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Special Sunday ''Midas'' at LeMetropole Cafe posted in clear at GoldSeek
By Matt Chambers
Bloomberg News Service
Sunday, April 18, 2004
http://quote.bloomberg.com/apps/news?
pid=10000082&sid=au.fCcA14kbs&refer=canada
MELBOURNE, Australia -- Newmont Mining Corp., the world's
biggest gold miner, and its competitors spent $27 billion on
acquisitions in the past six years. Now they're turning to
exploration after soaring share prices made potential targets
too expensive.
The value of gold industry mergers dropped 38 percent last
year to $4.1 billion, according to data compiled by Bloomberg.
Companies spent less on acquisitions as a 19.5 percent
surge in gold prices pushed the Philadelphia Stock
Exchange's index of the world's top gold producers to its
biggest gain in a decade.
Newmont, based in Denver, plans to step up exploration by
more than a third this year to boost reserves and take
advantage of gold prices that this month rose to a 15-year
high. In Australia, the world's third-biggest gold producer,
the jump in exploration is leading to a shortage of equipment
used to find new deposits.
"It's at the stage where you can't get a drill rig on the
continent," said Owen Hegarty, managing director of
Melbourne-based Oxiana Ltd., which is looking for gold in
South Australia to complement its mine in Laos.
Global metals exploration spending rose 26 percent last
year after slumping to a 10-year low in 2002, according to
Metals Economics Group, a Halifax, Canada-based consultant.
In Australia, gold exploration rose 14 percent to A$378.4
million ($281.6 million) in the year ended June 30,
according to the Australian Bureau of Statistics.
Gold futures on the New York Mercantile Exchange
surged 23 percent in the past year, rising as high as
$433 an ounce this month, as the dollar fell against the
euro. The increase spurred a 60 percent surge in Newmont
stock in the past year. Toronto- based Barrick Gold Corp.
climbed 33 percent, while Vancouver- based Placer Dome
Inc. rose 52 percent.
"With gold prices where they are and stock prices higher,
people don't see a lot of value in the acquisition front,"
John Dow, managing director of Newmont's Australian unit,
said in an interview. "We have to get out there and find
new reserves."
Newmont in 2002 spent $6 billion buying Normandy Mining
Ltd. and Franco-Nevada Mining Corp. to become the world's
biggest gold miner. The company, which plans to spend as
much as $110 million looking for gold in 2004, needs to find
7 million ounces of reserves a year to replace the gold it
digs out of the ground.
Australian gold exploration fell for five straight years to
A$331.3 million in 2001-2002, as gold prices sank to a
20-year low in August 1999, discouraging spending. Global
mine output dropped in 2002 for the first time since 1994,
according to researcher GFMS Ltd. in London.
"In the five-year period when exploration was depressed
there was not much gold found and there's not much new
gold in the pipeline," Newmont's Dow said. "We're paying
the price for neglect. I think you will see a strong
increase in exploration."
Dow and other gold company executives are scheduled to
speak in Perth between April 19 and 21 at the Australian
Gold Conference and Paydirt's Gold Conference. Also
speaking are Gold Fields Ltd. Chief Executive Ian
Cockerill and Harmony Gold Mining Co. Chief Executive
Bernard Swanepoel.
Some companies are still relying on takeovers to boost
reserves. AngloGold Ltd., Newmont's biggest rival, is
completing a $1.5 billion buyout of Ashanti Goldfields Ltd.
in Ghana, while Iamgold Corp. last month agreed to
combine with Canada's Wheaton River Minerals Ltd. in
a $2.05 billion stock swap.
Other companies prefer to explore. Barrick has said it's
focusing on developing its own mines, while AngloGold
Chief Executive Bobby Godsell said in February more
gold mergers are unlikely because companies probably
will focus on finding new deposits.
"We're starting a cycle again, which is going back to
exploration, finding new ore bodies, bringing them into
production," said Keith Goode, managing director of Eagle
Research Advisory Pty., a Sydney-based consultancy.
"Companies then get larger, companies take over other
companies, and we come back to where we are now.'"
Some analysts say gold companies aren't doing enough
to increase exploration. Global gold production may
decline in the first half of this year, helping prices
rise to $450 an ounce, because of low exploration spending
in previous years, GFMS said in January.
"Exploration spending is still a concern," said Hayden
Bairstow, a resources analyst at brokerage Paterson Ord
Minnett in Perth. "Historically it's still not a massive
amount."
Meanwhile, companies exploring for gold in Australia's
hinterlands are being made to wait for drilling equipment
as rivals look for their own deposits.
Once the rig arrives, explorers may spend A$5,000 a day
to hire a rig for 100 meters of drilling and to get the
rock samples analyzed by geologists, De Grey Mining Ltd.
Managing Director Denis O'Meara said. De Grey stock
rose fivefold in December when it said it found gold in
the Pilbara region of Western Australia.
"It's hard to get the drill rig you want," O'Meara said.
"You have to wait three to four weeks.
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Free sites:
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http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
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Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
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