Brent Cook quote re: time taken to build a gold mine
Gold mining is a terrible business... It's not scalable. It requires huge upfront and ongoing capital expenditures. Even when times are good, the profit margins are razor-thin. And times are terrible... and getting worse.
According to Brent Cook, who writes the excellent Exploration Insights newsletter, "the amount of time it takes to build a mine has doubled since 2004 – from 10 years to 20. It's harder than ever to clear the social, political, environmental, and technical hurdles.
"And it takes a lot more money, too. Brent noted that major miner Barrick Gold estimated a high-profile project would cost $600 million. It ended up costing $9 billion... and the mine still isn't producing.
"Plus, most potential projects these days are lower-quality. They contain less gold – down from 3.5 grams of gold per tonne of ore in 2005 to less than 2.5. Miners are concentrating on the higher-grade areas of their deposits. But that's just going to make it harder to mine what's left.
"Of course, the biggest problem right now is they can't really make any money mining gold. Brent says the average all-in cost of gold mining is about $1,500 an ounce. Gold trades at $1,320. So miners are cutting costs... They're spending less to maintain equipment, they're cutting staff, and they're reducing development. That's going to hurt them down the road."
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comment:
and now we tick off little old PGLC:
1) Lower Quality deposits nowadays? PGLC's currently waaaaaaaaay less than 2.5gpt in any assays done to date, let alone reported by mgmt. More like 0.019gpt last I recall.
2) spending less to maintain equipment per se'... Heck, I don't see it on a financial report as even a line item of any size or even reported that I can easily recall,
3) cutting staff? PERSHING???? Well, now THAT bullet point started my day with a guffaw. Staff is where PGLC lavishes the 90% of its budget, and to be fair, on some pens & pencils, printer ink, and stamps thrown in.
4) reducing development? Nope, a whole 10% is going to increase development, and they are STILL below 2.5g p/ton. They haven't found the glory zone/mine maker yet, and they've been poking holes for 3 years under Alfers now.
5) all in costs around $1500? I've been saying PGLC's around $1300 for quite sometime now. Pershing claims $750-ish w/no PEA in sight. I see a widening credibility gap developing on this bullet point.
I suppose PGLC can always turn out to be the exception, or......
