Metal is found both in pure deposits and in compounds. This was known medievally - cinnabar was mined for mercury in this timeframe. The effect described would only work on deposits. Separating metal from mineral using mundane methods requires heat; magic should be able to do this either with a heated crucible or a straightforward magical separation.
A straight magical separation is, I would say, a slightly unnatural ReTe effect, base 2. This amounts to (with essentially the same other parameters as before) a level 10 or 15 spell effect, to separate metal from mineral without heat.