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Infographic: Which Gold Miners Hold The Most Supply (And Who Must Replenish Through M&A)
The following infographic focuses on what is probably the key issue for current
state of the physical gold-strapped market: which gold miners hold the
most (physical, not paper) supply.
Readers will note that a key tangent of the above infographic is the presentation of which miners need to add new reserves, or otherwise boost their asset base quickly, ostensibly through M&A - information that may be useful if and when the inevitable wave of consolidation in the miner space finally takes place. To provide a more in depth perspective on that issue, here is Jeff Desjardins from Visual Capitalist with additional insight.
Which Gold Miners Must Replenish Their Reserves Through M&A?
We often hear that large gold producers are usually not the best explorers. As such, when it comes time to replenish or grow their resource base, they must look to M&A.
With the recent offer from Goldcorp to buy Osisko for $2.6 billion, we wanted to do the math and see how much gold the majors and mid-tiers actually have in the ground. In addition, we wanted to find how much of it was in undeveloped projects vs. current producing mines.
Two months ago, using data from the 2013 Gold Deposit Rankings, we completed a rough approximation of total gold for each major. However, this time we took it a step further and conducted a much more rigorous analysis. We looked at each major and mid-tier in depth, took into account joint ventures, and calculated what percentage of their gold is in undeveloped projects. Presumably, it is the companies that have nothing in the pipeline that will want to acquire more gold assets. This is especially true, given that the target companies for potential takeover offers are trading at some of their lowest valuations in years.
Note: because the 2013 Gold Deposit Rankings only deals with gold deposits above 1 million oz and with certain cutoff specifications, we haven’t included small (<1 mm oz) or very low-grades (<0.3 g/t) in this analysis. In addition, to be classified as a major or mid-tier, a company had to have at least 20 million oz Au and have at least one mine in production.
To start at a high level, here is the breakdown between how many mines are owned by big producers vs. junior miners.
Of the 2.02 billion oz Au that majors and mid-tiers have, it turns out 71.3% of projects in their portfolios are already in production.
This means that big producers have less than 30% of their total reserves and resources contained in undeveloped projects. On average, while each undeveloped project is slightly higher grade (1.27 g/t vs. 1.11 g/t), they contain less overall gold.
In fact, each average project in the pipeline has 38% less gold than those in production:
Projects in the pipeline are both fewer and smaller in size. However, what is really interesting is that we have not even yet looked at development hurdles such as permitting or jurisdiction risk. Take the Pebble Project – this is the biggest gold project in the world (even though it is primarily copper). It holds 107 million oz of gold, and it is currently stalled by the EPA.
Of the 76 projects in the pipeline for majors and mid-tiers, how many of them will never go into production? How many of them will run into significant development challenges like Barrick’s Pascua Lama project? The math says that majors and mid-tiers have less than 30% of their gold in undeveloped projects, but this number could be even less based on these considerations.
That all said, let’s look at what is available in the junior market – this is where majors and mid-tiers would go to fill their pipeline of projects:
There are many projects, but at a much lower grade and size. About 20% are in production and 80% are in development.
The question is now: which majors are going to be the most likely to acquire new projects? In this chart, I’ll show the resources and reserves for each company. For a more detailed chart, see the infographic done through Visual Capitalist.
Last, but not least, here are four other companies besides Goldcorp that we think may be looking to boost their asset base: Gold Fields, Newcrest, Newmont, and Kinross.
Newcrest (ASX: NCM)
- Cash: $69 million (June financials)
- Resources currently in production: 86%
- Resources in pipeline: 14%
- Avg. grade of pipeline: 0.86 g/t
Gold Fields (NYSE: GFI)
- Cash: $1.2 billion
- Resources in production: 89%
- Resources in pipeline: 11%
- Avg. grade of pipeline: 0.63 g/t
Newmont Mining (NYSE: NEM)
- Cash: $1.5 billion
- Resources in production: 78%
- Resources in pipeline: 22%
- Avg. grade of pipeline: 1.02 g/t
Kinross Gold (NYSE: KGC)
- Cash: $950 million
- Resources in production: 66%
- Resources in pipeline: 34%
- Avg. grade of pipeline: 1.12 g/t
Note: The recent writedown of the Tasiast project may make Kinross wary of M&A for the time being.
