Yevgeny Nekrasov
PhD in Geology and Mineralogy

I

n the world mining it is the gold mining industry which has demonstrated stabilization of the production rate and the level of the precious metal reserves of both proven and developed categories, the highest ones. The most interesting thing about this stabilization is that it has been achieved during a period of significant fluctuations of yearly average prices for gold from the minimum level of 8.78 – 8.96 USD/g in 1996-2001 up to 12.35-13.1 USD/g in 1996-2004.

This stabilization, which has been observed over the recent seven years (1998-2004), suggests that at the current state of the mining equipment and mined ore processing techniques one can scarcely expect a significant increase in the gold production volume.

Currently up to 40 % of gold are mined from major gold bearing deposits and as a by-product from ores of major copper-porphyry deposits. Usually not exceeding 10-15 tonnes of gold a year, in some unique cases the yearly production rate of such mines may reach 100 tonnes of gold. The key feature of such deposits is their low operating costs usually not higher than 6-8 USD/g. Thus, these deposits defy both fluctuations of prices for the precious metal and relatively high worldwide average costs of its production.

Here we should remind that in 1999-2001 after a deep restructuring of the gold mining industry gold production costs were reduced down to 7.25-7.8 USD/g. All the other time this value remained higher than 8 USD/g and even now it exceeds this figure. At a yearly average price for gold below 9 USD/g when many costly mining operations got suspended major mines kept on producing their gold cost-effectively. When the industry hit hard times it was major mines which maintained a high level of the world gold production though bringing their owners a lower income.

Thus, it is major gold producers which mine poor ore deposits with low Au grade ranging from a fraction of a gram to 2-3 grams per tonne mainly using open cast mining methods down to the depth of 300-400 m. Generally, it deals with low grade deposits initial reserves of which are in excess of 100-300 tonnes of gold. Though even now there are some of them with initial reserves exceeding 1000-2000 tonnes of gold (e.g. the Muruntau deposit in Uzbekistan, the Grasberg deposit in Indonesia of the Yanacocha in Peru). For some of these deposits there are plans to deepen their opens pits down to 700-750 m. Thus, for example, such deep pits are planned to be made at the Kalgoorlie deposit in Australia and at the Muruntau deposit in Uzbekistan.
Not so long before just 15-25 years ago exploration for gold yielded major discoveries. It was the time which saw discovery of the Sukhoi Log gold deposit in Russia with more than one thousand tonnes of gold in reserves, the above mentioned Grasberg deposit in Indonesia and the Yanacocha deposit in Peru. Year after year gold reserves of high, common and low categories were constantly built up. According to estimations made by J.-J. Bache (Memoire du BRGM, 1982, ¹ 118) in 1980 world proved gold reserves amounted to 31,400. tonnes, while in 1990 world overall gold reserves and proved gold reserves totaled c. 74,800. tonnes and 42,170.00 tonnes respectively as per estimation of VNII Zarubezhgeologia, a Russian scientific research institute ("Mineral Resources of Foreign Countries", Moscow, VNIIZ, 1982, p.397). Thus, over a period of 10 years proved gold reserves were increased by more than 10,500. tonnes to constitute an average yearly gold reserve increment of more than 1 thousand tonnes.

Over the next decade we can evidence absolutely different situation. Having reached 48,875. tonnes in 1995, world proved gold reserves practically stopped growing with the overall world gold reserves increased up to 87,100. tonnes ("Mineral Resources of the World", Moscow, GNPP Aerogeologia state scientific and industrial company, 1997, p. 369). Eight years later in 2003 world proved gold reserves reached 50,400, tonnes with the world overall gold reserves totaling 96,000. tonnes. Thus, over a period of ten years an increase in the world proved gold reserves constituted only 3,300. tonnes. Assuming that this figure had already been about 51,000. tonnes as long ago as in 1996, it becomes clear that the threshold had already been reached by the end of the XX century. At the current state of the gold mining industry, which is apparently the optimal one for the world economy, the existing volume of proved gold reserves is quite enough to ensure (including losses) a yearly gold production rate of 2,500. tonnes during the next seventeen years.

