Myth: The bigger the mine, the bigger the environmental impact and risk. Fact: A larger mine will attract better management and will have more financial power to do an outstanding job. The environmental impact and risk can be properly managed and detailed through an initial, comprehensive feasibility study allowing for contributions from the local communities and governments. A mine plan can be developed with the interests of safety and protection of the environment long before the first earth moving machine strikes the ground.
Myth: Small companies will not be able to do a good job. Fact: In large organizations, reviews and approvals take time which can slow the technical design process. As such, small companies often attract very experienced management with strong technical backgrounds. In addition, the best experts are working for consulting groups where large mining companies often solicit specialized work (Golder is the world leader in environmental tailings design). Also, one has to realize that all large companies were once small companies.
Myth: Every mine pollutes. Fact: In the past, mines were built to extract the resource without considering what they left behind. The last 10-20 years the industry has transitioned to: 1) designing and building mines that do not pollute and; 2) preparing a plan that includes site reclamation post mine operation. Considerable expertise has accumulated around the world and proper environmental design has become the normal planning process.
Myth: 100% risk free does not exist. Fact: With proper design and adherence to proper operating standards, risks become nil. When has a modern mine led to casualties or major pollution?
Myth: Foreign companies just exploit natural resources and leave a mess behind. Fact: With the world economy more integrated, companies can no longer practice lower standards abroad than in their home country.
Myth: No benefit for China to let in foreign mining companies. Fact: In most other industries, China has quickly learned world best practice standards. There is a big potential to make the Chinese mining industry world leaders.
Myth: A large mine at Maoling will attract many small scale miners. Fact: Maoling is a low-grade deposit with very fine gold. This is impossible for small miners to win.
Myth: Any pollution will affect the drinking water of Dalian Fact: Historically, less than 1% of the water in the Biluhe reservoir comes from the Maoling area. The recent construction of the Yushi reservoir upstream from Biluhe has reduced that further and any possible pollution will be contained in the Yushi reservoir.
Myth: It is not worth disturbing the community for a mine with a 10-year life. Fact: The 10-year life in the current plan is based on the best defined 2 Moz reserve within the 9 Moz resource. In the end, we expect most of the 9 Moz will be mined. In addition, we would expect further additions to the 9 Moz resource. Basically, we expect around a 30 year mine -- long enough to establish a sustainable industry at Maoling.
Myth: China is looking to nationalize its mining industry. Fact: On the contrary: China's mining industry is one of the last sectors to open to foreign investment.
Myth: Low-grade gold mining is the same as high grade gold mining. Fact: Not true. In order for a potential low-grade gold deposit to be mined economically and cost effectively, it must be fully defined with an extensive drilling program and a comprehensive engineering study. This is absolutely necessary for the following reasons: 1) the deposit must be sizable to offset the large expenditures for conducting the detailed engineering study, for building the infrastructure and for purchasing the equipment and; 2) a large low-grade mine must be built and exploited in stages such that the initial large investment can be recouped in as short amount of time.
Myth: The high grade portion of a deposit can be mined today by one company and the low-grade can be done later by another company. Fact: By mining the high grade ore prematurely, this will effectively ruin the economics to build a much larger mining operation that would take advantage of stockpiling low grade ore initially in order to add it at later stages of the mine life when the entire project has realized fully, its economic returns for all stakeholders.
Myth: Large mining companies will do a much better job at exploration and at development of a deposit than a small company. Fact: Large mining companies are not focused on exploration to grow and generally, do not have the time or resources to dedicate to a project and see it from discovery to production. Small mining companies are better equipped at making decisions and dedicating the necessary resources to ensure a project will become a producing mine in a short period of time. For example, in 2006, Barrick Gold and Goldcorp spent 3% and 1.5% (as a % of revenues) on exploration expenses, respectively. Small mining companies are much better focused on developing a project to production than large mining companies.
Myth: A deposit can be mined without doing any engineering studies. All that is needed are some drill results showing an ore deposit is there. Fact: Partially true in that a mining company can do it this way but it all depends on the amount of risk that the mining company is willing to accept. The company can purchase all the equipment and hire all the workers to begin operations but there is a risk that the deposit may not be large enough to justify the upfront costs. By hiring engineers to perform a study, the mining company will receive the following benefits: 1) better confidence by the investment and financial communities to support the project with capital; 2) a detailed engineering study upfront would only cost a mining company about 2 -- 5% as a percentage of the initial capital expenditure which is a small investment to make in order to minimize the risk and to ensure the existence of a sizable deposit and; 3) a complete understanding of the environmental impact and social benefits of its project which can be used to educate governments and concerned stakeholders on the entire project from year 1 of production to the last year of returning the mine site to its natural environmental state.
Myth: Cyanide kills. Fact: When ingested in undiluted form: correct. In gold extraction, cyanide is used in a diluted form under strict operating conditions. Also, Cyanide disintegrates quickly under sunlight and no harmful residues are left. When do we hear of people getting killed by cyanide?
Myth: Cyanide is dangerous. Fact: Cyanide has been used in the gold mining industry since the nineteenth century and with it, an abundance of knowledge has been accumulated over the years to understand its toxicological effects and how to design practices to minimize any exposure.
Myth: Gold can be extracted without the use of cyanide. Fact: It is possible but those methods use chemicals that can be more dangerous and harmful if exposed to humans, wildlife and plants. The other methods use chemicals such as mercury, hydrochloric acid and nitric acid (Aqua Regia) and thiourea. Cyanide is considered one of the best solutions for gold extraction, given its well understood effects and its widespread use by most producing gold mining companies.
