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By Timothy R. Eby

"The Wabush Mines project was formed in 1956 to develop a large iron ore property in Western Labrador. The town of Wabush along with the mining and concentrating facilities are located 640 air miles from Montreal, and 734 air miles from St. John's. The operation has been in production since late 1964.While mining and concentrating operations are located in Labrador, the pelletizing facilities are situated 275 miles south at Sept-Iles, Quebec. Dedicated in 1965, Wabush produces six million tons of high quality iron ore pellets annually. The company employs 1, 550 people at Wabush and the Pointe Noire plant at Sept-Iles.Wabush Mines is an unincorporated joint venture of three companies -The Steel Company of Canada, Dominion Foundries and Steel Ltd. and the remaining 58% by the Wabush Iron Co. Ltd. Wabush Iron Co. Ltd. is in turn owned by six companies: The Youngstown Sheet & Tube Company, Inland Steel Company, Interlake Inc., Wheeling Pittsburg Steel Company, Finsider International S.A. and Pickands Mather & Company which is also managing agent.The town of Wabush is set in a remote part of Northern Canada accessible only by rail and air transportation. But this in no way has hindered the growth and development of the area. Modern housing units, shopping facilities, airport and of course, recreational facilities are all patt of every day living amenities, an accepted aprt of southern communities, but quite unique for northern isolated mining localities."

Jan 1, 1978

By P Blattner

The Late Miocene gold-silver bearing epithermal system at Waihi has some close similarities in its paleo-thermal and geochemical structure with modern, volcanic-hosted geothermal systems such as Ohaaki-Broadlands. At Waihi an extensive braided quartz vein system is enveloped by hydrothermally altered andesites with minor tuff breccias and tuffs. A main stage of vein filling consists of multiple phases of chalcedonic quartz and fine to medium grained quartz, which are accompanied by pyrite, sphalerite, galena, chalcopyrite and acanthite below the base of oxidation. Platy calcite is present locally. Fluid inclusion studies indicate that the main stage quartz was deposited at temperatures of 189¦-273¦C from dilute (Tm of -0.1 to -1.0¦C) fluids that were locally boiling. Homogenisation temperature Th versus Tm data points lie within the field enveloped by dilution and boiling/gas loss paths determined for the Ohaaki geothermal field, and indicates that the parent hydrothermal fluid for the Waihi epithermal system had a similar composition to that at Ohaaki, ie 0.2 wt% equiv NaCl and 3.3 wt% equiv CO2. The hydrothermal alteration mineralogy and the isotopic composition of vein calcite indicate that the hydrothermal fluid contained relatively high concentrations of CO2 , as at Ohaaki. Oxygen isotope analyses of main stage quartz range from 6.1 to 11.6 %0 and of vein calcite from 2.29 to 9.4%0. Calculated d18Owater values for the hydrothermal fluid that deposited the main stage quartz range from 2.0 to -5.7%0, with a trend to less negative values with depth. They are similar to those in the deep chloride fluid in active geothermal systems with a substantial fluid throughput. A high fluid throughput at Waihi system is also evident from the extensive high intensity hydrothermal alteration and large volume of quartz deposited in the vein system.

Jan 1, 1995

By John T. Aler

The U.S. Bureau of Mines has been studying the problem of why explosives detonate weakly or misfire during blasting in underground coal mines. Cross-borehole shock wave interaction has been identified as a predominant mechanism causing explosives to function improperly (1)(Underline numbers in parenthesis refer to items in the list of references at the end of this report.). Cross-borehole shock wave interaction can be simulated in a laboratory setting, making possible the replication of tests in sufficient numbers to understand and quantify some of its effects on permissible explosives (2). The work presented here investigates the capacity of explosives to partially recover from the desensitizing influence of the shock wave. The recovery trend of different explosives can indicate optimum blasting patterns useful for minimizing borehole charge malfunctions.

