From Waste to Wealth: Understanding the Role of Tailings in Modern Mining

• Tailings cost $1-2/tonne versus $30-200 for underground mining, with virtually no grade dilution and no equipment downtime, creating exceptional profit margins and lower operational risk compared to traditional mining operations.
• Operations remediate existing pollution while generating revenue, rehabilitating contaminated land and eliminating acid drainage that affects local communities, turning environmental liabilities into profitable assets that meet ESG requirements by design.
• Material is pre-extracted and characterized, eliminating exploration risk entirely. Resources are already mapped with consistent grades confirmed through drilling, providing geological certainty that's impossible with traditional mining projects.
• Beyond precious metals, tailings contain critical minerals like gallium essential for semiconductors, zinc for energy infrastructure, and other strategic metals, providing diversified exposure to high-growth sectors driving the energy transition.
• Leading companies demonstrate proven returns: DRDGOLD (18-year dividend streak with 41% margins), Cerro de Pasco Resources ($2.9-6.3B profit potential from 423M oz resource), and GoGold Resources (profitable Parral operation funding larger development projects) validate the sustainable cash generation model.

Once viewed as environmental liabilities, tailings - the waste by-product of past mining - are now emerging as valuable assets. With growing demand for metals, rising ESG pressure, and technological advances, tailings reprocessing is gaining traction across the mining sector. This shift is more than a niche trend. For investors seeking long-life, lower-risk exposure to metals, tailings projects offer a compelling proposition.

Three companies leading the way - DRDGOLD, Cerro de Pasco Resources, and GoGold Resources - highlight the economic, environmental, and social potential of tailings mining.

What Are Tailings?

Tailings are the finely ground, processed remnants of mined ore left over after valuable minerals have been extracted. Historically dumped in vast storage facilities, these materials often contain significant residual metals - gold, silver, copper, zinc, and more - left behind due to outdated or inefficient processing technologies from decades past.

As outlined in recent industry analysis, tailings typically contain crushed rock, slurry, sand, water, residual metals like gold, silver, copper, and zinc, plus chemicals used in historical extraction processes. Due to less efficient historical processing methods, many tailings still contain significant concentrations of metals that are now economically viable for reprocessing with modern recovery techniques.

Unlike traditional mining, reprocessing tailings:

• Involves no drilling or blasting
• Avoids costly development of new sites
• Creates no new waste streams
• Can be operated like a factory with minimal geological variability
• Eliminates 40% of typical operational costs associated with conventional mining

This transforms tailings into above-ground resources - already extracted, already crushed, and often situated near existing infrastructure. As DRDGOLD CEO Niel Pretorius explains:

"We produce gold from old mine tailings…Our business is waste-neutral. We don't generate any new waste - we take old waste, reprocess it, and store it to a much higher environmental standard."

The Cost Advantage: No Mining, Just Extraction

Tailings projects dramatically reduce capital expenditure and operating risk compared to traditional mining operations. The cost advantages are substantial and create exceptional economics for investors.

Mining Type vs. Cost Structure

• Tailings Reprocessing: $1-2 per tonne, 0-5% grade dilution, no blasting/hauling required
• Open Pit Mining: $2-$15 per tonne, 10-30% grade dilution, extensive blasting/hauling required
• Underground Mining: $30-$200 per tonne, 20-50% grade dilution, very expensive blasting/hauling operations

The cost differential is dramatic. As Cerro de Pasco Executive Chairman Stephen Zadka notes:

"Underground mining… your cost could be $50 to $250 per ton. With tailings, it's $1–$2 per ton, no dilution, no equipment downtime."

DRDGOLD exemplifies this cost advantage through their factory-like operations, reporting cash operating costs of R866,221/kg ($1,430/oz) while achieving a remarkable 41.5% operating margin with revenue of R3.8 billion in their latest results. The company benefits from established infrastructure that eliminates the need for massive upfront capital investment typically required for greenfield mining projects.

Cerro de Pasco operates with even lower extraction costs of just $1-2 per tonne for their Quiulacocha tailings in Peru, using innovative slurry pumps on pontoon barges that can operate 24/7 without trucks, dust, noise, or explosives. This approach reduces operational costs while minimizing environmental impact.

GoGold Resources' Parral project demonstrates similar economics, using cement agglomerated heap leaching to reprocess historic silver tailings. The operation was commissioned in just 18 months and now produces 1.5 million AgEq ounces annually with minimal ongoing capital requirements.

Built-In ESG & Environmental Remediation

One of the standout aspects of tailings mining is that it reverses environmental damage while generating revenue. This creates a unique value proposition where companies can generate profits while improving environmental conditions.

DRDGOLD demonstrates this regenerative model across their Witwatersrand Basin operations. In their latest reporting period, the company vegetated 28 hectares of active tailings storage facilities while reducing external electricity consumption by 16%. Their solar plant and battery energy storage system now provides approximately half of their energy needs, reducing costs while improving their environmental footprint.

