THE price of gold should breach $US1000 an ounce by the end of the year and eventually hit $US1200 per ounce, says Sino Gold Mining chief executive Jake Klein.
Gold would continue to offer a hedge against inflation in an environment of financial market instability, Mr Klein told media at the Diggers and Dealers conference in Kalgoorlie today.
Maturing gold deposits and few new discoveries were keeping supply tight, he said.
"We closed out all of our hedges on the basis that we had an optimistic view of the gold price,'' he said.
"I think $US1200 an ounce seems like a reasonable target.
"I'd be very surprised if we didn't see $US1000 per ounce by the end of the year.''
Mr Klein said the sector had "some work to do to regain credibility'' after recent high-profile gold company collapses, including Monarch Gold Mining Company and View Resources.
"The Australian reinvigoration of the industry has not really been successful: we've been trying to re-mine old deposits.
"This industry is dependent on new discoveries and new mines coming on stream, and at the moment, it's not happening.''
Mr Klein said Sino Gold would continue to pursue gold projects in nations such as China as cash costs per ounce were too high in the traditional gold mining centres of South Africa and Australia.
He said the company would eventually expand its number of mines in China from one to four.
"It's very, very tough in places like South Africa and Australia to bring costs down because you're fighting a losing battle given the maturity of the belt that you're mining.
"Costs are certainly going up dramatically.
"Without wanting to just preach our story, I think you've got to go to new jurisdictions.
"And that's challenging as well because ... you've got to find those jurisdictions that have geological potential and manageable political risk.
"And that's where we think China has been under-recognised.
"If you speak to the majors, they say that China is difficult - and it is - it's bureaucratically complex but it's geopolitically very stable.''
He said Sino Gold's cash cost per ounce at its flagship Jinfeng mine in south-west China was $US390, which compared favourably with cash costs at the Newmont Mining Corporation/Barrick Australia Pacific joint venture-operated Super Pit mine in Kalgoorlie of as mch as $US800 an ounce.
Newmont yesterday flagged the possibility of it selling its 50 per cent stake in the mine.
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