a while back we talked about the costs for finding and operating a gold mine. and how these costs have increased sharply.
forgot a few of them:
1. Reclamation costs: When a mine has run out of ore, and the mine must be shut down then it must be made safe, and brought back to a more natural site: or as close as possible.
in many jurisdications money must be set aside, and this can cost tens of million even hundred of millions, depend on the size of the mine.
this is important for the company and the industry because the mine site has to be made safe and back to the way it was before, as close as possible.
2. Venezuela has annouced it will nationalize its gold industry.
They do not produce much gold and investment in the mining industry has fallen off sharply in last 10 years. this is because they have already nationalized most of the operating mines.
over the last ten years.
so no new investments have been made.
Peru : is looking at a mining tax, the talk is of 20%, the number is probably lower, but when nations look for money this is an easy out.
this is cost, taxes are only going up for the mining industry.
I believe mining properites that are in proven
regions will be worth more going forward.
my two largest positons in gold are yri, and abx.
most of my yri will be sold for $12, will only have 25% of the position.
have sold options on it since 2008 nov. so believe it still worked out, for the most part.
sold a few weeks yri dec puts $12.
abx have covered calls, and the dumbest thing they have done is buy the copper gold mine, look gold is up $30 and they are unchanged....they still far more gold 70/30 but not good to increase copper exposure for a gold company.
the economic news is not good, thought the sell off today would have hit yesterday, the economic news out of Germany is very weak, no growth.
if they do not grow, who does ..., in Europe.
the Europe Bonds cannot work, in the short term maybe but not long term....it is impossible...
note: many mining companies are paying local governments and cities villages, a royalty over what they give the national goverments.
this is because many local people around the mine do not see the money once it reaches the national governement level. in most countries you should make the people around the mine happy.
it is also the correct thing to do, they cannot help it if their is waste corruption at the national governement level...cost of business, another one...
thanks
selkirk
forgot a few of them:
1. Reclamation costs: When a mine has run out of ore, and the mine must be shut down then it must be made safe, and brought back to a more natural site: or as close as possible.
in many jurisdications money must be set aside, and this can cost tens of million even hundred of millions, depend on the size of the mine.
this is important for the company and the industry because the mine site has to be made safe and back to the way it was before, as close as possible.
2. Venezuela has annouced it will nationalize its gold industry.
They do not produce much gold and investment in the mining industry has fallen off sharply in last 10 years. this is because they have already nationalized most of the operating mines.
over the last ten years.
so no new investments have been made.
Peru : is looking at a mining tax, the talk is of 20%, the number is probably lower, but when nations look for money this is an easy out.
this is cost, taxes are only going up for the mining industry.
I believe mining properites that are in proven
regions will be worth more going forward.
my two largest positons in gold are yri, and abx.
most of my yri will be sold for $12, will only have 25% of the position.
have sold options on it since 2008 nov. so believe it still worked out, for the most part.
sold a few weeks yri dec puts $12.
abx have covered calls, and the dumbest thing they have done is buy the copper gold mine, look gold is up $30 and they are unchanged....they still far more gold 70/30 but not good to increase copper exposure for a gold company.
the economic news is not good, thought the sell off today would have hit yesterday, the economic news out of Germany is very weak, no growth.
if they do not grow, who does ..., in Europe.
the Europe Bonds cannot work, in the short term maybe but not long term....it is impossible...
note: many mining companies are paying local governments and cities villages, a royalty over what they give the national goverments.
this is because many local people around the mine do not see the money once it reaches the national governement level. in most countries you should make the people around the mine happy.
it is also the correct thing to do, they cannot help it if their is waste corruption at the national governement level...cost of business, another one...
thanks
selkirk
