Mining Basics
Part 1: Useful sources to start with
As I am no geologist, mining engineer, mining company executive, etc, it seemed useful to refer to other, far more capable sources to get a solid, basic understanding of mining. The website of one of the largest gold miners, Newmont, does an excellent job in explaining the basics of the mining process, and also gives information on gold, silver and copper. To get a visual impression of things like for example exploration, or open pit mining or underground mining, I would suggest to just google these terms for images, and you will be redirected to websites of mining companies in no time, if you check all available information out you will see what those companies are about. Make sure you google at least for one explorer, one developer, one under construction and one producer as well, in order to see the differences of those stages of development.
Another introduction is the Investment University by Sprott Global, a resource focused investment firm, who provides a series of videos.
When you have read and watched all this and have some idea, I would like to recommend Geo-Insights from respected economic geologist Brent Cook, to learn more about geology and related subjects, although it could be too technical at times for a retail investor. Even more technical, bordering to the or even outright scientific, are these papers on Brent's website. Here's another disclaimer: I don't recommend any stockpicks being made by Brent in Geo-Insights, or Sprott Global in their materials, and I don't recommend Newmont.
In addition you can read My Guide Chapter 1-5 and my articles to see my opinion on things.
Besides all this, there are always books to be found on mining and mining investments on Amazon if you are really interested.
Going through the dictionary in Part 2 is also a way of getting familiar with a lot of industry definitions.
Part 2: Dictionary Of Mining And Investing In Junior Miners
Maybe you are already experienced as a junior miner stockpicker, or maybe you are a complete novice, who wants to find out more about this exciting sector anyway. I decided to aggregate a large number of commonly used words in mining and mining investing for you, so you would not have to miss out on any information when reading about mining companies or related issues. I'm not pretending to be complete, as there is for example the Infomine dictionary with 27.000 words, but I believe I have gathered the most used ones here in this list, and added some as well. My list is based on a larger list taken from the website of the well known mining newspaper the Northern Miner, which can be found here from the source. If you think you miss certain words or terms commonly used in the sector, just let me know and I will be happy to add it to my list.
The technical mining terms aren't really needed to do due diligence yourself, but you will find them frequently showing up in news releases, so in that case you are a bit prepared to know what companies are talking about. Their geologists or engineers can get carried away sometimes. The links provided to the images I used were only meant to refer to the source, in no case are these sources recommended by me in any way.
My list of most used words in mining and investing in junior miners
A
Adit - An opening driven horizontally into the side of a mountain or hill for providing access to a mineral deposit. It is basically a tunnel:
Maenporth beach adit, South West England
Aeromagnetic survey - A geophysical survey using a magnetometer aboard, or towed behind, an aircraft. The endresult is a set of data, and a map indicating different zones of magnetic anomalies:
Aeromagnetic survey, for Pelé Mountain
This is usually one of the first things an exploration company conducts on its property, together with taking grab samples by hand in potentially mineralized areas at surface or in existing adits.
Airborne survey - A survey made from an aircraft to obtain photographs, or measure magnetic properties, radioactivity, etc. This could also lead to a set of data, and a map indicating different zones of magnetic anomalies
All In Sustaining Cost - AISC, consisting of operational cash cost, exploration, G&A, royalties and sustaining capital. No capex and no taxes included.
Alloy - A compound of two or more metals.
Alteration - Any physical or chemical change in a rock or mineral subsequent to its formation. Milder and more localized than metamorphism.
Amorphous - A term applied to rocks or minerals that possess no definite crystal structure or form, such as amorphous carbon.
Amortization - The gradual and systematic writing off of a balance in an account over an appropriate period.
Annual report - The formal financial statements and report on operations issued by a corporation to its shareholders after its fiscal year-end.
Anode - A rectangular plate of metal cast in a shape suitable for refining by the electrolytic process, well known for the production of copper.
Copper anodes
Anomaly - Any departure from the norm which may indicate the presence of mineralization in the underlying bedrock.
Anthracite - A hard, black coal containing a high percentage of fixed carbon and a low percentage of volatile matter.
Assay - A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained.
Authorized capital - see capital stock.
B
Backfill - Waste material used to fill the void created by mining an orebody.
Backwardation - A situation when the cash or spot price of a metal stands at a premium over the price of the metal for delivery at a forward date. The opposite of contango.
Balance sheet - A formal statement of the financial position of a company on a particular day, normally presented to shareholders once a year.
Ball mill - A steel cylinder filled with steel balls into which crushed ore is fed. The ball mill is rotated, causing the balls to cascade and grind the ore.
Copper Mountain ball mill
Basement rocks - The underlying or older rock mass. Often refers to rocks of Precambrian age which may be covered by younger rocks.
Base camp - Centre of operations from which exploration activity is conducted.
Base metal - Any non-precious metal (eg. copper, lead, zinc, nickel, etc.).
Bear market - Term used to describe market conditions when share prices are declining.
Bit - The cutting end of a drill frequently made of an extremely hard material such as industrial diamonds or tungsten carbide.
A worker checks a drill bit of the T130 drill in front of the Precision Drilling machine, which was used to dig a tunnel to extract the 33 trapped miners from a copper and gold mine near in Copiapo
Blasthole - A drill hole in a mine that is filled with explosives in order to blast loose a quantity of rock.
Blister copper - A crude form of copper (assaying about 99%) produced in a smelter, which requires further refining before being used for industrial purposes.
Block caving - An inexpensive method of mining in which large blocks of ore are undercut, causing the ore to break or cave under its own weight.
Bond - An agreement to pay a certain amount of interest over a given period of time.
Breccia - A rock in which angular fragments are surrounded by a mass of fine-grained minerals.
Breccia in limestone
Bulk mining - Any large-scale, mechanized method of mining involving many thousands of tonnes of ore being brought to surface per day.
Bulk sample - A large sample of mineralized rock, frequently hundreds or thousands of tonnes, selected in such a manner as to be representative of the potential orebody being sampled. Used to determine metallurgical characteristics. A bulk sample is generally used when standard drilling isn't enough to determine grades and amount of mineralization of an orebody. This could be necessary at for example complex vein deposits, or deposits with very irregular mineralization consisting of numerous nuggets and low grade zones (known as "nugget effect" or "nuggety").
Bullion - Metal formed into bars or ingots.
Bull market - Term used to describe financial market conditions when share prices are going up.
Byproduct - A secondary metal or mineral product recovered in the milling process. This happens quite frequently, a deposit rarely consists of just one metal or mineral. Base metal byproducts are frequently sold by off take agreements, precious metal byproducts are frequently sold by streams.
C
Capex - Capital expenditures. These are the construction costs of a mine, and have to be arranged before the start of construction by financings. As a rule of thumb, this happens by a 2/3-1/3 debt/equity financing on separate occasions. As another rule of thumb: the after tax NPV should be at least equal to capex.
Capitalization - A financial term used to describe the value financial markets put on a company. Determined by multiplying the number of outstanding shares of a company by the current stock price. Commonly known as market capitalization.
Carbon-in-pulp - In short CIP, a method of recovering gold and silver from pregnant cyanide solutions by adsorbing the precious metals to granules of activated carbon, which are typically ground up coconut shells. Method uses two tanks. Much more commonly used is the variation carbon-in-leach, or in short just CIL which combines the CIP method in one tank.
Cash Cost - CC, the operational cash cost, which just means costs of mining and processing ore. Also called CC1.
Cash flow - The net of the inflow and outflow of cash during an accounting period. Does not account for depreciation or bookkeeping write-offs which do not involve an actual cash outlay.
Cathode - A rectangular plate of metal, produced by electrolytic refining, which is melted into commercial shapes such as wirebars, billets, ingots, etc.
Channel sample - A sample composed of pieces of vein or mineral deposit that have been cut out of a small trench or channel, usually about 10 cm wide and 2 cm deep.
Chip sample - A method of sampling a rock exposure whereby a regular series of small chips of rock is broken off along a line across the face.
Chromite - The chief ore mineral of chromium.
Claim - A portion of land held either by a prospector or a mining company. In Canada, the common size is 1,320 ft. (about 400 m) square, or 40 acres (about 16 ha).
Clay - A fine-grained material composed of hydrous aluminum silicates.
Column flotation - A milling process, carried out in a tall cylindrical column, whereby valuable minerals are separated from gangue minerals based on their wetability properties.
Common stock - Shares in a company which have full voting rights which the holders use to control the company in common with each other. There is no fixed or assured dividend as with preferred shares, which have first claim on the distribution of a company's earnings or assets.
Concentrate - A fine, powdery product of the milling process containing a high percentage of valuable metal.
Newcrest; loading copper concentrate
Concentrator - A milling plant that produces a concentrate of the valuable minerals or metals. Further treatment is required to recover the pure metal.