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So this is bad news for Gold.
/Sarc.
Everything is bad news for gold.
/no sarc
You didn't mine that !!
I don't know about anyone else, but I just plain like gold.
If I had those kind of sites, I would not be selling what I mined for FRNs. Shit, I feel bad for the local coin guy.
I got the fever, and the only prescription is.., no, not more cowbell. More shiny!
pods
Even the candidate miners that look most attractive (Osisko and NewGold, for example) are risky, unless for speculation only. Quite agree pods, I'll take the gold itself.
If you're serious about this subject; you have to do more research than looking at a chart on a blog. Look up CTO, ticker symbol, on the ASX; Australian exchange. It's completely ignored by the market, under-priced, well managed, has real gold in the ground, it's an up and running company, they deliver bars every month. Yes it's more difficult than buying some ETF; it's a PITA to get an account in Australia to buy it; but if and when the world re'values gold; it will be "discovered". It's right there in plain sight, but that's the market for you; somethings just get overlooked.
If you're serious about the miners, here's a nice site with enough data to choke a pig. Click on companies and you'll see what I mean. It's free or $99 a year if you want the ratings and searches. No affiliation but I use them.
http://www.goldsilverdata.com/
Mind/mine the Gap.
Now's the time to buy miners.
I'd like to see a similar article on silver miner holdings.
Last time I looked Silver was most often a by-product of other mining activities rather than a primary goal.
Silver streaming....
If you like your 'miners', you can keep your miners, but the US government will be the custodian of the (physical) GOLD, but no worry, cuz everybody who owns' mining paper gets an IOU, as good 'paper gold'.
Me thinks that the cost of manufacturing GLD or ETF gold should be much less than $5, is that marketing cost? What is the actual cost? Take out the 50% commission too, I mean the cost to create a SHARE of paper gold should be less than a BUCK.
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It's know that most 'miners' are just guys with a whole in the ground, and the paper traded is the biz, ... if they had any GOLD, they would have sold it and retired to some place nice,... nobody stay's in the gold biz, if they actually have gold.
Finally an article on miners.,,
not what i have been waiting for.
svm, paas, exk , pzg are looking god? my two cents.
Once the Comex stash is gone and the only thing left is worthless paper gold, the miners will have to work overtime to meet the demand. Germany can pretty much forget about repatriating their gold.
One question I have had on the German deal's delay.....what did Germany get in return for having to wait 3 years? I have yet to see anyone report on that.
Germany has held nearly the same amount of US treasury debt since '00...around $50 B.
Little Ireland has $120 B, Belgium $200 B, Russia $140 B. Germany is not a player...so, no gold for you.
China who owned less than $100 B in '00 has steped up w/ $1.3 T now...lots a gold for you.
I beg to differ. But maybe someone can correct me if I'm wrong. Germany is a player. They allow American military bases to remain open in their own country.
JAPAN & GERMANY were subject to unconditional surrender.
BASES will remain, and JAPAN&GERMANY will remain puppet, aka clients states of the USA forever, or until WWIII.
"Germany's Gold", what a joke.
Count the Nukes in Germany & Japan.
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Germany is very much like the USA, they have civilian governments for entertaining their civilian citizens.
aka clients states of the USA...
Wrong
aka client states of the bankster cabal...
Fixed
A recent poll among Americans revealed that Americans would love to see Germany in a global leadership role because of the cultural progression, the innovation and the strong economy. Was just released today at spiegel.de
I guess there is hope for Americans after all.
Americans are in now, and have been for a long time, in a "give a shit" crises. Most of us have no clue who Merkle is. We can deliver if asked about grammys or the bachelorette or some other meaningless bullshit, "cultural progression"? What? Most of us do not even know where Germany is. You are giving way too much credit.
Japan and Germany are US-MIL colony's, managed since WWII to be economic superstars.
So then say we let the NSA/CIA run the US government too, since they have done such a god-damn good job of running these two country for over 50 years?
Funny that the USA control's two nations of the most monolithic and hard-working people on earth, should have NOT been a fucking accident that the PTB nabbed with two nations and put them to the screw to be manufacturing super-bases.
Yep, so let the US generals who control Japan, and Germany, let them control the US-GUBMINT too, ... fuck what an idea?
