@swecareBigmarns guide to the galaxy! And valuing gold mines!
There are 660 materials companies on the ASX.
not all at the stage where they can provide a JORC, you'll need one of these guys to begin your journey otherwise you really are riding the charts and hoping for the best, that's cool if you're a legend like mirren and patterns, sinnerz etc but if you want to accurately value a gold mining company, you'll need to slightly lift your game, but you can do this without becoming a geologist.
1.0
The JORC Code provides a mandatory system for the classification of minerals Exploration Results, Mineral Resources and Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations report, this system was introduced in 1989. It's extremely reliable in Australia, it sort of makes the PFS (pre feasibility study) obsolete, but not exactly, we'll discuss this later.
1.1
Gold contained in rock at concentrations or amounts not economic to mine is worth zero dollars. So basically an ounce of gold “in the ground” is worth somewhere between nothing and the current spot price.
1.2
There are many different types of gold mining, rocker boxing, sluicing, panning, dredging, underground etc, but for our purposes were sticking with hard rock gold mining which extracts gold encased in rock, rather than fragments in loose sediment, and produces most of the world's gold, this type of mining via an open pit style mine is the most economic in Australia.... mostly... we'll discuss the differences, fors and againsts of open pit vs underground later...
so for part 1 of "how much is that gold mine worth?"
what do we need to find out first?
1. 660 materials companies!
2. how many have a JORC? (Homework)
3. Google open pit mining and suss out how they operate!
I'll be back later for more school!
