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Gold Miners are Running Out of Metal Gold Miners are Running Out of Metal

Gold’s had a roller-coaster year, surging as much as 30 percent before giving up the bulk of those gains. But one trend has been consistent: mining companies are finding it harder to dig up more of the precious metal. Dwindling discoveries Even though producers’ exploration budgets surged more than 10-fold to $6 billion a year in the decade to 2012, new finds are in decline. The amount of go...

Gold’s had a roller-coaster year, surging as much as 30 percent before giving up the bulk of those gains. But one trend has been consistent: mining companies are finding it harder to dig up more of the precious metal.

Dwindling discoveries

Even though producers’ exploration budgets surged more than 10-fold to $6 billion a year in the decade to 2012, new finds are in decline. The amount of gold discovered last year was down 85 percent compared with 2006.

Capex cuts

To cope with bullion’s 41 percent price plunge from a record in 2011, miners have cut capital expenditure. That’s shortened the lifespans of many mines as firms haven’t been able to build the infrastructure needed to access more ore.

Falling reserves

Because of fewer discoveries, reduced mine life and a lower gold price, the amount of known metal that’s economically worth mining is falling. Major producers’ reserves have slipped 40 percent since 2011.

Supply crunch coming

Annual production might be near a record, but it’s not expected to last for long. Mine supply will peak in 2019 and keep falling through at least 2025, according to BMO Capital Markets. Randgold Resources Ltd. Chief Executive Officer Mark Bristow is among those expecting so-called peak gold in the next few years.

But there’s a caveat: Annual mine output totals less than 2% of all the gold that’s thought to have ever been produced and unlike commodities such as oil or copper, most of that gold is sitting in vaults or in jewelry form. That makes it easier for old metal to come back into the market if supply tightens.

The race for reserves: M&A

With their industry facing a tougher production future, gold mining CEOs have been on the hunt to buy up competitors to replace dwindling reserves. Deals for bullion producers have topped those for other commodities so far this year.

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Here is Why Gold is Headed Higher in 2017 Here is Why Gold is Headed Higher in 2017

In more ways than one, 2016 was a roller coaster year. One need only look at gold’s performance to confirm this. After rallying more than 30 percent in the first half, the precious metal stalled in the days before the U.S. election, then retreated on a weekly basis, under pressure from a strengthening dollar and tightening monetary policy. Gold is now down more than two standard deviations from ...

In more ways than one, 2016 was a roller coaster year. One need only look at gold’s performance to confirm this. After rallying more than 30 percent in the first half, the precious metal stalled in the days before the U.S. election, then retreated on a weekly basis, under pressure from a strengthening dollar and tightening monetary policy.
Gold is now down more than two standard deviations from its mean, or average, dollar amount. The reason I show you this is because, in the past, this was a good time to begin accumulating, as mean reversion soon followed.

Looking Ahead in the Near Term

U.S. debt dynamics are expected to turn positive for gold in 2017. That’s according to ICBC Standard Bank, which makes the case that the costs of higher yields are being overlooked. The Congressional Budget Office (CBO) calculates that net interest payments on the nearly $14 trillion of U.S. debt will amount to about $250 billion in 2016—or 1.4 percent of U.S. gross domestic product.
«If we apply an 80 basis point increase to the CBO’s net interest forecasts and keep the other variables unchanged, then by 2026 the Treasury would be paying an additional $185 billion in interest annually, and interest will have increased to 3.3 percent of GDP», the bank writes, with emphasis my own.

Looking Ahead in the Long Term

Gold’s rarity is one of the key reasons why it’s so highly valued across the globe and for most of recorded human history. Back in August, I shared with you that the precious metal makes up only 0.003 parts per million of the earth’s crust.
«Peak gold» has been a topic for years now, with major discoveries on the decline. According to a recent Bloomberg article, the number of new gold deposits discovered in 2015 was down a whopping 85 percent since 2006.
This means annual production is expected to peak in 2019, followed by a steady decline until at least 2025.

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Avellana Gold Participated in Mines and Money London International Conference Avellana Gold Participated in Mines and Money London International Conference

Participants from 76 countries recently attended the largest mining investment conference Mines and Money London held in the city. Present at the event was Director General of Avellana Gold Brian Savage. «This format helps us exchange experience with key players on the market, discuss and assess new investment prospects in mining», - Brian Savage said. During the event the main trends on r...

Participants from 76 countries recently attended the largest mining investment conference Mines and Money London held in the city. Present at the event was Director General of Avellana Gold Brian Savage.

«This format helps us exchange experience with key players on the market, discuss and assess new investment prospects in mining», - Brian Savage said.

During the event the main trends on raw materials market were discussed along with achievements and prospects for strategic investors. Several junior and brownfield projects were presented. A number of companies reported on beginning of exploitation of new gold, silver, non-ferrous and liquid metals deposits in 2016-2017.

Leading strategic investors, investment banks and financial advisors participated in the conference. They discussed current international experience of project financing and the prospects of attracting investment on international stock markets of Great Britain, Canada, Australia and others.

