The Costs of Finding and Acquiring Gold

How does your company’s reserves replacement strategy compare to your competitors?

How do the current costs of adding gold reserves through exploration compare to the costs of acquisition?

PRODUCTION, EXPLORATION, AND ACQUISITION—SUPPLY-SIDE ANALYSIS OF GOLD RESERVES REPLACEMENT

Metals Economics Group’s Strategies for Gold Reserves Replacement, to be published in June 2009, addresses key growth-strategy issues for the gold mining industry and compares the relative costs per ounce of discovering or acquiring gold in the ground. The study provides parameters for measuring the relative costs of various growth strategies for major gold producers and the industry as a whole.

Subscribers receive a print copy and access to an online electronic version of the complete study. Online access includes most of the study's supporting data in a series of spreadsheets, allowing subscribers to tailor the data and conduct further analysis.

The study addresses key issues for growth strategies, including

  • How your company’s reserves replacement strategy and your success as an explorer/acquirer compare to your competitors
  • The industry's average costs of adding reserves through exploration and acquisition
  • The companies most effectively adding reserves by exploring and/or by acquiring, and how
  • The growth successes and failures of your competitors
  • How successful greenfields exploration has been in recent years
  • What extent major-junior relationships have been successful in adding value for the majors
  • Are enough new large gold discoveries being made to satisfy expected demand
  • The effect of rising operating costs on the major producers’ growth strategies
  • The effect of rising capital costs on the gold pipeline

SECTIONS OF THE STUDY

Executive Summary
The Executive Summary provides an overview of the metrics used to compare the relative success of replacing gold reserves by exploration and acquisition, and examines how the profiled gold producers as a group are positioned relative to global gold production, acquisition activity, exploration spending, and discoveries. It also provides a general discussion of recent strategic activities related to gold production and reserves replacement.

Analysis: A Ten-Year Perspective
Includes metrics tables and graphs that compare the performance of the profiled companies relative to global industry performance with respect to exploration, discovery, and acquisition, and discusses their reserves positions.

Some topics covered

  • Annual gold reserves replacement by major gold producers and costs
  • Comparison of acquisitions versus exploration costs
  • Gold resources in new discoveries relative to production
  • Comparison of major gold producers' market capitalization
  • Cost of finding gold in new discoveries

Metrics tables for the major gold producers (from 1999-2008) include

  • Reserves changes and costs
  • Production changes
  • Reserves acquisitions and costs
  • Reserves development through exploration and costs
  • Discoveries and costs
  • Cash costs

Gold Production Pipeline, 1993-2013
Details the major new mines and expansions of existing mines brought onstream over the past ten years, and looks at the major producing companies’ most advanced and promising projects for future production. It traces the production changes year-by-year for each of the profiled companies, and analyzes the trends in mined gold supply and overall cash operating cost trends. In addition, this section examines the location of gold resources in the development pipeline and the relative risk associated with each location.

Gold Exploration Spending, 1999-2008
Provides companies’ exploration allocations for gold companies, from 1999 to 2008, and includes a database of budgets as well as total spending by the biggest spenders. The study examines in more detail the companies with the top budgets for gold over the period. In addition, it compares year-by-year allocations by the top companies with total annual budgets, and shows the allocation trends during the period. It also compares brownfields vs grassroots and majors vs junior spending.

Gold Acquisitions, 1999-2008
Lists the major purchases and divestitures by both the profiled companies, including the relative costs per unit of gold acquired in reserves. To the extent possible, it compares the reserves acquired at the time of the purchase with reserves reported three years later, to help analyze the return on the acquisition cost.

Discoveries, 1996-2008
Provides a comprehensive review of the major gold deposits discovered between 1996 and 2008, including copper-gold deposits. It also provides a list of discoveries considered but not included, so that subscribers can tailor the analysis to meet their own criteria. The analysis of the major discoveries includes an examination of the size distribution and location of discoveries made since 1996, and a comparison of gold discoveries with the gold production of major producers.

Company Profiles
A detailed look at how the largest gold producers are replacing or augmenting their reserves. Profiles of the largest gold-producing companies, accounting for more than half of world gold production, cover available activity from 1999 to 2008. The profiles detail each company’s

  • Reserves replacement
  • Production
  • Acquisitions and divestitures
  • Exploration budgets
  • Discoveries
  • Gold production pipeline

Reserves Replacement Metrics Table, 1999-2008

Metrics include

  • Average costs of reserves replacement
  • Production changes
  • Total costs of reserves acquisitions and gold equivalent in acquired reserves and resources
  • Reserves development through exploration, with costs of gold in exploration-derived reserves
  • Major discoveries during the period, including average grassroots exploration costs of gold per discovery

Major Gold Producers Profiled
(information as available)

  • AngloGold Ashanti
  • Barrick Gold
  • Buenaventura
  • Centerra Gold
  • China National Gold
  • Freeport-McMoRan
  • Goldcorp
  • Gold Fields
  • Harmony Gold
  • Iamgold
  • Kinross Gold
  • Lihir Gold
  • Navoi Mining
  • Newcrest Mining
  • Newmont Mining
  • Ok Tedi
  • Polyus Gold
  • Rio Tinto
  • Sumitomo Metal Mining
  • Xstrata
  • Yamana Gold
  • Zijin Mining

For information on how to subscribe to Strategies for Gold Reserves Replacement, call +1 902-429-2880, or .

December 2008
 
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