Nowadays, gold mining companies are focused on projects that were not considered economically attractive for several reasons, such as low gold grade, treatment is very complex or the technology was not appropriate to generate profits. The latter aspect is the target of gold mining companies. In general, a company tries to employ privately negotiated over the possible derivates to manage and handle the exposure to any commodity, metal international price or currency risk. Also, the company tries to make a projection of the interest returns based on the estimated metallurgical results. All these aspects must include other issues which include commodity options, contracts, commitments, and investment return. All factors have something in common, the risks generated by the international market.
Risks are influenced by the interest, gold international price and exchange rates. Obviously the geographical location plays an important role in this situation. The mining company is obliged to manage the risks by analyzing the possible changes in the international market and the ore quality during the life of the project.The person who is involved in commercialization must consider the effect of the risks so that the company can handle these issues with the financial institutions. There are some arrangements with other institutions that must be considered. In general, the credit risk associated with the profits is limited to the amount of unrealized gains at any point in time.
Gold Projects are Associated to High Levels of Investment
A component very important is the relationship between production capacity or treatment capacity and the capital necessary to get that capacity. This analysis must be done considering the effects on the time construction, life or project and the variability of the production due the different ore types to be processed. It well known that the capital required is conditioned and influenced by the inflation trends. Consequently, the economical projection and especially the capital to be expended must be corrected by a factor. Others parameters to be considered are preliminary expenses, stocks and contingencies. The treatment capacity of each gold project is referred to the tonnage milled per year. If the planned production rate is the main motivation that demands a program of capital expenses, the market analyst must consider a system that converts an input time series of the production into a corresponding time series of required capital. During this economical analysis there is common problem in every gold project, the conflict between a company’s objective to mine and extract the gold at maximum profitability and the desire of achieving maximum recovery. The exercise is not simple.
This situation is created by the conflict between the marketing department and metallurgy department. It’s clear that both areas try to get the best conclusion. Optimum recovery and maximum recovery under economical and metallurgical considerations are not the same. The analysis must be done by using accurate information in terms of profitability and recovery. Unfortunately the task is many times painful and tedious due to some factors are influenced easily. Some of these factors are operating and capitals costs, gold price, and technology. Probably, the relationship between profitability and recovery has a pick and other exercise is to find out what parameter is more important in this relationship. In general, the differences between optimum and maximum recovery are influenced by the incremental cost of extra recovery and its relationship with the estimated revenues.
Costs for some Carbon-In-Pulp Operations
Other factor that affects the election between optimum and maximum recovery is the gold price. This effect is notorious when the gold content is low and the gold price is high. This means that some projects are viable with specific gold rates. However, the gold price is not stable with the time and the differences between optimum and maximum recovery must be analyzed under this consideration, otherwise, the decision or economical result could be unrealistic.