It was the first meeting in three years dominated by a positive atmosphere, bold statements as to attraction of funds for exploration of new deposits, expansion of the geography of investment, chiefly due to Africa and developing markets. Unfortunately, Ukraine in view of the situation with ownership and absence of stable fiscal conditions is still seen as the worst of jurisdictions (in some aspects even worse than such countries as Columbia, Mali, Ethiopia). Georgian, Armenian, Kazakh, Russian and Mongol projects generate a more substantial interest. At the same time this drastically low assessment is not factually accurate and creates significant opportunities for Ukraine to bring about substantial changes already in the next few years.

It should also be mentioned that among the sponsors of Mines and Money London was Ukrainian company UMG founded in 2016 by the largest financial and industrial group in Ukraine – System Capital Management.

New Prospects of Ukrainian Gold New Prospects of Ukrainian Gold

Interview with Nikolay Gozhik, Head of Business development, Ukrainian office representative of Avellana Gold. - What do you think about gold mining in Ukraine – what are the problems and prospects? Muzhievo gold deposit is in fact the first project on polymetal mining in the history of independent Ukraine. Is the country actually ready for such a large-scale project? - Mining is currently ...

Interview with Nikolay Gozhik, Head of Business development, Ukrainian office representative of Avellana Gold.

- What do you think about gold mining in Ukraine – what are the problems and prospects? Muzhievo gold deposit is in fact the first project on polymetal mining in the history of independent Ukraine. Is the country actually ready for such a large-scale project?

- Mining is currently experiencing lack of investment as it is connected with many risks. We can name up to ten risks in total.
Firstly, there is a risk of confirming deposit during mining. It depends on how professional the exploration works were. Secondly, there is an environmental risk, i.e. how acceptable specific technologies for maximum gold extraction are. Thirdly, there are risks connected with stability of world prices for main metals of the deposit. The risks of a country are also of importance, namely stability of subsurface resource use, significant volatility of currency exchange rate. It is made even more complicated by the fact that the state acts as a compulsory buyer-counteragent of a part of resources.
There are many promising objects in Ukraine which may be interesting for investors. We have gold deposits and gold sites in central Ukraine. We have deposits of rare metals which are in high demand in the world. We also have deposits of lithium, beryllium and others. But Ukrainian judicial system and tax laws scare potential investors. There are no guarantees of license terms and regulatory rules stability in the sphere of subsurface resource use during project implementation.

- As far as we know it is the first Avellana Gold project in Ukraine.

- From the outset we stressed that Avellana Gold is an ideal company for gold mining in Ukraine. Namely, for Zakarpattia deposits, the industrial value of which has been confirmed. In fact, financing is given for implementation of this very project. And if the first project is a success, Avellana Gold will become the first junior mining company to have achieved positive results in Ukraine. I mean a company which is financed by private and public capital and is created by geologists with an extensive experience in the field. Most foreign companies employ the same principle as Avellana Gold does, particularly those which develop world-class projects.

To see the full version click the link down below
https://goo.gl/6bP1I9

Decade of Gold Mine Declines Poised to Spur Deals Decade of Gold Mine Declines Poised to Spur Deals

Mine supply may fall about a third in the 10 years to 2025, according to Bloomberg calculations based on forecasts from BMO Capital Markets and Randgold Resources Ltd. The number of newly discovered primary gold deposits fell to three in 2014, from a peak of 37 in 1987, according to Melbourne-based industry adviser MinEx Consulting Pty. «What we’ll possibly see is consolidation in the industry ...

Mine supply may fall about a third in the 10 years to 2025, according to Bloomberg calculations based on forecasts from BMO Capital Markets and Randgold Resources Ltd. The number of newly discovered primary gold deposits fell to three in 2014, from a peak of 37 in 1987, according to Melbourne-based industry adviser MinEx Consulting Pty.

«What we’ll possibly see is consolidation in the industry as a result, whether that’s a large company taking over smaller ones, a number of smaller ones getting together, or even two or three large companies being merged», Ian Telfer, chairman of Vancouver-based Goldcorp, said in an interview. – «No CEO wants to run a shrinking company».

The number of deals in the gold sector this year is the highest since 2011, as the metal’s price surge has spurred producers to trade assets to add production or to improve the quality of their mine portfolios. Goldcorp is reviewing opportunities for acquisitions or partnerships including in new discoveries and existing assets, both in the Americas and further afield, Telfer said.

Risky Business

A decline in gold mine output may arrive sooner than forecast, though a slowdown in supply will be gradual, Sydney-based Jordan Eliseo, chief economist at gold trader and refiner Australian Bullion Co., said by phone. «It’s not going to plummet overnight», he said. The availability of recycled gold means the impact on prices may also be limited, Eliseo said.

In the medium term, output from existing mines will drop about 10 percent in the five years to 2020, according to London-based Metals Focus Ltd. While gold finds are brought into production more quickly than copper or nickel discoveries, it still takes an average of 10 years to commercialize new projects, according to MinEx Consulting.

Newcrest expects to strike more deals as it looks to stock its growth pipeline, CEO Biswas told reporters in Melbourne last week. «There will be more», - he said. «Exploration is a very risky business, you have got to have a lot of irons in the fire».