Cerro de Pasco's environmental narrative is even more compelling. Their Quiulacocha tailings sit in the heart of Cerro de Pasco, a town of 67,000 people, where the tailings have been slowly leaching acid water into the environment for decades. CEO Guy Goulet explains:

"There's only one way to remediate the environment in Cerro de Pasco: reprocess the tailings and remove the stockpile. There is no other way to sustainably close or restore the area."

GoGold Resources has embraced environmental responsibility through their sustainability initiatives, achieving a 44% decrease in energy consumption compared to the previous year, including a 25% decrease at Parral, while reducing carbon dioxide emissions by 38%. The company published their fourth annual Sustainability Report in May 2024, highlighting their commitment to responsible mining practices.

The long-term liability advantages are significant compared to traditional mining operations, where environmental obligations can persist for decades after production ends. Tailings operations eliminate these legacy liabilities while creating economic value.

Predictable Grade, Lower Risk, Faster Payback

Unlike conventional ore bodies that require extensive exploration and carry geological risk, tailings are well-defined, homogenous, and significantly de-risked. This predictability transforms investment planning and reduces uncertainty.

DRDGOLD controls over 6 million ounces of gold equivalent across their tailings network—already drilled, mapped, and planned with operations expected to continue to 2040 and beyond. The company has maintained consistent operations for nearly two decades, demonstrating the stability and predictability of tailings operations.

The geological certainty is remarkable at Cerro de Pasco. Recent drilling confirmed 40 out of 40 holes hit mineralization with consistent grades averaging 5.5 oz/t AgEq across their Quiulacocha tailings:

"It's fairly systematic… 1.5 to 2.5 oz per tonne silver, averaging 4.3 oz silver equivalent. All of them, no gap. Never had one metre without grade."

GoGold's experience at Parral further validates this predictability. The company transitioned from acquisition to production in just 18 months, with consistent production of 1.5 million AgEq ounces annually since commissioning. This rapid development timeline would be impossible with traditional mining projects that typically require 10-15 years from discovery to production.

The risk profile is fundamentally different from traditional mining. There are no "dry holes" or geological surprises that can derail a project, no underground hazards like seismicity or falls of ground, and no exploration risk since the material has already been extracted and characterized.

Tailings Support the Circular Economy

Tailings mining represents a physical embodiment of the circular economy—reusing industrial by-products to create value while delivering measurable environmental and social benefits. This alignment with circular economy principles is increasingly important for institutional investors focused on sustainable investing.

The circular economy benefits are substantial: no virgin land disturbance, reduction of hazardous legacy waste, restoration of land for future use, and increased metal supply without new environmental impacts. DRDGOLD's "Vision 28" strategy focuses on environmental regeneration through recovery, processing, and rehabilitation, firmly embedded in the circular economy.

Cerro de Pasco goes beyond simple reprocessing to explore downstream opportunities that further support circular economy principles. The company can produce sulfuric acid from pyrite in their tailings to support local industries, particularly relevant given Peru's reduced access to Russian fertilizer exports. They're also exploring green hydrogen potential and Direct Reduced Iron (DRI) for green steel production.

"It's not just base and precious metals. Pyrite can be converted into sulfuric acid, ammonium sulfate, and even direct reduced iron," explains Stephen Zadka, highlighting the multiple value streams possible from comprehensive tailings processing.

GoGold's SART circuit at Parral exemplifies circular economy principles by regenerating cyanide for reuse, improving the quality of by-products, and creating additional saleable materials from what would otherwise be waste streams.

Strategic Metals: More Than Just Gold & Silver

Modern tailings operations offer exposure to a diverse range of metals, including critical minerals essential for technological advancement and the energy transition. This polymetallic nature provides natural diversification and exposure to high-growth sectors.

Cerro de Pasco's Quiulacocha tailings contain a remarkable array of metals: silver (27% of value distribution), zinc (30%), copper (19%), lead (12%), gold (12%), plus strategic metals including gallium and indium. The discovery of gallium averaging 53.2 g/t is particularly significant given China's 98% dominance of global production and the metal's critical importance for semiconductors, 5G technology, and renewable energy.

DRDGOLD, while primarily focused on gold recovery, also processes silver and other metals as by-products, providing additional revenue streams that enhance overall project economics. Their polymetallic approach helps stabilize cash flows during periods of gold price volatility.

GoGold Resources demonstrates the value of strategic metal recovery through their SART zinc circuit at Parral, commissioned in January 2024. This circuit provides multiple benefits: cyanide regeneration for significant cost savings, increased copper precipitate quality, production of saleable zinc precipitate, and cleaner solution flow that increases silver and gold recoveries.