Contango - A situation in which the price of a metal for forward or future delivery stands at a premium over the cash or spot price of the metal. The opposite of backwardation.
Core - The long cylindrical piece of rock, about two inches in diameter, brought to surface by diamond drilling. Mostly referred to as drill core.
Drill cores
Core barrel - That part of a string of tools in a diamond drill hole in which the core specimen is collected.
Corporate tax - According to Investopedia: A levy placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against profits earned by businesses during a given taxable period; they are generally applied to companies' operating earnings, after expenses.
Current assets - Assets of company which can and are likely to be converted into cash within a year. Includes cash, marketable securities, accounts receivable and supplies. Is used to calculate working capital (= current assets minus current liabilities).
Current liabilities - A company's debts that are payable within a year's time.
Custom smelter - A smelter which processes concentrates from independent mines. Concentrates may be purchased or the smelter may be contracted to do the processing for the independent company.
Cut-and-fill - A method of stoping in which ore is removed in slices, or lifts, and then the excavation is filled with rock or other waste material (backfill), before the subsequent slice is extracted.
Cyanidation - A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving it in a weak cyanide solution. May be carried out in tanks inside a mill or in heaps of ore out of doors.
Cyanide - A chemical species containing carbon and nitrogen used to dissolve gold and silver from ore.
D
Day order - An order to buy or sell shares, good only on the day the order was entered.
DCF analysis - Discounted Cash Flow analysis. According to Investopedia: A valuation method used to estimate the attractiveness of an investment opportunity. Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.
Debenture - See bonds.
Debt financing - Method of raising capital whereby companies borrow money from a lending institution.
Decline - A sloping underground opening for machine access from level to level or from surface; also called a ramp.
Deferred charges - Expenses incurred but not charged against the current year's operation.
Depletion - An accounting device, used primarily in tax computations. It recognizes the consumption of an ore deposit through production, a mine's principal asset.
Depreciation - The periodic, systematic charging to expense of plant assets reflecting the decline in economic potential of the assets.
Development - Underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting and raising. In Canada this is often described as "exploration" in financial statements as this is eligible for tax deductions and development isn't.
Development drilling - drilling to establish accurate estimates of mineral reserves. Also called infill drilling.
Diamond - The hardest known mineral, composed of pure carbon; low-quality diamonds are used to make bits for diamond drilling in rock.
Diamond drill - A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, two cm or more in diameter.
Diamond drill
Dilution (mining) - Rock that is , by necessity, removed along with the ore in the mining process, subsequently lowering the grade of the ore. This is a very important factor with vein deposits, as veins are frequently too narrow for standard mining equipment (2-3m).
Dilution (of shares) - A decrease in the value of a company's share caused by the issue of new shares. This happens often in the case of financings (placements,offerings, bought deals).
Dip - The angle at which a vein, structure or rock bed is inclined from the horizontal as measured at right angles to the strike.
Discount - The minimum price below the par value at which treasury shares may legally be sold. Also used for DCF analysis, representing the hypothetical return of capital invested elsewhere, at the same time indicating the amount of risk of a project.
Dividend - Cash or stock awarded to preferred and common shareholders at the discretion of the company's board of directors.
Doré bar - The final saleable product of a gold mine. Usually consisting of gold and silver. It's a rough version coming from the mine's processing plant, which has to be refined at a smelter afterwards to high purity gold (> 92.5%).
Doré gold bar
Drift - A horizontal underground opening that follows along the length of a vein or rock formation as opposed to a crosscut which crosses the rock formation.
Due diligence - The degree of care and caution required before making a decision; loosely, a financial and technical investigation to determine whether an investment is sound.
Dump - A pile of broken rock or ore on surface. Also referred to as stockpiled ore or waste.
Dyke - A long and relatively thin body of igneous rock that, while in the molten state, intruded a fissure in older rocks.
E
Electrolytic refining - The process of purifying metal ingots that are suspended as anodes in an electrolytic bath, alternated with refined sheets of the same metal which act as starters or cathodes.
EM survey - A geophysical survey method which measures the electromagnetic properties of rocks.
Environmental impact study - A written report, compiled prior to a production decision, that examines the effects proposed mining activities will have on the natural surroundings. This can often create large hurdles and delays in permitting for mega projects (capex over $1-2B), as environmental activists or locals opposing the project can easily protest against it, and come up with for example endangered species or wildlife in waterbodies, which has to be ruled out or mitigated first by the mining company etcetc.
Epithermal deposit - A mineral deposit consisting of veins and replacement bodies, usually in volcanic or sedimentary rocks, containing precious metals or, more rarely, base metals.
Equity financing - The provision of funds by buying shares.
Erosion - The breaking down and subsequent removal of either rock or surface material by wind, rain, wave action, freezing and thawing and other processes.
Escrowed shares - Shares deposited in trust pending fulfilment of certain conditions, and not ordinarily available to trading until released.
Ex-dividend - On stocks selling "ex-dividend", the seller retains the right to a pending dividend payment.
Exploration - Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
Exploration drilling
F
Fault - A break in the Earth's crust caused by tectonic forces which have moved the rock on one side with respect to the other.
Ferrous - Containing iron.
Fine gold - Fineness is the proportion of pure gold or silver in jewelry or bullion expressed in parts per thousand. Thus, 925 fine gold indicates 925 parts out of 1,000, or 92.5% is pure gold.
Fixed Assets - Possessions such as buildings, machinery and land which, as opposed to current assets, are unlikely to be converted into cash during the normal business cycle. Resources and reserves are also fixed assets, and all mentioned assets are prone to fire sale discounts in case of a bankruptcy procedure.
Youga gold mine, Burkina Faso
Flotation - A milling process in which valuable mineral particles are induced to become attached to bubbles and float as others sink.
Flowsheet - An illustration showing the sequence of operations, step by step, by which ore is treated in a milling, concentration or smelting process.
Flow sheet
Flow-through shares - Shares in an exploration company that can be sold after a 4 month and one day holding period for Canadian listed companies.
G
Geiger counter - An instrument used to measure the radioactivity that emanates from certain minerals by means of a Geiger-Mueller tube.
Geochemistry - The study of the chemical properties of rocks.
Geology - The science concerned with the study of the rocks which compose the Earth.
Geophysics - The study of the physical properties of rocks and minerals.
Geophysical survey - A scientific method of prospecting that measures the physical properties of rock formations. Common properties investigated include magnetism, specific gravity, electrical conductivity and radioactivity.
Gold loan - A form of debt financing whereby a potential gold producer borrows gold from a lending institution, sells the gold on the open market, uses the cash for mine development, then pays back the gold from actual mine production.
Grab sample - A sample from a rock outcrop that is assayed to determine if valuable elements are contained in the rock. A grab sample is not intended to be representative of the deposit, and usually the best-looking material is selected.
Most reconnaissance mapping will involve grab sampling of rocks that each weigh between 500 grams (1.1 pounds) to 1 kilogram (2.2 pounds). Amanda Geard Photos
Granite - A coarse-grained intrusive igneous rock consisting of quartz, feldspar and mica.
Greenstone belt - An area underlain by metamorphosed volcanic and sedimentary rocks, usually in a continental shield. Well-known as very prospective areas for gold mineralization.
Greenstone belts worldwide
Gross value royalty - A share of gross revenue from the sale of minerals from a mine. These are the worst kind of royalties as they eat away lots of profits, but they are rare. Most common are net smelter royalties these days, taking a percentage of profits after smelter costs.
Gypsum - A sedimentary rock consisting of hydrated calcium sulphate.
Gyratory crusher - A machine that crushes ore between an eccentrically mounted crushing cone and a fixed crushing throat. Typically has a higher capacity than a jaw crusher.
H
Hangingwall - The rock on the upper side of a vein or ore deposit.
Head grade - The average grade of ore fed into a mill. This is usually the grade of ore referred to in economical studies, and is usually 15-20% below resource grades.
Heap leaching - A process whereby valuable metals, usually gold and silver, are leached from a heap, or pad, of crushed ore by leaching solutions percolating down through the heap and collected from a sloping, impermeable liner below the pad.
Heap leach pad being filled with crushed ore
Hedging - Taking a buy or sell position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change. This is also done by financiers of mining projects, especially precious metals miners, and the resulting hedging obligation is called a hedgebook.
Hematite - An oxide of iron, and one of that metal's most common ore minerals.
High grade - Rich ore. As a verb, it refers to selective mining of the best ore in a deposit. High grading operations and deposits is done frequently since 2013 and onwards, in order to operate more efficiently, save costs and optimize profitability.
Holding company - A corporation engaged principally in holding a controlling interest in one or more other companies.
Host rock - The rock surrounding an ore deposit.
Hydrometallurgy - The treatment of ore by wet processes, such as leaching, resulting in the solution of a metal and its subsequent recovery. This is often a critical component at heap leach mining and in situ recovery mining (ISR), together with hydrogeology.
