|
JOHANNESBURG (Mineweb) - Gold Fields CEO, Nick Holland said that the gold industry needs aprice above US$1500 per ounce otherwise curtailment of projects,rationalisation and possibly more consolidation was on the cards. "The all-in cost of the industry to produce an ounce of gold isprobably around U$1400 per ounce...that is capital expenditure,operating costs...that doesn't leave a lot of margin at U$1500. Weare using US$1500 as a long term price because we try to structurethe business around a floor price, and we think that is a goodfloor price, and I don't see any reason based on what we are seeingtoday, even though there is volatility, to change that view" saidHolland. The consolidation referred to by Holland was not of the traditionalkind where ounces are only added but also where high cost ounceswere cut post consolidation. Holland ventured to say that given the decrease in size of newdiscoveries and the lower grades coming through, that prices abovethe US$1500 level would be necessary in the long term in order toreplace ounces being mined out in order to sustain the industry at70 to 75moz a year. The CEO repeated that his unwavering faith in the gold price wasdue to the fundamentals remaining intact and that the bad news outof Europe was being slowly "drip-fed" into the markets. Morequantitative easing across the globe was also amongst Holland'sforecasts. On the current fall in the yellow metal's price, Holland's view wasthat it was falling on short term sentiment. "The thing with gold is that it only makes up around 1% of globalinvestment portfolios across the world. It's tiny! I think thatgold is in scarce supply, people are struggling to get gold.China's growth rate looks like it is going to be lower but againgold is a strong value investment in China, people want todiversify their investments away from other currencies like dollarsand people are just looking for preservation. People who wantpreservation of capital are surely going to invest some of theirmoney into gold" said Holland. The current flight to the US dollar, which bucks the trend aroundgold's safe haven status, was an interesting one said Holland,attributing it to investors seeking liquidity. "but there is still a place for gold in portfolios given it is only1%" said the CEO. On the potential for cutting back and rationalising at its ownoperations, Holland said one must take account of the movement ofcurrencies in the jurisdictions in which the miner operates. "If you look at the rand received price we are still above R400 000per kg" said Holland. With the fact that the rand gold price has remained above theselevels and all three major gold producers in South Africa losingbetween 29% and 35% in their share prices over the last six monthsit was important to ask Holland why this was not being reflected inthe gold equity share prices. Holland attributed it to a number of factors. Firstly, he said,there is a sentiment or belief that the bull run for gold is over,secondly the concern that there is not enough leverage out of goldequities relative to the metal price and then the stinginess arounddividend distributions. Cost escalations and the concern around thehike in capital to build new projects were also mentioned. The CEO didn't miss the opportunity to punt his company'sperformance: "Look at Gold Fields, last year on an 80% increase in the goldprice we went up 200%. If that's not leverage then I don't knowwhat is! Again, who is the highest dividend payer in the industry?Gold Fields. We are sitting on a 3.5% yield. We are paying outroughly a third of our earnings. We have to just keep on repeatingit" said Holland. Holland said that if the gold price stayed at current levels,analysts' forecasts would eventually have to be moderated upwards. "If we can continue to show the leverage to the gold price,continue to pay good dividends, ultimately we must be rewarded. SoI think that we've just got to be patient, this is not a time forpanic" concluded Holland. SUBSCRIBE to Mineweb.com's free daily newsletter now. I am an expert from pcbseparator.com, while we provides the quality product, such as Hot Bar Soldering Machine Manufacturer , PCB Separator Machine Manufacturer, PCB Separation,and more.
Related Articles -
Hot Bar Soldering Machine Manufacturer, PCB Separator Machine Manufacturer,
|
