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Gold mine concentrate marketing (11 replies)
Working out the Net Smelter Return (NSR) will depend on who the buyer is. Chinese smelters are typically keen to buy pyrite concentrate and give a high return on gold content, around 93%. Silver content also attracts payment though not as much as the processing steps are more complicated since its not a noble metal like gold. You need to get a full analysis of the concentrate to determine the levels of penalty elements such as arsenic and mercury as some smelters won't take these. There are also treatment costs, moisture penalties and marketing costs to consider. You will also get paid for the sulphur content for added bonus.
Galena concentrate typically needs to be 60% lead or better to get an off-take agreement The NSR schedule is typically something like this:
Smelting charges - US$250/t concentrate, 50 g/t silver deduction, US$1.5/g gold
Lead - 95% payment
Silver - 100% payment over the silver deduction (e.g. if silver content is 500 g/t you get paid for 450 g/t content)
Gold - 95% payment above the first gold charge
Concentrate would typically be bagged, loaded into 20 tonne seatainers and transported by truck to a seaport for onboarding. You will need to work out the cost of transport which for 500 miles might be around $100/t.
To get a more accurate view of marketing potential I would contract a professional consultancy such as Cliveden Trading who I have used for jobs in the past. Here's their web page:
The grades look really good, I'm sure you will find buyers for the concentrates.
If you need any assistance with the plant side of things please let me know on email@example.com
Hope this helps
Greg, thank you - that's a great response.
I hadn't considered China but the unequal balance of trade, I assume there must be some bargain backhaul discounts on empty returning containers.
The life of this mine will be no more than 10 years, producing approx 6,000t of ore per month - but the company has leases on other small gold mine prospects in the area which could also be developed. Might it be feasible for the company to invest in its own small smelter to treat these concentrates? Presumably their biggest hurdle would be environmental/planning consent and getting rid of the waste…
Forget the idea of your own dedicated smelter......... environmental considerations kill this almost immediately. Greg Henderson has hit the major points but I think it likely that terms offered to you will vary dramatically across say North America / Europe / China. Personally I would assume at best payment for only 80% of the gold. Remember the smelters tend to have the upper hand in negotiations like this and it is not uncommon for the "mine " to suffer excessive penalties as well as non payment for some of the metal.
Thanks, miningman - you're probably right but this mine is not far away from a part of Scotland which has traditionally accommodated aluminium smelters; and although the last of them is about to be shut down, there's a community campaign to revive the smelting industry there. So if the planners are clued up on smelters and the residents want smelters, there might be a chance…
Well not wanting to appear too pessimistic , nor wanting to eliminate any local support for a smelter consider the following. You appear to have started with 870 tons of ore to produce slightly in excess of 10.2 tons of concentrate........ , say an 85:1 concentration factor. With your 6,000 tons of ore per month, you might be looking at 850 tons of con annually or 70 tons per month.
These figures need to be taken into consideration in generating the estimates of the initial capital costs, and I suspect you would need at least an order of magnitude more than this .
And if you get passed this hurdle , make sure the locals are aware that there is almost certainly Arsenic in the pyrite and Sulphur Dioxide will be generated as part of the process. These issues may be more perceived problems rather than real problems but you would need to address them during conversations with the local communities.
There used to be smelters in Spain that took gold con from an operation in Greenland. This would be my first line of inquiry.
Thanks again. If they get several small mines up and running, they might get close to an optimal throughput.
It's worth looking at since a dedicated local smelter wouldn't break the audit trail and there is likely to be a 10-20% premium from Scottish jewellery firms for gold with a 100% Scottish provenance if verified by the assay office -- none having ever been commercially mined in Scotland before.
Dear goldinvestor, you are starting to sound like a stock promoter. Building a smelter for mini tonnages like you are chatting up while the World is shocking with excess smelter capacity = FORGET IT
Jewelers paying Extra for gold or anything = FORGET IT & I do not think gold has a DNA...
You might enjoy this pyrite smelting classic.
Stick with the payable terms and penalties and drill to expend. Good luck.