Hydrothermal - Relating to hot fluids circulating in the earth's crust.
I
Igneous rocks - Rocks formed by the solidification of molten material from far below the earth's surface.
Induced polarization - A method of ground geophysical surveying employing an electrical current to determine indications of mineralization.
Industrial minerals - Non-metallic, non-fuel minerals used in the chemical and manufacturing industries. Examples are asbestos, gypsum, salt, graphite, mica, gravel, building stone and talc.
Initial public offering - The first sale of shares to the public, usually by subscription from a group of investment dealers. In short: IPO.
Institutional investors - Pension funds and mutual funds, managing money for a large number of individual investors. Also known as "big money", "insto's" or "strong hands".
Intrusive - A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded upon the surface.
IRR - Internal rate of return. According to Investopedia: The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As a rule of thumb: for base metal projects an after tax IRR of at least 15% is preferred by financiers of mining projects, for precious metal projects an after tax IRR of at least 20% is preferred by financiers, at current metal prices.
J
Jaw crusher - A machine in which rock is broken by the action of steel plates.
K
Kimberlite - A variety of peridotite; the most common host rock of diamonds.
L
Laterite - A residual soil, ususally found in tropical countries, out of which the silica has been leached. May form orebodies of iron, nickel, bauxite and manganese. In West Africa, lots of precious metals and especially gold are found in this soil, and can be washed out by hand, so lots of local artisanal miners earn a living with this mining method.
Artisanal mining in laterite deposits
Leachable - Extractable by chemical solvents.
Leaching - A chemical process for the extraction of valuable minerals from ore; also, a natural process by which ground waters dissolve minerals, thus leaving the rock with a smaller proportion of some of the minerals than it contained originally. See heap leach.
Lens - Generally used to describe a body of ore that is thick in the middle and tapers towards the ends.
Level - The horizontal openings on a working horizon in a mine; it is customary to work mines from a shaft, establishing levels at regular intervals, generally about 50 metres or more apart.
Limestone - A bedded, sedimentary deposit consisting chiefly of calcium carbonate.
Limit order - An order made by a client to a broker to buy or sell shares at a specified price or better.
Lode - A mineral deposit in solid rock.
Logging - The process of recording geological observations of drill core either on paper or on computer disk.
London fix - The twice-daily bidding session held by five dealing companies to set the gold price. There are also daily London fixes to set the prices of other precious metals. It ended recently in March 2015.
London Metals Exchange - A major bidding market for base metals, which operates daily in London.
Long position - Securities owned outright or carried on margin.
Long ton - 2,240 lbs. avoirdupois (compared with a short ton, which is 2,000 lbs.). In mining, long tonnes are common.
M
Mafic - Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.
Magma - The molten material deep in the Earth from which rocks are formed.
Magmatic segregation - An ore-forming process whereby valuable minerals are concentrated by settling out of a cooling magma.
Magnetic gradient survey - A geophysical survey using a pair of magnetometers a fixed distance apart, to measure the difference in the magnetic field with height above the ground.
Magnetic survey - A geophysical survey that measures the intensity of the Earth's magnetic field. See aeromagnetic survey.
Magnetite - Black, magnetic iron ore, an iron oxide.
Map-staking - A form of claim-staking practised in some jurisdictions whereby claims are staked by drawing lines around the claim on claim maps at a government office.
Marble - A metamorphic rock derived from the recrystallization of limestone under intense heat and pressure.
Margin - Cash deposited with a broker as partial payment of the purchase price for any type of listed stock. The stock is held by the broker as security for the loan. A margin call is, according to Investopedia: when you would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets.
Marginal deposit - An orebody of minimal profitability.
Market order - An order to buy or sell at the best price available. In absence of any specified price or limit, an order is considered to be "at the market".
Metallurgical coal - Coal used to make steel.
Metallurgy - The study of extracting metals from their ores.
Metamorphic rocks - Rocks which have undergone a change in texture or composition as the result of heat and/or pressure.
Mill - A plant in which ore is treated and metals are recovered or prepared for smelting; also a revolving drum used for the grinding of ores in preparation for treatment. See ball mill.
Milling ore - Ore that contains sufficient valuable mineral to be treated by milling process.
Minable reserves - Ore reserves that are known to be extractable using a given mining plan.
Mineral - A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form.
N
Net profit interest - A portion of the profit remaining after all charges, including taxes and bookkeeping charges, such as depreciation, have been deducted.
Net smelter return - A share of the net revenues generated from the sale of metal produced by a mine.
Net worth - The difference between total assets and total liabilities.
NPV - Net present value. According to Investopedia: The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project.
Nugget - A small mass of precious metal, found free in nature.
Prospector finding a 21 ounce gold nugget
O
Open pit - A mine that is entirely on surface. Also referred to as open-cut or open-cast mine.
Ore - A mixture of ore minerals and gangue from which at least one of the metals can be extracted at a profit.
Orebody - A natural concentration of valuable material that can be extracted and sold at a profit.
Ore Reserves - The calculated tonnage and grade of mineralization which can be extracted profitably; classified as possible, probable and proven according to the level of confidence that can be placed in the data.
Outcrop - An exposure of rock or mineral deposit that can be seen on surface, that is, not covered by soil or water.
Copper outcrop
Overturned - Where the oldest sedimentary rock beds are lying on top of a younger beds.
Oxidation - A chemical reaction caused by exposure to oxygen that results in a change in the chemical composition of a mineral.
P
Patent - The ultimate stage of holding a mineral claim, after which no more assessment work is necessary because all mineral rights have been earned.
Pellet - A marble-sized ball of iron ore fused with clay for transportation and use in steelmaking.
Pillar - A block of solid ore or other rock left in place to structurally support the shaft, walls or roof of a mine.
Pitchblende - An important uranium ore mineral. It is black in color, possesses a characteristic greasy lustre and is highly radioactive.
Placer - A deposit of sand and gravel containing valuable metals such as gold, tin or diamonds.
Plant - A building or group of buildings in which a process or function is carried out; at a mine site it will include warehouses, hoisting equipment, compressors, maintenance shops, offices and the mill or concentrator.
Plate tectonics - A geological theory which postulates that the Earth's crust is made up of a number of rigid plates which collide, rub up against and spread out from one another.
Plunge - The vertical angle a linear geological feature makes with the horizontal plane.
Plutonic - Refers to rocks of igneous origin that have come from great depth. Porphyry - Any igneous rock in which relatively large crystals , called phenocrysts, are set in a fine-grained groundmass.
Porphyry copper - A deposit of disseminated copper minerals in or around a large body of intrusive rock. Also found as gold/copper deposits, usually low grade (0.3-0.7g/t Au) and large.
Portal - The surface entrance to a tunnel or adit.
Portfolio - A list of financial assets.
Potash - Potassium compounds mined for fertilizer and for use in the chemical industry.
Preferred shares - Shares of a limited liability company that rank ahead of common shares, but after bonds, in distribution of earnings or in claim to the company's assets in the event of liquidation. They pay a fixed dividend but normally do not have voting rights, as with common shares. It is equity on the balance sheet.
Price-to-earnings ratio - The current market price of a stock divided by the company's net earnings per share for the year.
Primary deposits - Valuable minerals deposited during the original period or periods of mineralization, as opposed to those deposited as a result of alteration or weathering.
Private placement - Sale of shares to individuals or corporations outside the normal market, at a negotiated price. Often used to raise capital for a junior exploration company.
Pro rata - In proportion, usually to ownership, income or contribution.
Profit and loss statement - The income statement of a company detailing revenues minus total costs to give total profit.
Prospect - A mining property, the value of which has not been determined by exploration.
Prospectus - A document filed with the appropriate securities commission detailing the activities and financial condition of a company seeking funds from the public through the issuance of shares.
Proven reserves - Reserves that have been sampled extensively by closely spaced diamond drill holes and developed by underground workings in sufficient detail to render an accurate estimation of grade and tonnage. Usually the term "Proven" and "Probable" reserves are used.
Pyrite - A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as "fool's gold".
Q
Quartz - Common rock-forming mineral consisting of silicon and oxygen.
Quartzite - A metamorphic rock formed by the transformation of a sandstone by heat and pressure.
R
Radioactivity - The property of spontaneously emitting alpha, beta or gamma rays by the decay of the nuclei of atoms.
Radon survey - A geochemical survey technique which detects traces of radon gas, a product of radioactivity.
Raise - A vertical or inclined underground working that has been excavated from the bottom upward. A vent raise is a vertical shaft meant for ventilation purposes.
Rare earth elements - Abundant minerals in very low concentrations found all over the globe. Hard to mine, production is mostly controlled by China which controls pricing as a consequence.
Reclamation - The restoration of a site after mining or exploration activity is completed.
