Gold’s perfect storm

RBC Capital Markets,held its annual Global Gold Mining Conference in London, November 15.  The conference brought together senior executives from the industry’s leading exploration, mining and production companies, together with institutional investors from across the world. Opening the conference, Anthony S. Fell, Chairman, RBC Capital Markets commented: “The timing of this conference is excellent; we have a perfect storm which favours investment in gold bullion and gold shares as far as the eye can see. The past few years have been a major long-term positive turning point in the fundamentals for gold, and the current systemic risk in the global financial system is now a very serious and real concern which will also bring renewed focus on gold as a store of value. 

“This trend will continue and accelerate as events in this credit supercycle unfold, with this prolonged bull market lasting another decade or more. In this climate, I believe gold bullion is re-emerging as an accepted alterative investment and currency.”

Among the speakers sharing insights at the conference was Ian Cockerill, CEO of Gold Fields, who confirmed the company’s commitment to its international strategy, especially in China, commenting: “We see China as a long-term investment. The country is likely to be the world’s largest gold producer this year; however, that production is coming from hundreds of different mines, so the opportunities for consolidation are huge.  Furthermore, prospecting in China has hitherto been over large areas at shallow depths, so we are looking forward to working in this region extensively to drive Gold Fields’ growth. Along with the company’s unhedged profile, an increase in production from new projects and large resource base, we are well-placed to see improved earnings growth and cash flow in the future.”

Also speaking was Gregory Wilkins, President & CEO of Barrick Gold: “Our recent strategic acquisitions have given us a much bigger global footprint, not only in gold, but also in copper, platinum and nickel.  Although the company’s focus is gold and will continue to be, this strong portfolio of high quality non-core assets allows us to deliver real value to our shareholders, as we seek ways to monetise our broad range of assets, using those proceeds to re-invest cash back into gold.” Commenting on the gold price he added: “It’s hard to say where it will actually go. However, I do believe that the cost structure of the industry has changed so substantially in the past few years, that the sector would be in real trouble if we saw prices go down to $500/oz.”

Evgueni Ivanov, General Director of Polyus Gold, the leading gold producer in Russia discussed the company’s growth strategy: “Growing organically rather than by acquisition will be the primary driver over the forthcoming years, as Polyus works to the approved strategy of four times growth by 2015, resulting in 3.9 Moz of production annually.  Our announcement yesterday updated the market on two major projects in the Krasnoyarsk region, Blagodatnoye, the largest gold discovery in Russia with reserves of 7.2 Moz, and Titimukhta.  Alongside our other projects and driven by an ambitious exploration programme, we expect our stated reserves of 68.6 Moz to grow even further.  We are always looking for acquisition opportunities; however, we are seeing few good, value-creating deals out there at the moment.”

To access the RBC Capital Markets’ Global Gold Mining Conference webcast click on  The webcast will be available for 30 days.