Gold mining

Precious but precarious

The high price of gold is encouraging miners to dream

Dec 29th 2010 | From the print edition

OLD gold-mining shafts are being reopened

around the world, as economic uncertainty and
scepticism about other assets has sent the gold
price soaring: the yellow metal hit a record high
of over $1,400 an ounce in December, double its
2007 level (though it has since fallen a little).
Abandoned veins in mineral-rich countries have
become viable again—and despite the relatively
steep extraction costs, a miniature gold rush
might be under way in Britain, too.

The action and the deposits are concentrated on

the Celtic fringe. Since 2007 Galantas Gold
Corporation, a Canadian firm, has been working There's gold in them there Highlands
what is currently Britain's only gold-producing
mine at Omagh, in Northern Ireland, shipping the ore to Canada and running a small
gold-jewellery operation. Extensive electromagnetic prospecting has been carried out
elsewhere in the province. There are proven though mostly unquantified deposits in Scotland.
Only Wales, once the focus of British gold mining, seems destined to miss out.

Chris Sangster of Scotgold Resources, an Australian outfit that holds assorted exploration
licences in the Scottish Highlands, is confident that his firm will be mining soon. He expects
others to follow, and that Britain will have two more active mines within five years. Roland
Phelps of Galantas thinks over 3m ounces of gold reserves could be discovered in that period:
not much by the standards of big gold-producing nations, but enough for a tidy niche industry.

For all their enthusiasm, however, the prospectors face obstacles, among them regulation and
environmental concerns. Scotgold Resources is struggling to get permission to reopen an old
mine at Cononish, inside the Loch Lomond and the Trossachs National Park (above). The
planning process for the Galantas mine in Omagh took 11 years.

The hope is that the strict regulatory regime will offer a commercial compensation, enabling
Britain to specialise in “ethical gold”, as Mr Phelps puts it. But other problems might prove
less pliable.

Gus Gunn of the British Geological Survey reckons that, apart from Omagh and Cononish,
“nowhere is gold known to be present in quantities that would currently be economic to
mine”; he also thinks it might take a decade to prove and develop other finds. The mining
firms are more bullish—but even they can't confidently predict the future path of the gold
price. Low mineral prices have wrecked British mining before; if the gold market drops, the
country might once again see empty tunnels and broken dreams.

From the print edition: Britain