"IT'S A GOLD MINE!" is a cry which implies that a venture is sure to be a howling financial success. But in reality gold mining itself is fraught with financial risk and grave uncertainty. The risk begins with finding a gold mine in the first place. Only about one in a thousand prospects ever becomes a mine. And all gold mines are certainly not profitable. In fact, a strong argument can be made that the money spent looking for gold mines is more than the value of all the gold ever mined!
Most modern gold mines are originally found with surface geochemistry. Stream sediment sampling is especially productive in reconnaissance exploration. With success, more detailed sampling is performed. Then, if warranted, comes claim staking or other types of land acquisition. The last three properties that I staked for mining companies, using contract staking crews, were each about ten square miles. This is not cheap to do, but what follows costs much more. That is detailed surface work, e.g., mapping, sampling, geophysics, and geochem. If that works out, then the next step is drilling. Standard percussion-type drilling is always thrilling to the prospector and share holders, but is seldom successful and always expensive. At this point the investment in the prospect is well into six figures. Usually the property is then dropped for lack of potential. Rarely a prospect shows mining potential. Then the costs go into the millions in detailed drilling, metallurgical, and engineering studies, etcetera. If a "go" decision is made, then the cost to make a mine will be tens of millions to hundreds of millions of dollars. But even after all this, many gold mines are not profitable. Hardly a sure thing!
So how rich are gold mines? The richest are the venerable mines of South Africa, where the average grade has been 0.3 ounces of gold per ton of rock for many decades. These mines are, by now, about 12,000 feet below the surface, and working conditions are barely tolerable and mining costs are extraordinary. "Rich" in gold mining doesn't necessarily mean highly profitable. Mining costs at these mines are reported as above $550.00 per ounce. Surely Walmart and McDonalds do better than that. In any event BEWARE of anyone who approaches you with a gold mining venture said to contain so many ounces of gold per ton!
In the western United States, and especially in the world-class gold mining district in northeastern Nevada, "high grade" is anything above one-tenth of an ounce per ton. Below this, but above about one-hundredth ounce per ton is "leach grade" of which, by far, is most of the ore. (In mining, "ore" is material which can be mined AT A PROFIT!) In at least one mine the lowest usable grade is .007 oz/ton gold. Inevitably the mine geologists call it "James Bond ore." At that grade, one ounce of gold is contained in 143 tons of rock, or the contained value of each ton of rock is less than five dollars. Clearly, this low a grade cannot support the mine by itself, but it shows how modern mining technology can retrieve even thin resources. This is conservation in the best sense of the word.
Most gold is used in jewelry making. The largest industrial use is dental. A lesser, but still important use is in electronic circuits. Consumption is likely to increase because many people in countries such as China and India do not trust currency and keep a small gold hoard. As economics improve, they buy more gold. On the other hand, there are known to be 27,000 tons of gold in government repositories worldwide. This gold is potentially for sale and is an ever-present possible damper on the market. Recent annual production of gold has been 2200-2500 tons.
Of note is that sixty percent of current mines were discovered by independent prospectors or "penny" stock companies. The big gold miners are aware of this and are usually eager to court submission of prospects by outside parties. It is up to the individual to educate himself on the subject, but "weekend prospecting" is still very much with us. One wonders why more people do not pursue this, since it fits in with today's outdoor lifestyle, and is potentially much more rewarding than, say, hiking or birdwatching. In any case, Good Prospecting!