Abandoned coal mine reclamation
Recovery - The percentage of valuable metal in the ore that is recovered by metallurgical treatment.
Refractory ore - Ore that resists the action of chemical reagents in the normal treatment processes and which may require pressure leaching or other means to effect the full recovery of the valuable minerals. Considered a problem.
Replacement ore - Ore formed by a process during which certain minerals have passed into solution and have been carried away, while valuable minerals from the solution have been deposited in the place of those removed.
Resource - The calculated amount of material in a mineral deposit, based on limited drill information.
Rights - In finance, a certified right to purchase treasury shares in stated quantities, prices and time limits; usually negotiable at a price which is related to the prices of the issue represented; also referred to as warrants. Rights and warrants can be bought and sold prior to their expiry date because not all shareholders wish to exercise their rights.
Rock mechanics - The study of the mechanical properties of rocks, which includes stress conditions around mine openings and the ability of rocks and underground structures to withstand these stresses.
Room-and-pillar mining - A method of mining flat-lying ore deposits in which the mined-out area, or rooms, are separated by pillars of approximately the same size.
Rotary drill - A machine that drills holes by rotating a rigid, tubular string of drill rods to which is attached a bit. Commonly used for drilling large-diameter blastholes in open-pit.
Royalty - An amount of money paid at regular intervals by the lessee or operator of an exploration or mining property to the owner of the ground. Generally based on a certain amount per tonne or a percentage of the total production or profits. Also, the fee paid for the right to use a patented process.
Run-of-mine - A term used loosely to describe ore of average grade, or ore that doesn't need crushing and can be placed on heap leach pads right away after excavating it.
S
Salting - The act of introducing metals or minerals into a deposit or samples, resulting in false assays. Done either by accident or with the intent of defrauding the public. Happened at the Bre-X scandal.
Sample - A small portion of rock or a mineral deposit taken so that the metal content can be determined by assaying.
Sandstone - A sedimentary rock consisting of grains of sand cemented together.
Sedimentary rocks - Secondary rocks formed from material derived from other rocks and laid down under water. Examples are limestone, shale and sandstone.
Seismic prospecting - A geophysical method of prospecting, utilizing knowledge of the speed of reflected sound waves in rock. Not widely used in mining, but common for oil exploration.
Semi-autogenous grinding (SAG) - A method of grinding rock into fine powder whereby the grinding media consist of larger chunks of rocks and steel balls. Often used in the word SAG mill.
Shaft - A vertical or inclined excavation in rock for the purpose of providing access to an orebody. Usually equipped with a hoist at the top, which lowers and raises a conveyance for handling workers and materials. Used for underground mining. Shafts are used when deposits go deeper than 400-500m.
Shear zone - A zone in which shearing (lateral movements) has occurred on a large scale.
Shoot - A concentration of mineral values; that part of a vein or zone carrying values of ore grade. Often referred to as ore shoot.
Prospector at a ore shoot
Short selling - The borrowing of stock from a broker in order to sell it in the hope that it may be purchased at a lower price later on.
Shrinkage stoping - A stoping method which uses part of the broken ore as a working platform and as support for the walls of the stope.
Skarn - Name for the metamorphic rocks surrounding an igneous intrusive where it comes in contact with a limestone or dolostone formation.
Slate - A metamorphic rock; the metamorphic equivalent of shale.
Solvent extraction-electrowinning (SX-EW) - A metallurgical technique, so far applied only to copper ores, in which metal is dissolved from the rock by organic solvents and recovered from solution by electrolysis.
Split - The shareholder-approved division of a company's outstanding common shares into a larger number of new common shares.
Spot price - Current delivery price of a commodity traded in the spot market.
Step-out drilling - Holes drilled to intersect a mineralization horizon or structure along strike or down dip.
Stock exchange - An organized market concerned with the buying and selling of common and preferred shares and warrants by stockbrokers who own seats on the exchange and meet membership requirements.
Stockpile - Broken ore heaped on surface, pending treatment or shipment.
Stope - An excavation in a mine from which ore is, or has been, extracted.
Rosendale Mine, NY, stope
Stop-loss order - An arrangement whereby a client gives his broker instructions to sell a stock if and when its price drops to a specified figure on the market.
Strike - The direction, or bearing from true north, of a vein or rock formation measure
on a horizontal surface. This term is commonly used to indicate that mineralized rocks are trending further along the direction of the perceived orebody.
Stringer - A narrow vein or irregular filament of a mineral or minerals traversing a rock mass.
Strip - To remove the overburden or waste rock overlying an orebody in preparation for mining by open pit methods.
Stripping ratio - The ratio of tonnes removed as waste relative to the number of tonnes of ore removed from an open-pit mine.
Strip mine - An open-pit mine, usually a coal mine, operated by removing overburden, excavating the coal seam, then returning the overburden.
Subsidiary company - A company in which the majority of shares (a controlling position) is held by another company.
Sulphide - A compound of sulphur and some other element. The host rocks in which it is found. In this case, the mineralization was formed at the same time as the host rocks. (The opposite is epigenetic.). For gold and copper, sulphide is commonly found together with oxide, both containing gold and/or copper. Usually there is an oxide layer of 10-50m near surface, followed by a much larger orebody consisting of sulphide, going much deeper (200-1000m).
T
Tailings - Material rejected from a mill after most of the recoverable valuable minerals have been extracted.
Tailings pond - A low-lying depression used to confine tailings, the prime function of which is to allow enough time for heavy metals to settle out or for cyanide to be destroyed before water is discharged into the local watershed. Sometimes tailings ponds are contained by dams, and when a dam breaks, like at Mount Polley recently, the result is usually a large tailings spill, which causes an environmental disaster and could cost hundreds of millions of dollars to clean up.
Mount Polley tailings dam disaster
Thickener - A large, round tank used in milling operations to separate solids from liquids; clear fluid overflows from the tank and rock particles sink to the bottom.
Trench - A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure.
Trend - The direction, in the horizontal plane, of a linear geological feature, such as an ore zone, measured from true north. Trends can be signaled on different scales, from a project scale to a district scale or even larger:
Humboldt/Getchell trends
Tunnel - A horizontal underground opening, open to the atmosphere at both ends.
Tunnel-boring-machine - A machine used to excavate a tunnel through soil or rock by mechanical means as opposed to drilling and blasting. Rarely used in mining.
U
Umpire sample or assay - An assay made by a third party to provide a basis for settling disputes between buyers and sellers of ore.
Uncut value - The actual assay value of a core sample as opposed to a cut value which has been reduced by some arbitrary formula. Uncut values are rare as they take into full account the earlier described nugget effects, which is often misleading. The Red Lake district is an exception as the nugget effect is quite common in drill results (for example Pretium).
Underground mine - The opposed and more expensive type versus an open pit mine. Used in case of high grade sub surface deposits.
Underwriter - A broker or other financial institution who made the commitment to purchase a block of shares at a specified price. Used at bought deals.
Uraninite - A uranium mineral with a high uranium oxide content. Frequently found in pegmatite dykes.
Uranium - A radioactive, silvery-white, metallic element.
V
Vein - A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.
Visible gold - Native gold which is discernible, in a hand specimen, to the unaided eye.
VMS - Volcanogenic massive sulfide deposits, massive sulfide ore deposits, created by volcanic associated hydrothermal activity in former submarine environments. VMS deposits are often found in clusters, containing copper, gold and zinc.
VMS districts on same scale. Little squares are deposits, with a 5km diameter colored circle around them
Volcanic rocks - Igneous rocks formed from magma that has flowed out or has been violently ejected from a volcano.
Volcanogenic - A term used to describe the volcanic origin of mineralization.
Voting right - The stockholder's right to vote in the affairs of the company. Most common shares have one vote each. Preferred stock usually has the right to vote when preferred dividends are in default.
Vug - A small cavity in a rock, frequently lined with well-formed crystals. Amethyst commonly forms in these cavities.
W
Wall rocks - Rock units on either side of an orebody. The hangingwall and footwall rocks of an orebody.
Warrant - See Rights.
Waste - Unmineralized, or sometimes mineralized, rock that is not minable at a profit.
Working capital - The liquid resources a company has to meet day-to-day expenses of operation; defined as the excess of current assets over current liabilities.
Writeoffs - Amounts deducted from a company's reported profit for depreciation or preproduction costs. Writeoffs are not an out-of-pocket expense, but reduce the amount of taxable profit. Also known as write-downs or impairments.
X
Xenolith - A fragment of country rock enclosed in an intrusive rock.
Xenotime - host rock of rare earth minerals
Y
Yield - The current annual dividend rate expressed as a percentage of the current market price of the stock.
Z
Zone - An area of distinct mineralization.
Zone of oxidation - The upper portion of an orebody that has been oxidized.
