Before getting into the part of amalgamation it is important to explain it. An amalgam is any combination or mixture of mercury with another metal or with an alloy. Most metals are soluble in mercury, but some; such as in the case of iron are not. Amalgams are commonly used in dental fillings.
Mercury has been used in the gold and silver mining methods because of the convenience and easiness with which mercury will amalgamate with them. In gold placer mining, in which minute specks of gold are washed from sand or gravel deposits, mercury was often used to separate the gold from other heavy minerals.
After all of the practical metal had been taken out from the ore, the mercury was dispensed down a long copper trough, which formed a thin coating of mercury on the exterior. The waste ore was then transferred down the trough, and any gold in the waste that was amalgamated with the mercury. This coating would sometimes get scraped off and refined to get rid of the mercury, leaving behind somewhat high purity gold.
Mercury amalgamation was first useful to silver ores with the development of the patio process in Mexico in 1557. There were also additional amalgamation processes that were created for processing silver ores, including pan amalgamation and the Washoe process.
Because of the fact that mercury is expensive and dangerous, amalgamation is not something that is usually done a lot these days. Nonetheless, if there are fine values found it is one of the best ways of getting to it. Another thing is that if you have a few pounds of concentrate that you obtained from a sluicing operation, it is usually hard work and will take a lot of time to pan it all in the small pan.
Today, mercury amalgamation has been changed by other methods to recuperate gold and silver from ore. Hazards of mercury toxic waste have played a part in the very close to disappearing of mercury amalgamation processes. However mercury amalgamation is still regularly used by small-scale gold placer miners, in particular in developing countries.