloped deposits being markedly lower (37%) guaranteeing the need for higher energy input in the future only to sustain current production figures.

Another caveat with the undeveloped deposits in the database is that some of the largest ones face significant permitting headwinds. Pebble, Reko Diq, Donlin, KSM, and Rosia Montana which represent nearly 20% of the undeveloped  ounces in the database may not become mines for 10,20 and even 30 years.

Quality Deposits are Rare

While this report and the accompanying database provide an accurate view of global mine supply, there are crucial qualitative metrics still missing. Even high grade deposits with no infrastructure are inferior to easily mined bulk tonnage deposits with close proximity to infrastructure in stable geopolitical jurisdictions.

Looking at the matrix of undeveloped deposits, one can see why size and even grade are not the most important attributes when predicting which deposit will become a mine. Let us compare Cerro Cassale in Chile with 32.5mm ounces to Titiribi in Colombia with 11.1mm ounces (and continues to grow). While Cerro Cassale is nearly three times the size, its remote location in the Maricunga desert has forced Barrick to budget over $500mm for a120km water pipeline. Titiribi, owned by independent junior Sunward Resources, is located on a paved road with both water and power running directly to the site. While it is too early to estimate CAPEX for Titiribi, it is not farfetched to assume that for the amount Barrick will be spending transporting water from point A to point B, Titiribi will be producing a few hundred thousand ounces of gold per annum.

In conclusion, we would like to stress that while this database serves as an effective starting point we urge investors to incorporate additional metrics such as geopolitical risk, permitting challenges, and most importantly infrastructure when ranking deposits for investment.

Global Mine Supply Exercise

In this section we will attempt to make sense of the 3,015,542,164 ounce (93,796 tonnes) figure which is the sum of all in-situ ounces in the database. As we previously explained this figure is inaccurate as it relates to potentially mined ounces in the future due to the following factors:

1)       Inclusion of inferred resources in global contained ounces.

2)       Not applying any economic pit outlines.

3)       Not applying any metallurgical recovery rates.

4)       The inclusion of undeveloped deposits with no clear path towards permitting.

In order to project an accurate figure we will adjust the 3,015,542,164 ounce number through an exercise that incorporates metallurgical recovery rates, economic pit outlines, and physical constraints that come with moving the billions of tonnes that host these ounces.

First, we will apply a metallurgical recovery rate. Industry averages tend to be 70-90% depending on the type of mineralization. Casting a wide net, we will use 80% as our metallurgical recovery rate. Following this step we are left with 2,412,433,133 ounces.

Next, we will apply economic pit outlines to the resource figure. Once again in an effort to include the most possible ounces we will apply only a 10% reduction for potential pit outlines. Given the amount of inferred ounces in our database this is a very generous figure. Following this step we are left with 2,171,190,358 ounces or 67,533 tonnes.

Next, we will estimate the physical constraints required to mine the remaining ounces. As these ounces exist within 81 billion tonnes of ore (49 billion tonnes for undeveloped deposits containing 1.05 billion ounces after applying economic pit outlines and metallurgical recoveries) they cannot be immediately extracted from the earth’s crust.

As we are estimating future potential supply, the 189 producing mines are less important given their production is already factored in the existing supply mix. A more relevant exercise is one projecting future supply from undeveloped deposits as only they could meaningfully disrupt the supply & demand fundamentals.

Let us assume for a moment that all 250 undeveloped deposits were somehow permitted and financed tomorrow.  With 49 billion tonnes to mine at an average grade of .66 g/t it would take no less than 25 years to extract the 1,050,000,000 ounces contained within these deposits. Arriving at this figure, we assume that the average build time would be 3 years and the average mill size would be 25,000 tonnes per day.

Even with our unrealistic scenario introducing all 250 undeveloped deposits into the supply mix at once, we can only quantify an increase of roughly 42mm ounces of gold production or 1,306 tonnes per annum. Compare that to current gold production of roughly 2,800 tonnes or 90mm ounces per annum.

