yesteryears castoffs

Excerpt from Louis Roulston interview with The Gold Report;
http://www.theaureport.com/pub/na/5670

Chuckey,s comment; This is why CTO is one of the higher cost producers


LR: Absolutely. And getting new supplies of metals is critical. Going back to gold as an example, the gold mining industry pulls 80 million ounces of gold out of the ground every year. If they don't replace it with 80 million ounces of reserves, the industry shrinks. In fact, over the last few years the rate of production has exceeded the rate of new reserves, so the gold mining industry overall has shrunk.

And to a somewhat lesser extent, it applies to base metals, as well as precious metals. If the typical life of a mine is roughly 20 years, every decade 50% of all the metal mining capacity in the world has to be replaced just to stay level. Factoring in 2% to 3% average growth annually over the last few years, you can see an incredible need for new metals deposits to be discovered, developed and brought into production. That's where my focus has been.

TGR: What's making historic mining properties attractive again? Is it better technology that enables miners to extract more volume, or lower operating costs, or higher metals prices?

LR: In many of these situations where deposits were looked at in the past, it was an era of lower metal prices. At that time?a lot of this was in the '60s, '70s and the early part of the '80s?picture a company that goes looking for a copper deposit, finds one and starts developing it. Meanwhile, the company's geologists are finding other copper deposits all over the place, and as soon as they find something better, they drop everything and put the focus on developing the better one they found later. Fast-forward 20 or 30 years, and those better deposits are all mined out.

The properties that were cast off in decades gone by are now the best available in the world. The low hanging fruit has been picked. The mining industry has spent 50 years now going over every square inch of the surface of the earth, and the big deposits that were sticking out of the ground have been found, developed and mined out. Now we're going back to what were effectively second-tier deposits in the first pass.

TGR: So instead of being cheaper thanks to technology or whatever, these deposits actually cost more to develop and more to mine than they did in the good old days.

LR: And that's why we'll never see metal prices back at the levels of previous decades.