Mining Sector’s Uncharted Waters

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” — Warren Buffett

It’s great when you can learn from others’ mistakes.

But what if the sector you want to invest in is unknown to most financial advisors?

In mining, fancy diplomas and Wall Street experience don’t help much.

Your title at a top investment bank won’t matter if you can’t understand a junior miner’s press release.

What is a good grade for a future gold mine? What does “refractory” mean when it appears deep inside a long technical report?

These details matter. Only experienced mining professionals can read them with confidence.

Knowing them can protect your capital in the uncharted waters of the mining sector.

Even more, it can lead to gains that change your financial future.

Let’s go through a quick list of things you should know about mining companies to be able to look at their press releases—and, hopefully, profit from what you know.

Grade

Most mining companies run drill programs to define a deposit. Drill results can move share prices fast. They can create huge gains or send a stock into a long decline.

Understanding drill results is the most important skill for a mining investor.

Let’s focus on gold.

Anything below 0.5 g/t (grams per tonne) gold is low-grade. Some mines still make money at these levels, but margins are thin and depend on strong gold prices.

A grade of around 0.5 g/t gold can work for open-pit mining in soft, easy-to-process rocks (oxide material). Anything higher at shallow depth is a good result.

If the mineralization sits deeper than 250 meters, the project likely requires underground mining. That usually needs grades around 4.0 g/t gold to be profitable.

Some large underground mines can work with lower grades, but only if the deposit is huge and allows for economies of scale. These projects need drill results showing hundreds of meters of mineralization’s breadth and depth. Without that scale, the economics of the deposit fall apart.

It’s usually best to avoid those stories.

Also, very narrow drill hits—less than one meter—are a red flag. Mining such thin zones is difficult. You end up moving a lot of waste rock, which dilutes the grade.

Size

Now imagine that drill results show a good grade and a decent width. For example, 10 meters of 2.0 g/t gold starting at 60 meters in depth. That’s a strong start.

But it’s only the beginning.

Geologists now need to test how far the mineralization extends. They do this with step-out drilling. They drill new holes about 100 meters away from the original hit, moving outward.

If the mineralized zone continues, they keep stepping out. By the end of the program, they have a rough idea of the deposit’s size.

Next, they drill between the holes to fill in the gaps. If the thickness and grade stay consistent, that’s a great sign.

But real deposits are rarely that simple. They pinch and swell. Grades change. Sometimes the mineralization disappears entirely and abruptly due to geological events.

This is why understanding local geology is essential for a successful drill program.

Metallurgical recovery

Even if a company defines a deposit with a good grade and size—say 1.0 to 2.0 million ounces of gold, or even 5.0 million ounces for larger targets—the work isn’t done.

The ore must go through metallurgical tests. These tests show how much metal can be recovered.

A simple gravity process might recover 60–70% of gold. Additional methods can push total recovery to 90–95%.

That means a million ounces of gold in the ground could yield 900,000–950,000 ounces in the plant. That’s excellent.

But not all ore is easy to process. Some ore needs very fine grinding or even roasting to break the tiny particles that trap gold. This can be extremely expensive and destroy project economics.

That’s a major red flag.

If you see the word “refractory,” it means the ore may be difficult and costly to process. It’s not always fatal, but it’s a serious risk.

Many deposits also contain multiple metals, like gold-silver or gold-copper. Metallurgical tests must show strong recoveries for all of them. The more metals involved, the harder the processing becomes.

If a project seems to contain half the periodic table, that’s usually not a good sign.

Conclusion

This is a brief overview of the most important technical factors in mining.

It’s a good starting point for new investors.

If it feels overwhelming, that’s OK. Mining is not simple, and neither is investing in mining companies.

But as mentioned earlier, it’s better to learn from others’ mistakes—especially those who spent decades working with real mining companies and delivering real gains.

One example is Rob Bruggeman, former executive at Abra Silver. The company grew from about $5 million to a $1.6 billion market cap. That’s more than a 30,000% gain. For many investors, that was life-changing.

After his success at Abra, Mr. Bruggeman launched a service for individual investors, The Wealthy Miner. His goal is to teach the most important technical aspects of the mining sector to investors like you.

You can learn more about his service here: https://www.thewealthyminer.com/elite-investment-club