What ya waiting for BARRICK???
Gold discovery rates are decreasing even as exploration spending in the industry reached a record $8 billion last year, according to Jamie Sokalsky, chief executive officer of Barrick Gold Corp, the world's largest producer.
There were three discoveries last year, compared with 11 in 1991, and none of those can be described as "supergiant," or holding more than 20 million ounces, Sokalsky said at a conference in Hong Kong. Breakeven costs are rising, he said, predicting gold's bull market shows no signs of ending.
A further rally may not spur much higher output, he told the conference. "I don't see a surge in gold production if we saw a gold price of $3,000," Sokalsky said. "At a higher gold price, we'd still be experiencing the same challenges. I'd suggest there'd be very limited response to that higher gold price."
Gold for immediate delivery, which climbed to a record $1,921.15 an ounce on September 6, 2011, traded at $1,725.97 at 6:02 pm in Hong Kong after rising 10% this year. The run of annual gains is the best performance since at least 1920. "It's getting harder to find large deposits and to get those deposits into production takes at least twice as long as it might have taken a decade ago," Sokalsky said in an interview.
"We're not going to see new mines coming in as fast as we thought to replace old mines that are closing." World gold-mine production may increase to 2,672 tonne next year from an estimated 2,652 tonne in 2012, according to data from Barclays in a November 8 report.
Global scrap supply may decline to 1,636 tonne from 1,671 tonne, reducing total supply to 4,308 tonne in 2013 from 4,323 tonne, according to Barclays. "Getting mines permitted, dealing with the government and the communities, environmental issues , all of that takes so much longer," said Sokalsky, who took over as CEO in June.
"It also costs multitudes more to build a mine and to finance that." Barrick reported third-quarter earnings on November 1 that missed analysts' estimates after mining costs increased more than expected and production fell.