From the Ground Up

The first exposure to mining that I remember was when I was in elementary school and I heard about the Bre-X scandal. My father explained it to me as an example of how there’s no such thing as a free lunch. Watching the headlines these days and seeing John Felderhof found not guilty for felony insider trading, the other clear lesson is buyer beware. Nowhere outside gold investment is the following rule better illustrated:

If it sounds too good to be true, it probably is.

In a class I took on precious metals recovery one of the topics we discussed was how to spot gold mining scams. Here are a few of the buzzwords snake oil salesmen spout, and how a bit of chemistry knowledge can stop you from losing your shirt on a bad investment.

Unassayable gold: This is where the claim is that the ore body contains lots of gold that isn’t assayable. If only you, the investor, cough up some cash then we’ll use our patented new process to get this phantasmal gold out, and we’ll all be rich!

There are two main techniques for gold assaying. First is to completely dissolve the ore sample in a very strong acid such as aqua regia (one of the few reagents capable of dissolving gold and other noble metals), and analyze the solution with atomic absorption. The other method is the good old fire assay, where everything is melted down and separated. In either case, the conditions used to assay the gold are far more extreme and intensive than anything found in an economical industrial process. Thus, any process used to extract this unassayable gold will need to be more intensive than the assay process, which implies either a) very high operating costs, or the more likely b) that the whole thing is a fraud.

A brand new gold reagent: Here, the idea is that a fancy new reagent or process will extract gold where other more traditional methods fail. Setting aside the risks associated with investing in new technology, ask yourself: If this new technique is so great, why haven’t I heard of it before? Why aren’t scientists and gold companies and miners across the world champing at the bit to use this technology? People around the world have been searching for the next big gold reagent since cyanide for decades, and nothing concrete has been discovered yet. Thiosulphate has potential, but even that is far too finicky and poorly understood to be built into an industrially relevant plant today.

The gold is strongly complexed: This is often coupled with the unassayable gold claim. Here the fraud is that the gold is so strongly complexed with cyanide that it stays in solution, even after cementation or carbon adsorption techniques are applied. There are two glaring holes in this claim. First is that if you’re using so much cyanide that gold is strongly complexed, you’re doing it wrong. Very little free cyanide is needed in solution to leach gold and having excess does not help. Second, even if the gold was strongly complexed enough to prevent zinc cementation (which is well nigh impossible), then what’s the good of it? If you can’t get the gold out of solution, you can’t sell it. I’ve never heard of someone backing a currency with big vats of cyanide, and likewise I’ve never heard of a wedding band made of liquid. “Trust me honey, I’ve dissolved 3 months salary in there.”

In renaissance Italy many kings got suckered into paying alchemists vast amounts of money for sure fire gold schemes that never materialized. Five centuries later the uninformed investor is just as vulnerable.

This entry was posted on Wednesday, August 22nd, 2007 at 1:49 pm and is filed under Chemistry, Gold, Investment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.