If you try to analyze the modern state of the industry you will see that out of the world overall gold reserves there are 46,000. to 47,000. tonnes of low categories (i.e. indicated reserves). Sure, for the present these reserves can not be considered commercially advisable. However, the author believes that in 10-15 years i.e. in 2015-2020 the industry will get new cost-effective ore mining and ore processing technologies to involve into production many deposits which are currently considered unprofitable.

Generally speaking it looks like the notion of "low category reserves" will be defined more broadly in the future. Today, for example, in Russia exploration drilling is often rejected due to significant remoteness of the territory under exploration and lack of infrastructure on it. When it becomes possible to manipulate the low category reserves through either increasing them or rejecting some volumes of prospected ore reserves according to current prices for metals, consumables used for mining and energy feedstock, including costs for their transportation to the site, dependence on the infrastructure will be significantly reduced. Therefore, in the future low category reserves (which now totals c. 46,000. to 47,000. tonnes), volume of which will inevitably be increased, can all be additionally explored to be transferred to the category of proved reserves. With these reserves taken into account, the world gold mining industry will be provided with raw materials for more than 35 years.


Gold is mined from deposits of different geological and metallurgical types. Commercial value of the deposits differs as well: one deposit yields only one tone of gold a year while other ones may produce 430 tonnes of gold or even more. It is clear then that it would be advisable to outline for the deposits geological and commercial types which could be considered prospective in terms of their reserves and, visa versa, to reject those which are definitely exhausted to be of no commercial interest. Both of the tasks could be easily illustrated in table 2. In the first turn the table outlines a group of the most commercially important gold deposits with gold production of not less than 180 – 200 tonnes of gold a year. This group features not only large-scale reserves and high production rates but also includes deposits of significant and major gold reserves. Significant deposits with more than 300 tonnes in gold reserves make it possible to arrange an essentially large –scale production of dozens of million tonnes of ore mined and dozens of tones of gold recovered. As a rule, mines built on such deposits prove very cost-effective even if the site infrastructure is poor.

The world practice shows that poorly developed infrastructure contributes extra 30-50% to the total costs of construction of mining and metallurgical facilities at the mining site. However, this factor produces very insignificant influence on operating costs. Thus, mining and metallurgical facilities recently built at the Yanacocha and Pierina deposits located in the Peruvian Ands at an absolute elevation of 4000 meters, the Kumtor deposit in the high altitude Tien-Shan in Kirgizia, the Sadiola and Morila deposits in the Malian savanna, the Batu Hijau deposit in the Sumbawa Island (Indonesia), etc. are characterized by low gold recovery costs (6-6.5 USD/g for Yanacocha, – 6 – 6.4 USD/g for Kumtor, 5-5.5 USD/g for Morila, 7 USD/g for Batu Hijau, etc. – see World Gold, 2004, v.7, ¹ 12).

Geological and commercial types of deposits represented in Table 2 are ranked in the decreasing order based on the share each of them constitutes in the world overall gold production to indicate significance of each type of deposits. Moreover, this table shows importance of gold bearing copper –porphyry deposits which contribute as much as 17.4 % to the overall world gold reserves and 14.8 % to the overall world gold production. Deposits represented in this table are grouped based on their genetic characteristics. There is no need to remind that different morphology of ore bodies determines different mining methods applicable for this or that deposit.

