Wednesday, March 7, 2012

Alchemy - Turning Oil into Gold

Thanks to SRSROCCO for the following text and stats:

In 2010, the top 5 gold miners consumed a total (estimated) 470 million gallons of diesel to produce 19.7 million ounces of gold. This turns out to be 24 gallons of diesel per ounce of gold produced. If we estimate that these gold big cap miners only had to pay about $3.50 (maybe less due to hedging) for diesel, their grand total diesel cost per ounce was:


$3.50 X 24 Gallons = $84 diesel cost per ounce of gold

$84 / $1,600 (average price of gold) = 5% diesel cost per ounce of gold

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