Producing gold mines are those that are in operation, producing ore, and generating revenue. They have pre-established infrastructure, skilled workers under strict management, in-depth production data, and confirmed ore reserves.
They already have the necessary regulatory permits and own agreements to sell produced gold to buyers.
Finding all the producing gold mines for sale in Australia can be difficult. You may overlook profitable ones. So, go to an online marketplace listing all mining projects for sale across Australia, along with their asking price. You can even request the profit and other data directly from the seller using the platform.
Advantages
1. Immediate Cash Flow
The most significant benefit of buying a producing gold mine is the immediate cash flow. With financial due diligence, you will know about the expected income. You won’t have to wait years to produce a commodity and generate revenue, unlike previous owners.
2. Minimal Geological Risks
An active mine already has its resources measured and indicated. So, you won’t feel uncertain about how many reserves are left in the mine. Based on the remaining reserves, you can negotiate the mine price.
3. Consistent Track of Operations
Before investing, you can even assess ore grade consistency, production expenses, equipment condition, rate of resource depletion, and revenue trends. A few recent data points can help you forecast upcoming performance and minimise potential risk.
4. Easy Financing
Operating gold mines are low risk and have steady revenues. Thus, banks and private lending bodies are more lenient toward passing loans for buying one.
Drawbacks
1. High Purchase Price
The upfront price of buying a producing gold mine is extremely high. This is because the seller charges for the infrastructure, permits, the effort required to find the reserves, and a steady income stream.
2. Shorter Lifespan
If the gold mine is in its mid- or later-life stage, the resources may deplete soon. So, it may not offer long-term profits. Even if it has not reached that stage, you may not find as heavy deposits as earlier.
3. Operation Complications
You will suddenly take over all responsibilities. From staff management and equipment maintenance to environmental compliance and safety measures, you need to become familiar with everything quickly for smoother operations.
Who Should Choose Producing Gold Mines?
Producing gold mines are the right choice if you want predictable and immediate revenue and to avoid exploration risk. The short-term timelines and easy financing make it great for anyone seeking stability.
Non-Producing Gold Mines
Non-producing gold mines are inoperative because the existing team is still in the exploration stage and hasn’t found any resource yet, or they’re in the development stage, where they know the exact resources. Still, production hasn’t begun because development is underway.
Advantages
1. Minimal Acquisition Cost
Compared to producing ones, these gold mines are much cheaper upfront. So, investors can secure large tracts of land at minimal cost.
2. Value-Adding Opportunities
If you conduct a drilling program to obtain mineralisation data and the results are positive, you will achieve significant profits once production begins.
You can improve the value of the mining project by enhancing its economics through studies, obtaining additional permits, completing all feasibility studies, and upgrading resource estimates.
If you get positive results, these make your asset even more valuable. You can then resell the mine or begin further development.
3. Tax Benefits
Exploration activities are eligible for tax deductions in some jurisdictions. So, you may get a lot of tax benefits initially.
Drawbacks
1. Geological Risk
The exploration activities may not show promising results. There’s a significant risk of failure, with the potential to incur a loss
2. Long Timelines
The development of a non-producing gold mine can take up to 15 years. Until you can access the gold ores, there will be no production and no revenue. You would have to rely on other sources of income or financing for all operations until then.
3. Expensive Operations
Exploration includes costly operations, such as assays, drilling, environmental studies, geophysical surveys, and feasibility reviews. It will become an expensive endeavour.
Who Should Choose Non-Producing Gold Mines?
Non-producing mines are for those seeking much higher profits and willing to bear high risks. It’s also for those who want to pay a small upfront price and invest in the long run. If you don’t need external financing support, this can be a viable choice.
Conclusion
Both producing and non-producing gold mines are profitable business endeavours. But before investing, evaluate every last factor to understand which path is right for you. When in doubt, consult professionals and only then go ahead.
