Understanding Gold Grades: A Complete Guide for Everyone

Imagine standing on a hillside somewhere in Nevada or Australia, looking at what appears to be ordinary rock. To the untrained eye, it's just stone. But to a geologist, that rock might contain gold—possibly enough to justify building a multi-million dollar mine. The question that determines whether that mine gets built comes down to a deceptively simple concept: grade.

Gold grade is one of those terms that gets thrown around in mining reports, investment presentations, and geological surveys, yet many people don't really understand what it means or why it matters so much. If you've ever wondered why some gold deposits become famous mines while others remain untouched, or why mining companies get excited about some discoveries but not others, understanding gold grade is your key to unlocking these mysteries.

This guide will walk you through everything you need to know about gold grades, from the basic concepts to real-world examples, all explained in plain language that anyone can understand.

Example we will use in this article:

Two main gold deposits located 5km apart with NI 43-101 resources of 21.6 M @ 0.87 g/t gold (604,000oz) and Inferred Resources of 19.8 Mt @ 0.84 g/t gold (534,500 oz)

What Exactly Is Gold Grade?

At its core, gold grade is simply a measurement of how much gold is contained in a certain amount of rock. Think of it like measuring the sugar content in lemonade—the grade tells you how "rich" the rock is in gold.

The standard way to express gold grade is in grams per tonne, written as g/t. This means grams of gold per metric tonne (1,000 kilograms) of rock. Sometimes you'll also see it expressed as ounces per ton, but g/t is the international standard.

To put this in perspective, let's start with something tangible. A paperclip weighs about one gram. A small car weighs about one tonne. So when someone says a gold deposit has a grade of 1 g/t, they're saying that in every car-sized pile of rock, there's about one paperclip's worth of gold hidden inside.

That might not sound like much, and honestly, it isn't. Gold is incredibly rare in the Earth's crust. But here's the thing: gold is also incredibly valuable. At today's prices of around $2,000 per ounce (or about $65 per gram), even small concentrations can be worth extracting if you can do it efficiently enough.

The Spectrum of Gold Grades: From Disappointing to Extraordinary

Not all gold deposits are created equal. The gold mining industry has developed informal categories to describe different grade levels, and understanding these categories helps you immediately grasp whether a deposit is exciting or just mediocre.

Ultra-Low Grade (Below 0.5 g/t)

At the bottom of the spectrum, we have ultra-low grade deposits. These contain less than half a gram of gold per tonne of rock. At first glance, you might wonder why anyone would bother with such low concentrations. The answer usually comes down to two words: massive scale.

Some of the world's largest gold mines operate at these grades because they move truly staggering amounts of rock. When you're processing millions of tonnes per year, even 0.3 or 0.4 g/t can add up to substantial gold production. These operations typically use large open-pit methods where enormous trucks and shovels can move material cheaply.

However, mines at this grade level walk a tightrope. Their profit margins are thin, and they're extremely sensitive to changes in gold prices or operating costs. A drop in the gold price or an increase in fuel costs can quickly turn a profitable operation into a money-losing venture.

Low Grade (0.5 to 1.5 g/t)

This is where your example deposit falls, at 0.87 g/t. Low-grade deposits represent a significant portion of the world's gold production, particularly in regions with favorable mining conditions.

These deposits can be quite profitable if several factors align in their favor. The rock needs to be relatively easy to mine, the metallurgy needs to be straightforward (meaning the gold can be extracted efficiently), and the deposit needs to be large enough to justify the infrastructure investment.

Many successful North American mines operate in this grade range. They rely on economies of scale, efficient operations, and modern technology to extract gold profitably. The key is keeping costs down and throughput high.

Medium Grade (1.5 to 5 g/t)

Now we're getting into territory that makes mining executives smile. Medium-grade deposits offer a comfortable balance between grade and tonnage. They're rich enough that the economics work out favorably, but not so high-grade that you need expensive underground mining methods.

Deposits in this range can often be mined profitably using either open-pit or underground methods, depending on their geometry and depth. They offer better margins than low-grade deposits, which means they're more resilient when gold prices soften or costs increase.

