Fooling Mother Nature

Mother Nature can be a real bitch of a mistress sometimes.

And there’s a perfect example I know all of us can relate to…

Let me ask you this: What’s the one common characteristic of every kind of food you crave?

Whether it’s sweet, savory, cooked, cured, or chilled, I bet the one common trait is that you can’t eat too much — because for one reason or another, it’s unhealthy.

The same, unfortunately, usually goes with any sort of highly profitable industrial process.

Nature has her funny way of always throwing mankind a curveball in the form of a very substantial and very unpleasant drawback.

When it comes to mining one of humanity’s oldest-enduring obsessions — gold — that drawback is environmental impact…

Specifically the environmental damage caused by cyanide contamination of soil and stream water.

The Price of Progress

You see, typically, the process of extracting gold from minerals comes in stages.

There is the physical separation of gold and non-gold particles, and then — to squeeze the most possible out of the hard-dug earth — there is the chemical separation.

Cyanide leaching is one of the industry standards, and despite the fact that it can be fatal to freshwater fish in concentrations of higher than 20 parts per billion and adversely affect the reproductive cycles of those fish at concentrations of higher than five parts per billion, it remains such for one reason: extraction efficiency.

You see, by using cyanide in the final stages of extraction from most gold-bearing minerals, modern miners can recover gold at rates that would make their grandfathers’ spirits sick with envy.

Using purely mechanical forms of extraction, such as amalgamation and sluicing, mining operations going back all the way to antiquity were able to extract gold at a rate of about (and not much more than) 52%.

With cyanide leaching, that figure jumped to 95%.

Unfortunately, as environmental concerns have become more and more important in the consideration of how and where to produce the yellow metal, the practice started to come under fire.

As of today, there are bans on the method in South America, Eastern and Western Europe, and a handful of U.S. states — including Colorado, one of the epicenters of the American gold rush of the 19th century.

But gold is still gold, which meant a new method would have to take its place.

With the new environmental concerns now a guiding force, however, and Mother Nature being the horrid girlfriend she sometimes is, it was only expected that the solution would have to be less efficient and therefore less profitable than the standard it was to replace.

A Win-Win?

Well, this time, somehow, Mother Nature smiled on us.

In fact, to put it into the terms I mentioned earlier, she created a donut that not only tasted great and left gooey goodness on your fingers but took inches off your waistline to boot.

The process is called chloridation, and the byproduct it leaves behind isn’t considered an environmental risk at all.

More important for those looking to profit, however, is that this process can extract up to and even beyond 95% of gold from its mineral substrate.

Now, maybe a few percentage points don’t mean that much to you, but on the balance sheets of companies producing $200 million or more worth of gold per year, they makes quite a bit of difference indeed.

Combine that with the consideration that mines using this method can breathe easy in the face of ever-expanding regulation, and it’s a no brainer.

So why am I writing about this in a tech letter?

21st Century Mining Starts in a Lab

Well, I recently learned of a Canadian-based exploration technology company that’s taking the process of chloridation to the next level.

Using its proprietary chloridation-based treatment methods, this company has proven the ability to pull up 99% of gold from substrates such as silica, with extraction from other substrates either even with or superior to traditional cyanide leaching recovery rates.

This company holds dozens of patents in a handful of countries for a technology that will very likely become the new benchmark in gold production around the world.

In fact, its environmentally friendly “closed-loop” extraction method has proven to be so revolutionary that it’s been recognized by the scientific community and rewarded handsomely by the Canadian government.

To date, more than $5,700,000 in grants has been provided by the governments of Quebec and Canada for the construction of a demonstration plant, currently approaching completion in Thetford Mines, Quebec.

The plant is scheduled to go online in mid-January 2015.

The company is called Dundee Sustainable Technologies Inc., and it trades under the symbol DST on the Canadian Venture Exchange.

Over the last 10 years, DST has tested over 50 different gold deposits, achieving both exceptionally high extraction rates across a wide spectrum of mineral types and a universally positive result in terms of environment.

So yeah, I guess you can say Mother Nature gave us a break this time around… but she also gave investors a very rare opportunity.

Shares of this stock aren’t always easy to find, but at just $0.09 and with a market cap of less than $20 million, this is a small seed ready to grow into something major.

In a decade, its patented process could well be the most common method for separating pure gold from mixed minerals.

I think the stock is going to react long before that, though, so check it out — before gold starts heading back towards $1,300 an ounce.

To your wealth,

Brian Hicks

Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Tech Investing Daily, Wealth Daily and Energy & Capital. Known as the “original bull on America,” Brian is also the author of the 2008 book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox and countless radio shows. For more on Brian, take a look at his editor’s page.