Page 65 - Introduction to investing in Gold

The Beginner's Guide to Investing in Gold
This is one reason that exploration near existing mines is more attractive. Not only is the infrastructure already there, but there’s also a greater chance of a well-trained local workforce who are ready to work on your project. Again, this is something that a capital provider will look for.
But you need to be careful. Sometimes there’s a good local infrastructure because there’s an existing mill in the vicinity. If it’s running at (or close to) full capacity, then you might be able to make a good case as to why there should be another mill in the area. But if it isn’t, you need to be careful about making any assumptions that they’ll have access to that particular mill. If the mill owner knows a new mining company has got no other options, they’re likely to drive a hard bargain. The assumptions used about processing the ore used by the mining company could be completely different to what transpires.
Diversity
This really has more to do with having a diversified portfolio, but it’s also relevant for individual companies. Some companies are very much about one project, whereas others may have several. If they’ve only got one project and it delivers bad results, it may be difficult to raise money, and your investment could be in trouble.
If they’ve got several projects, that may be an advantage, but it depends on what they are. I’d suggest you do plenty of research beforehand to find out not only what they have but also what they’re looking for. You can then ensure you’ve got it in the correct risk category.
Grade
Grade refers to how much metal is in the ore. This is incredibly difficult to generalise because there are so many factors at play, such as the depth and type of ore/metallurgy. But as a very general rule, you should be careful about investing in an open pit project where the grade is less than 1g/t or an underground project where the grade is less than 5g/t.
There are exceptions (for example, there are some profitable mines with lower grades, such as Canadian Malartic – which has a proven reserve, at
60