Today within each commercially important type of gold deposits one can outline at least one major deposit with more than 1,000. tonnes in gold reserves. Thus, the first type includes such major deposits as Yanacocha with remaining reserves of 986 tonnes, Pascua-Lama – Veladero (802 tonnes), Lihir (746 tonnes), Pueblo Viejo (544 tonnes), etc. The second type includes such majors as Muruntau (1,700. tonnes), Sukhoi Log (c. 1,100. tonnes), Bakirtchik (534 tonnes), etc. Key representatives of the third type of gold deposits are those in Nevada (USA), including Goldstrike (537 tonnes) and Pipeline (170 tonnes), as well as Olimpiadinskoie in Russia with c. 550 tonnes in primary ore reserves. The fourth type is represented by the Kalgutry (410 tonnes) and Bulyanhulu (340 tonnes) deposits.
Based on the share reserves of each deposit constitute in the overall world gold production for each type of deposits one can approximately determine its economic advisability and significance for the future gold production. Thus, if for a particular type of deposits the share in the overall world reserves proves higher than the that in the overall gold production it will evidence that deposits of this type are securely provided with reserves and feature relatively low rate (lower compared to the world-wide average level) of ore mining and respectively reveal no signs of impending exhaustion of the reserves.
Assuming a large-scale mining of deposits of the type in question one can deduce that deposits of this type are prospective in terms of mining and exploration. Their reserves can serve a reliable base for new mining and metallurgical companies. Thus, for example, for deposits of type four the share in the overall world gold production amounts to 7.6 % while that in the overall world reserves is only 5.2 %. It means that deposits of this type have been generally exhausted. Similarly, one can see that the most poorly provided with reserves are alluvial gold deposits (their share in the overall world production is 7.2 %, while that in the overall world reserves is only 2.9 %) and jasperoid ore deposits (10.5% in the overall world gold production and 4 % in the overall world gold reserves). On the contrary, deposits hosted in carbonaceous rocks of sandstone–schist formations feature a higher share in the overall world reserves compared to that in the overall world gold production. This evidences their secure base of mineral resources. Gold bearing deposits, mostly copper-porphyry deposits, in their turn are securely provided with by-product gold reserves (14.8 % and 17.7 % respectively).

Within the group of gold deposits of minor geological–commercial types one can single out those associated with tectonically altered contacts e.g. the Vasilkovskoie deposit (with 383 tonnes in gold reserves) in Kazakhstan and the Sadiola deposit in Maly (with remaining gold reserves of 240 tonnes) which was recently explored and now is being actively mined. A ratio between the share of this type deposits in the overall world gold production and that in the world overall gold reserves is next to 1. However, the very existence of such major deposits evidences prospectivness of this type of deposits.

Let us summarize our findings. The world economy is secured with available gold reserves of different categories up to 2040. It looks like the gold production level, which has been achieved to date, will be maintained on the whole as the lion` s share of the gold consumed (about 80%) is used in the jewelry industry, manufacturing volume of which is quite enough for the present to satisfy the world demand for such kind of products.

As the stock of easy-to-discover gold deposits has been exhausted or has been nearly exhausted, at a certain moment the volume of gold reserves will start decreasing. As a result 2015-2020 will see a gradual increase in the price for this metal until new cost-effective ore exploration, mining and ore processing techniques have been implemented on a large scale.

In terms of exploration and mining in this century the most reliable and prospective are deposits of the second geological–commercial type as well as gold bearing copper-porphyry ore deposits. Epithermal deposits, which are also being intensively mined now, are also considered prospective as there is a series of this type deposit representatives known to date with gold reserves estimated at approximately 1,000. tonnes for each (besides the Yanacocha deposit, which has already been mentioned, such gold reserves are also found on the Lihir, Pascua-Lama – Veladero and Pueblo Viejo deposits). It is very likely that years to come will see discovery of other major deposits localized in tectonically altered contacts, which would currently be considered minor both geologically and commercially.

In Russia such commercially important types of gold deposits should be top priority target for planning and exploration. To date there are some major gold deposits which still remain unmined or insignificantly mined. Thus, there are still no mining operations on the Sukhoi Log deposit while the Natalinskoye and Nezhdaninskoye deposits are producing unacceptably small amounts of gold just some 1 to 2 tonnes of the metal a year. At the same time each of the three deposits can be mined using open cast mining methods to produce not less than 20 to 30 tonnes of gold annually. On the contrary, placers and gold bearing zones of oxidized sulfide ores will by entirely mined out soon and can not be considered prospective for exploration. Deposits of gold–bearing weathered rocks and some other minor gold deposits will loose their current commercial significance as well.

