This article about how to calculate the mineral equivalents in polymetallic deposits is a great resource for investors in individual mining stocks. However, when you are investing in mining stocks through a Stock Based mineral ETF I recommend you to read this article too.
When reading a company's press release in which they announce their mineral resources and or reserves of a polymetallic deposit, you will often see them reporting in the metal equivalents of the primary metal.
The secondary mineral(s) are being multiplied by their own current mineral prices and are then divided by the current mineral price of the primary mineral of the polymetallic deposit to get the mineral equivalent value.
For example, if company XYZ announces a mineral resource containing 1 million ounces of gold at a current price of $1,500 per ounce and 10 million ounces of silver at a current price of $30 per ounce, the calculation to convert the secondary metal (silver) into the primary metal (gold) is:
Metal Equivalent Calculation
|(10,000,000 ounces of silver * $30 =) $300,000,000 / $1,500 =||200,000 gold equivalent ounces|
You will often find the mineral chosen for reporting on a metal equivalent basis (i.e. the primary mineral) is the one that contributes most to the value of the deposit.
Cautionary Note: Always make sure to read which prices were used when the metal equivalent calculations were made, due to potential differences between the prices used for the calculations and the current metal prices, which in turn could over or under estimate the potential value of the polymetallic deposit.