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Mining allows you to get various minerals from the world, for use in other skills; primarily Smithing.
To mine a rock, simply interact with it while holding a pickaxe you have the level to use and you'll start mining it. Eventually, you'll collect the ore and the rock will deplete. Low level rocks will replenish themselves fairly quickly, but higher level ones will take longer and longer to come back.
At higher mining levels, you'll have an increased chance of successfully mining a rock. You'll also be able to use more powerful pickaxes, which decrease the amount of time between mining attempts.
Note that while most pickaxes have an Attack level requirement to equip them, you're still able to use them from within your inventory if you have the required Mining level.
Congratulations! You are now a master miner. Why not visit Gadrin at the entrance to the Mining Guild? He has something special that is only available to true masters of the Mining skill!