Imagine too that there was an NSA/CIA that listened to everything on earth,... imagine if they too were ran by the US generals.
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Why are we even having this conversation, when if ever did the US public not know there was a COUP in 1953.
Everytime Germany takes on a 'global leadership role' it creates a lot of jobs in America.
And soldiers in Europe.
Germany needs to sit the fuck down and shut up.
I think the NSA offered to back up Merkel's cell phone data free of charge.
Is that the US Gov's mushroom cloud backup service?
These dumb fucks should just shut things down and sell off their furniture while they have the chance. Haven't they heard - the market's currently vastly oversupplied by the paper mines out of New York and London, who, by the way have a WAY lower production cost than these guys can even dream of.
I believe a certain poster here years ago cited $5 per ounce to print gold. Clearly paper gold has the production advantage!
(or was that silver? I was never good with Math, Man.)
bravo!
$5 per ounce, wow - that's high!!!... the production costs at that paper mine are way out of control.
Businesses don't own any furniture these days, it's all leased.
Ditto for employees. 'Progress'. "You've come a long way, baby!" [blows smoke]
Re-posting from earlier today...
Chart Yen/gold and you will see a near 1/1 inverse relationship since ’09.
Since Yen began it’s big devaluation in ’13 gold prices have bombed (same timing as Germany’s request for phyz)…GLD gold holdings have been puked out from 1350 tons now down to 792 tons…with likely more today. Another 3%-5% devaluation of the Yen and GLD holdings should be halved again? The faster they print, the more worthless gold becomes. Interesting.
Comex has 222 tons of which 11 are available for delivery. LBMA is apparently only full of bare shelves.
US Gold scrap export sales has collapsed since the peak in ’08…from 880 tons/yr to less than 200…
Funding in Yen to go short paper gold to go long physical gold.
In theory this works shorting the price of gold while going very long the physical asset…in an infinite world.
Comex deliverable gone from 3 million oz to 375 k oz in ’13…GLD lost 560 of it’s 1350 tons…LBMA pretty well cleaned out…all the non-mining scrap sales have collapsed…mining production slightly up in '14 before declining in'15 and at/near/below the all-in cost of production…exploration / capex is completely shelved.
So available supply @ these prices is collapsing and assuming Yen devaluation continues un-abated, soon the shorting will no longer have a correpsonding physical asset available with which to pair off long against. Simply another 3%-5% Yen devaluation and nearly all available physical supplies are gone or unavailable (non-deliverable). This is coming @ us very rapidly…it is quite obvious and nearly every obvious trade is wrong…so what are we looking at???
maybe it was you I read/recollect. Have heard this before ...the 'reality' of it all currently.... but a lot of smart money has gone bust waiting on the obvious 'short" JGB idea
I'm sure women will love Paper Gold on their fingers!
Link opens in new window so you don't leave this site.
Nice graphics.....if a miner has an open pit mine versus, say, one of the really deep So. African ones, then the open pit miner can still make more $$$ in profits even with a far lower ore grade....just one item missing from these charts if someone begins to compare miners' reserve quality you need to determine mining method and costs.
My question being: As 63%(?) of silver is mined as a castoff from copper, zinc, nickel, what would occur with silver's production and scarcity should copper go into a deep price tumble?
I came across an article or video somewhere that claimed a lot of copper was being warehoused... I got the impression that their goal was to extract the by-product (silver) and not let the price of copper collapse. Of course, all specualtion and conjecture. --no link:(
Only about 4.5 billion ounces of gold have been mined in all of history.
This graphic indicates that 2 billion ouncees sits in mining company reserves.
That makes no sense.
Only about 4.5 billion ounces of gold have been mined in all of history.
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If you add up all the GOLD held by the US gubmint you get this figure and higher,
If you add up all the GOLD held by gold backed ETF's and ETN's you get a bigger number than stars in the universe.
Hell even COMEX has more gold than 4.5 B in their CHICAGO vaults, ... eveybody knows this.
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I want to see a 'shitcoin' a BTC backed by feces,... I think it will do better than dodgecoin, or flim-flam-coin.
Yeah. Something is wrong with the numbers.
According to the World Gold Council there are 179,000 Metric Tons of Gold ever mined in all of History.
