The almost 100 significant gold discoveries between 1997 and 2011 could potentially replace only 56% of the estimated gold mined during that same period, a study by Metals Economics Group, Halifax, Nova Scotia, has concluded.
The study, “Strategies for Gold Reserves Replacement: The Costs of Finding and Acquiring Gold” found that 99 significant gold discoveries of deposits containing at least 2 million ounces of gold had been reported in the period.
The entire group of deposits are said to contain 743 million ounces of gold in reserves, resources and past production as of year-end 2011, analysts said. They noted the 56% replacement of gold mined during the period assumes a 75% resource-conversion rate and a 90% recovery rate during production if the discoveries prove economical to mine.
The analysts note that the economic viability of the discoveries also relies to a large extent on location, politics, capital and operating costs, as well as market conditions.
Overall, reserves and resources in the 99 discoveries account for only about 18% of all reserves and resources in the world’s currently producing mines and developing projects, which analysts said indicates that most of the industry’s exploration-derived gold has been added through brownfields work and exploration at older, known deposits.
The Americas were described as accounting for the greatest share of gold in the discoveries, which analysts noted was not surprising since the Americas have accounted for more than half of the industry’s discovery-oriented gold exploration spending during the period.
In the past decade the top 26 global gold producers (who mined at least 600,000 ounces of gold in 2011) collectively replaced almost 208% of the gold they produced. Of those, 21 producers added sufficient gold through exploration and acquisitions to keep ahead of production and maintain a strong pipeline of projects for future gold output.
The major gold producers also increased aggregate annual production 17% in the past decade to 46.4 million ounces or 57% of world mine production. As of year-end 2011 these companies held reserves for 21 years of production at last year’s rate. Based on their 2011 production, each major producer needs to replace an average of almost 2 million ounces of gold reserves each year, the analysts noted.
Just 14 of the 26 major gold producers made major gold discoveries between 1997 and 2011 – accounting for about a quarter of the 743 million ounces found – but they increased their share of the reserves and resources created by the 99 discoveries to 39% through acquisitions.
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at pburgert@resourceinvestor.com.