Gold Part II: Mining and Supply

GOLD VISUAL CAPITALIST A FOUR PART SERIES 3. HISTORY OF GOLD MINING & SUPPLY USES & DEMAND AS AN INVESTMENT FROM ANCIENT TIMES TO FAMOUS GOLD RUSHES, GOLD WAS FIRST DISCOVERED IN PLACER DEPOSITS (Pronounced "plas-er") PLACER GOLD OCCURS WHEN HOST ROCK WEATHERS AND RELEASES GOLD PARTICLES THAT TRAVEL DOWNSLOPE TO A HILLSIDE, CANYON MOUTH, OR STREAMBED. 78KG THE LARGEST EVER GOLD NUGGET WAS FOUND IN AUSTRALIA IN 1869. ALSO, GOLD IS 19× HEAVIER THAN WATER, SO IT TENDS TO SINK AS DEEP AS IT CAN IN THE BEDROCK. GOLD IS DISPERSED BY GEOLOGICAL FORCES SUCH AS MOVING WATER AND GLACIERS OVER MILLIONS OF YEARS. TODAY, THE GOLD EXTRACTED FROM IT WOULD BE WORTH $4,000,000 USD SLUICING PLACER GOLD CAN BE MINED USING GRAVITY TO SEPARATE THE GOLD, SUCH AS PANNING OR SLUICING. WATER RUNS ALONG THE SLUICE BOX DENSE MATERIAL (SUCH AS GOLD) GETS TRAPPED BY THE "RIFFLES" FACT AT 10 PARTS PER QUADRILLION THE EARTH'S OCEANS WOULD ACTUALLY HOLD 15,000 TONNES OF GOLD. THAT'S WORTH $800 BILLION, OR ENOUGH TO PAY OFF GREECE'S DEBT ALMOST 3X OVER! MODERN GOLD MINING HOW DO UNDERGROUND GOLD DEPOSITS FORM? TODAY MOST GOLD COMES FROM HARD ROCK DEPOSITS WHERE GOLD IS DISSEMINATED OR ASSOCIATED WITH OTHER METALS AND MINED EITHER THROUGH GOLD IS DISSOLVED IN HOT PRESSURIZED FLUIDS DEEP IN THE CRUST THEN TRANS- PORTED UPWARDS ON FISSURES AND CRACKS WHERE IT IS DEPOSITED CLOSER TO SURFACE. OPEN PIT OR UNDERGROUND MINING FACT THE WORLD'S DEEPEST GOLD MINE IS IN SOUTH AFRICA AND GOES 3,9KMS BENEATH THE SURFACE GROUP 11 HOW IS GOLD RECOVERED FROM ORE? GOLD, SILVER, AND COPPER OCCUR TOGETHER FREQUENTLY BECAUSE THEY ALL HAVE THE SAME GEOCHEMISTRY. 111 GENERALLY, GOLD ORE ONLY HAS A COUPLE OF GRAMS OF GOLD PER TONNE. HOW CAN WE GET IT OUT? AU AG CU RG GOLD SILVER COPPER ROENTGENIUM AROUND 90% OF THE GOLD PRODUCED TODAY IS RECOVERED THROUGH THE CYANIDE LEACHING PROCESS. ENVIRONMENTAL CONCERNS CYANIDE LEACHING RECOVERS OVER 97% OF GOLD, BUT REMAINS CONTROVERSIAL IN SOME PLACES BECAUSE OF THE TOXIC NATURE OF CYANIDE. HERE'S A LOOK AT THE HEAP LEACHING PROCESS: 1 ORE IS CRUSHED, FLATTENED, AND SPRAYED WITH A CYANIDE SOLUTION. 2 THE GOLD BEARING 3 GOLD IS THEN PRECIPITATED SOLUTION IS OUT OF THE SOLUTION COLLECTED TAILING POND GOLD SUPPLY THERE ARE THREE DISTINCT STREAMS THAT MAKE UP GOLD SUPPLY 37.0% SUPPLY FLOWS, 5-YEAR AVERAGE ('07–'11) 1.5% OFFICIAL SALES* RECYCLED GOLD 61.4% MINE PRODUCTION * "OFFICIAL SECTOR SALES" REFERS TO HERE'S A CLOSER LOOK AT SUPPLY AS IT RELATES TO GOLD PRICES OVER THE LAST 10 YEARS: RESERVE GOLD SOLD BY GOVERNMENTS AND BANKS. I GOLD PRICE PER OZ OFFICIAL SALES* RECYCLED GOLD MINE PRODUCTION $300 2002 $325 2003 $400 2004 2005 $425 $500 2006 $625 2007 $975 2008 $950 2009 $1100 2010 $1400 2011 $1600 -500 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 SUPPLY IN TONNES OF GOLD