That is equivalent to 5.76 Billion Troy Ounces. There are 1.25 Billion Troy Ounces unaccounted for using the Infographic information.
If that number is errant then I am uncertain as to how much Refined Gold that the Miners own.
But what I learned is that the Miners are substantial owners of Physical Gold. They are a good portion of the Private Party Ownership.
As they will ultimately be the new Bankers in the World then maybe it might be a good time to buy some of their stock?
In the end it will be that he who has the Gold will make the rules. The Golden Rule.
Maybe it is they whom are putting the squeeze on the Debt Ridden Ponzi Banking paradigm in the current and corrupted order. Maybe they are the Good Guys.
Anyone know how many miners or how much production has been hedged at these low prices?
Rubicon Minerals....
In bizarro world, gold would be backed by paper
I have a question, after looking at the gold charts, do you think it is possible that gold was manipulated up and not down? This would benefit the banks as they lend to minors, hedge, get new investment, and do daily trades with indexes and leverage etfs,
if you look at the gold price since early 2000's you see it all picked up when they really got involved with etfs to sell to the masses.
so maybe the jokes on us. it is just another trick for them to pump and dump
Gold Prices started increasing when the United States reversed course and began to ramp up Defict Spending in the early 2000s. The US Government began to borrow $400 Billion annually after George W. Bush took office.
When that happened and the Republican led SPENDTHRIFT Congress of 2002 reversed the trend of responsible spending enacted by the Republican led FRUGAL Congresses of the 1990s then I knew that it was going to be a Bull Market for Gold Prices and acted accordingly.
(The Republican Congresses of the 1990s were responsible through restricting Military Budgets as well as Social Spending. AS CONGRESS HOLDS THE PURSE...Do not blame Clinton for Closing Military Bases or give Clinton credit for being Fiscally Responsible. It was CONGRESS whom were responsible for BOTH POLICIES. Money talks and Bullshit walks.)
The Gold ETF began in 2005 if my memory is still acute. (It is.)
While I will agree that there has been Manipulation Upward as well as Downward...Manipulation is Manipulation...and is AGAINST THE LAW.
Where the hell is Anglo America on this chart?
The pebble project has over 100 million oz, and yet Northern Dynasty Minerals is also not listed in the top 20. Where are these guys getting their data?
Great article, thanks ZH.
"If you don't hold it....it's gone!"
How do the Total Cost of Processing compare -- when you include the FULL environmental/perma-toxic sludge component? For those [cough, cough] who actually know or care to know these "devil in the detail" things.
"I love the smell of Mercury in the morning. Smells like profits!"
p.s. Notice that the number or blog posts on ZH have fallen off as much as the PM prices.
Whereas, the number of posts for Bitcoin or Cyber-Currency has shot through the roof. Long ZH articles (hence Clicks, hence Ad revenue) on the latter. Just sayin'.
gold miners are a great buying opportunity right now. And gold is a pretty good trade. I like to trade it with some leverage:
http://www.cfd-trading-info.com/index.php/articles/8-articles/8-trading-gold
Rob McEwen On Goldcorp's Hostile Bid, M&A Opportunity And Market Bottoms
With general equity markets sliding into the territory which will challenge Bernanke's Happy Exit with Tapering, time is to listen to those who have seen and have done it. Rob McEwen is dissecting the recent market situation in Gold and M&A activity, which will make the best stories in the market to move very fast from the bottom.http://sufiy.blogspot.co.uk/2014/01/rob-mcewen-will-gold-soar-on-dow-dro...
Forgive me if it's be offered already, but I suggest a better question would be:
Which miners hold the most gold that has not already been sold forward?
Or maybe it is better to have sold gold you have not yet mined back when the price was much higher.
Here's what you loo for:Gold miners who have been beaten down to the point where they trade below their asset value.This one is SanGold on the richest gold belt in Canada that extends from Red Lake to Flin Flon.These guys control over 400 square kilometers of land position along what geologists call the Uchi Sub-Province.The assets are valued at .57 and the debenture debt looks even more attractive.Sprott and Dundee are in on it too.Listed on Toronto,this is one example of value.They also control the Company with the symbol SXR
http://www.sangold.ca/s/Home.asp
Can someone tell me what happen to gold price during 1929? And few years after? Did gold price drop like stock price during October panic? Or did it rise?