Jan 1, 1991

By R L. Brathwaite

The gold-scheelite-quartz lodes of the Wakamarina valley were the most productive of the mesothermal gold-bearing areas in the Marlborough Schist. Most of the production came from the Empire City and Golden Bar mines which worked the Golden Bar lode. Only 134 m of its 1800 m strike length are accessible, in the No.2 level of the Golden Bar Mine. A fault has downthrown the Golden Bar Mine section by = 47 m and displaced it left-laterally by 18 m. The lode is a typical ribbon-banded mesothermal vein, averaging c. 1.75 m wide, and enclosing narrow horses of schist country rock. It is composed of bands of milky æbuckÆ quartz with thin laminae of schist. Scheelite occurs in short strings of grains within quartz on the footwall side of the lode and also in small quartz-carbonate veinlets in the foot wall and hanging wall schist. The lode quartz contains only localised traces of pyrite and arsenopyrite. They are more abundant in the wall-rock schist.   The Golden Bar lode lies within a steeply dipping normal fault, which, on its footwall side, is adjacent to a 40 m-wide, shallow-dipping mylonite shear zone. Within 1 m of the lode, the shear foliation has been dragged down to nearly parallel the lode footwall. Wall rock alteration is manifested by a marked increase in K and Rb, which correlate with abundant illite/muscovite and K-feldspar within 2 m of the footwall of the lode. Amphibole, stilpnomelane, and pumpellyite show a progressive decrease towards the lode. As and Sb increase close to the lode, but are at background levels within the lode itself. Enhanced Cr (150-430 ppm) in the quartz, relative to the schists (~40 ppm), suggests that the source hydrothermal fluids passed through and leached mafic rocks, such as the metabasites from the hanging wall of the lode (~400 ppm Cr).

Jan 1, 1995

By R L. Brathwaite

The mesothermal quartz-scheelite lodes of the Wakamarina valley are one of twelve known mined or prospected gold-bearing areas in the Marlborough Schist. Recorded production was 556 kg gold, a little silver, and c. 390 t scheelite. 134 m of the 1800 m long Golden Bar reef are accessible in the No 2 level of the Golden Bar mine. The reef is a typical multi-banded mesothermal vein, mostly c. 1.75 m wide, enclosing narrow horses of schist country rock. Scheelite is sparsely distributed, and is more common in small veinlets in the hanging wall schist. The country rocks are textural zone I-1m schists of prehnite-pumpellyite to pumpellyite-actinolite metamorphic facies. Their geochemistry suggests they are part of the Caples Terrane, and of calc-alkaline volcanogenic arc origin. The associated Wakamarina Quartzite is strongly recumbent folded, and of the same metamorphic grade, with abundant pumpellyite, stilpnomelane, and garnet, presumably spessartine. Although it has geochemical signatures of a deep sea sediment, it is depleted in Cr and Cu, and greatly enhanced in K and Ti, when compared with a standard chert. It also has trace element characteristics of a calc-alkaline arc-related sediment. However, associated greenschist has MORB-like incompatible element chemistry. The Golden Bar reef lies within a steeply dipping, normal to transtensional dip-slip fault adjacent to a shallow-dipping mylonite shear zone, which, at least on the footwall side, is 040 m wide. The shear foliation has been severely dragged down to nearly parallel the Golden Bar reef within 1 m of the quartz lode. Preliminary structural analysis suggests that the shear zone is extensional. X-ray diffraction analyses of the wall rocks show a progressive depletion of amphibole, stilpnomelane, and pumpellyite towards the reef, and enhanced illite/muscovite and Kfeldspar adjacent to the lode, along with possible graphitic carbon within 10m. Two zones of intense quartz veining occur, one adjacent to the hanging wall for 12 m and one from 40 m outwards. Quartz vein systems in the country rock are complex and span from pre-schistosity to post-mylonite. They include multiple generations of quartz, actinolite, stilpnomelane, pumpellyite, albite, adularia, chlorites, illite/muscovite, calcite, and scheelite. Metal analyses across the Golden Bar reef showed gold values of 0.13.1 ppm, and low tungsten values, consistent with the observed sporadic scheelite occurrences. As and Sb are at background levels, but enhanced Cr (150 - 430 ppm) relative to the schists (30 - 41 ppm) suggests that the source hydrothermal fluids passed through and leached mafic to ultramafic rocks.