GOLD WANTED! MINE PRODUCTION 571% INCREASE IN GOLD PURCHASES BY CENTRAL BANKS (2011 VS 2010) Ш HIGH GOLD PRICES LED TO 30% GROWTH IN GOLD PRODUCTION BETWEEN 2002 AND 2011. HIGH PRICES MEAN MORE GOLD DEPOSITS ARE ECONOMIC TO PRODUCE. RECYCLED GOLD 2000 1600 1200 SINCE THE 2008 FINANCIAL CRISIS, MORE PEOPLE HAVE OPTED TO RECYCLE GOLD BECAUSE OF ITS HIGHER PRICE. BETWEEN 2002 AND 2011, SUPPLY FROM GOLD RECYCLING HAS INCREASED 93% 800 400 2002 I ||| | 2008 | | | 2011 DISCOVERIES ARE DECLINING... AND GOLD IS BECOMING MORE EXPENSIVE TO FIND. 150 COPPER GOLD PRIMARY GOLD 125 100 75 50 25 1992 '93 '94 '95 96, '97 98 '99 00, '01 '02 *03 '04 '05 90, '07 80, 60, UNDERGROUND >» DATA SHOWS THAT THE GRADE OF UNDERGROUND AND OPEN PIT GOLD MINES ARE DECREASING OVER TIME. THIS MEANS LARGE SCALE, HIGH-GRADE GOLD DEPOSITS ARE RARER THAN EVER. AVERAGE >> OPEN PIT >> DECREASE IN AVERAGE GOLD GRADES FROM 1997-2009 > '97 I ||| |||||| I 09 WHO'S STILL PRODUCING GOLD? (PERCENTAGE OF WORLD PRODUCTION) USA PERU CANADA GHANA SOUTH AFRICA RUSSIA CHINA INDONESIA AUSTRALIA 9% 6% 4% 4% 7% 13% 4% 10% GOLD RESERVES AROUND THE WORLD CENTRAL BANKS HOLD A SMALL % OF ASSETS AS RESERVES TO REDUCE RISK. MOST COUNTRIES HAVE GOLD RESERVES AS PART OF THEIR HOLDINGS. 50 METERS 1ol•]•[•]•]•l•| ALL THE GOLD MINED IN HUMAN HISTORY WOULD FIT IN THIS CUBE. 30% OF ALL GOLD IN RESERVE 10 METERS WOW! 8133.5 TONNES $420 BILLION (USD) THE RESERVES OF RECENTLY MODERNIZED COUNTRIES WILL OFTEN CONTAIN MORE CURRENCY (SUCH AS USD) THAN PRECÌOUS METALS OLDER ECONOMIES OFTEN HAVE A HIGHER PERCENTAGE OF GOLD IN THEIR RESERVES AS A LEGACY OF THE GOLD STANDARD SYSTEM CHINA HAS 3 TRILLION DOLLARS (USD) IN RESERVE PORTUGAL HAS THE HIGHEST CONCENTRATION OF GOLD IN ITS RESERVES: 90.5% NEXT: PART 3 - USES & DEMAND Visual Capitalist is committed to providing independently researched content for educational purposes. Thank you to Cambridge House for covering the production costs of this project. Learn more at www.cambridgehouse.com Cambridge House INTER NATIONAL Canada's Investment Conference Company Special thanks to Dan Oancea, P.Geo (@dankogaion) for helping review the geological nature of this infographic. www.exploration-mining.com VISUAL CAPITALIST Educating a new generation of investors on resource investing and managment VISUAL CAPITALIST www.visualcapitalist.com Top 5 Sources: World Gold Council http://www.gold.org Bloomberg http://www.bloomberg.com/news/2012-04-05/top-10-gold-producing-countries-in-2011-table-html Kinross Gold http://www.kinross.com/investor-centre/discover-gold.aspx Gold Cyanidation http://en.wikipedia.org/wiki/Gold_cyanidation The Daily Bell http://www.thedailybell.com/printerVersion.cfm?id=3657 For a complete list of sources, please visit: visualcapitalist.com/sources ENDOWMENT (M OZ) GRADE (GOLD PER TONNE) EXPLORATION SPENDING (US$B)