Realistically, 50% or more of the deposits in the database will most likely remain deposits 25 years from now for a variety of factors including: permitting, ability to finance a mine, and attractiveness to a producer (producer balance sheets are so large they require significant projects to be accretive , making even most 1mm-2mm ounce deposits unattractive).

Consequently, the guaranteed depletion in the existing production mix coupled with a more realistic introduction of new mines into the mix (as opposed to our theoretical tomorrow scenario) makes it clear that barring multiple high-grade, multi-million ounce discoveries each year, a significant increase in gold production is unlikely. Moreover our back of the envelope calculations point towards gold production peaking at some point between 2022 and 2025 assuming the 90mm ounce per year figure is maintained.

Subscribe to Visual Capitalist
Click for Comments

Gold

How Gold Royalties Outperform Gold and Mining Stocks

Gold royalty companies shield investors from inflation’s rising expenses, resulting in stronger returns than gold and gold mining companies.

Published

on

gold royalty company returns compared to gold and gold mining companies
The following content is sponsored by Gold Royalty
Infographic on gold royalty company returns

How Gold Royalties Outperform Gold and Mining Stocks

Gold and gold mining companies have long provided a diverse option for investors looking for gold-backed returns, however royalty companies have quietly been outperforming both.

While inflation’s recent surge has dampened profits for gold mining companies, royalty companies have remained immune thanks to their unique structure, offering stronger returns in both the short and long term.

After Part One of this series sponsored by Gold Royalty explained exactly how gold royalties avoid rising expenses caused by inflation, Part Two showcases the resulting stronger returns royalty companies can offer.

Comparing Returns

Since the pandemic lows in mid-March of 2020, gold royalty companies have greatly outperformed both gold and gold mining companies, shining especially bright in the past year’s highly inflationary environment.

While gold is up by 9% since the lows, gold mining companies are down by almost 3% over the same time period. On the other hand, gold royalty companies have offered an impressive 33% return for investors.

In the graphic above, you can see how gold royalty and gold mining company returns were closely matched during 2020, but when inflation rose in 2021, royalty companies held strong while mining company returns fell downwards.

 Returns since the pandemic lows
(Mid-March 2020)
Returns of the past four months
(July 8-November 8, 2022)
Gold Royalty Companies33.8%1.7%
Gold9.1%-1.7%
Gold Mining Companies-3.0%-8.6%

Even over the last four months as gold’s price fell by 1.7%, royalty companies managed to squeeze out a positive 1.7% return while gold mining companies dropped by 8.6%.

Gold Royalty Dividends Compared to Gold Mining Companies

Along with more resilient returns, gold royalty companies also offer significantly more stability than gold mining companies when it comes to dividend payouts.

Gold mining companies have highly volatile dividend payouts that are significantly adjusted depending on gold’s price. While this has provided high dividend payouts when gold’s price increases, it also results in huge dividend cuts when gold’s price falls as seen in the chart below.

chart of gold royalty company dividends vs gold mining company dividends

Rather than following gold’s price, royalty companies seek to provide growing stability with their dividend payouts, adjusting them so that shareholders are consistently rewarded.

Over the last 10 years, dividend-paying royalty companies have steadily increased their payouts, offering stability even when gold prices fall.

Why Gold Royalty Companies Outperform During Inflation

Gold has provided investors with the stability of a hard monetary asset for centuries, with mining companies offering a riskier high volatility bet on gold-backed cash flows. However, when gold prices fall or inflation increases operational costs, gold mining companies fall significantly more than the precious metal.

Gold royalty companies manage to avoid inflation’s bite or falling gold prices’ crunch on profit margins as they have no exposure to rising operational expenses like wages and energy fuels while also having a much smaller headcount and lower G&A expenses as a result.

Along with avoiding rising expenses, gold royalty companies still retain exposure to mine expansions and exploration, offering just as much upside as mining companies when projects grow.

Gold Royalty offers inflation-resistant gold exposure with a portfolio of royalties on top-tier mines across the Americas. Click here to find out more about Gold Royalty.

