Gold price of $2 000/oz-plus needed to replace infrastructure – Gold
Fields
By: Martin Creamer
25 August 2008
A gold price of more than $2 000/oz would be required to replace Gold Fields’ infrastructure, said the company’s CEO Nick Holland on Monday.
In announcing gold reserves of 82,8 Moz, 80% of which were in South Africa, Holland said that Gold Fields mines could not be replaced anywhere in the world at the current gold price of $820/oz, which indicated gold’s current unrealistically low price level.
Holland spoke after Gold Fields minerals head Tim Rowland put the resources of Gold Fields – as at June 30, 2008 – at 250,6 Moz, which represented a 4% increase over 18 months ago, and said the company’s reserves were the world’s third largest with 66,6 Moz in South Africa.
“There’s not enough money today to replace the infrastructure that exists today at Gold Fields,” said Holland, who earlier this month said the gold price could rise to $1 500.
“If you tried to build these mines today, you would need a $2 000/oz gold price and higher to justify the investment in all of these mines today.
“Replacement costs of all of the operations, whether it be South Deep, Kloof, Driefontein or Beatrix, you could not recoup your investment today at these prices
“You could not build these facilities today anywhere, and that gives an idea of the gold price’s behaviour today in the face of reality,” he said.
In outlining the position at Gold Field’s South Deep operation, Gold Fields South African Operations Head Vishnu Pillay said that South Deep had 76 Moz of resource and 29 Moz of reserve.
He said that the application to South Deep of the normal Gold Field’s guidelines that are used to distinguish between above current infrastructure and below current infrastructure, had indicated that South Deep's levels between 87 and 110 level were above current infrastructure, and the levels from 110 to 130 level were below current infrastructure.
“In essence, having done this, I feel comfortable in telling you that we actually acquired two mines for the price of one,” said Pillay.
From www.miningweekly.com