Goldcorp CEO Jeannes Sees “Peak Gold” in Sector This Year or Next – by Alistair MacDonald (Wall Street Journal – September 8, 2014)

Mining Company Head Says Market Wrong to Assume Company Poised to Acquire

Miners have reached “peak gold,” in which production of the precious metal has hit its high as easy-to-mine gold deposits become harder to find, said Chuck Jeannes, chief executive of Goldcorp, the world’s largest gold miner by market capitalization.

Mr. Jeannes said in an interview that a falloff in supply will support the gold price, but make mining it even harder and lead to further consolidation in the industry. Still, the Vancouver-based miner played down investors’ expectation that Goldcorp itself is poised to make a takeover bid following the rejection of its most recent attempt to buy a rival miner.

“Whether it is this year or next year, I don’t think we will ever see the gold production reach these levels again,” he said. “There are just not that many new mines being found and developed.”

Gold production has been rising quickly since the late 1970s, hitting 2,270 metric tons last year, according to preliminary figures from the U.S. Geological Survey. The 386 metric tons of gold produced in 1900 is 17% of the gold mined in 2013. Mr. Jeannes said that without a dramatic technological advance gold production is unlikely to increase during his career.

While many other miners agree with Mr. Jeannes, some analysts and geologists believe that it is too hard to predict whether there will be a falloff. Michael George, a gold specialist at the USG, said people have worried about this precious metal running out since the California gold rush in the 1840s. He argues that demand for gold will remain strong, so there will always be people willing to dig it up.

Mr. Jeannes said that peak gold is “very positive” for the long-term price of gold. The metal is trading at $1,261 a troy ounce, down almost a third since its peak in September 2011. Miners’ stock performances have fallen with the metal. And while Goldcorp, the world’s third-biggest gold miner by production, has outperformed its peers, its share price has been halved in value during that time.

Mr. Jeannes expects gold to trade within a tight range over the next few years. Increasingly it is being moved by supply and demand, which is currently relatively finely balanced, he said. In recent years, the metal hasn’t traded as a safe haven, as through much of modern history, and has barely been affected by recent geopolitical tensions and troubles, he said.

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