by Steven St. Angelo, SRS Rocco:
One way a mining company can remain profitable while dealing with much lower gold prices is by “High Grading.” However, this does not seem to be taking place as the top 5 gold producers average yield continued to decline in the first half of 2013 as gold prices fell to new lows.
High grading is a method by which a company decides to extract higher grade ore in the mine for the short-term to increase production as well as lower costs. Unfortunately, this technique leaves a great deal of gold ore in the ground (as future waste) that may not be commercially viable to extract in the future.
The diagram below shows two different ways a company would mine a deposit:
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