GFMS: "New Era" for Gold Mining Production

GLOBAL Gold Mining production has entered a "new era", with a fourth consecutive year of rising output expected in 2012, says leading precious metals consultancy Thomson Reuters GFMS.

A widening gap between mining costs and the Gold Price helped encourage a 2.8% rise in global Gold Mining production last year, equivalent to an additional 78 tonnes of Gold Bullion, GFMS reported today at the London launch of its Gold Survey 2012.

First publishing its annual Gold Survey in 1967 as GoldFields Mineral Services, the London-based GFMS consultancy now analyses over 100 gold extraction companies operating more than 350 mines worldwide. Today it forecast that worldwide Gold Mining production will grow a further 3% in 2012.

That would mark the third consecutive record for global output, after 2010 broke the previous record set in 2001, when the Gold Price averaged a 23-year low of $272 per ounce.

"We are in growth mode now," said Philip Klapwijk, GFMS's global head of metals analytics, speaking to analysts, traders and journalists gathered at Thomson Reuters' London offices for Wednesday's launch.

"Mine production has turned the corner...[this is] a new era for global mine production."

Africa saw the largest growth in Gold Mining output last year, according to GFMS data, adding 51 tonnes to its output – despite the region's largest producer South Arica seeing a five tonne drop.

The average cost-per-ounce faced by Gold Mining companies rose 15% last year to $643. GFMS's proprietary all-in costs measure – which includes infrastructure and environmental spending now necessary to secure official licenses – saw a 22% rise to $1044 per ounce. Even so, that still left the industry with "a really nice" margin, Klapwijk noted.

Average Gold Prices in 2011 gained 28.3% year-on-year in Dollar terms to $1571 per ounce. The year-on-year rate of gain eased to 22% in the first quarter of this year.

Last year's rise in global Gold Mining output came as recycled supplies from old and unwanted "scrap" metal fell, down 3.4% on GFMS analysis, and central-bank gold sales were again near zero. Overall, official sector players worldwide in fact bought some 450 tonnes between them.

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