The strategic importance of these metals cannot be overstated, particularly as supply chain security becomes increasingly important for critical minerals used in defense, technology, and renewable energy applications.

Infrastructure, Cash Flow & Capital Efficiency

Tailings projects benefit significantly from existing infrastructure, dramatically reducing capital requirements and development timelines compared to greenfield mining projects. This infrastructure advantage creates superior economics and faster returns for investors.

Infrastructure advantages include existing processing facilities, established transportation networks, available power and water supply, and access to skilled workforces in established mining districts. These factors combine to reduce both capital requirements and execution risk.

DRDGOLD operates in the well-established Witwatersrand Basin with comprehensive mining infrastructure developed over more than a century. CEO Niel Pretorius notes:

"Our stay-in-business capex is only about 5% of our cash operating cost. The model is sound. The return on capital is significant. It's justifiable."

Cerro de Pasco benefits from proximity to existing processing facilities with 20,000 tonnes per day combined capacity through third parties. The El Metalurgista project is located in an established mining region with good access to infrastructure and services, reducing development complexity and cost.

GoGold's Parral operation showcases rapid infrastructure development and capital efficiency. The company moved from acquisition to production in just 18 months while maintaining consistent profitability since commissioning, demonstrating the speed and efficiency possible with tailings projects.

The capital efficiency extends to ongoing operations, where tailings projects typically require significantly lower sustaining capital compared to traditional mining operations that must continuously develop new areas and maintain complex underground infrastructure.

Real Returns, Real Impact

The financial performance of leading tailings companies demonstrates that this sector delivers genuine returns while creating positive environmental and social impact—a rare combination in the mining industry.

DRDGOLD's Proven Track Record

‍DRDGOLD has demonstrated remarkable consistency with 18 consecutive years of dividend payments, supported by strong operational cash flow generation. Their recent results show revenue of R3.8 billion (+28%) with operating profit of R1.6 billion (+74%), achieving a 41.5% operating margin. The company generated free cash flow of R319 million for the six-month period while maintaining their dividend streak.

GoGold Resources' Operational Excellence

‍GoGold has maintained consistent production at Parral of 1.5M AgEq ounces annually since 2019, while developing their larger Los Ricos projects. Their feasibility study for Los Ricos South shows a $355M NPV with 28% IRR, demonstrating how profitable tailings operations can fund development of larger projects. The company's current market capitalization of approximately $375M represents significant value creation from their focused strategy.

Cerro de Pasco's Transformational Potential

‍With 423 million ounces of silver equivalent in their Quiulacocha tailings, Cerro de Pasco represents massive scale potential. Internal projections suggest $2.9-6.3 billion in life-of-mine profit. The project combines economic opportunity with meaningful social impact.

The sector's performance is particularly impressive when considering risk-adjusted returns. Traditional mining projects carry significant geological, regulatory, and execution risks that can destroy shareholder value. Tailings operations offer a more defensive investment profile while maintaining significant upside potential.

The Smart Frontier for Future-Proof Mining

Tailings reprocessing represents a fundamental shift in mining strategy—from exploration-driven to remediation-focused, from high-capex to capital-efficient, from environmentally destructive to regenerative. This transformation creates exceptional opportunities for investors who recognize the convergence of economic, environmental, and social benefits.

The investment case is compelling across multiple dimensions: superior economics through lower costs and faster payback periods, environmental benefits that align with ESG requirements, strategic metal exposure with reduced geopolitical risk, and social impact through job creation and environmental remediation.

The opportunity scale is massive, yet the sector remains underexploited. Stephen Zadka of Cerro de Pasco observes:

"You probably wouldn't need to open a new mine for hundreds of years if you just re-mined all the tailings in the world."

The success of companies like DRDGOLD, which has built an 18-year dividend streak from tailings operations, demonstrates the sustainability and profitability of this business model. Similarly, GoGold's rapid development of Parral and Cerro de Pasco's transformational Quiulacocha project show how tailings can create value across different scales and geographies.

For investors seeking exposure to the mining sector while avoiding many traditional risks, tailings reprocessing offers an attractive alternative. The sector provides leverage to commodity prices with lower operational risk, faster development timelines, and built-in ESG credentials that appeal to institutional investors.

As the mining industry continues to evolve toward more sustainable practices, tailings reprocessing is positioned to transition from niche opportunity to mainstream strategy. The companies that master this approach today are building the foundation for tomorrow's circular economy mining sector, creating value for shareholders while contributing to environmental restoration and sustainable development.

The convergence of technological advancement, environmental necessity, and economic opportunity makes tailings reprocessing one of the most compelling investment themes in modern mining. For investors tired of high capex, geopolitical risk, and slow timelines, tailings projects offer scale, sustainability, and speed—the rare trifecta that defines superior investment opportunities.