For anyone interested in what happens when niter is found when mining and how to retrieve it, read on.
When digging, a rock graphic will appear near your character and may look like this (depending on amount of luck):
EUO ID = WGH
OEUO ID = 4962
Gigantic
The rock itself needs to be targeted, and per shovel use, you will received anywhere from 0-10 pieces of saltpeter (perhaps more) which go directly into your pack. Over the course of mining the rock, it will change from one graphic to the next each progressively getting smaller. The above image is what a gigantic deposit will look like. The following images are the progressions from largest to smallest.

Massive
EUO ID = VGH
OEUO ID = 4963

Huge
EUO ID = RGH
OEUO ID =4967

Large
EUO ID = QGH
OEUO ID = 4964

Small
EUO ID = BHH
OEUO ID = 4969
Once you've reached this smallest size rock, the rock will disappear. The only journal entry for discovering a niter deposit occurs at the first instance of a niter vein discovery. That message reads: "You have uncovered a (size) deposit of niter! Mine it to obtain saltpeter." Successfully mining the rock will yield the journal message: "You extract (number) saltpeter from the niter deposit." Failure to obtain saltpeter produces this message: "You mine the niter deposit but fail to produce any usable saltpeter."
Not every niter discovery will start with a 'gigantic' rock since it is luck based, but will follow the gradual depletion states as described above.
Happy Mining!
Edit: updated rock names and journal messages