ASARCO Mission Mine, Arizona, US
Part 1: Useful sources to start with
As I am no geologist, mining engineer, mining company executive, etc, it seemed useful to refer to other, far more capable sources to get a solid, basic understanding of mining. The website of one of the largest gold miners, Newmont, does an excellent job in explaining the basics of the mining process, and also gives information on gold, silver and copper. To get a visual impression of things like for example exploration, or open pit mining or underground mining, I would suggest to just google these terms for images, and you will be redirected to websites of mining companies in no time, if you check all available information out you will see what those companies are about. Make sure you google at least for one explorer, one developer, one under construction and one producer as well, in order to see the differences of those stages of development.
Another introduction is the Investment University by Sprott Global, a resource focused investment firm, who provides a series of videos.
When you have read and watched all this and have some idea, I would like to recommend Geo-Insights from respected economic geologist Brent Cook, to learn more about geology and related subjects, although it could be too technical at times for a retail investor. Even more technical, bordering to the or even outright scientific, are these papers on Brent's website. Here's another disclaimer: I don't recommend any stockpicks being made by Brent in Geo-Insights, or Sprott Global in their materials, and I don't recommend Newmont.
In addition you can read My Guide Chapter 1-5 and my articles to see my opinion on things.
Besides all this, there are always books to be found on mining and mining investments on Amazon if you are really interested.
Going through the dictionary in Part 2 is also a way of getting familiar with a lot of industry definitions.
Part 2: Dictionary Of Mining And Investing In Junior Miners
Maybe you are already experienced as a junior miner stockpicker, or maybe you are a complete novice, who wants to find out more about this exciting sector anyway. I decided to aggregate a large number of commonly used words in mining and mining investing for you, so you would not have to miss out on any information when reading about mining companies or related issues. I'm not pretending to be complete, as there is for example the Infomine dictionary with 27.000 words, but I believe I have gathered the most used ones here in this list, and added some as well. My list is based on a larger list taken from the website of the well known mining newspaper the Northern Miner, which can be found here from the source. If you think you miss certain words or terms commonly used in the sector, just let me know and I will be happy to add it to my list.
The technical mining terms aren't really needed to do due diligence yourself, but you will find them frequently showing up in news releases, so in that case you are a bit prepared to know what companies are talking about. Their geologists or engineers can get carried away sometimes. The links provided to the images I used were only meant to refer to the source, in no case are these sources recommended by me in any way.
My list of most used words in mining and investing in junior miners
A
Adit - An opening driven horizontally into the side of a mountain or hill for providing access to a mineral deposit. It is basically a tunnel:
Maenporth beach adit, South West England
Aeromagnetic survey - A geophysical survey using a magnetometer aboard, or towed behind, an aircraft. The endresult is a set of data, and a map indicating different zones of magnetic anomalies:
Aeromagnetic survey, for Pelé Mountain
This is usually one of the first things an exploration company conducts on its property, together with taking grab samples by hand in potentially mineralized areas at surface or in existing adits.
Airborne survey - A survey made from an aircraft to obtain photographs, or measure magnetic properties, radioactivity, etc. This could also lead to a set of data, and a map indicating different zones of magnetic anomalies
All In Sustaining Cost - AISC, consisting of operational cash cost, exploration, G&A, royalties and sustaining capital. No capex and no taxes included.
Alloy - A compound of two or more metals.
Alteration - Any physical or chemical change in a rock or mineral subsequent to its formation. Milder and more localized than metamorphism.
Amorphous - A term applied to rocks or minerals that possess no definite crystal structure or form, such as amorphous carbon.
Amortization - The gradual and systematic writing off of a balance in an account over an appropriate period.
Annual report - The formal financial statements and report on operations issued by a corporation to its shareholders after its fiscal year-end.
Anode - A rectangular plate of metal cast in a shape suitable for refining by the electrolytic process, well known for the production of copper.
Copper anodes
Anomaly - Any departure from the norm which may indicate the presence of mineralization in the underlying bedrock.
Anthracite - A hard, black coal containing a high percentage of fixed carbon and a low percentage of volatile matter.
Assay - A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained.
Authorized capital - see capital stock.
B
Backfill - Waste material used to fill the void created by mining an orebody.
Backwardation - A situation when the cash or spot price of a metal stands at a premium over the price of the metal for delivery at a forward date. The opposite of contango.
Balance sheet - A formal statement of the financial position of a company on a particular day, normally presented to shareholders once a year.
Ball mill - A steel cylinder filled with steel balls into which crushed ore is fed. The ball mill is rotated, causing the balls to cascade and grind the ore.
Copper Mountain ball mill
Basement rocks - The underlying or older rock mass. Often refers to rocks of Precambrian age which may be covered by younger rocks.
Base camp - Centre of operations from which exploration activity is conducted.
Base metal - Any non-precious metal (eg. copper, lead, zinc, nickel, etc.).
Bear market - Term used to describe market conditions when share prices are declining.
Bit - The cutting end of a drill frequently made of an extremely hard material such as industrial diamonds or tungsten carbide.
A worker checks a drill bit of the T130 drill in front of the Precision Drilling machine, which was used to dig a tunnel to extract the 33 trapped miners from a copper and gold mine near in Copiapo
Blasthole - A drill hole in a mine that is filled with explosives in order to blast loose a quantity of rock.
Blister copper - A crude form of copper (assaying about 99%) produced in a smelter, which requires further refining before being used for industrial purposes.
Block caving - An inexpensive method of mining in which large blocks of ore are undercut, causing the ore to break or cave under its own weight.
Bond - An agreement to pay a certain amount of interest over a given period of time.
Breccia - A rock in which angular fragments are surrounded by a mass of fine-grained minerals.
Breccia in limestone
Bulk mining - Any large-scale, mechanized method of mining involving many thousands of tonnes of ore being brought to surface per day.
Bulk sample - A large sample of mineralized rock, frequently hundreds or thousands of tonnes, selected in such a manner as to be representative of the potential orebody being sampled. Used to determine metallurgical characteristics. A bulk sample is generally used when standard drilling isn't enough to determine grades and amount of mineralization of an orebody. This could be necessary at for example complex vein deposits, or deposits with very irregular mineralization consisting of numerous nuggets and low grade zones (known as "nugget effect" or "nuggety").
Bullion - Metal formed into bars or ingots.
Bull market - Term used to describe financial market conditions when share prices are going up.
Byproduct - A secondary metal or mineral product recovered in the milling process. This happens quite frequently, a deposit rarely consists of just one metal or mineral. Base metal byproducts are frequently sold by off take agreements, precious metal byproducts are frequently sold by streams.
C
Capex - Capital expenditures. These are the construction costs of a mine, and have to be arranged before the start of construction by financings. As a rule of thumb, this happens by a 2/3-1/3 debt/equity financing on separate occasions. As another rule of thumb: the after tax NPV should be at least equal to capex.
Capitalization - A financial term used to describe the value financial markets put on a company. Determined by multiplying the number of outstanding shares of a company by the current stock price. Commonly known as market capitalization.
Carbon-in-pulp - In short CIP, a method of recovering gold and silver from pregnant cyanide solutions by adsorbing the precious metals to granules of activated carbon, which are typically ground up coconut shells. Method uses two tanks. Much more commonly used is the variation carbon-in-leach, or in short just CIL which combines the CIP method in one tank.
Cash Cost - CC, the operational cash cost, which just means costs of mining and processing ore. Also called CC1.
Cash flow - The net of the inflow and outflow of cash during an accounting period. Does not account for depreciation or bookkeeping write-offs which do not involve an actual cash outlay.
Cathode - A rectangular plate of metal, produced by electrolytic refining, which is melted into commercial shapes such as wirebars, billets, ingots, etc.
Channel sample - A sample composed of pieces of vein or mineral deposit that have been cut out of a small trench or channel, usually about 10 cm wide and 2 cm deep.
Chip sample - A method of sampling a rock exposure whereby a regular series of small chips of rock is broken off along a line across the face.
Chromite - The chief ore mineral of chromium.
Claim - A portion of land held either by a prospector or a mining company. In Canada, the common size is 1,320 ft. (about 400 m) square, or 40 acres (about 16 ha).
Clay - A fine-grained material composed of hydrous aluminum silicates.
Column flotation - A milling process, carried out in a tall cylindrical column, whereby valuable minerals are separated from gangue minerals based on their wetability properties.
Common stock - Shares in a company which have full voting rights which the holders use to control the company in common with each other. There is no fixed or assured dividend as with preferred shares, which have first claim on the distribution of a company's earnings or assets.
Concentrate - A fine, powdery product of the milling process containing a high percentage of valuable metal.
Newcrest; loading copper concentrate
Concentrator - A milling plant that produces a concentrate of the valuable minerals or metals. Further treatment is required to recover the pure metal.
