The Globe and Mail Thursday EditionThe Globe and Mail reports in its Thursday edition that Newmont Mining says costs applicable to 2007 sales may exceed its previous estimate of $400 an ounce (all figures U.S.). The Globe's Andy Hoffman writes that Newmont said the large-scale, mature and low-grade nature of current gold deposits may limit its ability to replace proven and probable gold reserves this year, which stands at 94 million ounces. Chief executive officer Richard O'Brien says the industry has been unable to make enough significant discoveries to increase supply. Of the major new deposits that have been found, most are in geographically challenging areas or politically risky jurisdictions.
"I believe that is one of the reasons the price of gold has to go up. We just aren't replacing the reserves year after year in the industry that we should. We're not building new mines, the growth is a train wreck," says Goldcorp CEO Kevin McArthur. The warnings come during what should be heady times for the gold industry. The price of bullion has recently jumped to levels not seen in nearly three decades. Many unnamed observers predict gold will hit $800 an ounce this year. Other executives see the price heading toward $1,000 one day.