Douglas B. Silver, CEO of Flydentity LLC, investigated global gold endowment by asking a straightforward question, “What happened to the gold deposits of 1989?”
Gold is one of the most economically essential metals produced, probably why gold mining is a significant economic driver for many countries worldwide. Directly and indirectly, this industry is responsible for jobs and employment, foreign direct investment, foreign exchange, and tax revenues for the governments in which they work. For these reasons, it’s essential to understand the fate of gold deposits and where they stand now.
What Happened to the Gold Deposits of 1989?
Douglas B. Silver, CEO of Flydentity LLC, asked a simple question: “What happened to the gold deposits of 1989?” His methodology included checking databases in 1989, systematically going through 5,500 websites found on goldsheetlinks.com, searching for specific data using stockwatch.com, backfilling hundreds of recent NI 43-101 reports and press releases much more. With all his gathered information, he found that numerous gold deposits have disappeared (or seem to have disappeared). Why? Because...
- Deposits are mined out, abandoned, or returned to its private owner.
- Deposits change their names.
- Operators change industry but don’t disclose asset dispositions.
- Operators didn’t disclose terminating its operation or dropping the property.
- With multiple expansions at the large porphyry copper mines, many no longer consider their precious metals as product, so they don’t report them.
- Older deposits are often incorporated into more significant deposits due to land consolidation and the push for larger mines, citing as examples the Canadian Malartic mine, jointly owned by Yamana Gold (TSX: YRI; NYSE: AUY) and Agnico Eagle Mines (TSX: AEM; NYSE: AEM), and the Super Pit in Western Australia operated by Kalgoorlie Consolidated Gold Mines, a joint venture between Barrick (TSX: ABX; NYSE: GOLD) and Newmont (TSX: NGT; NYSE: NEM).
- Asset absorbed by a larger company and became non-material.
- Or, they have fallen in the crack and are available for staking.
These data sources had tremendous bias for various reasons. Some included that it’s anglophone-centric since he’s not polylingual, the internet wasn’t invented in 1989, so he relied on mailing lists, non-English names are often spelled phonetically, which leads to multiple terms for the same deposit and so on.
Setting the Stage for the Gold Mining Industry
According to Traders’ Insight, the top 10 gold producing countries in 2020 were:
1. China (383.2 tonnes)
2. Russia (329.5 tonnes)
3. Australia (325.1 tonnes)
4. United States (200.2 tonnes)
5. Canada (182.9 tonnes)
6. Peru (143.3 tonnes)
7. Ghana (142.4 tonnes)
8. South Africa (118.2 tonnes)
9. Mexico (111.4 tonnes)
10. Brazil (106.9 tonnes)
But it’s also worthwhile to give some honorable mentions to other countries outside the top 11 gold producing countries globally, who account for over 600 million oz. Of gold production in 1989 and over 1.6 billion oz. in 2020:
- Ethiopia (+400%)
- Finland (+400%)
- Saudi Arabia (+367%)
- Romania (+233%)
- Armenia (+200%)
- Turkey (+188%)
- Burkina Faso (+183%)
- Ivory Coast (+160%)
- Colombia (+158%)
- Kyrgyzstan (+120%)
The Fate of Gold Deposits
For over 30 years, 23 deposits have been known and yet to be in production. This totals 147 million ounces. Those are in four countries: 15 in Canada, 6 in the USA, 1 in Peru, and 1 in Chile. According to Silver’s analysis, today’s gold deposits are larger in tonnage, have lower grades, and contain more ounces compared with deposits in 1989, which, he said, is primarily due to the higher gold prices and lower operating costs today. “What you see here is classic resource management,” Silver explained. “By the end of 1989, the gold price was about US$409 per ounce, and by the close of December last year it was US$1,860 per ounce. So, when gold prices are low, you mine high grades, and when gold prices are high, like today, you mine low grades.” The mix of mining methods has also changed over the past 30 years, with the proportion of open-pit mines increasing by 20% and the share of million-plus-oz. deposits that are open-pit mined jumping 35%, he noted, despite the impacts of open-pit mining on the environment. When you roll all this together, it amounts to probable resources of about 5.0 billion ounces, which, if mined at 100 million ounces per year provides for a 50-year supply,” he said. “Improvements in technology, which lead to lower operating costs and lower cut-off grades, combined with increases in gold prices could see a lot more gold being extracted.”
It’s safe to say that gold deposits aren’t going away any time soon but in order to keep up with demand and make the most of their deposits, mining companies will need new technology to keep growing. With the right technology, metal prices, and politics, this industry will get more ounces into production. See how CyanoGuard’s solution can help to increase gold production by up to 2%, and contact us to learn more.