Gold mining has certainly come a long ways from the images in the history books of the 49ers in California using their picks and shovels or of the Yukon Gold Rush of the late 1890s panning for gold in streams. Today, mining for gold is a multinational, multimillion dollar business taken up largely by big companies, such as Barrick Gold (ABX), using much more sophisticated methods and equipment than swinging a pick at a rock. That is because most of the surface gold, called alluvial gold, has been found and gold now must be mined from the earth [for more gold news and analysis subscribe to our free newsletter].
Finding a Site
Modern gold mining involves a lot of technology. First, mining companies must find where to mine for gold; geological maps offer insights as to where the best locations might be based on the physical and chemical characteristics of the rocks. Then, once a prospect is found, mining companies use remote sensing and other testing devices to detect and pinpoint specific rock characteristics and outline targets for drilling.
Drill Baby, Drill
Once drilling commences, rock samples are brought up and further analyzed to see if there is gold at the site and the potential size of the deposit. If gold is found, the rocks are studied to determine the quality of the gold: how many grams of gold there are per ton of rock. Anything over two grams per ton is considered decent and obviously, the higher the number the better [see also Three Reasons Why Gold Is Overvalued].
If gold is found at a particular site, one factor plays a key role in determining the type of mine to be established: the depth of the gold deposit. For gold deposits near the surface, surface or open-pit mining is used; in most cases, the floor of the pit is lowered in around 30 foot benches. If the gold deposit is buried deeply in the earth, an underground mine will be built. Some underground mining methods include block caving, long hole stopping, cut-and-fill and drift-and-fill.
Ore samples are taken and examined to determine the appropriate processing technique needed to remove the gold in the most efficient and cost-effective method. The mine site itself has a processing area where the ore is crushed and undergoes the necessary process to extract the gold [see also How to Play $10,000 Gold].
Extracting the Gold
The process for the lowest grade ores is rather simple. A cyanide solution is applied to the crushed ore, dissolving the gold, which is then collected. Higher-grade oxide ores go straight to the leaching circuit and undergo a similar process using cyanide. However, other higher-grade ores head to the grinding mill for more complex processes. The particular process depends on the type of ore involved. For example, refractory ore (which contains carbon) is heated to 1000 degrees Fahrenheit to burn off carbon and sulfides before going to the leaching circuit.
In the leaching circuit, gold is extracted from the solution and deposited onto activated carbon, from which gold is then chemically stripped. The gold is then melted into bars, which are about 90% pure gold. These bars are then sent on to refineries to be processed further into purer gold [see also Three ETFs To Cure a Gold Hoarding Addiction].
Mining and producing is not a simple or easy. Even the simplest surface mine, with gold ore very near the surface, can take about a year to build thanks to the infrastructure needed. Since most gold is not very near the surface, it takes on average five years from when gold is first discovered to actually bring it to the surface and process it.
Disclosure: No positions at time of writing.