These are the "bread and butter" deposits that many mining companies seek. They're not the most exciting discoveries, but they're reliable and often easier to finance because banks and investors understand their economics well.

High Grade (5 to 10 g/t)

When geologists start finding consistent intercepts of 5 g/t or higher, people start paying attention. High-grade deposits are valuable because they offer excellent economics. Each tonne of rock you mine contains significant gold value, which means your costs as a percentage of revenue are lower.

High-grade deposits are often amenable to selective mining techniques. Instead of scooping up everything in sight, miners can target the richest zones, leaving lower-grade material behind. This selectivity can dramatically improve project economics.

These deposits are particularly attractive for underground mining, where the higher costs of underground extraction are offset by the richer ore being mined.

Very High Grade (10 to 20 g/t)

Now we're talking about deposits that generate real excitement in the mining community. At 10+ g/t, you're looking at ore that's exceptionally valuable. These grades can support underground mining operations with very healthy profit margins.

Projects at this grade level often have shorter payback periods, meaning investors get their money back faster. They're also more forgiving of operational challenges because even if recovery rates aren't perfect or costs run a bit high, there's still plenty of value to extract.

Ultra-High Grade (20+ g/t)

These are the deposits of legend. Grades above 20 g/t are rare and often associated with the world's most famous gold districts. When companies announce drill results with grades like 50 g/t or 100 g/t, it makes headlines in the mining press.

Ultra-high grade deposits can support very selective, high-cost mining methods because the value per tonne is so extreme. Some historical mines operated at grades of 30, 50, or even 100+ g/t, producing spectacular profits despite primitive technology and high operating costs.

However, it's worth noting that ultra-high grades are often found in narrow veins or small, discontinuous zones. A drill hole might hit 50 g/t over two meters, but that doesn't mean the entire deposit averages 50 g/t. Understanding the distribution of high grades within a deposit is crucial.

Why Grade Matters: The Economics of Gold Mining

You might be wondering: if gold is so valuable, why don't companies just mine everything that contains any gold at all? The answer lies in the fundamental economics of mining.

Every mining operation has costs. You need to pay for equipment, fuel, labor, electricity, chemicals for processing, environmental management, and countless other expenses. All of these costs are incurred per tonne of rock that you mine and process.

Let's work through a simplified example to illustrate why grade matters so much.

Imagine a mining operation where it costs $50 to mine, haul, crush, and process one tonne of rock. This is actually a pretty reasonable cost for a well-run operation.

If your ore grade is 1 g/t, each tonne contains about $65 worth of gold (at $65/gram). After subtracting your $50 in costs, you're left with $15 profit per tonne. That's a 30% margin—not bad.

Now imagine the same operation, but with ore grading 2 g/t. Each tonne now contains $130 worth of gold. Subtract the same $50 in costs, and you're left with $80 profit per tonne. That's a 160% margin. By doubling the grade, you've more than quintupled your profit margin.

This is why grade is so crucial. It's not just about how much gold you have—it's about how much profit you can make from each tonne of rock you mine. Higher grades mean better margins, which means more forgiving economics, faster payback periods, and less risk.

Real-World Examples: Gold Mines Around the Globe

To really understand how gold grades work in practice, let's look at some actual mining operations around the world.

The Super Pit, Kalgoorlie, Australia

The Super Pit in Western Australia is one of the country's largest gold mines and a perfect example of how scale can overcome modest grades. This massive open-pit operation processes ore grading around 1.5 to 2 g/t.

The pit itself is over 3.5 kilometers long, 1.5 kilometers wide, and more than 600 meters deep. It's so large that it's visible from space. The mine moves tens of millions of tonnes of material each year.

Despite the relatively modest grades, the Super Pit has been producing gold profitably for over 30 years. The operation succeeds because of its enormous scale, efficient mining methods, and relatively low operating costs. Big equipment moves material cheaply, and modern processing plants extract gold efficiently.

Fosterville Mine, Victoria, Australia

On the opposite end of the spectrum, we have Fosterville in Victoria, Australia. This underground mine has become legendary in recent years for its spectacular grades, often averaging 15 to 30 g/t, with some zones exceeding 50 or even 100 g/t.

