Gold Mining: New Finds Failing to Match Production

LEADING CONSULTANCY the Metal Economics Group says in a new report that new discoveries by the Gold Mining industry are failing to keep pace with mined output.

Over the last 10 years, says MEG, the world's top 26 Gold Mining companies have as a group replaced 208% of the gold they have mined.

However, only 14 of those 26 major miners made large discoveries, where the deposit contains 2 million ounces or more. "After conversion to reserves and recovery losses," says MEG, the gold in large, more economical discoveries made over the last 15 years "could amount to just 46% of the gold needed to replace their production from 2002 to 2011."

Since 1997 says MEG's new study – Strategies for Gold Reserves Replacement: The Costs of Finding and Acquiring Gold – the Gold Mining industry as a whole made 99 significant gold discoveries.

Based on industry-standard conversion and recovery rates, however, "These 99 discoveries could potentially replace only 56% of the estimated gold mined during the same period, if they are economical to mine," says MEG.

Globally, the reserves and resources in development-stage Gold Mining projects is about equal to the known gold in mines now in production. But "the biggest reserves replacement challenge faced by the major producers and the industry is not that there is no gold left, but that all the 'easy' gold has been found," MEG's study continues.

"With increasing risk of political, regulatory, and tax instability in many resource-rich nations, declining grades, rising costs, and dramatically longer development times, the amount of gold available for production in the near term is likely far less than has been found."

MEG's new report comes as former world #1 Gold Mining nation South Africa reports yet another drop in its output.

South Africa's gold output fell nearly 3% by weight in May from a year earlier, even as the country's total mineral output rose 1.3%. Since peaking in the late 1990s, annual Gold Mining output from South Africa has more than halved, leaving China to move rapidly into top spot.

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