The news seems to be uniformly gloomy: The ANC Youth League saying nationalization of mines must occur; Rio Tinto and BHP cutting staff and costs: Barrick’s credit rating downgraded because of Pascua Lama delays; and so on.
A bit of interesting information is interspersed with all this bad news: Natural Resource Holdings at this link publish their report Global Gold mines & Deposits 2012 Ranking (over 1mm oz). Here is a summary of their findings and opinions:
This year’s results confirmed both the scarcity of gold deposits as well as the lower-grade production trends facing the industry. Even with our generous thresholds allowing inferred resources to be included in the database, we were able to identify only 439 mines or deposits containing over 1 million ounces of gold. In our view a mine or deposit is an asset no different than a farm, commercial property, or financial security. Yet when it comes to gold, there are only 439 assets that meet the industry perceived economic threshold of 1 million ounces. Last year, we compared this figure to the tens of thousands of commercial real estate properties in the world or the nearly 72,000 financial securities. While the crustal abundance of gold is fixed, and discovery grades continue to decline, there is no limit to the creation of financial securities and plenty of land and building materials to construct more property. Simply put, a gold mine or deposit with over 1 million ounces is a very rare asset. This is especially true when viewing the geographical distribution of the mines & deposits.
In some 29 pages they list just about every statistic on large gold deposits worldwide. A few that caught my attention–I list only the top five, whereas they list the top 100:
- The five top producing gold mines: Grasberg, Indonesia; Lihi, Papua New Guiniea; Muruntau, Uzbekistan; Mponeng, South Africa; Olimpiada, Russia.
- Top five producing mines by grade: Hollister, Nevada; Tautona, South Africa; Moab Khotsong, South Africa; Savuka, South Africa; Kirkland Lake, Ontario.
- Top five undeveloped deposits by grade: Dvoinoye, Russia; Brucejack, Canada, BC; Kencana, Indonesia; F2 Deposit, Canada, Ontario; Cerro Blanco, Peru.
- Top five undeveloped deposits by global in-situ resources: Pebble, Alaska; KSM Deposit, Canada, BC; Natalka, Russia; Donlin Creek, Alaska; Reko Diq, Pakistan.
- Top five mines & deposits in U.S. and Canada: Pebble, Alaska; KSM Deposit, BC; Donlin Creek, Alaska; Snowfield, BC; Detour Lake, Ontario.
- South Africa followed closely by Canada is tops in deposits of high grade.
- Canada tops the list of countries by having the most 1 million + deposits.
On the basis of these figures, they conclude:
Another data point we found fascinating was that out of 439 mines or deposits, 189 are in fact producing mines owned by companies with an average market capitalization of $1.8 Billion. This leaves us with a universe of undeveloped deposits over 1 million ounces of just 250. Of course some of these 250 deposits are owned by miners (84) while just 166 are owned by independent junior companies, private companies, or government sponsored enterprises. Investors seeking leverage to gold should focus on these companies as they provide the best exposure to a rising gold price environment. We have attached a table with these deposits and companies at the end of the report titled “Undeveloped Deposits over 1mm oz owned by Independent Juniors”.
It is interesting to note that in Canada we were able to find only 59 undeveloped deposits over 1mm ounces owned by 49 companies (41 Independents). In the United States we found only 33 deposits owned by 26 companies (23 Independents).
Internally, the purpose of this report was to identify potential short-comings in the theories employed by leading thinkers in the gold industry. After reviewing nearly 2,000 companies in the space we can objectively say that are no such red flags. Annual discoveries in 2011 lacked the gravitas required to move the needle on the aggregate in-situ figures after incorporating depletion. This was surprising as historically high gold prices have provided nearly unprecedented capital to gold exploration companies and we had assumed that after tallying up the year’s discoveries there would be a significant nominal gain in ounces.