Despite price shocks...Local gold miners remain optimistic about their prospects

Despite price shocks…Local gold miners remain optimistic about their prospects

Jun 13, 2013 News

The price of gold fell by as much as $38 in trade Friday last crashing through the US$1,400 an ounce level and causing renewed mayhem among gold mining stocks worldwide.
Despite this volatility however, local miners say they will not lose their nerves. They are bent on “hanging in there”; on working towards the 2013 target of 460,000 ounces, all the while hoping that prices will at least stabilize or even hopefully, start climbing again.
Gold was trading yesterday on the London Daily fix at US$1,377 per ounce in the morning with a slight increase to US$1,382 in the afternoon.
A recurring question in the minds of many industry “insiders” is how low can the gold price go without breaking a project; without making gold mining unprofitable?
The view is that, for small and medium level miners the breaking point is likely to be if or when the price drops to US$1200 per ounce.
Some small and medium scale miners may reach breaking point even earlier, since they are faced with higher costs operating due to the remoteness of their operations.
Miners who are likely to be hard hit before others are those who invested heavily in expensive earth moving equipment during high gold prices in 2011 and 2012.
Some large scale miners, with their potential for economies of scale, can remain profitable until the price falls to US$1000 an ounce. Then they will have to close down their operations, sources inside the industry say.
President of the Guyana Gold and Diamond Miners Association (GGDMA), Patrick Harding, yesterday said that members are not going to speculate about the future too much because there is nothing they can do about the prices anyhow.
He stressed that local miners have to remain focused on improving efficiencies in existing operations.
“They can get by quite decently if they can raise the rate of recovery of gold from the sluice boxes from the current average of 45 to 50% to 70 to 80%,”he said.
He said that equipment for gravity concentration processes such as shaking tables and for flotation processing are available to increase recovery rates, but miners would have to be happy about the balance between the costs and benefits of such equipment.
They also have to try to keep operating costs down by cooperating and collaborating with each other in such activities as the movement of goods and fuel.
“They might find it more economical to pool resources in these activities and thereby benefit from reduced costs at the individual level,” he said.
Harding said that local miners remain optimistic that the industry will survive.
“We faced harder times than these and we survived,” he said.
He however stressed the importance of all miners maintaining a low cost base and improving recovery rates, rather than wishing or hoping that prices will stabilize or start climbing again, or not fall even further.
“If we get this right our operations will remain sustainable regardless of the price environment,” he said.

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Despite price shocks…Local gold miners remain optimistic about their prospects

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