Working directly with mines

[Jordan12]

Hello everyone,

Just wanted to know if anyone here has worked with gold and silver mines directly? and if so how was your experience?

Do you know what refiners are charging to refine commercial volumes? Up to 25 kg lots?

I know dore bars differ greatly in purities from mine to mine but what is the most common ratio for gold bars? 80/20 ?

Would like a little bit of insight.

 

[nickvc]

If you are looking to refine large volumes expect very low profit margins, these types of amounts are needed by the large boys to feed their refineries and are done nearly at cost, think 99%+ as the returns to the mines, you have to remember the big refineries are set up with the latest and most efficient systems in most part and for you to compete will not be easy unless you have very deep pockets to set up the same systems plus you need security and insurance which will not be cheap.
I believe Australian gold is very pure well over 95% which makes refining easier and cheaper for the refiner but another problem you will face is selling your product on, you will need LBM approval to stamp your bars and be accepted worldwide which is a long process and very expensive.
Sorry no good news from what I know but maybe I’m wrong.

 

[Lou]

You'll be refining gold on a 0.25-0.3 % net margin.

 

[kurtak]

As Nick has already pointed out its hard to compete with the BIG refineries because they are buying their gold from the mines at very close to spot price (98 - 99 % spot)

Keep in mind - that refining is not actually where the big refiners make their money - they actually make their money turning the gold (&/or silver &/or PGMs) into "products" which they sell for a profit

In other words products they sell for MORE then spot

Products like casting grain, wire, sheet, tubing or plating solutions etc. etc. etc.

In other words - you can not simple buy gold from a mine - for the same price the big boys are already buying it for - then simple refine it to make a profit selling the gold as simply refined gold --- you need to make a product that can then be sold for a profit

Kurt

 

[Jordan12]

Thank for your feedback Nickvc.

A lot of the contacts I have in India and China do not care much about lbma. The are usually big manufacturing jewellers and they are going to melt it again and make it into jewellery. I think the lbma accreditation is highly used for investment minted bars and coins.

Can anyone here let me know if they have had problems selling non lbma gold ?

Please let me know your experiences.

 

[Jordan12]

You'll be refining gold on a 0.25-0.3 % net margin.

Hi Lou,

That is very close to the figures my refiner friend quoted me also, which is fine if the volume is there.

Do you work directly with the mines Lou?

 

[nickvc]

If your customers are happy to take your gold as is then you don’t need the accreditation but just make sure you have an end buyer for everything you refine or you will lose money hand over fist having to sell on to the big refiners who will no doubt refuse to accept the gold as fine or will offer lousy terms while accepting the gold.
While I was professionally refining my business model was very similar i refined to get the gold to sell onto manufacturers but got better margins supplying carated alloys either grain wire or sheet which was where I made my profit in most part.

 

[Lou]

You'll be refining gold on a 0.25-0.3 % net margin.

Hi Lou,

That is very close to the figures my refiner friend quoted me also, which is fine if the volume is there.

Do you work directly with the mines Lou?

I have worked before with Merril-Crowe derived dore from a few large mining facilities just for process optimization on the front end making it and some that wanted to just purify it on site to save the cost of umpire representation on the pure gold (rather hard to argue with pure gold). I was not buying it. It's not much different than any other gold. As Nick alluded, gold out of Wasa is higher purity and more fun to refine to high purity.

Really, I think Jordan's model of going to India/China's manufacturing jewelers. Most of them would love a 22K or 24 K grain product or fat flat wire made from it as so much of it goes into bangles.

I've never had any issues selling non LBMA gold. I've sold 99.9+ material to the big refiners at 99.5%-99.6% in 20-200 oz lots and they covered the shipping. On high purity, market grade material, We cert it and the buyers I go to know well the quality of what we make and that we stand behind our products. Usually I'm at spot price and a few over or a few bucks back depending on my buyers' needs for physical inventory.

 

[Jordan12]

As Nick has already pointed out its hard to compete with the BIG refineries because they are buying their gold from the mines at very close to spot price (98 - 99 % spot)

Keep in mind - that refining is not actually where the big refiners make their money - they actually make their money turning the gold (&/or silver &/or PGMs) into "products" which they sell for a profit

In other words products they sell for MORE then spot

Products like casting grain, wire, sheet, tubing or plating solutions etc. etc. etc.

In other words - you can not simple buy gold from a mine - for the same price the big boys are already buying it for - then simple refine it to make a profit selling the gold as simply refined gold --- you need to make a product that can then be sold for a profit

Kurt

Hi Kurt,

I totally agree with you but the difference between paying 98% or 99% is a huge difference when refined in volume. Like Lou said I don’t think even 1% discount can be achieved.

Finding the exact cost is the key to know if the deal is profitable or not.

We will be highly focusing on bars and grains.

 

[Lou]

One of my favorites was Chris Owen's story of buying gold in Papua New Guinea in the 70s. He told me even then it went for 90-95% of spot price!

 

[Jordan12]

One of my favorites was Chris Owen's story of buying gold in Papua New Guinea in the 70s. He told me even then it went for 90-95% of spot price!

That’s a good one. That would be nice but unfortunately it’s not realistic.

I have seen very useful machinery for refineries here - https://www.italimpianti.it/en/

Lou I have emailed you.

 

[Lou]

And I've responded.

The problem with many of the 'Italian Jobs' as I call them is that--while built nicely and looking neat and professional--they're somewhat of one trick ponies and you'll spend about $500-600K in US currency to setup with them to do 50 kg/day.

There are other options and it really does depend on what you want to run as a feed material.

 

[nickvc]

If all you are going to be running through your refinery is high grade ore it’s not too hard to scale up the vessel sizes and keep it simple and relatively cheap if you are going to use wet chemistry, if the grade of ore is nearly pure 95%+ you could also run it all through cells.
If memory serves me correctly 4metals was involved with setting up a system many years ago that produced very fine grains of material which could all be refined and recovered very easily and quickly and only using HCl and peroxide I believe, it was in a thread about dental gold refining.

 

[Jordan12]

One of my favorites was Chris Owen's story of buying gold in Papua New Guinea in the 70s. He told me even then it went for 90-95% of spot price!

That’s a good one. That would be nice but unfortunately it’s not realistic.

I have seen very useful machinery for refineries here - https://www.italimpianti.it/en/

Lou I have emailed you.

Yes I totally understand what you mean Lou. A lot of the machinery is not meant to be versatile in handling different types of feedstock.

Thank you so much Lou.

 

[Jordan12]

If all you are going to be running through your refinery is high grade ore it’s not too hard to scale up the vessel sizes and keep it simple and relatively cheap if you are going to use wet chemistry, if the grade of ore is nearly pure 95%+ you could also run it all through cells.
If memory serves me correctly 4metals was involved with setting up a system many years ago that produced very fine grains of material which could all be refined and recovered very easily and quickly and only using HCl and peroxide I believe, it was in a thread about dental gold refining.

Hi Nickvc,

If the dore bars are 95% + purity we can put them straight into the cells, but I can not just bet on that as different mines around the world produce different purities. Also can not process karat gold directly into the cells. So need a versatile separation system in place before pms go to cells.

Thank you to everyone being so helpful and letting me know their experiences they have had. Have a great weekend team.