'Global scramble for gold' Nov 15 2005 04:30:11:293PM Print...

'Global scramble for gold'
Nov 15 2005 04:30:11:293PM

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Johannesburg - Global gold production is set to decline dramatically over the next four years and this is set to generate a scramble for gold ounces, DRDGold chief executive officer Mark Wellesley-Wood said in the company's latest investor newsletter released on Tuesday.
"There are 29 new gold mines in the pipeline right now and even if all these are developed, it would require a further seven projects every year to make up the deficit," he added.

"The reality is that not all these 29 mines will get the go-ahead as cost inflation, especially capital cost inflation for resources projects, has increased by a great deal more than the gold price. So where are the ounces going to come from," Wellesley-Wood wrote.

"Well, not from the traditional source - exploration. Expenditure on exploration peaked in gold mining in 1997, and has been pretty flat since then.

"Not only are the geologists not there (as most have gone off to look for oil, nickel, copper, etc) but the geological terrain is getting tougher with most of the known prospective ground having been searched by now," he added.

"Shares in junior mining and exploration companies are soaring. Next, the dehedging trend is set to continue. Who would want to be short gold in four years in this climate? Finally, merger and acquisition activity and industry consolidation will continue apace - if you can't find it, buy it", Wellesley- Wood wrote.

World number three gold miner Barrick Gold is currently bidding for rival Placer Dome.

http://www.fin24.co.za/articles/economy/display_article.asp?Nav=ns&lvl2=econ&ArticleID=1518-25_1834813