Gold mining, like any mining process, is challenging, complex and capital intensive. If you are thinking of investing in gold or an AIM listed gold mining company, this article aims to give you some background information before making an investment decision.
It explores the history of gold mining; how gold is mined and refined; and lastly, it summarises where the main gold mining regions are located and who the major producers are.
A brief history of gold mining?
Nobody knows for sure when people began mining gold, but it was probably at least 7,000 years ago.
Some think that the Sakdrisi goldmine in Georgia might have been the first. The Romans were probably the first to use hydraulic mining methods to separate gold from alluvial deposits.
Prospectors and miners adopted panning and sluicing for gold during the late nineteenth century. The Californian Gold Rush was sparked by the discovery of a gold nugget in 1848.
During that period, around 300,000 prospectors from all over the world, flocked to California to seek their fortunes.
While the Californian Gold Rush is probably the best known, there have been many others in North and South America, Australia, New Zealand, and South Africa.
How is gold mined?
Gold is mined from two different sources: Alluvial deposits and Solid rock.
Alluvial deposits:
Alluvial deposits are loose materials laid down by ancient and modern rivers, lakes and glaciers.
As tunnelling in such material is extremely difficult, extraction of the gold usually involves the use of water. Various techniques are used for doing this:
- Sluicing is used in small scale mining. This utilises long narrow boxes lined with riffles, metallic structures designed to separate gold particles from lighter materials carried by water flow.
- Dredging is another small scale mining technique that uses floating suction dredges to suck up material from the river bad and separate out the gold using similar techniques to sluicing.
- Panning is no longer commercially viable. Gold panners fill shallow pans with river sediments and manually separate gold particles that fall to the bottom from lighter materials that they discard.
To extract fine particles of gold, mercury is often used to form a gold-mercury amalgam which increases the weight of the particles making them easier to separate. Eventually, the mercury is removed by thermal evaporation.
While large scale use of mercury is now banned, many clandestine operations continue to use it.
Solid rock:
Most gold on the planet is encased in hard rock rather than in sediment. This is extracted using open cast or underground mining methods.
While usually, gold is the principal element sought, sometimes gold is a by-product of other mining operations, for instance, copper mining.
The Grasberg mine in Indonesia, although primarily a copper mine is the biggest yielding gold mine in the world.
Ore processing
The gold–containing rock from mining operations is finely ground and the gold chemically extracted from the rock using a sodium cyanide solution.
The fine powder is agitated in the cyanide solution which reacts with the gold to form gold cyanide. Zinc is added to the solution. This displaces the gold which precipitates out of solution.
Residual zing is removed by dissolving it in sulphuric acid, and the resulting gold smelted to form an ingot, typically 80% pure. This is subsequently refined.
Alternative processes include the extraction of gold from the gold cyanide solution using activated carbon.
Ethical mining
Gold mining processes that involve highly toxic materials such as cyanide and mercury are hazardous to people and wildlife.
Today, there is a powerful movement towards sustainable or ethical mining designed to protect the environment.
How is gold refined?
The next stage in the process is refining the gold to increase its purity from the typical 80% produced by mining and extraction, up to 99.99% which is considered to be pure gold.
The two primary methods of doing this are the Miller Process and the Wohlwill process:
Miller Process:
This refines gold to a maximum purity of 99.95%. Patented in 1867, it is the easiest known method of refining gold bullion.
A stream of chlorine gas is passed through a crucible of liquid gold. This reacts with silver and other impurities to form various chlorides.
These precipitate out as a slag that floats on the liquid surface and which is skimmed off. Any gold that is removed with the slag is recovered subsequently.
Wohlwill process:
This is an electro-chemical process that takes the gold produced using the Miller process and refines it further by removing the residual impurities, mainly copper and silver.
The method uses a gold ingot which is at least 99.5% pure as an anode in an electro-chemical cell with a chloroauric acid electrolyte and a pure gold or stainless–steel cathode.
Under the influence of an electric field, gold and its impurities dissolve from the anode. Gold ions migrate to the cathode where they plate out, while the impurities remain in solution. The deposited gold is up to 99.999% pure.
Where are the largest gold producing regions?
Today, nearly all of the world’s gold is produced in Australia, Canada, China, Indonesia, Peru, Russia, and the United States.
Who are the major gold producing companies?
Currently, the largest gold mining company is Barrick Gold, based in Toronto, California, with a production of 165.6 tonnes (in 2017).
Almost as large, is US–based Newmont Mining which produces 163.8 tonnes. In third place, the global gold producer AngloGold Ashanti produces 116.8 tonnes.
Investing in gold
if you want to learn more about investing in gold or what gold is used for, then please click on the links.
