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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Enigma who wrote (53479)	6/1/2000 3:14:00 PM
From: LLCF	Respond to of 116815

The basic tennant for gold NOW IMO, all this stuff about production hedging, etc is a side show: Message 13811528 DAK

To: Enigma who wrote (53479)	6/1/2000 5:57:00 PM
From: goldsheet	Respond to of 116815

> but I don't see major new projects being developed beyond 3 years We agree. I don't see anything, although Tanzania, Peru, and Argentina seem like the right places to be looking > I agree that there are some moth balled deposits out there which can be re-activated - but with a time-lag. Operations on care and maintenance can get up and running in a few months. Don't have all the permitting hassle of a new mine. > Bob has so clearly pointed out some projects have cost hundreds of millions to develop and bring into production. There was a time when you could build a mine for $100-200 million, then produce at a cash cost of $200 or more. Most of your costs were variable cash costs as opposed to fixed capital costs. These mines are most sensitive to the spot price of gold. Some of these new mines, approaching the $1 billion capital level, now produce at a cash cost of $50-80. The equation has shifted and capital cost per ounce often exceed cash costs per ounce. The math (IRR) has to make sense at the start of the project, but once you have made the huge capital investments in these mines it almost make the spot gold price irrelevant