Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Franco & Euro Nevada FN , EN -- Ignore unavailable to you. Want to Upgrade?

To: fergie who wrote (466)	5/13/1999 4:32:00 PM
From: Traveling Man	Respond to of 658

Fergie, These guys have the same opinion of FN management I do. Thanks for the article. TM

To: fergie who wrote (466)	5/19/1999 2:25:00 PM
From: CIMA	Read Replies (1) \| Respond to of 658

TORONTO, May 18 (Reuters) - The world's largest gold producers are dancing to a Latin beat as development of new South American mines promises to add millions of ounces of low-cost gold to global supply. Not since a tiny force of Spanish conquistadors plundered their way through the Andes 466 years ago in a largely unsuccessful search for Inca treasure has there been such keen interest in South American gold. Three massive mines, stretching from the steamy jungles of Venezuela to the arid mountains of the Chilean and Argentine Andes, will either begin or reach full production during the next three years. The Pierina, Pascua and Las Cristinas mines will eventually churn out a combined two million ounces of gold each year, roughly equivalent to 2.5 percent of 1998 world production. Development of these prized assets will allow South America, once a bastion of military dictators, uncompromising bureaucrats and stringent mining laws, to challenge South Africa as the cornerstone of gold mining. South Africa has seen its gold production steadily decline since 1970. Last year, the country's production touched a 40-year low of 473.7 tonnes. "The confluence of the decline of South African production and the combination of factors in South America in terms of mining laws, development of the economies, stability and tax stabilization agreements have contributed to a welcome mat being there alongside the long-established attractive geology," Barrick Gold Corp. spokesman Vincent Borg said. Barrick and other gold miners fully committed themselves to the region in the early 1990s after a host of economic reforms, notably in Peru and Argentina, effectively streamlined foreign investment laws and mining regulations. What began as a trickle of exploration and development in South America turned to a heavy flow in 1997 after the Bre-X mining scandal left many companies and investors disillusioned with gold exploration in the Pacific Rim. Shareholders lost billions after Canadian miner Bre-X Minerals Ltd. admitted that its Indonesian gold discovery, touted as the find of the century, contained insignificant traces of gold. Whether entering the region through grass roots exploration or the more expensive acquisition route, South America's successful gold miners have one common trait: a knack for achieving low cost operations. Toronto-based Barrick, North America's second largest gold producer, has achieved some of the lowest cash costs in the gold sector at its prized Pierina mine in Peru and Pascua property on the northwestern Chile-Argentine border. Pierina, which began production late last year, is expected to produce 835,000 ounces of gold annually at a cash cost of $45 an ounce, while the $950-million Pascua development will likely begin production in 2002 with annual output of about 675,000 ounces of gold at a cash cost near $125 an ounce. The worldwide average cash cost of producing an ounce of gold during 1998 was $206 an ounce, down $62 or 23 percent from 1996, according to industry consultants Gold Fields Mineral Services of London. Gold traded at $273.90 an ounce on Tuesday. The prospect of adding another low-cost mine to its stable of gold properties also persuaded Placer Dome Inc. , the third largest North American producer, to proceed with the financing of its 70-percent-owned Las Cristinas gold mine. The $575-million project, located in the remote southeastern reaches of Venezuela, is expected to begin production in 2001 with annual output of 530,000 ounces at a cash cost of about $155 an ounce over a 10-year period. Placer Dome spokesman Earl Dunlop said Las Cristinas fit perfectly into the company's strategy of becoming one of the lowest cost senior producers in the gold sector. Success in South America's gold fields has touched off a stampede by exploration firms and a bidding war among mining companies eager to stake further claims on the continent. San Francisco-based Homestake Mining Co. raised a few eyebrows two months ago when it paid a lofty $200 million in a friendly takeover of upstart Canadian miner Argentina Gold Corp. and control of the Veladero gold mine in northwestern Argentina. Canadian rival Barrick previously had offered C$160 million in a deal rejected by Argentina Gold shareholders. Veladero, which sits nearly 16,000 feet (5,000 meters) above sea level in the Andes, is estimated to contain 5.8 million ounces of gold and 72 million ounces of silver. Construction could begin as early as 2001. Despite the imminent arrival of new gold mines in Peru, Venezuela and Argentina, analysts have warned that large acquisition and depreciation costs could ultimately wipe out much of the benefit of low-cost operations. "It's the acquisition costs in addition to your cash costs that you have to look at," said John Ing, president of Canadian brokerage Maison Placements Canada Inc., who highlighted Barrick's 1996 acquisition of Arequipa Resources Ltd. as an example. Barrick paid $800 million for Vancouver-based Arequipa and control of the Pierina mine. "You have to include the depreciation, amortization and reclamation. When you add all of that up you are approaching, in Pierina's case, (around) $270 an ounce all-in cost," Ing said. ($1=$1.46 Canadian) ((Paul Simao, Reuters Toronto Bureau (416) 941-8104) or email: toronto.newsroomreuters.com))