Jan 1, 1994

By Jan M. Mutmansky

"When, in 1973, a limit was placed on the amount of dust in the coal mine atmosphere, restricting the average exposure of a coal miner to 2 milligrams of dust per cubic meter of air (mg/m'), skeptics in the United States and abroad Said the standard could never be achieved. They cited much more lenient standards already established in other countries and refused to believe that the United States could meet the world's most stringent requirements in mines where dust had never before been regulated. Yet 10 years later the goal had largely been achieved and miners were working underground in a cleaner atmosphere than ever before. It was a major achievement and a big stride in what had become a war on coal workers' pneumoconiosis (CWP), the black lung disease prevalent among miners in underground coal mines.Although the health hazards caused by working in a dust-filled mine atmosphere have long been recognized, the problem became particularly acute in this century with the mechanization and increased productivity of underground coal mining. The United States was much slower than some other countries to address the problem of respirable diseases among miners. While dust levels in South African gold mines were first regulated in 1912, in the United States it was only when 476 workers died of silicosis while blasting a tunnel through a mountain near Gauley Bridge, West Virginia in the 1930s that widespread public attention became focused on the plight of workers in dust-filled environments. Another 30 years passed before regulation of dust finally became law in the Coal Mine Health and Safety Act of 1969.With a stringent new standard imposed in all underground coal mines, the industry was faced With the daunting problem of reducing levels of airborne dust from perhaps 6.5 mg/m' to 2 mg/m', in an inherently dusty operation carried out in the close confines of underground passageways. Most of the coal dust is made by the cutting operation in which the continuous miner or longwall machine can produce several thousand milligrams of respirable dust for each ton of coal mined. Other dusty operations such as drilling holes for roofbolts, loading and unloading coal on shuttle cars, and the operation of conveyor belts contribute to the overall problem.Since the institution of the new dust control standards, a number of strategies have been adopted for reducing the coal dust in the mine atmosphere. These strategies involve engineering and design improvements that help lo prevent the generation of particles, keep particles of dust from becoming airborne, carry dust away from the working area, and isolate the dust from the workers in the mining operation. These procedures have been pursued vigorously by the Bureau of Mines, and many successful methods have been developed to reduce the mass concentration to which the workers are subjected. The mining companies were reluctant at first to confront the problems but after a period of trials and gradual improvement, they joined with others in the fight to reduce the dust concentrations in the working place."

Jan 1, 1990

Australian coals tend to be young in geological age and high in ash by world standards; preparation of the coal before marketing is almost universal. On the basis of float and sink data from 39 locations in the Eastern Australian coalfields, the coals are placed in four categories representing increasing difliculty in their washability characteristics. These seem to be related neither to the geological age nor the geographical position of the deposit and Hunter Valley coals, for example, span all categories. The influence of crushing on the washability of Australian coals is briefly considered and from limited data it is concluded to be appreciably smaller than for British or North American coals. A strategy for the float and sink analysis of Australian coals is proposed and the influence of washability characteristics on current trends in the selection of separating processes for coking and steaming products is discussed.

Jan 1, 1979

At Great Boulder Gold Mines Ltd. a number of attempts were made to remove water soluble copper and iron salts from calcined pyritic concentrates but variou~ problems arose and the methods were abandoned.A method of rapid washing has been developed and although some problems still exist a workable process was established which resulted in substantial savings of reagents used for the cyanidation of calcine.INTRODUCTIONIn the Great Boulder flowsheet crude ore is ground in cyanide solution, then thickened, agitated and subjected to two stage filtering. Secondary filter discharge is pulped with flotation circuit water, gassed with sulphur dioxide to precipitate soluble gold and activate pyrite, and after the addition of copper sulphate and xanthate, the pyrite and tellurides are recovered by flotation. Flotation tailings are thickened and pumped to the disposal area and concentrates are calcined in Edwards roasters. Calcine is washed to remove water soluble copper and iron salts and the washings pumped to the flotation section where the copper is used as an activator. The washed calcine is cyanided and returned to the crude ore circuit via the thickeners. Solution for precipitation in the Merrill Crowe is drawn from the crude ore thickeners.Prior to the introduction of calcine washing the calcine contained 7 lb/ton copper of which approximately 60 per cent was water soluble. It also contained approximately 90 lb/tol'l of water soluble iron salts. Both the copper and...

