Peak Gold Coming As Exploration Dwindles, Randgold CEO Says
Peak gold production may be reached within the next three years as miners fail to replace their reserves, according to Randgold Resources Ltd. Chief Executive Officer Mark Bristow.
The lack of new discoveries, cost cutting and miners digging out higher-grade material for a short-term gain, which can subsequently shorten the lifespan of a mine, are to blame for a supply crunch in the industry, Bristow told reporters in Johannesburg on Monday.
Bristow, a South African who made his name by discovering and building some of the continent’s biggest gold mines, is a longtime critic on his own industry and frequently criticizes miners for bad acquisitions and spiraling costs.
Even so, any short-term increase in the gold price may make companies’ reserves profitable and extend production, he said.
Unlike many mining firms, Randgold has never written down the value of its assets and continues to value its reserve at $1,000 an ounce. The company’s biggest challenge is finding fresh reserves that are at least as profitable as the gold currently mined, Bristow said.
Gold fell 0.3 percent to $1,334.32 an ounce at 7:51 a.m. in London.
Randgold may have about $500 million in net cash by the end of this year, which could be used to develop new mines or make an acquisition, Bristow said. The company plans to add three major operations, currently in the exploration phase, to its portfolio in the next five years that will likely be in central and west Africa, he said.