Fosterville demonstrates what's possible with truly high-grade ore. Despite being an underground operation (which is inherently more expensive than open-pit mining), Fosterville generates exceptional profit margins because of its extraordinary grades.

The mine doesn't need to move massive volumes of rock. Instead, it focuses on selectively mining the richest zones, extracting perhaps a million tonnes per year but producing substantial gold from that relatively modest tonnage. Each tonne of ore is extremely valuable, which allows the operation to absorb higher mining costs while still generating impressive profits.

Cortez Hills, Nevada, USA

Nevada's Carlin Trend is home to numerous gold mines that work with what most people would consider low grades. Cortez Hills, operated by Barrick Gold, processes ore averaging around 1.5 to 2.5 g/t.

What makes these Nevada operations successful is a combination of factors. The deposits are large, the ore is relatively easy to process, labor and infrastructure costs are reasonable (by mining standards), and the operations are very efficient.

Nevada mines pioneered many of the bulk mining techniques that make low-grade deposits economically viable. They use massive equipment, move enormous quantities of material, and employ sophisticated processing methods to extract gold efficiently.

Detour Lake, Ontario, Canada

Detour Lake in northern Ontario mines ore grading around 0.8 to 1.0 g/t—similar to uur example deposit. This large open-pit operation processes over 20 million tonnes of ore per year.

Detour Lake shows both the potential and the challenges of low-grade mining. When gold prices are strong and the operation runs smoothly, it generates healthy cash flow. But it's also been sensitive to operational challenges and cost pressures.

The mine has invested heavily in automation and efficiency improvements to reduce costs and maintain profitability despite the modest grades. It's a good example of how modern technology is making lower-grade deposits increasingly viable.

Macraes Mine, New Zealand

On New Zealand's South Island, the Macraes operation has been mining gold for decades at grades around 1.0 to 1.5 g/t. This open-pit operation has succeeded through a combination of careful planning, efficient operations, and steady expansion as new deposits are discovered nearby.

Macraes demonstrates that even in high-cost jurisdictions (New Zealand has higher labor and regulatory costs than many mining regions), low-grade deposits can work if they're managed well and the operation maintains discipline on costs.

Factors Beyond Grade: Why Context Matters

While grade is crucial, it's far from the only factor that determines whether a gold deposit becomes a successful mine. Understanding these other factors helps explain why a lower-grade deposit might be more valuable than a higher-grade one.

Tonnage: Size Matters

A low-grade deposit with massive tonnage might contain more total gold—and generate more total profit—than a small high-grade deposit. This is why mining companies report both grade and tonnage.

Our example deposit contains about 1.14 million ounces of gold total. That's a significant endowment. Compare that to a hypothetical deposit of 500,000 tonnes grading 20 g/t, which would contain only 320,000 ounces despite the much higher grade.

The larger deposit, despite its lower grade, might actually be more valuable because it can support a longer mine life, spreading infrastructure costs over more production and providing more certainty to investors.

Mining Method: Open Pit vs. Underground

The method required to extract the ore dramatically affects economics. Open-pit mining is generally much cheaper per tonne than underground mining, often by a factor of two or three.

A deposit that can be mined from surface using open-pit methods can be profitable at lower grades than one requiring underground mining. The cutoff grade—the minimum grade worth processing—might be 0.3 g/t for an open pit but 2.0 g/t for an underground operation.

Your deposit's viability depends significantly on whether it can be mined from surface or requires underground methods. If it's shallow and open-pittable, those 0.87 g/t grades could work fine. If it requires expensive underground mining, the economics become much more challenging.

Metallurgy: Can You Get the Gold Out?

Not all gold is equally easy to extract. Some ore can be processed using simple methods like gravity separation or cyanide leaching, achieving recovery rates of 90% or higher. Other ore is "refractory," meaning the gold is locked up in sulfide minerals or other complex forms that require expensive processing.

A deposit grading 2 g/t with 95% recovery yields more gold than a deposit grading 2.5 g/t with only 70% recovery. The metallurgy can make or break a project's economics.