Jan 1, 1964

Most mines in the Bundamba, North Ipswich, and Rosewood districts of the West Moreton coalfield of south eastern Queensland have installed washing plants during the last five years. Many problems were encountered in their installation, including the small size of washing plant required in many cases, the economical minimum ash content under present and future market requirements, production from a one-product washbox of large and small coal of quality to satisfy both markets, measures to avoid adding unnecessary moisture to the washed slack coals, and excessive middlings in some coals or soft clay in others.INTRODUCTIONIt was fortunate for Brisbane, which was to become the capital of a new State, Queensland, in 1859, and grow into a city of over half a million people by the time of its centenary, that coal was found in abundance almost on its doorstep near Ipswich, the first mine being opened at Redbank in 1843. This was followed by the opening of many more mines in that district and, some 40 years later, in the nearby Rosewood district where high-volatile gas coal was produced (Fig. 1). These discoveries ensured a supply of reasonably priced coal (currently about 85/- per ton delivered) in Brisbane, but the quality is inferior to that of other coals mined in Queensland beyond economic range of Brisbane.Various factors led to an increase in the average ash content of the West Moreton coals during and after the war. Between 1940 and 1952 the gasworks coals rose in average ash from 13 8 per cent to 23·9 per cent and the powerhouse coals from 17·1 per cent to 27·1 per cent. This drift was arrested by the installation of 28 screening and picking plants from 1952 onward, but it became obvious that mechanical cleaning of the coals was essential due to the competitive market for coal and the worsening quality of reserves.

Jan 1, 1963

THE power requirements of the Mount Lyell Mining and Railway Company at Queenstown, Tasmania, have, since the inception of smelting operations in June) 1896, been derived continuously from the extensive forests in the watershed of the Queen River, adjacent to the works, the fuewoodbeing of good quality, mainly composed of myrtle or beech (Fagus Ounninghami), eucalypts, and manuka (Leptospermum ericoides). The country is very rugged and mountainous, indented by numerous ravines and gullies, and intersected by, many creeks, which are subject to periodical floods, under the influence of a heavy and persistent rainfall, which averages about 110 in per annum. The areas so far exploited aggregate a total of about42 square miles, and this denuded country gives promise of ultimately becoming very valuable pastoral ground for cattle-raising. The tonnage of wood yielded per acre varies from 40 to 100 tons on stack measurement of 80 cubic feet per ton, 60 tons per acre being considered a good average yield. The gross amount...

Jan 1, 1910

By Michael B. Cortie

The young field of nanotechnology has as its objective the design and construction of useful devices made of nanoscale materials. Objects or structures which have at least one important dimension in the range 0.5 to perhaps 50 nm may be considered to be in the nanoscale domain. These sizes lie far below the 200 nm or so that can be resolved with an optical microscope, and are closer in size to the 0.3 nm diameter of individual atoms. Nanotechnology, which is the study and exploitation of these tiny structures, is attracting keen interest at present. The excitement is motivated by the observation that control of matter at the nanoscale holds the promise of faster computing, better medicines, and smarter materials. In this paper, the physical phenomena on which this optimism is based are broadly discussed and explained. Where appropriate, examples of the rather different and curious properties of gold at the nanoscale are used to illustrate the points covered.

Oct 1, 2003

By Louis R. Hodell

WHEN the drilling of an oil well is completed a permanent opening from the reservoir to the surface must be provided. This is done by lining the hole with pipe, commonly known as casing. In the past, all but a small amount of casing has been run in the hole and joined by threads and couplings. Recently, however, in California, Texas, and Oklahoma, there has been a definite tendency 'to adopt -the welded joint for the following reasons: (1) Plain end casing for welding may be bought for 15 per cent less than thread-and-coupled casing; some of this is offset by the cost of welding the pipe in the hole but a respectable net profit remains.