Contango - A situation in which the price of a metal for forward or future delivery stands at a premium over the cash or spot price of the metal. The opposite of backwardation.
Core - The long cylindrical piece of rock, about two inches in diameter, brought to surface by diamond drilling. Mostly referred to as drill core.
Drill cores
Core barrel - That part of a string of tools in a diamond drill hole in which the core specimen is collected.
Corporate tax - According to Investopedia: A levy placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against profits earned by businesses during a given taxable period; they are generally applied to companies' operating earnings, after expenses.
Current assets - Assets of company which can and are likely to be converted into cash within a year. Includes cash, marketable securities, accounts receivable and supplies. Is used to calculate working capital (= current assets minus current liabilities).
Current liabilities - A company's debts that are payable within a year's time.
Custom smelter - A smelter which processes concentrates from independent mines. Concentrates may be purchased or the smelter may be contracted to do the processing for the independent company.
Cut-and-fill - A method of stoping in which ore is removed in slices, or lifts, and then the excavation is filled with rock or other waste material (backfill), before the subsequent slice is extracted.
Cyanidation - A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving it in a weak cyanide solution. May be carried out in tanks inside a mill or in heaps of ore out of doors.
Cyanide - A chemical species containing carbon and nitrogen used to dissolve gold and silver from ore.
D
Day order - An order to buy or sell shares, good only on the day the order was entered.
DCF analysis - Discounted Cash Flow analysis. According to Investopedia: A valuation method used to estimate the attractiveness of an investment opportunity. Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.
Debenture - See bonds.
Debt financing - Method of raising capital whereby companies borrow money from a lending institution.
Decline - A sloping underground opening for machine access from level to level or from surface; also called a ramp.
Deferred charges - Expenses incurred but not charged against the current year's operation.
Depletion - An accounting device, used primarily in tax computations. It recognizes the consumption of an ore deposit through production, a mine's principal asset.
Depreciation - The periodic, systematic charging to expense of plant assets reflecting the decline in economic potential of the assets.
Development - Underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting and raising. In Canada this is often described as "exploration" in financial statements as this is eligible for tax deductions and development isn't.
Development drilling - drilling to establish accurate estimates of mineral reserves. Also called infill drilling.
Diamond - The hardest known mineral, composed of pure carbon; low-quality diamonds are used to make bits for diamond drilling in rock.
Diamond drill - A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, two cm or more in diameter.
Diamond drill
Dilution (mining) - Rock that is , by necessity, removed along with the ore in the mining process, subsequently lowering the grade of the ore. This is a very important factor with vein deposits, as veins are frequently too narrow for standard mining equipment (2-3m).
Dilution (of shares) - A decrease in the value of a company's share caused by the issue of new shares. This happens often in the case of financings (placements,offerings, bought deals).
Dip - The angle at which a vein, structure or rock bed is inclined from the horizontal as measured at right angles to the strike.
Discount - The minimum price below the par value at which treasury shares may legally be sold. Also used for DCF analysis, representing the hypothetical return of capital invested elsewhere, at the same time indicating the amount of risk of a project.
Dividend - Cash or stock awarded to preferred and common shareholders at the discretion of the company's board of directors.
Doré bar - The final saleable product of a gold mine. Usually consisting of gold and silver. It's a rough version coming from the mine's processing plant, which has to be refined at a smelter afterwards to high purity gold (> 92.5%).
Doré gold bar
Drift - A horizontal underground opening that follows along the length of a vein or rock formation as opposed to a crosscut which crosses the rock formation.
Due diligence - The degree of care and caution required before making a decision; loosely, a financial and technical investigation to determine whether an investment is sound.
Dump - A pile of broken rock or ore on surface. Also referred to as stockpiled ore or waste.
Dyke - A long and relatively thin body of igneous rock that, while in the molten state, intruded a fissure in older rocks.
E
Electrolytic refining - The process of purifying metal ingots that are suspended as anodes in an electrolytic bath, alternated with refined sheets of the same metal which act as starters or cathodes.
EM survey - A geophysical survey method which measures the electromagnetic properties of rocks.
Environmental impact study - A written report, compiled prior to a production decision, that examines the effects proposed mining activities will have on the natural surroundings. This can often create large hurdles and delays in permitting for mega projects (capex over $1-2B), as environmental activists or locals opposing the project can easily protest against it, and come up with for example endangered species or wildlife in waterbodies, which has to be ruled out or mitigated first by the mining company etcetc.
Epithermal deposit - A mineral deposit consisting of veins and replacement bodies, usually in volcanic or sedimentary rocks, containing precious metals or, more rarely, base metals.
Equity financing - The provision of funds by buying shares.
Erosion - The breaking down and subsequent removal of either rock or surface material by wind, rain, wave action, freezing and thawing and other processes.
Escrowed shares - Shares deposited in trust pending fulfilment of certain conditions, and not ordinarily available to trading until released.
Ex-dividend - On stocks selling "ex-dividend", the seller retains the right to a pending dividend payment.
Exploration - Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
Exploration drilling
F
Fault - A break in the Earth's crust caused by tectonic forces which have moved the rock on one side with respect to the other.
Ferrous - Containing iron.
Fine gold - Fineness is the proportion of pure gold or silver in jewelry or bullion expressed in parts per thousand. Thus, 925 fine gold indicates 925 parts out of 1,000, or 92.5% is pure gold.
Fixed Assets - Possessions such as buildings, machinery and land which, as opposed to current assets, are unlikely to be converted into cash during the normal business cycle. Resources and reserves are also fixed assets, and all mentioned assets are prone to fire sale discounts in case of a bankruptcy procedure.
Youga gold mine, Burkina Faso
Flotation - A milling process in which valuable mineral particles are induced to become attached to bubbles and float as others sink.
Flowsheet - An illustration showing the sequence of operations, step by step, by which ore is treated in a milling, concentration or smelting process.
Flow sheet
Flow-through shares - Shares in an exploration company that can be sold after a 4 month and one day holding period for Canadian listed companies.
G
Geiger counter - An instrument used to measure the radioactivity that emanates from certain minerals by means of a Geiger-Mueller tube.
Geochemistry - The study of the chemical properties of rocks.
Geology - The science concerned with the study of the rocks which compose the Earth.
Geophysics - The study of the physical properties of rocks and minerals.
Geophysical survey - A scientific method of prospecting that measures the physical properties of rock formations. Common properties investigated include magnetism, specific gravity, electrical conductivity and radioactivity.
Gold loan - A form of debt financing whereby a potential gold producer borrows gold from a lending institution, sells the gold on the open market, uses the cash for mine development, then pays back the gold from actual mine production.
Grab sample - A sample from a rock outcrop that is assayed to determine if valuable elements are contained in the rock. A grab sample is not intended to be representative of the deposit, and usually the best-looking material is selected.
Most reconnaissance mapping will involve grab sampling of rocks that each weigh between 500 grams (1.1 pounds) to 1 kilogram (2.2 pounds). Amanda Geard Photos
Granite - A coarse-grained intrusive igneous rock consisting of quartz, feldspar and mica.
Greenstone belt - An area underlain by metamorphosed volcanic and sedimentary rocks, usually in a continental shield. Well-known as very prospective areas for gold mineralization.
Greenstone belts worldwide
Gross value royalty - A share of gross revenue from the sale of minerals from a mine. These are the worst kind of royalties as they eat away lots of profits, but they are rare. Most common are net smelter royalties these days, taking a percentage of profits after smelter costs.
Gypsum - A sedimentary rock consisting of hydrated calcium sulphate.
Gyratory crusher - A machine that crushes ore between an eccentrically mounted crushing cone and a fixed crushing throat. Typically has a higher capacity than a jaw crusher.
H
Hangingwall - The rock on the upper side of a vein or ore deposit.
Head grade - The average grade of ore fed into a mill. This is usually the grade of ore referred to in economical studies, and is usually 15-20% below resource grades.
Heap leaching - A process whereby valuable metals, usually gold and silver, are leached from a heap, or pad, of crushed ore by leaching solutions percolating down through the heap and collected from a sloping, impermeable liner below the pad.
Heap leach pad being filled with crushed ore
Hedging - Taking a buy or sell position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change. This is also done by financiers of mining projects, especially precious metals miners, and the resulting hedging obligation is called a hedgebook.
Hematite - An oxide of iron, and one of that metal's most common ore minerals.
High grade - Rich ore. As a verb, it refers to selective mining of the best ore in a deposit. High grading operations and deposits is done frequently since 2013 and onwards, in order to operate more efficiently, save costs and optimize profitability.
Holding company - A corporation engaged principally in holding a controlling interest in one or more other companies.
Host rock - The rock surrounding an ore deposit.
Hydrometallurgy - The treatment of ore by wet processes, such as leaching, resulting in the solution of a metal and its subsequent recovery. This is often a critical component at heap leach mining and in situ recovery mining (ISR), together with hydrogeology.
