Gold miners to remain cautious in 2019: report

Gold miners are expected to remain committed to cutting costs
and capping expenditures in 2019, a new report by Fitch Solutions
reveals.

According to the document, despite the fact that prices are
predicted to average $1,300/oz and that most major miners’ cash
costs of production should remain comfortably below $900/tonne, the
largest firms in the world are likely to remain committed to
spending cuts in an effort to reduce debt loads, and continue to
pursue a strategy of improving both operational and cost
performance.

“Capital expenditure estimates for 2019 indicate that although
gold companies may have turned a financial corner in 2016, spending
will not return to the heights of the past decade. As such,
priority will be given to reinvestment in brownfield assets rather
than the development of greenfield projects,” Fitch report
states.

The market researcher also expects more mergers and acquisitions
in the new year, given that they have become cheaper options than
expanding gold reserves through exploration.

“We expect more M&A activity to filter through the industry,
especially following the Barrick –
Randgold merger
(completed in January 2019), which has changed
the dynamics of the gold industry by creating the largest
gold-mining company in the world with the greatest concentration
(five of top 10) of tier-one gold assets in the market,” the paper
reads.

Fitch also foresees an increase in joint ventures, used as
strategies to mitigate risk, particularly in unstable countries
where resource nationalism, labour strikes, extreme weather, and
increased environmental regulation jeopardize the continuity of
ongoing projects. “Examples of notable joint ventures in 2018
include Gold Fields & Asanko Gold’s 50/50 deal in the Nkran
and Esaase gold deposits in Ghana and Indiana Resources and Cradle
Arc’s 65/35 deal in the Kossanto West Gold project in Western
Mali.”

Also to avoid the risk of engaging in murky activities, miners
are expected to invest in blockchain technology. According to
Fitch, such a system would allow them to effectively track the
sourcing of minerals across the supply chain in order ensure they
abide by ethical and sustainability standards.

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Gold miners to remain cautious in 2019: report
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Source: FS – Mining B.
Gold miners to remain cautious in 2019: report



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