Jan 1, 1937

By G. D. Buson

Driefontein Consolidated Limited has a proud history in the South African gold mining industry dating back to March 1945 with the formation of the West Driefontein Gold Mining Company. The reclamation gold plant at West Driefontein was originally built as a uranium recovery plant in 1970. With the collapse of the uranium oxide yellow cake market, the uranium plant was closed in 1988and successfully converted into a gold plant, recovering gold from repulped tailings dams1. The West Driefontein Reclaim plant utilized milling, leaching, conventional rotary vacuum filtration and cementation to recover the gold at a rate of 200,000 dry tons per month. The No. 1 tailings dam (at a head grade of 0.8 Au g/t) began to near the end of its life during 1996, and the next slimes dams to be treated, the No. 2tailings dam (at a lower head grade of 0.56 Au g/t) was found too marginal for reprocessing using the filtration technology. Alternate technologies were investigated, particularly the carbon-in-pulp (CIP) plant based on the Anglo-American Corporation (AAC) pump-cell technology at the Vaal Reefs Exploration and Mining Company?s East gold plant which was operating profitably at lower head grades2. The AAC pump-cell technology is based on the carousel mode of operation2. The suitability of CIP technology for the West Driefontein Reclaim plant was investigated using a pilot plant pump-cell supplied by Kemix The data gathered were utilized in sizing a full scale AAC pump-cell plant. This plant was motivated, built and commissioned on the 22nd of November 1996. Incorporating 6 eighty cubic metre AAC pump-cells. The West Driefontein Reclaim plant initially treated repulped slimes dam material. A subsequent change of feed material to current arisings (from the main gold plant) occurred in1997 in order to convert mills for waste rock treatment. Currently the reclaim plant treats a combination of current arisings and waste rock (milled at the reclaim site). The new CIP plant replaced twenty-seven rotary vacuum filters. A comparison between the filters and CIP in terms of operating costs was undertaken, as well as a performance analysis of the CIP plant to determine its flexibility in terms of variation of the throughput, pulp density, gold input, leaching efficiency prior to CIP, and the rate of carbon movement.

Jan 1, 1999

By R. W. Nice

Presently about 60% of the world's nickel resources are tied up with lateritic ores while about 25% of the world's nickel is produced from sulphides. Based on this the industry has to focus on improving lateritic nickel economics in order to maintain the high use of the metal worldwide. In 1997 three junior mining companies in Australia organised finance against all odds and commenced development of three separate nickel and cobalt extraction plants treating lateritic nickel ores. All three projects utilise similar pressure acid leaching (PAL) technologies while each has unique metal recovery technologies All projects have experienced numerous processing and maintenance related difficulties such that full ore throughput has been reached by only one operation after five years. This shortfall in performance has caused the owners considerable angst and financial pain. In 2000 Cawse went into receivership and was purchased by an international corporation. Recently, Bulong also went into receivership and has undergone an orderly shutdown, awaiting sale to a new buyer. Murrin Murrin has settled with its financiers and is in a position to operate as planned for many years forward. This paper will discuss a number of the technical difficulties that affect the ore preparation, PAL and solution treatment circuits of these plants. The objective is to identify the cause of some of the difficulties and propose possible solutions so that the next generation of lateritic operations can emerge as technically and, more importantly, economic successes. A number of these process improvements have been identified by the existing operators and in many instances have been or are being implemented into the existing operations.

