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To: goldsheet who wrote (7187)	8/18/1999 12:52:00 AM
From: Greg Ford	Read Replies (1) \| Respond to of 81187

Bob those are very insightful comments. However, the difficulty for the majors is replacing low cost production with smaller exploration budgets and less financing. The focus in the industry is on profitability as opposed to production growth. Based on the 1998 Goldfields Mineral Survey, 80% of production had a total cost of over $260. 20% had a cash cost over $260. When you consider the fact that weak commodity currencies helped some producers last year you can certainly make a case for lower production. It will take time however as in many cases producers will need to consider environmental and closure costs when looking at closing high cost mines. In other words it may be better from a cash flow basis to operate the mine rather than accelerate closer/environmental costs. Greg

To: goldsheet who wrote (7187)	8/18/1999 4:57:00 AM
From: sea_urchin	Read Replies (1) \| Respond to of 81187

Bob : Thanks for showing us those beautiful charts and, of course, my congratulations on a magnificent bit of work (as usual!) As you say, it seems most unlikely that mine prduction will fall by 40%. It has certainly risen in the past two years as the gold price fell. Still, at $250-260 many mines will have to go to the wall. What I find most fascinating is that production has in fact doubled since the mid-seventies. And at a time when CBs were not serious buyers. I am sure it is this, as much as CB selling and speculation, which has weighed on the gold price. Another fact is also clear and that is South African production, which is now only half of what it was in the early seventies, is likely to fall more, absolutely and relatively to the other sources, in the years to come. The reason, clearly, is mining costs and, in particular, the cost of labor which in the mines, like most other places in SAf, is unproductive and uncompetitive. As an aside, the trade unions hope to bring the country to its knees next week in an attempt to force government to pay higher wage increases in the public sector.