Two Different Stories The two biggest gold miners recently released their 3rd
quarter earnings results.
An interesting contrast
Since Newmont released their earnings, it's
market cap lost more than US$10 billion.
To put it perspective the market cap of
Gold Fields is US$14.50 b
Kinross US$12.26b
IAMGold US$3.1b
One of the reasons was the increase in contracted
labor costs . 50% of NEM costs in total is labor and of that
half are for contracted labor. In the Q&A portion of the conference call an analyst mentioned an inflation rate for the contracted workers
of 12 to 14 % which the CEO refused to confirm by not
answering the analyst's question. The CEO did confirm that they had budgeted zero % increase for labor costs.
The CEO said this in an interview
"....costs of running camps , cost of flying people
to and from camps- that's where we are seeing some
escalation beyond what we'd assumed at the start of the year."
AEM said that its total labor costs represent 45% of total costs of which a third are contracted workers.
Their labor inflation rate is at 3% for both AEM workers
and contractor workers with low employee turnover and vacancy rates.
Also mentioned was that energy costs including diesel costs were 12% of total costs which came in lower.
One of the comments by AEM was that employees value medical care ( and specialized facilities) and "educational centers for children ".
IMO this focus on location of deposit and worker attitudes reflects very positively for Probe Gold.
It highlights that the location of one's deposit is extremely important. The Novador deposit is a hop from Val d'Or
which is a essentially a mining town of more than 30 000 inhabitants with a young skilled workforce.
"Employee infrastructure" includes housing, schools medical care and hospital.
This verifies that Probe's Novador project should be viewed at a premium.