Jan 1, 2004

By C Fountain

It is commonly known that copper smelter terms include penalties if the concentrations of elements, such as arsenic, mercury and fluorine, exceed stipulated limits. It is less commonly known that the behaviour of these elements in the smelters can depend on the processes used to treat the concentrate. The principle behind the penalties is to compensate the smelters and refineries for additional costs caused by the presence of the penalty elements, but these costs will vary depending on the process used and the location of the smelter.The issues caused by the minor elements include effects on the occupational health of smelter workers, increased environmental disposal costs, increased operating costs and reduced cathode copper quality.The effects of minor elements can be surprising. High levels of arsenic in concentrate are considered undesirable, but some smelters add arsenic to anode copper to improve the performance of the refinery.Excess concentrations of some elements will result in rejection of concentrates by smelters. China has blanket import bans on copper concentrates with concentrations of lead, arsenic cadmium, fluorine and mercury exceeding specified levels.This paper will review the behaviour of minor elements in smelters and refineries, explaining the deleterious effects of each of them, to provide a greater understanding for people and organisations wishing to market copper concentrates.CITATION:Fountain, C, 2013. The whys and wherefores of penalty elements in copper concentrates, in Proceedings MetPlant 2013 , pp 502-518 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 15, 2013

By H. C. Boydell

Those connected with mining, prospecting, or mining geology in northern Ontario are familiar with the fact that it is a comparatively unusual thing to have assayed a sample for which the assay report shows no gold. Values of 20 cents to 80 cents per ton, or even higher, are extremely common. Whilst contamination by fluxes, faulty manipulation, or a desire, on the part of the assayer, to sugar-coat the pill for the client, may account for 20 to 40 cent values at times, it is un1ikely that they would a1ways do so. Exonerating the assayer from being necessarily at fault, what can be the cause of such a widespread distribution of gold (and silver) in minute quantities- of a dissemination .that, in the writer's experience, and so far as he is? aware, is not met with on a simi1ar scale in other parts of the world? Explanations that suggest themselves are, that the dissemination is due: 1. To a very widespread auriferous minera1ization, post-dating (epigenetic) the formation of the rocks in which it occurs. 2. To a general syngenetic distribution of gold in the volcanic rocks of Keewatin age that form so large a part of the sections of northern Ontario that have been prospected.

Jan 1, 1928

By Saverio Agresti, Giuseppe Lunardi, Donato Basta, Roberto Trapasso

"At a distance of 10 years from the first application of the Nazzano Method, the widening under traffic of a tube of an existing motorway tunnel was realized near Ancona, along the A14 Motorway in Italy. This paper describes the works for the enlargement with conventional method of the second tube, very close to that already widened under traffic.This enlargement was realized very fast, taking into account the advantages of some interesting technological improvements of the Final Design proved in the first tube.INTRODUCTION TO THE WIDENING OF EXISTING MOTORWAY TUNNELSThe widening of a twin-bore motorway tunnel usually considers the double option of creating a third bore as an alternative or closure to traffic of one of the two bores with the resulting reduction in the level of service for users.On the contrary, the extension in situ of a road, motorway, railway or underground tunnel in the presence of traffic, made possible by an inspired idea of Prof. Pietro Lunardi, enables the level of service of the infrastructure to be maintained without the need to resort to alternative routes to create new permanent or temporary bores, not always feasible because of the lack of the necessary space.This construction technique, known as the ‘Nazzano Method’, is part of the technologies refined and offered by the ADECO-RS approach to tunnel design and construction (Lunardi P., 2008) which is increasingly used in the world, leading to the industrialisation of tunnelling (meaning respect for the times and costs set out during detailed design) both in conventional and mechanised (through TBM) excavations.The first true experimentation of the ‘Nazzano Method’ was carried out between 2004 and 2007 to enlarge the two-bore ‘Nazzano’ tunnel (Italy, Milan-Rome A1 motorway) in the presence of traffic, widening it to house from two to four lanes in each direction (Lunardi P. et al., 2007). Following the success achieved in this first application, the Nazzano Method was strengthened considering all the possible suggestions arising from the previous experience and then taken up to enlarge the north bore of the ‘Montedomini’ two-bore tunnel (Italy, Bologna-Taranto A14 motorway), in situ and the presence of traffic."