Many promising high-grade discoveries have failed to become mines because the metallurgy was too complex or expensive. Conversely, some lower-grade deposits succeed because the gold is exceptionally easy to extract.

Location and Infrastructure

A gold deposit in a remote wilderness area faces much higher development costs than one near existing infrastructure. Access roads, power lines, water supplies, and accommodations for workers all cost money.

Some high-grade discoveries in extremely remote locations (the Arctic, deep jungle, high mountains) remain undeveloped because the infrastructure costs are prohibitive. Meanwhile, lower-grade deposits near existing mines or in developed areas can be brought into production relatively cheaply.

Political stability, regulatory environment, and community relations also matter enormously. A lower-grade deposit in a stable, mining-friendly jurisdiction might be worth more than a higher-grade deposit in a region with unstable government, unclear mining laws, or strong opposition from local communities.

Geometry and Continuity

How the mineralization is distributed matters. A thick, continuous zone of mineralization is much easier and cheaper to mine than gold distributed in numerous thin veins scattered throughout a large rock mass.

Some high-grade deposits exist as narrow veins only one or two meters wide. Mining these selectively is difficult and expensive. Meanwhile, a lower-grade deposit with mineralization in thick, continuous zones can be mined very efficiently using bulk methods.

The geometry also affects how much waste rock you need to move to access the ore. A shallow, flat-lying deposit might have a very favorable strip ratio (waste to ore), while a deep, steeply-dipping deposit might require moving much more waste rock to access the same amount of ore.

Understanding Resource Classifications

When companies report gold resources, they don't just give you grade and tonnage. They also classify the resources by confidence level. Understanding these classifications helps you evaluate how reliable the numbers are.

Measured Resources

These represent the highest level of confidence. Measured resources are supported by detailed drilling, sampling, and analysis. The geology is well understood, and the company has high confidence that the grade and tonnage estimates are accurate.

Think of measured resources as the "we're really sure about this" category. If a company reports measured resources, it means they've done extensive work to define the deposit and reduce uncertainty.

Indicated Resources

Indicated resources have a lower confidence level than measured resources but are still reasonably well understood. There's been sufficient drilling to establish the geology and grade patterns, but perhaps not with the same density or detail as measured resources.

Many feasibility studies are based primarily on indicated resources, combined with some measured resources. This level of confidence is sufficient for making major investment decisions.

Inferred Resources

Your example includes inferred resources of 19.8 million tonnes. Inferred resources represent the lowest confidence level. They're based on limited drilling or sampling, and there's significant uncertainty about their actual grade and tonnage.

Inferred resources are essentially educated guesses. They're supported by some data, but not enough to rely on them for major decisions. Mining companies typically need to convert inferred resources to indicated or measured categories through additional drilling before they'll commit to mining them.

Here's the practical implication: those 534,500 ounces of inferred resources in your example might be real, or further drilling might show they're smaller, larger, higher-grade, or lower-grade than currently estimated. You should view them as potential upside rather than counting on them.

Reserves vs. Resources

There's an important distinction between resources and reserves. Resources are an estimate of the gold in the ground. Reserves are the portion of resources that the company plans to actually mine, based on economic analysis.

Not all resources become reserves. Lower-grade portions of a deposit might be classified as resources but not reserves because they wouldn't be profitable to mine at current gold prices or with current technology.

What About Your Deposit?

Let's return to the original example: two deposits 5 kilometers apart with combined measured and indicated resources of 21.6 million tonnes at 0.87 g/t (604,000 oz) plus inferred resources of 19.8 million tonnes at 0.84 g/t (534,500 oz).

At first glance, these grades of 0.84 to 0.87 g/t put this deposit in the low-grade category. But that doesn't automatically mean it's not viable. Let's consider what would need to be true for this deposit to become a successful mine.

Size: With potentially over 1.1 million ounces of gold, this is a decent-sized deposit. It's not world-class, but it's substantial enough to support a mine with a 10-15 year life at reasonable production rates.

Mining method: If this deposit is shallow enough for open-pit mining, the economi