Hydrothermal - Relating to hot fluids circulating in the earth's crust.
I
Igneous rocks - Rocks formed by the solidification of molten material from far below the earth's surface.
Induced polarization - A method of ground geophysical surveying employing an electrical current to determine indications of mineralization.
Industrial minerals - Non-metallic, non-fuel minerals used in the chemical and manufacturing industries. Examples are asbestos, gypsum, salt, graphite, mica, gravel, building stone and talc.
Initial public offering - The first sale of shares to the public, usually by subscription from a group of investment dealers. In short: IPO.
Institutional investors - Pension funds and mutual funds, managing money for a large number of individual investors. Also known as "big money", "insto's" or "strong hands".
Intrusive - A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded upon the surface.
IRR - Internal rate of return. According to Investopedia: The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As a rule of thumb: for base metal projects an after tax IRR of at least 15% is preferred by financiers of mining projects, for precious metal projects an after tax IRR of at least 20% is preferred by financiers, at current metal prices.
J
Jaw crusher - A machine in which rock is broken by the action of steel plates.
K
Kimberlite - A variety of peridotite; the most common host rock of diamonds.
L
Laterite - A residual soil, ususally found in tropical countries, out of which the silica has been leached. May form orebodies of iron, nickel, bauxite and manganese. In West Africa, lots of precious metals and especially gold are found in this soil, and can be washed out by hand, so lots of local artisanal miners earn a living with this mining method.
Artisanal mining in laterite deposits
Leachable - Extractable by chemical solvents.
Leaching - A chemical process for the extraction of valuable minerals from ore; also, a natural process by which ground waters dissolve minerals, thus leaving the rock with a smaller proportion of some of the minerals than it contained originally. See heap leach.
Lens - Generally used to describe a body of ore that is thick in the middle and tapers towards the ends.
Level - The horizontal openings on a working horizon in a mine; it is customary to work mines from a shaft, establishing levels at regular intervals, generally about 50 metres or more apart.
Limestone - A bedded, sedimentary deposit consisting chiefly of calcium carbonate.
Limit order - An order made by a client to a broker to buy or sell shares at a specified price or better.
Lode - A mineral deposit in solid rock.
Logging - The process of recording geological observations of drill core either on paper or on computer disk.
London fix - The twice-daily bidding session held by five dealing companies to set the gold price. There are also daily London fixes to set the prices of other precious metals. It ended recently in March 2015.
London Metals Exchange - A major bidding market for base metals, which operates daily in London.
Long position - Securities owned outright or carried on margin.
Long ton - 2,240 lbs. avoirdupois (compared with a short ton, which is 2,000 lbs.). In mining, long tonnes are common.
M
Mafic - Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.
Magma - The molten material deep in the Earth from which rocks are formed.
Magmatic segregation - An ore-forming process whereby valuable minerals are concentrated by settling out of a cooling magma.
Magnetic gradient survey - A geophysical survey using a pair of magnetometers a fixed distance apart, to measure the difference in the magnetic field with height above the ground.
Magnetic survey - A geophysical survey that measures the intensity of the Earth's magnetic field. See aeromagnetic survey.
Magnetite - Black, magnetic iron ore, an iron oxide.
Map-staking - A form of claim-staking practised in some jurisdictions whereby claims are staked by drawing lines around the claim on claim maps at a government office.
Marble - A metamorphic rock derived from the recrystallization of limestone under intense heat and pressure.
Margin - Cash deposited with a broker as partial payment of the purchase price for any type of listed stock. The stock is held by the broker as security for the loan. A margin call is, according to Investopedia: when you would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets.
Marginal deposit - An orebody of minimal profitability.
Market order - An order to buy or sell at the best price available. In absence of any specified price or limit, an order is considered to be "at the market".
Metallurgical coal - Coal used to make steel.
Metallurgy - The study of extracting metals from their ores.
Metamorphic rocks - Rocks which have undergone a change in texture or composition as the result of heat and/or pressure.
Mill - A plant in which ore is treated and metals are recovered or prepared for smelting; also a revolving drum used for the grinding of ores in preparation for treatment. See ball mill.
Milling ore - Ore that contains sufficient valuable mineral to be treated by milling process.
Minable reserves - Ore reserves that are known to be extractable using a given mining plan.
Mineral - A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form.
N
Net profit interest - A portion of the profit remaining after all charges, including taxes and bookkeeping charges, such as depreciation, have been deducted.
Net smelter return - A share of the net revenues generated from the sale of metal produced by a mine.
Net worth - The difference between total assets and total liabilities.
NPV - Net present value. According to Investopedia: The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project.
Nugget - A small mass of precious metal, found free in nature.
Prospector finding a 21 ounce gold nugget
O
Open pit - A mine that is entirely on surface. Also referred to as open-cut or open-cast mine.
Ore - A mixture of ore minerals and gangue from which at least one of the metals can be extracted at a profit.
Orebody - A natural concentration of valuable material that can be extracted and sold at a profit.
Ore Reserves - The calculated tonnage and grade of mineralization which can be extracted profitably; classified as possible, probable and proven according to the level of confidence that can be placed in the data.
Outcrop - An exposure of rock or mineral deposit that can be seen on surface, that is, not covered by soil or water.
Copper outcrop
Overturned - Where the oldest sedimentary rock beds are lying on top of a younger beds.
Oxidation - A chemical reaction caused by exposure to oxygen that results in a change in the chemical composition of a mineral.
P
Patent - The ultimate stage of holding a mineral claim, after which no more assessment work is necessary because all mineral rights have been earned.
Pellet - A marble-sized ball of iron ore fused with clay for transportation and use in steelmaking.
Pillar - A block of solid ore or other rock left in place to structurally support the shaft, walls or roof of a mine.
Pitchblende - An important uranium ore mineral. It is black in color, possesses a characteristic greasy lustre and is highly radioactive.
Placer - A deposit of sand and gravel containing valuable metals such as gold, tin or diamonds.
Plant - A building or group of buildings in which a process or function is carried out; at a mine site it will include warehouses, hoisting equipment, compressors, maintenance shops, offices and the mill or concentrator.
Plate tectonics - A geological theory which postulates that the Earth's crust is made up of a number of rigid plates which collide, rub up against and spread out from one another.
Plunge - The vertical angle a linear geological feature makes with the horizontal plane.
Plutonic - Refers to rocks of igneous origin that have come from great depth. Porphyry - Any igneous rock in which relatively large crystals , called phenocrysts, are set in a fine-grained groundmass.
Porphyry copper - A deposit of disseminated copper minerals in or around a large body of intrusive rock. Also found as gold/copper deposits, usually low grade (0.3-0.7g/t Au) and large.
Portal - The surface entrance to a tunnel or adit.
Portfolio - A list of financial assets.
Potash - Potassium compounds mined for fertilizer and for use in the chemical industry.
Preferred shares - Shares of a limited liability company that rank ahead of common shares, but after bonds, in distribution of earnings or in claim to the company's assets in the event of liquidation. They pay a fixed dividend but normally do not have voting rights, as with common shares. It is equity on the balance sheet.
Price-to-earnings ratio - The current market price of a stock divided by the company's net earnings per share for the year.
Primary deposits - Valuable minerals deposited during the original period or periods of mineralization, as opposed to those deposited as a result of alteration or weathering.
Private placement - Sale of shares to individuals or corporations outside the normal market, at a negotiated price. Often used to raise capital for a junior exploration company.
Pro rata - In proportion, usually to ownership, income or contribution.
Profit and loss statement - The income statement of a company detailing revenues minus total costs to give total profit.
Prospect - A mining property, the value of which has not been determined by exploration.
Prospectus - A document filed with the appropriate securities commission detailing the activities and financial condition of a company seeking funds from the public through the issuance of shares.
Proven reserves - Reserves that have been sampled extensively by closely spaced diamond drill holes and developed by underground workings in sufficient detail to render an accurate estimation of grade and tonnage. Usually the term "Proven" and "Probable" reserves are used.
Pyrite - A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as "fool's gold".
Q
Quartz - Common rock-forming mineral consisting of silicon and oxygen.
Quartzite - A metamorphic rock formed by the transformation of a sandstone by heat and pressure.
R
Radioactivity - The property of spontaneously emitting alpha, beta or gamma rays by the decay of the nuclei of atoms.
Radon survey - A geochemical survey technique which detects traces of radon gas, a product of radioactivity.
Raise - A vertical or inclined underground working that has been excavated from the bottom upward. A vent raise is a vertical shaft meant for ventilation purposes.
Rare earth elements - Abundant minerals in very low concentrations found all over the globe. Hard to mine, production is mostly controlled by China which controls pricing as a consequence.
Reclamation - The restoration of a site after mining or exploration activity is completed.
