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

To: goldsnow who wrote (5633)	1/12/1998 11:51:00 PM
From: goldsnow	Respond to of 116759

News Alert from Nightly Business Report via Quote.com Topic: (NYSE:ABX) Barrick Gold Corp, Quote.com News Item #5056388 Headline: Gold Mining Loses Its Shine ====================================================================== LINDA O'BRYON: Well, Paul, there isn't much glitter in the gold mining industry these days. The price of gold nose dived last year as central banks sold off, reaching an 18-year low last month. And as Jennifer Arterburn explains, the problems are hitting hard in Nevada. JENNIFER ARTERBURN, NIGHTLY BUSINESS REPORT, CORRESPONDENT: More than 2/3 of U.S. gold production comes from Nevada. Here the price of gold has mining companies looking at ways to economize. RUSS FIELDS, PRESIDENT, NEVADA MINING ASSOCIATION: Everybody is focused on costs right now, trying to reduce costs. ARTERBURN: That means cutting back on exploration, capital expenses and trying to reduce the cost of production. BRIAN KENNEDY, PRESIDENT &CEO, MERIDIAN GOLD: Our particular production's about $225 now. So yes, as we see the price closing into that cost level, it gives us all a concern. ARTERBURN: About a half of the world's mines become unprofitable at the $285 an ounce level. The price drop has forced shutdowns in South Africa and Australia, the number one and two producers. JOHN DOBRA, DIRECTOR, NATURAL RESOURCE INDUSTRY INSTITUTE: They have very high cost in the 200- over $290 an ounce cash cost. ARTERBURN: In the U.S., the world's third largest gold producer, the average cost of production is $240 per ounce. Despite the benefits of low production cost, analysts say in the past three years many of the North American mining companies have increased their operating expenses by taking on debt. DAVID CHRISTENSEN, ANALYST MERRIL LYNCH: Those companies which have large debt loads on their balance sheet are more sensitive than they would normally appear just from looking at their normal production costs. ARTERBURN: Some companies, like Toronto-based Barrick Gold (NYSE:ABX) have hedged against the drop in prices by pre-selling their gold. MICHAEL BROWN, VICE PRESIDENT PUBLIC AFFAIRS, BARRICK GOLD: We've actually pre-sold it two or three years in advance so that we kind of know what the price is going to be. And fortunately we locked those prices in before the current dip in gold prices. ARTERBURN: The decline in gold prices has led to a drop in the price of mining company stocks and scattered layoffs. In addition, some in the industry are now finding it cheaper to acquire gold by buying other mining companies rather than digging. What does the future hold for gold? Experts say they expect to see output decline in countries with high production cost. That lessening in supply may help increase demand. As for the central banks, they hold seven year's worth of production in their vaults. But as one expert reasons, the banks are unlike to sell their reserves at gold's current lackluster price. Jennifer Arterburn, NIGHTLY BUSINESS REPORT, Las Vegas. Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c)1998 Community Television Foundation of South Florida, Inc.