logo-loader

Gold mining industry facing reserves replacement challenges - MEG report

Published: 10:43 17 Jul 2012 EDT

no_picture_pai

Finding gold in future will become an increasingly difficult prospect according to a new report out today.

The Canadian mining analyst Metals Economics Group (MEG) said it’s not that there is no gold left to mine, but that there is no “easy” gold left as discoveries struggle to keep up with the pace of mined production.

The report, ‘Strategies for Gold Reserves Replacement: The Costs of Finding and Acquiring Gold’, said in the period 1997-2011, 99 significant gold discoveries were reported – ie deposits with at least 2 million ounces of the metal.

These contained 743 million oz in reserves, resources and past production as of year-end 2011.

Assuming a 75 percent resource-conversion rate and a 90 percent recovery rate during production, these 99 discoveries could potentially replace only 56 percent of the estimated gold mined during the same period, if they are economical to mine, MEG found.

Then again, the group also noted, the economic viability of the discovered gold relies to a large extent on location, politics, capital and operating costs, and market conditions, which will inevitably further reduce the amount of resources that will reach production.

Overall, reserves and resources in the 99 discoveries only account for about 18 percent of all reserves and resources in the world’s currently producing mines and developing projects.

This indicates that most of the industry’s exploration-derived gold has been added through brownfield work and exploration at older, known deposits, MEG said.

Just 14 of the 26 major gold producers made major discoveries between 1997 and 2011, accounting for about a quarter of the 743 million oz found.

Today, the majors producers hold 39 percent of the reserves and resources in the 99 significant discoveries made in the past 15 years which, after conversion to reserves and recovery losses, could amount to just 46 percent of the gold needed to replace their production from 2002 to 2011, the report said.

“Worldwide, the total gold in reserves and resources at development-stage projects is essentially equal to that in currently producing mines.  However, with increasing risk of political, regulatory, and tax instability in many resource-rich nations, declining grades, rising costs, and dramatically longer development times, the amount of gold available for production in the near term is likely far less than has been found,” MEG added.

Coniagas Battery Metals secures new key ground with focus on...

Coniagas Battery Metals (TSX-V:COS) CEO Frank Basa joined Steve Darling from Proactive to announce the company's strategic acquisition of key ground near SOQUEM’s Cardinal Property, located 80 km southeast of Chibougamau, Quebec. This acquisition underscores Coniagas’ commitment to capitalizing...

31 minutes ago