Golden dreams

October 27, 2013

The recent climb in gold prices has excited investors. Indeed gold companies were the biggest movers on the TSX (9/15 companies) on Friday’s market. Gold projects in the north are amongst the most promising in the world.

The price of gold has crept up to $1,352/oz. from its July low of $1,255. Still the gold price is down from its high of $1,883/oz three years ago.

The Virtual Capitalist (see source b). ) notes that:

• 12 of the top 50 gold deposits are located in North America. (And most of these are located north of 56).
• North America is the cheapest place in the world to produce gold, ie. has the lowest cash cost.
• A gold mining operation would have to move 148 Volkswagen Beatles worth of earth to yield a golf ball size quantum of gold, that would be worth $43,000.

Amongst the “movers” on the TSX:

• Agnico Eagle. AEC has made efficiency improvements at its Meadowbank gold mine in Nunavut. Meadowbank is Agnico Eagle’s largest gold producer, with 2.3 million ounces of gold in reserves (25 million tonnes at 2.8 g/t), and potential for more. The mine is located on a very large property that has exploration potential for gold. The mine is expected to produce 360,000 ounces of gold in 2013, and an average of 358,000 ounces of gold per year from 2014 through 2015, with a mine life through 2018.
• Seabridge Gold. The KSM project, in northern BC, is one of the largest undeveloped gold projects in the world. Proven and probable reserves total 38.2 million ounces of gold and 9.9 billion pounds of copper.  An Environmental Assessment Application was then submitted to the provincial and federal regulatory authorities in early 2013 and was subsequently accepted into the formal review process. In August, 2013, during its sixth drill program, Seabridge announced a major discovery of high-grade core zone at Deep Kerr.

 

 

Commentary

Rising gold prices are good for companies contemplating investments in gold mines. It improves the economics and business case for the investment and makes it easier to attract capital.

Sources

• a)"Weekly big movers" Globe and Mail, 26-Oct-2013, p.B16.



• b)http://www.visualcapitalist.com/what-is-the-cost-of-mining-gold



• c) http://www.agnicoeagle.com/en/Operations/Our-Operations/Meadowbank/Pages/Overview.aspx?PagePreview=true&isDlg=1#sthash.HBfwsNhj.dpuf



• d)http://seabridgegold.net/ksm_summary.php