Know Your Lore: Lyrium
More than half the wealth of Orzammar comes from a single, extremely rare substance: Lyrium. The Chantry believes it to be the "Waters of the Fade" mentioned in the Canticle of Threnodies, the very stuff of creation itself, from whence the Maker fashioned the world. Only a handful of Mining caste families hazard extracting the ore, finding veins in the Stone quite literally by ear. For in its raw form, lyrium sings, and the discerning can hear the sound even through solid rock.
Even though dwarves have a natural resistance, raw lyrium is dangerous for all but the most experienced of the Mining Caste to handle. Even for dwarves, exposure to the unprocessed mineral can cause deafness or memory loss. For humans and elves, direct contact with lyrium ore produces nausea, blistering of the skin, and dementia. Mages cannot even approach unprocessed lyrium. Doing so is invariably fatal.
Despite its dangers, lyrium is the single most valuable mineral currently known. In the Tevinter Imperium, it has been known to command a higher price than diamond. The dwarves sell very little of the processed mineral to the surface, giving the greater portion of what they mine to their own smiths, who use it in the forging of all truly superior dwarven weapons and armor. What processed lyrium is sold on the surface goes only to the Chantry, who strictly control the supply. From the Chantry, it is dispensed both to the templars, who make use of it in tracking and fighting maleficarum, and to the Circle.
In the hands of the Circle, lyrium reaches its fullest potential. Their Formari craftsmen transform it into an array of useful items from the practical, such as magically hardened stones for construction, to the legendary silver armor of King Calenhad.
When mixed into liquid and ingested, lyrium allows mages to enter the Fade when fully aware, unlike all others who reach it only when dreaming. Such potions can also be used to aid in the casting of especially taxing spells, for a short time granting a mage far greater power than he normally wields.
Lyrium has its costs, however. Prolonged use becomes addictive, the cravings unbearable. Over time, templars grow disoriented, incapable of distinguishing memory from present, or dream from waking. They frequently become paranoid as their worst memories and nightmares haunt their waking hours. Mages have additionally been known to suffer physical mutation: The magister lords of the Tevinter Imperium were widely reputed to have been so affected by their years of lyrium use that they could not be recognized by their own kin, nor even as creatures that had once been human.
—From In Pursuit of Knowledge: The Travels of a Chantry Scholar by Brother Genitivi