Sugar Watkins, thank you particularly for the link to the Pyrite Smelting book which I enjoyed a great deal - even though much of the technical talk sailed over my head. I was struck by the pioneering spirit of the old-school metallurgists and their willingness to share their knowledge - in a very coherent and learned way. I wondered if many of them would have been British, not least because the early furnace technology was apparently brought to America by the Welsh.
Highly readable though it is, I wonder to what degree the processes they describe have been superseded in the past 100 years and more by advances in metallurgy and in equipment...? Could it still be the case that "the fire-brick would absorb gold and silver in a remarkable way, old [furnace] bottoms assaying from 150 to 250 oz. silver and 8 to 20 oz. gold"?
Anyway, my idea of a dedicated smelter may be "pie in the sky" but that didn't stop those smelting pioneers or Steve Jobs. I shall persevere.
As for gold having a "DNA", it certainly has a fingerprint or profile which can prove its provenance. To return the favour, here's a recommended read for you: http://goo.gl/y6y3Ys
And I am not connected with this Scottish mine in any way other than as a potential investor - due diligence for which is why I'm here.
Having done a number of these types of trade-offs, including a recent job in Indonesia, concentrate sale is likely to be your best bet. Aluminium smelters are not the same as pyrite smelters and can't handle the off-gases. There is a decent market for sulphuric acid so selling to an existing smelter to get credits for sulphur is the safest approach. I think your return will be in the 90's rather than 80% given the high grade of the con, particularly if arsenic content is low. If arsenic is high you will most likely have to treat the concentrate hydrometallurgically (pressure oxidation, bio-oxidation, ultrafine grinding, Albion Leach). Before committing any money you need to get a hold of a comprehensive concentrate analysis and mineralogical report, even if its just from testwork. This will provide the roadmap for treatment (for us metallurgical nerd anyway!).
I'm sure that's what will happen - for the foreseeable future at least.
I am not privy to the full analysis but they will certainly have had it done. The management has relevant experience. But one of the limitations imposed by the planning consent is that they can't treat the concentrate on site so it would be convenient if no pre-treatment were necessary.
Can a pyrite smelter also deal with the galena or will they be looking at two separate routes to market? I assume that one man's meat is another man's poison in which case they would be unlikely to get the best price for both concentrates from a single smelter…
My suggestion, you need a 34 or 64 element ICP to see what is in the concentrates so you know where you stand. The lead concentrates will be the most difficult to get rid of, there are smelters in Mexico that take lead concentrates that you should look into. Straight pyrite concentrates can be done chemically, very likely right on site. I have stated before here, you need to find out if the gold is in the pyrite or with the pyrite a big difference. If it is with the pyrite you can do a pretty good job with good classification and a concentrating table, a totally enclosed cyanide plant will work very well, I have even done that in California. If the gold is in the pyrite I have been having good luck with very fine grinding in an attritior, with sodium thiosulfate, 95% recovery in 1 hour.
Hi, I have been invited to invest in a new gold mine (in Scotland) which has just announced preliminary results from a tailings bulk processing trial and I'm trying to get a rough idea of revenues. The Au grade of the tailings is 8g/t (the mine when built will access 11g/t) and around 25% of the recovered gold is free (the value of which is easy to work out). But the remainder is in concentrates and I would appreciate any help you can give me in calculating the revenues therefrom.
I have read a great blog post here on Concentrate Marketing - https://www.911metallurgist.com/blog/concentrate-marketing - but the numbers therein are vintage and well out of date.
Bearing in mind that the small trial plant impact crusher results in a relatively coarse product (approx 80% less than 400micron) the trial results to date have delivered the following after processing 870t of the tailings:
-- 10t (wet) Pyrite concentrate containing approx. 200g/t Au (equates to approx. 64oz Au )
-- 200kg (wet) Galena concentrate produced containing approx. 9,000g/t Au (equates to approx. 58oz Au)
The mining company says it will be selling these concentrates "at the gate" (although I don't know who the buyer will be as I don't think there are any smelters in Scotland these days). But leaving aside the possibility that it would have to be transported 500 miles, does anyone have any idea of the market value of these concentrates - and specifically the gold therein, although there is also silver? Obviously, they could be stockpiled until commercially-sized bulk loads were ready.
Thanks for any help.