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Mining economics
Grade, cut-off, all-in sustaining cost, and what happens when the orebody is finished.
A gold mine is an arithmetic problem before it is an engineering one. Grade sets how much rock must move per ounce; the cut-off grade decides what counts as ore at all and moves with the gold price; all-in sustaining cost decides whether the operation survives the next downturn. Closure and rehabilitation costs sit at the far end and are frequently under-bonded.
Our mining coverage runs from open-pit arithmetic to artisanal supply chains and post-closure liabilities.
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Industry · 17 min read
After the Cyanide
Every ounce of mined gold leaves behind roughly a tonne of processed rock and the water that carried it. What happens to that material after the last shift is the part of the industry with the longest timeline and the least coverage.
Tomas Herrera · 7 August 2026
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Grade, Cut-off and the Arithmetic of an Open Pit
A gold mine is not a hole with gold in it. It is a spreadsheet with a hole attached — and the single number that decides which rock is ore and which rock is waste moves every time the price does.
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Urban Mining: The Richest Gold Ore on Earth Is in Your Old Phone
A tonne of good underground ore holds a few grams of gold. A tonne of discarded circuit boards can hold two hundred. So why is most of it still going into landfill?
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The Other Supply Chain: Artisanal Mining and the Mercury Problem
A significant share of the world's gold is produced by people working with hand tools, informal finance and a neurotoxin. Formalisation is the stated solution. Nobody agrees on what it costs.
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Terms used in this topic
- Ore grade
- How much gold a tonne of rock contains, quoted in grams per tonne. Large open-pit operations can be economic at around 1 g/t; underground mines generally need several grams to justify the cost of getting to the rock. Grade drives everything downstream — at 1 g/t a mine must move a tonne of material to produce roughly a third of a gram of sellable metal, which is why energy and haulage dominate the cost base.
- All-in sustaining cost (AISC)
- The industry's standard measure of what it costs to produce an ounce and keep producing it: mining and processing costs plus royalties, site administration, sustaining capital and reclamation accruals, divided by ounces sold. It deliberately excludes expansion capital and exploration for new deposits, so a company can report a healthy AISC while quietly depleting its reserve base — read it alongside reserve life, never alone.
- Cut-off grade
- The lowest grade of material worth processing rather than dumping as waste. It is a function of the gold price, recovery rate and processing cost, so it moves as those move: a higher gold price lowers the cut-off, converting waste into ore and enlarging the reserve without any new drilling. This is why reserve statements change with the price and must always be read with their assumed gold price attached.
- Reserves vs resources
- A resource is gold known to be in the ground with reasonable geological confidence. A reserve is the part of a resource that a study has shown can be extracted profitably under current costs, prices, permits and technology. Every reserve is a resource; most resources never become reserves. Reporting codes such as JORC and NI 43-101 exist precisely to stop the two being blurred in investor material.
- Artisanal and small-scale mining (ASM)
- Labour-intensive gold mining by individuals and small groups, typically with minimal mechanisation and often outside formal permitting. It produces a material share of world supply and supports millions of livelihoods, but it also accounts for the largest anthropogenic release of mercury on earth, used to amalgamate gold from concentrate. Formalisation and mercury-free processing are the central policy questions in the sector.
- Doré
- The impure alloy a mine pours on site, typically somewhere between 60 and 90 percent gold with silver and base metals making up the rest. Doré bars are not tradable bullion; they are feedstock, shipped under insurance to an accredited refiner where they are assayed and settled on contained fine gold. The step from doré to Good Delivery bar is where the mining industry ends and the bullion market begins.
- Cyanide leaching
- The dominant method of extracting gold from ore. A dilute cyanide solution dissolves gold into a complex that is then recovered onto activated carbon or by zinc precipitation. Heap leaching stacks crushed ore on a lined pad and irrigates it; carbon-in-leach agitates finely ground ore in tanks. The chemistry is efficient and well understood; the risk sits in solution containment and in the tailings that remain afterwards.
- Tailings
- The ground rock and process water left after the gold has been extracted, stored behind engineered embankments. Because ore grades are low, tailings dwarf the product by orders of magnitude, and their long-term stability is the largest environmental liability a mine carries. Failures are rare but catastrophic, which is why dam design, water balance and closure bonding now sit at the centre of mine permitting.
Questions readers ask
- What is a good gold grade?
- It depends on the mining method. Around 1 gram per tonne can be economic in a large open pit; underground operations generally need several grams per tonne to cover the higher cost per tonne moved.
- What is all-in sustaining cost?
- An industry measure covering cash operating costs plus sustaining capital, royalties and site administration — roughly what it costs to keep producing an ounce without expanding. It excludes growth capital and exploration on new orebodies.
Other topics
- The gold standard
- Central-bank reserves
- Refining and assay
- Recycling and recovery
- Price and market structure
- Goldsmithing and craft
- The science of gold
Reported from the Industry desk.