RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada today held its annual Gold Conference in London. The conference brought together senior executives from the industry’s leading exploration, mining and production companies, together with institutional investors from across the world.
Speaking at the conference, Stephen D. Walker, Head of Global Mining Research, RBC Capital Markets said: “While we recently lowered our expectations for gold prices over the next few years, as the global economy slows, we remain very positive on the outlook for gold. RBC Capital Markets’ global mining research team sees the potential for gold to rally through $900/oz in the first half of 2009. We believe that the gold market should begin to price in a recovery in the global economy, and with that recovery, an increase in inflation expectations, particularly given the enormous amount of monetary and fiscal stimulus being applied by central banks.”
Leon Esterhuizen, Equity Analyst, RBC Capital Markets said: “The current financial crisis has delivered the perfect conditions for gold to rise over the next year or two. Europe will converge with the US in terms of cutting rates, strengthening the case for an extended period of rock-bottom real rates. Oil could play a key role, as recent efforts by producers to reduce output may leave oil prices higher than many expect. If this is the case, inflation will most certainly be rising in an environment where rates are being cut. This is gold price heaven – declining real rates or even negative real rates will drive the gold price much higher.”
One of the speakers at the conference was Alex Davidson, Executive Vice President of Exploration & Corporate Development at Barrick Gold, a Canadian gold producer, who said: “Barrick is well-positioned in the current uncertain economic environment with the gold industry’s highest rated balance sheet, a competitive cost structure and the industry’s largest reserves and production. We continue to be positive about the underlying fundamentals of the gold market and the prospects for Barrick in anticipation of production from three new mines over the next three years. Buzwagi, Cortez Hills, and Pueblo Viejo remain on schedule and continue to track their respective capital budgets. Collectively, these new mines are expected to produce almost 2 Moz of gold over the first full five years of production at lower costs than Barrick’s current portfolio of mines.”
Commenting on the impact of the company’s growth strategy, Tye Burt, President and CEO of Kinross Gold, a mining and exploration company, said: “Kinross is delivering on its strategy and commitments as our three major growth projects at Kupol, Paracatu and Buckhorn come into production, increasing total ounces produced while reducing costs, improving margins and strengthening cash flow per share. With the majority of our spending for growth projects behind us, no exposure to falling base metal prices, and a strong balance sheet, Kinross is exceedingly well positioned to navigate the current difficult global economic environment.”
Speaking on AngloGold Ashanti’s (gold producer) new direction, Mark Cutifani, CEO, said: “Our aim is to become the most profitable company in the business, achieving returns on capital employed of at least 15% in the medium term.”
Other speakers sharing insights at the conference were Goldcorp, Franco-Nevada Corp, Agnico-Eagle Mines, Yamana Gold Corp, Polyus Gold, Centerra Gold, Harmony Gold Mining, Polymetal, Great Basin Gold, European Goldfields, Simmer & Jack Mines, Eldorado Gold, Gabriel Resources, Randgold Resources and Banro Corp. To access the RBC Capital Markets’ Gold Conference webcast please click on http://www.wsw.com/webcast/rbc93/ The webcast will be available until 12 December 2008.