Jan 1, 2016

By Robert H. Richards

Tuns truly remarkable machine was built on a preliminary scale in May, 1895. The first full-sized table was built by Mr. A. R. Wilfley, and was used in his own mill in Kokomo in May, 1896. The first table sold for installation was placed' in the Puzzle mill, Breckinridge county, in August, 1896. The mill enthusiasts at first hailed it as the cure for all the ills that flesh is heir to in the milling line. A little later it was found to make losses which were serious, and on this account the table succeeded only to a limited extent in displacing the vanners of the gold-mills. Still later, mill-men in a number of districts throughout the country made special studies of the faults of the machine, and devised a number of ways of grouping supplementary machines to overcome as far as possible the losses, and at the same time retain the benefit of the extraordinarily large capacity accompanied by the production of clean concentrates for which the machine has become so justly famous. I hope to make an exhibit of some of these methods in an appendix to my book on ore-dressing which is now in preparation. These experimenters have not written up the subject, and if they possess all the facts they have not given them out for the benefit of the mining profession at large. The object of this paper is to obtain the facts and to pre¬sent them so clearly that their bearing can be seen by all. To this end two complete series-'of tests have been planned. One (the present paper), to study concentration of galena in presence of quartz; the other (to follow shortly), to study concentration of chalcopyrite in presence of quartz. Some authorities claim that the table does its best work when treating natural products; by this phrase I mean products which have been crushed to pass through a limiting

Jul 1, 1907

The theme of the conference this year is diversification. One way to diversify is through acquisition. The principle underlying the winner's curse is that in competitive bidding situations where the value of the asset bid for is uncertain the winning bid will overstate the true value of the asset. The successful bidder is blessed with the winner's curse. What this paper will explore is to what extent this is true; how acquirers can avoid being blessed with the winners curse; and show how joint venture deal structures are used within the mining industry to avoid the winners curse.

Jan 1, 1996

By Thomas D. Kaufmann

Introduction What drives the price of gold? Supply and demand, of course. But in ways far different from the forces that drive the prices of other major metals, such as steel, aluminum, and copper. Gold, in fact, is one of the few commodities where both buyers and sellers are happy when the price goes up. Current production, production costs, and variations in production have little influence on its price. Gold inventories are so tremendous that current production has small impact on the amounts available to the market at any time. Worldwide gold inventory and production The world's inventories seem to be between 78 and 98 kt (2.5 and 3 billion oz). Since biblical times, the gold miners of the world have produced about 98 kt (3 billion oz), mostly in this century. Only small amounts have been thrown away and most of it - more than 78 kt (2.5 billion oz) - remain in bullion, coins, or jewelry. About 40% is held by central banks and other governmental authorities, 30% by private individuals as bullion or coins, and about 30% as jewelry. Except for some of the jewelry and the few industrial applications, this inventory is constantly available in marketable form at a price. By comparison, gold production is indeed small. The US Bureau of Mines estimates that the world produced 1.5 kt (50 million oz) of gold in 1986. Consequently, production increased world inventories by only 2%. Variations in production have a negligible or very short-term effect on the supply and, consequently, on the markets for gold. Although South Africa mines about 40% to 50% of the world's annual production, continuing labor strife there does not seem to have ruffled gold prices. Determining gold's price Gold prices, however, do determine cutoff grades in the mines and, thus, do influence production. Nonetheless, changes in production have little impact on the inventory supply. Consequently, it has small influence on the price of gold on the market. With a fairly stable supply, price changes are driven by changes in its demand. Unlike other metals, very little of the demand for gold comes from industry. Dental, electronic, and other industrial uses for gold consume less than 46.6 t/a (1.5 million oz per year). It would be safe to assume that such uses are less than 124 t/a (4 million oz per year) for the entire world. Variations in the 124 t (4 million oz), compared to a supply of 78 kt (2.5 billion oz) of supply can have only a negligible effect. Production net of industrial uses adds perhaps 1% annually to world inventories. This could, in time, affect markets. The increase, however, is mostly absorbed by population growth - more people wanting to own gold - and by gold being put in more attractive forms, such as coins. As an ancient Lydian king discovered, minting bullion permits

Jan 9, 1987