Gold Lining On The Commodity-Price Collapse – by Tim Treadgold (Forbes Magazine – February 22, 2016)

There is a perfect storm blowing through the Australian gold-mining industry, but it’s not doing any damage, because it’s a storm which has triggered soaring share prices and a modern-day gold rush.

A recovery in the U.S. dollar gold price is one factor driving interest in the metal, but it’s not the major force in the Australian gold sector. Two other events have helped some miners more than double their share prices over the past year.

A 30% fall in the value of the Australian dollar against the U.S. dollar has boosted the Australian gold price to an all-time high in the local currency while operating costs and fuel prices have been slashed.

The biggest cost win for gold producers is from the flood of surplus equipment and surplus labor flowing out of the contracting Australian iron ore industry which has been hit by a sharp fall in the price of the steel-making material, while the oil price fall has effectively halved the price of mine site power.

What Was Marginal Is Now Profitable

The net effect is that once marginal mines have become goldmines in more ways than one.

One of the best examples of the return of gold as the metal leading the Australian mining industry is St Barbara Mines which operates the century-old Gwalia mine in Western Australia.

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