Good news for explorers: The gold giants are running out of gold...

Good news for explorers: The gold giants are running out of gold
September 04, 2020

With leading gold producers facing declining production, dwindling reserves and rising production costs again, it is expected that many corporations will expand their exploration activities in the short term while at the same time using targeted acquisitions to fill their empty project pipelines, according to S&P.And according to the analysts, 80% of the majors in the gold industry are depleting reserves. 16 of the 20 largest gold producers would have seen their remaining production years dwindle between 2010 and 2019! Kinross (WKN A0DM94), for example, showed a remaining production time of nine years in 2019 - after 24 years in 2010.Too little explorationAccording to S&P Global Market, a lack of new gold discoveries is primarily responsible for the continued decline in minable gold reserves at the world's 20 largest gold producers. At the end of 2019, they had a total of 668 million ounces of gold, which at current production rates would be enough for around 14 years. After all, it managed to replace 95% of production over the past decade, with the average cost to discover a new ounce of gold being $ 175, analysts said.In addition, many majors have focused on strengthening / maintaining their margins rather than focusing on growth-oriented strategies, the report said. In the past decade, some producers have made acquisitions to expand their reserves or increase production, but some of the largest deals are now viewed as too expensive, poorly timed, or ultimately disappointing.Of the top 20 gold producers, 18 have made acquisitions over the past decade, according to the report. These deals were worth $ 51.3 billion, according to S&P, while exploration saw investments of just $ 18.2 billion as a measure to replace depleted deposits.Newmont (WKN 853823) tops the list of these deals. The group acquired 56.3 million ounces through acquisitions. Barrick Gold (NYSE: Barrick Gold) came in at 33.5 million ounces. However, this approach is more expensive than exploring new ounces. For the $ 51.3 billion above, the top 20 gold producers acquired 209 million ounces at an average of $ 245.50 an ounce. Detecting these occurrences with the help of exploration cost an average of only USD 96.75 million.And yet the acquisitions are likely to continue, with many producers also likely to participate in promising projects that are still under development. If they don't take it over completely. However, exploration companies with promising discoveries could also be targeted by larger societies.From the GOLDINVEST.de universe, for example, project developer Treasury Metals (WKN A0Q8DW) would be a candidate for a takeover - especially now that the Goldlund project has been secured from First Mining. Among the explorers who currently have the prospect of finding really large deposits, the Australian De Gray Mining (WKN 633879) is at the forefront, followed, for example, by Osino Resources (WKN A2NB4J), which have not yet identified a resource, and Nova Minerals (WKN A2H9WL), whose 2.5 million ounce inferred resource in Alaska is believed to have only been the beginning.