Abandoned coal mine reclamation
Recovery - The percentage of valuable metal in the ore that is recovered by metallurgical treatment.
Refractory ore - Ore that resists the action of chemical reagents in the normal treatment processes and which may require pressure leaching or other means to effect the full recovery of the valuable minerals. Considered a problem.
Replacement ore - Ore formed by a process during which certain minerals have passed into solution and have been carried away, while valuable minerals from the solution have been deposited in the place of those removed.
Resource - The calculated amount of material in a mineral deposit, based on limited drill information.
Rights - In finance, a certified right to purchase treasury shares in stated quantities, prices and time limits; usually negotiable at a price which is related to the prices of the issue represented; also referred to as warrants. Rights and warrants can be bought and sold prior to their expiry date because not all shareholders wish to exercise their rights.
Rock mechanics - The study of the mechanical properties of rocks, which includes stress conditions around mine openings and the ability of rocks and underground structures to withstand these stresses.
Room-and-pillar mining - A method of mining flat-lying ore deposits in which the mined-out area, or rooms, are separated by pillars of approximately the same size.
Rotary drill - A machine that drills holes by rotating a rigid, tubular string of drill rods to which is attached a bit. Commonly used for drilling large-diameter blastholes in open-pit.
Royalty - An amount of money paid at regular intervals by the lessee or operator of an exploration or mining property to the owner of the ground. Generally based on a certain amount per tonne or a percentage of the total production or profits. Also, the fee paid for the right to use a patented process.
Run-of-mine - A term used loosely to describe ore of average grade, or ore that doesn't need crushing and can be placed on heap leach pads right away after excavating it.
S
Salting - The act of introducing metals or minerals into a deposit or samples, resulting in false assays. Done either by accident or with the intent of defrauding the public. Happened at the Bre-X scandal.
Sample - A small portion of rock or a mineral deposit taken so that the metal content can be determined by assaying.
Sandstone - A sedimentary rock consisting of grains of sand cemented together.
Sedimentary rocks - Secondary rocks formed from material derived from other rocks and laid down under water. Examples are limestone, shale and sandstone.
Seismic prospecting - A geophysical method of prospecting, utilizing knowledge of the speed of reflected sound waves in rock. Not widely used in mining, but common for oil exploration.
Semi-autogenous grinding (SAG) - A method of grinding rock into fine powder whereby the grinding media consist of larger chunks of rocks and steel balls. Often used in the word SAG mill.
Shaft - A vertical or inclined excavation in rock for the purpose of providing access to an orebody. Usually equipped with a hoist at the top, which lowers and raises a conveyance for handling workers and materials. Used for underground mining. Shafts are used when deposits go deeper than 400-500m.
Shear zone - A zone in which shearing (lateral movements) has occurred on a large scale.
Shoot - A concentration of mineral values; that part of a vein or zone carrying values of ore grade. Often referred to as ore shoot.
Prospector at a ore shoot
Short selling - The borrowing of stock from a broker in order to sell it in the hope that it may be purchased at a lower price later on.
Shrinkage stoping - A stoping method which uses part of the broken ore as a working platform and as support for the walls of the stope.
Skarn - Name for the metamorphic rocks surrounding an igneous intrusive where it comes in contact with a limestone or dolostone formation.
Slate - A metamorphic rock; the metamorphic equivalent of shale.
Solvent extraction-electrowinning (SX-EW) - A metallurgical technique, so far applied only to copper ores, in which metal is dissolved from the rock by organic solvents and recovered from solution by electrolysis.
Split - The shareholder-approved division of a company's outstanding common shares into a larger number of new common shares.
Spot price - Current delivery price of a commodity traded in the spot market.
Step-out drilling - Holes drilled to intersect a mineralization horizon or structure along strike or down dip.
Stock exchange - An organized market concerned with the buying and selling of common and preferred shares and warrants by stockbrokers who own seats on the exchange and meet membership requirements.
Stockpile - Broken ore heaped on surface, pending treatment or shipment.
Stope - An excavation in a mine from which ore is, or has been, extracted.
Rosendale Mine, NY, stope
Stop-loss order - An arrangement whereby a client gives his broker instructions to sell a stock if and when its price drops to a specified figure on the market.
Strike - The direction, or bearing from true north, of a vein or rock formation measure
on a horizontal surface. This term is commonly used to indicate that mineralized rocks are trending further along the direction of the perceived orebody.
Stringer - A narrow vein or irregular filament of a mineral or minerals traversing a rock mass.
Strip - To remove the overburden or waste rock overlying an orebody in preparation for mining by open pit methods.
Stripping ratio - The ratio of tonnes removed as waste relative to the number of tonnes of ore removed from an open-pit mine.
Strip mine - An open-pit mine, usually a coal mine, operated by removing overburden, excavating the coal seam, then returning the overburden.
Subsidiary company - A company in which the majority of shares (a controlling position) is held by another company.
Sulphide - A compound of sulphur and some other element. The host rocks in which it is found. In this case, the mineralization was formed at the same time as the host rocks. (The opposite is epigenetic.). For gold and copper, sulphide is commonly found together with oxide, both containing gold and/or copper. Usually there is an oxide layer of 10-50m near surface, followed by a much larger orebody consisting of sulphide, going much deeper (200-1000m).
T
Tailings - Material rejected from a mill after most of the recoverable valuable minerals have been extracted.
Tailings pond - A low-lying depression used to confine tailings, the prime function of which is to allow enough time for heavy metals to settle out or for cyanide to be destroyed before water is discharged into the local watershed. Sometimes tailings ponds are contained by dams, and when a dam breaks, like at Mount Polley recently, the result is usually a large tailings spill, which causes an environmental disaster and could cost hundreds of millions of dollars to clean up.
Mount Polley tailings dam disaster
Thickener - A large, round tank used in milling operations to separate solids from liquids; clear fluid overflows from the tank and rock particles sink to the bottom.
Trench - A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure.
Trend - The direction, in the horizontal plane, of a linear geological feature, such as an ore zone, measured from true north. Trends can be signaled on different scales, from a project scale to a district scale or even larger:
Humboldt/Getchell trends
Tunnel - A horizontal underground opening, open to the atmosphere at both ends.
Tunnel-boring-machine - A machine used to excavate a tunnel through soil or rock by mechanical means as opposed to drilling and blasting. Rarely used in mining.
U
Umpire sample or assay - An assay made by a third party to provide a basis for settling disputes between buyers and sellers of ore.
Uncut value - The actual assay value of a core sample as opposed to a cut value which has been reduced by some arbitrary formula. Uncut values are rare as they take into full account the earlier described nugget effects, which is often misleading. The Red Lake district is an exception as the nugget effect is quite common in drill results (for example Pretium).
Underground mine - The opposed and more expensive type versus an open pit mine. Used in case of high grade sub surface deposits.
Underwriter - A broker or other financial institution who made the commitment to purchase a block of shares at a specified price. Used at bought deals.
Uraninite - A uranium mineral with a high uranium oxide content. Frequently found in pegmatite dykes.
Uranium - A radioactive, silvery-white, metallic element.
V
Vein - A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.
Visible gold - Native gold which is discernible, in a hand specimen, to the unaided eye.
VMS - Volcanogenic massive sulfide deposits, massive sulfide ore deposits, created by volcanic associated hydrothermal activity in former submarine environments. VMS deposits are often found in clusters, containing copper, gold and zinc.
VMS districts on same scale. Little squares are deposits, with a 5km diameter colored circle around them
Volcanic rocks - Igneous rocks formed from magma that has flowed out or has been violently ejected from a volcano.
Volcanogenic - A term used to describe the volcanic origin of mineralization.
Voting right - The stockholder's right to vote in the affairs of the company. Most common shares have one vote each. Preferred stock usually has the right to vote when preferred dividends are in default.
Vug - A small cavity in a rock, frequently lined with well-formed crystals. Amethyst commonly forms in these cavities.
W
Wall rocks - Rock units on either side of an orebody. The hangingwall and footwall rocks of an orebody.
Warrant - See Rights.
Waste - Unmineralized, or sometimes mineralized, rock that is not minable at a profit.
Working capital - The liquid resources a company has to meet day-to-day expenses of operation; defined as the excess of current assets over current liabilities.
Writeoffs - Amounts deducted from a company's reported profit for depreciation or preproduction costs. Writeoffs are not an out-of-pocket expense, but reduce the amount of taxable profit. Also known as write-downs or impairments.
X
Xenolith - A fragment of country rock enclosed in an intrusive rock.
Xenotime - host rock of rare earth minerals
Y
Yield - The current annual dividend rate expressed as a percentage of the current market price of the stock.
Z
Zone - An area of distinct mineralization.
Zone of oxidation - The upper portion of an orebody that has been oxidized.
ASARCO Mission Mine, Arizona, US
