When reading a company’s press release announcing the mineral resources or reserves of a polymetallic deposit, it’s common to see them reported in metal equivalents of the primary metal. This involves multiplying the secondary mineral(s) by their current prices, and then dividing the result by the current price of the primary mineral in the deposit to obtain 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 (silver price per ounce) / $1,500 (gold price per ounce) = 200,000 gold equivalent ounces
Thus, in the example above, the mineral resource of Company XYZ contains a total of 1,200,000 gold equivalent ounces.
The primary mineral chosen for reporting on a metal equivalent basis is typically the one that contributes the most value to the deposit.
Cautionary Note: Always check the prices used for metal equivalent calculations in relation to current metal prices, as differences between the two can lead to over- or under-estimating the potential value of the polymetallic deposit.