Metal Equivalent Calculation – How to Calculate the Mineral Equivalents in Polymetallic Deposits

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

Calculation  Answer 
(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.


You may also want to read...

  1. Mining Companies Analysis - Learn How to Invest in Mining Stocks. To execute your own mining companies analysis, I have created a lot of (sub)pages about the relevant terminology and working methods from the mining sector.
  2. Oil and Gas Companies Analysis - How to Invest in Energy Stocks. I created different pages about the relevant terminology and working methods from the energy sector to conduct your own analysis for oil and gas companies.
  3. Understanding the Stock Market - How Do Stocks Work. To help you with understanding the stock market, I have created some articles to explain how stocks work and I also reveal my own stock market analysis in this chapter.
  4. How to Invest in Shares - Learn How to Start Investing in Stocks. In this chapter I inform you how to invest in shares - the UndervaluedEquity.com way. I also reveal which (free) resources I use to execute my due diligence.
  5. How I Invest in Stocks - My Preconditions for Selecting Undervalued Stocks. In this chapter I answer the question: how do I invest in stocks? Thus, I explain which investment rules I follow whilst selecting companies for my stock portfolio.
  6. Stock Investment Analysis - A More Detailed Elaboration on How to Buy Stocks. When a company complies with my preconditions for selecting undervalued stocks, I will elaborate my stock investment analysis to assess the quality of it's assets, management, etc.

Leave a Comment