Recently during my monthly shareclub meeting someone told me about an old geolgist that told him every gold company can produce it for $350 an ounce. (nice run on sentence)
even 20 years ago it is hard to find companies that could produce an ounce of gold for $350 an ounce. it was also discussed why the seniors gold companies have failed to rally with the rise in gold price...some have done better than others.
here is a list of US/Cdn. listed companies because many are the biggest producers in the world, operate in North America, Asia, Europe, South america, and Africa...so diversified, and you can look at their operating costs.
Barrick Gold 2011 operating costs 450-480 an ounce
Newmont Gold 2011 410-525 an ounce
Kinross 2011 565 an ounce
Agnico Eagle 445-475 an ounce
also many of these companies have had to buy other gold companies to increase (in most cases just) to maintain production.
Goldcorp bought Glamis gold in 2006 for 8.6 billion
Newmont bought Fronteer gold in 2011 for 2.32 billion
Kinross bought Red Back mining for 7.1 billion in 2006.
Kinross and Newmont are the two laggards of the group, Newmont is the biggest in North America and will have trouble to raise, maintain production, so expect more money to be spent.
Kinross spent to much for Red Back mining, time will tell if Kinross managment can greatly expand the Red Back reserves in Africa,.
By the way when I qote the above prices or hear about a ceo from a gold company they leave out major costs.
ie. heard an interview on CNBC where a gold ceo claim his costs were $450 on average. the interviewer then said that the company had a wide margin of profit, gold was then 800 an ounce.
the interviewer did not realize and the numbers take into account operating mine, in production.
1. to get there you have to find a site. buy into a project or do some early stage exploration.
months, years spent.
2. drilling.
3. more drilling.
4. prefeasibility study: if drilling looks good, yes and more drilling.
5. final feasibilty study
6. eniromental impact study : consists of many studies.
7. PR public relations, to get people and governments on side.
8. permits there are a handfull of permits to apply for and if one is denied then project is dead, often sometimes these can be delayed....
9. money spent on setting up camps, and infastructure, roads, airstrips, water, power, ect.
10. hire experieced staff $$
have left some out, but after all of this and the mine is running for a few months, 3-6 months, then you get the production costs.
often plenty of money have to be spent before there is even a chance of a mine.
often hundred of millions, or even now billions...
also sometimes politics can get involved or the mine can be under producer or a dud.
see the gold business is not as eay as it my seem.
own abx, and yri (yamana gold) use covered calls that is another topic.
would avoid newmont, and actually looking at kinross.
jr. watching avion gold.
thanks
selkirk
even 20 years ago it is hard to find companies that could produce an ounce of gold for $350 an ounce. it was also discussed why the seniors gold companies have failed to rally with the rise in gold price...some have done better than others.
here is a list of US/Cdn. listed companies because many are the biggest producers in the world, operate in North America, Asia, Europe, South america, and Africa...so diversified, and you can look at their operating costs.
Barrick Gold 2011 operating costs 450-480 an ounce
Newmont Gold 2011 410-525 an ounce
Kinross 2011 565 an ounce
Agnico Eagle 445-475 an ounce
also many of these companies have had to buy other gold companies to increase (in most cases just) to maintain production.
Goldcorp bought Glamis gold in 2006 for 8.6 billion
Newmont bought Fronteer gold in 2011 for 2.32 billion
Kinross bought Red Back mining for 7.1 billion in 2006.
Kinross and Newmont are the two laggards of the group, Newmont is the biggest in North America and will have trouble to raise, maintain production, so expect more money to be spent.
Kinross spent to much for Red Back mining, time will tell if Kinross managment can greatly expand the Red Back reserves in Africa,.
By the way when I qote the above prices or hear about a ceo from a gold company they leave out major costs.
ie. heard an interview on CNBC where a gold ceo claim his costs were $450 on average. the interviewer then said that the company had a wide margin of profit, gold was then 800 an ounce.
the interviewer did not realize and the numbers take into account operating mine, in production.
1. to get there you have to find a site. buy into a project or do some early stage exploration.
months, years spent.
2. drilling.
3. more drilling.
4. prefeasibility study: if drilling looks good, yes and more drilling.
5. final feasibilty study
6. eniromental impact study : consists of many studies.
7. PR public relations, to get people and governments on side.
8. permits there are a handfull of permits to apply for and if one is denied then project is dead, often sometimes these can be delayed....
9. money spent on setting up camps, and infastructure, roads, airstrips, water, power, ect.
10. hire experieced staff $$
have left some out, but after all of this and the mine is running for a few months, 3-6 months, then you get the production costs.
often plenty of money have to be spent before there is even a chance of a mine.
often hundred of millions, or even now billions...
also sometimes politics can get involved or the mine can be under producer or a dud.
see the gold business is not as eay as it my seem.
own abx, and yri (yamana gold) use covered calls that is another topic.
would avoid newmont, and actually looking at kinross.
jr. watching avion gold.
thanks
selkirk
