Canadian mining firm sees gold production drop

A leading Canadian gold mining firm has cut its fourth quarter forecasts, signalling a potential drop in gold supply that could start to affect prices.

Northgate Minerals has cut the fourth-quarter gold production forecast by as much as 30 per cent for its Kemess South mine in north-central British Columbia, with a higher capacity predicted instead for its copper operations.

The news comes at a time when leading bodies such as the World Gold Council (WGC) are claiming that gold demand is reaching record levels, without supply being able to keep up.

The WGC said that demand for gold constituted a record value of $65.3 billion in 2006, while in the same year mine supply of gold dropped by as much as 15 per cent.

Northgate's set-back in gold production could help extend the trend through 2007, with the group attributing the drop-off to necessary repair work on a pit ramp, which has delayed the drilling of high-grade ore until March 2008.

Those looking to buy gold have multiplied this year, with mining companies now looking to capitalise on higher commercial gold demand and rising market bullion investment – but not yet producing enough to feed eager buyers.