Gold industry consolidation likely despite Barrick-Newmont merger collapse

|By:, SA News Editor

Despite the collapse of the $33B Barrick-Newmont merger last month, scarcity and extraction costs would seem to make consolidation of the embattled gold mining sector inevitable, WSJ's Alistair McDonald and John Miller write.

The gold industry ramped up exploration as prices increased 6x from 2001 through 2012 to $1,750/oz., but prices since have tapered off to ~$1,300/oz.

Discoveries also have tapered off: 22 gold deposits with at least 2M oz. of gold each were discovered in 1995, there were six such discoveries in 2010, one in 2011, and zero in 2012.

The grade of gold held by miners declined 35% from 2001 to last year, and lower grades require digging up more earth to find the metal so are more expensive per ounce; the cost of mining an average oz. of gold rose to $745 in 2012 from $280 in 2005.

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