RE: RE: Show me the money! For bullion producers,it's getting more difficult to add new projects that are sigifiant and there's a lot of competition for the few of them that are there.Exploration take time,and for producers who need replacement ounces within 5 years,the only option maybe to get it by acquisition.
The principle difference between now and the $1,000 an ounce plus being paid for gold in the ground in 2010, is that gold has nearly doubled in price since then …..
OK, Goldcorp did not purchase gold in the ground in Quebec....... they chose Argentina …… where it is in the safe care and custody of Mrs Kirchner……
2010 …….
A modern day gold rush is underway, and the prices being offered for gold companies suggest that we are in the silly season. For the gold miners it seems cheaper to buy ounces on Bay Street than to explore. Kinross' whopping $7.1 billion for Red Back Mining is for more than $1,000 an ounce of resources. Goldcorp's outrageous bid for Andean Resources at $1,200 per ounce amazingly trumped the overnight bid by Eldorado by almost $200 an ounce. The frenzy has sent gold stocks soaring into the stratosphere. Bankers and lawyers are working overtime. Bidding wars and hostile takeovers have always be part of the gold mining scene. Barrick for example, the world largest gold miner has grown through acquisitions. However, the gold mining industry is a maturing industry and the big producers are stuck on a treadmill because they haven't replaced reserves. One of the biggest, Newmont Mining actually had declining reserves last year.
Lost on the industry and investors is that Andean's finding costs for the Cerro-Negro deposit is only $15 an ounce and its shareholders will receive $1,200 an ounce. And that is the point. The industry should spend money, not on bidding wars but to fund exploration or to acquire and support those junior explorers. Currently there are only about ten, twenty million ounce deposits in the world. Gold discoveries have dropped to only one or two a year. The peak gold situation occurred more than two years ago. And with a relatively empty pipeline, heated bidding for the existing players is likely