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Friday, January 24, 2014

Gold in Mali

From what I have seen and heard of Mali, it doesn't seem like there is much of anything there, but at lunch yesterday Don tells me that they have gold mines. Turns out he's right, and there are a bunch, including several big ones like the

open pit Syama Gold Mine. Image is about 3.5 miles across
 and who knows how many little ones.
The open pit mines are digging up tons of earth to recover grams of gold. Does not seem like it should pay, but evidently if you can dig enough dirt it does. The amount of gold seems to vary between 1 and 5 grams per ton. The cost to recover one once of gold seems to be around $500, and they can sell those ounces for $1500. Each mine produces on the order of 100,000 ounces of gold a year, so the mine generates a profit of around a hundred million dollars a year. 
    In order to produce 100,000 ounces of gold, you need to dig up something like a million tons of dirt, which is why you need really big shovels and really big dump trucks.
    Of course there was a big upfront investment in time and money and politicking to get the whole thing set up and running, and all the money you are spending has an interest penalty attached to it. And then there is the whole "operating in Africa" thing, which means your whole operation could get wiped out by one of a vicious wars that Africa is famous for.
I came across several companies that are involved in gold mining in Mali:

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