Subscribe to Visual Capitalist
Click for Comments

You may also like

Subscribe

Continue Reading

Mining

The Next Generation of Uranium Deposits

Canada’s Athabasca Basin has the highest-grade uranium deposits in the world.

Published

on

https://www.visualcapitalist.com/wp-content/uploads/2022/11/The-Next-Generation-of-Uranium-Deposits shareable
The following content is sponsored by Skyharbour Resources

The Next Generation of Uranium Deposits

Government policies are shifting in favor of nuclear energy as countries try to reduce carbon emissions.

Unlike coal, oil, or gas, nuclear power plants produce little to no CO₂. As a result, nuclear is the second largest source of low-carbon electricity in the world, behind hydropower.

In this infographic from Skyharbour Resources, we look closely at the next generation of uranium deposits necessary to power up the nuclear sector.

The Uranium Supply Squeeze

Roughly 440 nuclear reactors operating worldwide generate around 10% of the world’s electricity annually.

In the United States, for example, nuclear energy provides 52% of carbon-free electricity, and in the European Union, it accounts for 43%. In three European countries, the share of nuclear energy in the electricity mix exceeds 50%.

RankCountryNuclear Share of Electricity Mix
1France 🇫🇷70.6%
2Slovakia 🇸🇰53.1%
3Ukraine 🇺🇦51.2%
4Hungary 🇭🇺48.0%
5Bulgaria 🇧🇬40.8%
6Belgium 🇧🇪39.1%
7Slovenia 🇸🇮37.8%
8Czechia 🇨🇿37.3%
9Armenia 🇦🇲34.5%
10Finland 🇫🇮33.9%
11Switzerland 🇨🇭32.9%
12Sweden 🇸🇪29.8%
13South Korea 🇰🇷29.6%
14Spain 🇪🇸22.2%
15Russia 🇷🇺20.6%
16Romania 🇷🇴19.9%
17United States 🇺🇸19.7%
18Canada 🇨🇦14.6%
19United Kingdom 🇬🇧14.5%
20Germany 🇩🇪11.3%

All of the world’s nuclear reactors are powered by uranium. They require approximately 67,500 tonnes of uranium annually. However, the uranium market has been in a growing deficit since 2015, with the widening demand-supply gap being filled by civil stockpiles and secondary sources.

The World Nuclear Association expects a 27% increase in demand between 2021 and 2030.

In addition, the recent energy crisis following Russia’s invasion of Ukraine has led investors to the uranium market, betting on nuclear energy to shift away from fossil fuels. In this scenario, new uranium mines are expected to come online in the next decade to meet the demand.

The World’s Richest Uranium Region

Canada is the world’s second-largest producer of uranium, accounting for roughly 13% of total global output.

The country’s Athabasca Basin has the highest-grade uranium deposits in the world, with grades that are 10 to 100 times greater than the global average. The Northern area covers almost a quarter of Saskatchewan and a small portion of Alberta.

The region— sometimes described as the “Persian Gulf of uranium” — is home to Cameco’s Cigar Lake, the world’s richest uranium mine.

According to the Fraser Institute, Saskatchewan ranks as the second-best mining jurisdiction in the world. The province appears only behind Western Australia regarding geologic attractiveness, government policy, and attitudes toward exploration investment.

In recent years, many uranium companies have made uranium discoveries in the basin, with Skyharbour Resources among them. The company holds an extensive portfolio of fifteen uranium exploration projects, ten of which are drill-ready, covering 450,000 hectares of mineral claims.

The U.S. Nuclear Future

While the Biden Administration is urging lawmakers to pass a $4.3 billion plan to purchase enriched uranium from domestic producers, the country’s production is still considered small in scale.

For this reason, Athabasca Basin and companies like Skyharbour Resources are expected to play a key role in the U.S.’ nuclear future.

Skyharbour Resources is becoming an industry leader in high-grade Canadian uranium exploration needed for nuclear power and clean energy.

Subscribe to Visual Capitalist
Click for Comments

You may also like

Subscribe

Continue Reading

Subscribe

Popular