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Mineral Deposit Value - How to Calculate the Potential Value of a Mining Project

This article about how to calculate the mineral deposit value is a great resource for investors in individual mining stocks. However, when you are investing in mining stocks through an ETF like COPX, CU, KOL, XLE, XOP, IEO, FCG, URA, NLR, NUCL, SOIL, REMX, GDX, GDXJ, RING, GLDX, PLTM, SIL, SLVP and SILJ I recommend you to read this article too.

Mineral Deposit Value -

Before you can calculate the potential mineral deposit value, you first need to gather some specific data regarding the ore body and the individual drill results.

This required data can be found in the mining company's press releases in which they announce their drill results. Make sure that this data is announced according to he guidelines of National Instrument 43-101 (i.e. approved by a Qualified Person) or similar international reporting standard.

The required data for calculating the potential mineral deposit value is explained in the table below.

Required Data  Description  Example 
Grade  The concentration of a mineral in the ore body (i.e. % or g/t)  2% copper and 1.5 gram per tonne gold 
Strike Length  The length in which the mineralization is found in the ore body (horizontally)  500 meters 
Depth  The depth in which the mineralization is found in the ore body (vertically)  200 meters 
Width  The width in which the mineralization is found in a drill hole  100 meters 
Specific Gravity¹  The density of the ore body (i.e. the rock)  2.5 

To find out what I do in case some of the required data is missing or incomplete, or what I do when I need someone to verify some of the data provided in the mining company's press release, I recommend you to read the first note at the bottom of this page.

4 Steps in Calculating the Mineral Deposit Value

1. Calculate the Tonnage of the Mineral Deposit

Formula  Example 
Strike Length x Depth x Width x Specific Gravity = "X" (in tonnes 500 x 200 x 100 x 2.5 = 25,000,000 tonnes 

2. Multiply the Tonnage by the Grade


25,000,000 x 2% copper =  500,000 tonnes of copper 
25,000,000 x 1.5 grams per tonne gold =  37,500,000 grams per tonne of gold 

3. Convert Copper to Pounds and Gold to Ounces

Calculation  Answer 
500,000 tonnes x 2,204.62262 =  1,102,311,310 pounds of copper 
37,500,000 gram per tonne divided by 34.2857 =  1,093,750.4 ounces of gold 

To find out how I come up with the numbers 2,204.62262 and 34.2857 I recommend you to read the break even analysis page, on which I explained How to Calculate the Cut Off Grade.

4. Convert the Pounds and Ounces to the Corresponding Metal Value

Calculation  Answer 
1,102,311,310 x $3.82 per pound of copper² $4,210,829,204 
1,093,750.4 x $1,649.80 per ounce of gold²


As you can see from the example above the deposit does not have to be enormous in size (only 500 meters long by 100 meters wide) to contain a valuable deposit (approximately $6 billion worth of minerals).

In order to be as realistic as possible about this valuation you can not assume that the complete ore body contains the same grade (i.e. 2% copper and 1.5 gram per tonne gold). You also can not expect that this mineral deposit value is the price the mining company will receive from a buyer when this property is sold, as for instance, the costs of extracting the metal from the ore and other operating expenses are not deducted from the mineral deposit value. Therefore you could see a major or mid-tier mining company that wants to replace their mined reserves just pay a small percentage of this metal value for the deposit (i.e. 5% to 10%).

To find out how much of this mineral deposit value I assign to the mining company's value as a whole, I recommend you to read the second note at the bottom of this page on

Note: Whenever I conclude that (a part of) the required data is missing or incomplete, I always contact the mining company's management directly, to kindly ask them to provide me the missing data. I also contact the management directly, whenever I need some of the data provided in the mining company's press release to be verified.

¹ Water has a specific gravity of 1, and so minerals with a specific gravity greater than one will sink in water, and those with a specific gravity of less than one are less dense than water, and so will float.
² Prices from March 23rd, 2012.

About the author:
Jeroen Snoeks is the founder of, a website for investors passionate about investing in undervalued stocks. Through, he shares his experience and knowledge and will soon reveal his personal stock portfolio.

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