To extend mine life of gold-bearing conglomerate deposits and deposits of some other types it is necessary to develop and implement new cost-effective gold mining techniques like the underground leaching of the metal from deep-seated ore beds. New ore processing techniques will make it possible to involve into profit-making production low grade mineral resources which are currently of no commercial interest.

Table 1
World Gold Production and World Proved Gold Reserves Dynamics in 1995 - 2003, tonnes

1995 1996 1997 1998 1999 2000 2001 2002 2003
Production 2207,5 2264,9 2437,5 2497,8 2514,3 2540,9 2555,6 2500,6 2480
Proved Reserves 48875 50925 48900 48400 49170 49950 48900 49270 50400

Note: gold production figures relating to the stabilization period are in bold print.
Source: Annual Statistics Review published by IATs Mineral information and analytical center.

Table 2
2003 Breakdown of the World Gold Production and World Gold Reserves by Geological and Commercial Types of Gold Deposits

Gold Deposit Type ¹ Geological and Commercial Types of Deposits
2003 Gold Production, tonnes Share in the World Gold Production, %
Gold Reserves as of the beginning of 2004, tonnes Share in the World Reserves, %

A Group of Gold Deposits of the Major Geological and Commercial Types

Endogenous Series Gold Deposits of Hydrothermal Class

1 Epithermal Au-Ag è Au-Te Ore Deposits Spatially Related to Volcano-Tectonic Structures
430 17,2 13500 14,1


2 Deposits in Carbonaceous Rocks of Sandstone–Schist Formations 280 11,2 11500 12

3 Bedded and Subbedded Jasperoid-Hosted Gold Deposits of Clay-Bearing Rocks of Terrigenous and Carbon-Bearing Formations (Carlin Type) 260 10,5 3800 4

4 Deposits in Regionally Metamorphosed Terrigenous–Volcanic Rocks of the Archean Greenstone Belts 190 7,6 5000 5,2

Exogenous Series Gold Deposits
5 Placers 180 7,2: 2800 2,9
Metamorphized-Metamorphic Series gold deposits
6 Deposits of gold-bearing conglomerates 390 15,6 31700 33

Gold Deposits of the Major Geological and Commercial Types, TOTAL:
1730 69,2 68300 71

Complex deposits of gold-bearing copper porphyry ores 370 14,8 16700 17,4

Gold deposits of minor geological–commercial types

Endogenous Series Gold Deposits of the Hypothermal Class

7 Deposits in Terrigenous–Volcanic -Hosted Rocks of Poterozoic and Phanerozoic Folded Belts 60 2,4 2400 2,5

8 Deposits in Tectonized Contacts of Intrusive Generally Granitoid Massifs 70 2,8 2200 2,3

9 Deposits in Brittle Rock Bodies, i.e. Stocks, Dikes and Quartzite’ Sheets
45 1,8 1600 1,7

10 Skarn Gold Deposits 35 1,4 900 0,9

11 Deposits of Saddle-Shaped Ggold Ore Bodies in Folds’ Hinge (Bendigo type) 20 0,8 800 0,8

12 Deposits in High-Grade Metamorphized Crystalline Rocks 20 0,8 600 0,6
TOTAL in the Series 250 10 8500 8,8

Exogenous Series gold deposits
13 Deposits of Gold–Bearing Weathered Rocks 80 3,2 1800 1,9

14 Deposits of Gold-Bearing Zones of Oxidized Sulphide-Bearing Ores 70 2,8 700 0,7

TOTAL in the Series 150 6 2500 2,6
The Group of Deposits of Minor Geological and Commercial Types, TOTAL: 400 16 11000 11,4
For Both of the Groups TOTAL: 2500 100 96000 100

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Source: Annual Statistics Review published by IATs Mineral information and analytical center