Gold Fields Ltd, Yamana Gold Inc to Remain Profitable Miners?

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As producers endeavor to cut costs, they are likely to halt, downscale or offload operations in South Africa, Australia and Papua New Guinea. We went into more detail on production cutbacks in Part Two.

This means it could be a long time before projects like the Golpu mine in Papua New Guinea and the Pebble gold mine in Alaska, among many others, could see commencement of production operations.

gold-mining-costs-by-region

Source: Beroe Inc.

Although South America is currently the lowest-cost region for gold mining, the Pascua Lama project belonging to Barrick Gold Corp. may not see the start of mining operations before 2016 unless environmental safeguards are met by the company.

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Which Gold Miners Will Remain Profitable?

With gold price trapped in the region of US $1,200-1,400 per troy ounce, not one of the top 15 gold producers earned positive cash flows during the second quarter of 2013.

Gold mining stocks have lost nearly 50% of their value this year as industry-wide non-profitability became evident among investors. Only Gold Fields Ltd., among the global top five gold miners, reported a positive net margin for the first half of 2013, despite having major operations in high-cost regions like South Africa, Ghana and Australia.

Among top gold producers, Canada-based Yamana Gold Inc. and Agnico Eagles Mines Ltd., China-based Zijin Mining Group, and South America-based Cia de Minas Buenaventura are expected to be better placed than their peers at the current gold price environment, thanks to the concentration of their operations in low-cost regions like China and South America.

gold-spot-price-vs-equity-indexes

Source: Beroe Inc.

Coming Up: What are the gold producers’ strategies?

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MetalMiner welcomes guest contributor Moonmoon Basu, a senior research analyst at Beroe Inc., tracking base metals & precious metals for over two years and specializing in price forecasting. Beroe is the premier global provider of customized procurement services specializing in sourcing, supply chain visibility, financial risk analysis and environmental impact to Fortune 500 organizations. With nearly 400 dedicated procurement specialists in 38 domains, across 9 industries, Beroe proactively invests in knowledge assets to build valuable, real-time procurement insight.

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