Medusa Share Discussion Threads

[kimboy2] 23/12/2017 09:11

Flooding in Mindanao;

[speedsgh] 13/12/2017 08:37

Change in Accounting Policy for Exploration and Evaluation Expenditure -

[tightfist] 09/12/2017 20:29

Yes, at last Management are prepared to make some commitments....

[ilostthelot] 08/12/2017 12:39

Tempted to buy back in now 🤔. 4 months to completion of service lift and signs things are improving.

[deka1] 08/12/2017 08:38

Cost to Produce an Ounce of Gold?

By ProvidentMetals.com on May 23, 2017 Filed Under: Facts and History





Our planet’s gold reserves are limited, which is part of what makes the yellow metal such a valuable resource. This means that finding and mining gold can be a very costly endeavor. But just how much does it cost to produce an ounce of gold? It’s very difficult to determine exact numbers, but mining companies have methods of estimating production costs.

Mining costs were grossly underestimated up through the 1990s. Companies would report “cash costs” on their financial statements, which measure the costs specifically tied to extracting gold from the ground. These costs ran from $500 to $800 per ounce, depending on the location of the mine. But these cash costs failed to consider the expense of running a company, buying and repairing equipment, adhering to compliance regulations, and such.

A new metric has since been developed by the World Gold Council to report the “all-in sustaining costs” of mining gold. These numbers report that the cost of extracting an ounce of gold is actually over $1,000 per ounce, well above the aforementioned numbers. And since gold is currently trading at just over $1,200 per ounce, it explains why mining companies have had less-than-stellar profits.

Determining the costs of mining largely depend on the region as well. The cost differentiation depends on a variety of factors, such as the type of mine, the area’s regulations, the security of the area, taxation, legal hurdles, etc.

Generally speaking, one must consider each stage of the mining process when determining overall costs.
•First, gold deposits are discovered, explored, and found to be mineable.
•More intensive studies of the terrain take place, such as geochemical analysis and exploratory drilling. This may require an exploration license from local authorities.
•Once the size and location of the gold reserve has been estimated, the mining company must ensure it meets environmental and other regulations before pressing forward.
•The mining company must establish the site, which may include clearing the area, constructing roads and buildings, and bringing in mining equipment.
•Gold ore can then be physically extracted from the ground.
•Once the mine is tapped out, the mining company may be required (depending on the location) to restore and rehabilitate the site to pre-mining conditions, within reason.
•Mining companies may be required to monitor the ecology of the site after restoration.
•After authorities determine that the site has been successfully returned to a natural state, the mining company may relinquish its lease, and therefore its liability, for the area.

As you can see, the cost of mining gold goes well beyond the act of pulling the metal from the ground. Fortunately, more than one-third of gold is recycled from old jewelry, electronics, dentistry, etc. This means that not all consumables made with gold must rely solely on gold that has been freshly sourced from the ground. Relying more on recycling as a continuous source of gold may prove beneficial as gold reserves in the ground dwindle.

Much of the gold found on earth was mined and prospected many years ago. The process of finding and mining new sources of gold is a challenging endeavor. Our mining techniques have grown more sophisticated in modern times, but we can still only mine what is available. And the more scarce gold becomes, the more likely we are to see prices increase.

[tightfist] 06/12/2017 13:24

The winds they are a changing... Over the last three months MML/Boyd communications have been markedly improving (transparency, detail) but I wasn't expecting this!

Hopefully we will see a gradual ascent from here to a more sensible and respectable sp!

Good also to see a more clarity regarding the E15 Service Shaft completion date.

[deka1] 06/12/2017 12:58

another 5kozs prod or thereabouts, and aisc down by $100/oz or thereabouts.
nice

[speedsgh] 06/12/2017 08:16

Whoah. Steady om MML. I thought company policy was to underperform expectations?

[eintracht] 06/12/2017 01:19

I nearly fell off my chair !!!!!

[noirua] 06/12/2017 01:05

Guidance Change for Year 2017 / 2018
6th December 2017

[atlantic57] 01/12/2017 14:42

Chip,

here are some comments which support your view from jim rickards

hy should investors believe gold won’t just get slammed again?

The answer is that there’s an important distinction between the 2011–15 price action and what’s going on now.

The four-year decline exhibited a pattern called “lower highs and lower lows.” While gold rallied and fell back, each peak was lower than the one before and each valley was lower than the one before also.

Since December 2016, it appears that this bear market pattern has reversed. We now see “higher highs and higher lows” as part of an overall uptrend.

The Feb. 24, 2017, high of $1,256 per ounce was higher than the prior Jan. 23, 2017, high of $1,217 per ounce.

The May 10 low of $1,218 per ounce was higher than the prior March 14 low of $1,198 per ounce.

The Sept. 7 high of $1,353 was higher than the June 6 high of $1,296. And the Oct. 5 low of $1,271 was higher than the July 7 low of $1,212.

Of course, this new trend is less than a year old and is not deterministic. Still, it is an encouraging sign when considered alongside other bullish factors for gold.

But more importantly, gold has held its own despite higher interest rates and threats of more.

That tells me we’re seeing a flight to quality, meaning people are losing confidence in central banks all over the world. They realize the banks are out of bullets. They’ve been printing money for eight years and keeping rates close to zero or negative. But it still hasn’t worked to stimulate the economy the way they want.

[chipperfrd] 01/12/2017 10:45

Atlantic,

Irrespective of the manipulation, gold has still averaged c. 10% annual growth in price since 2002, in UK£ it was about 12% CAGR. In investment terms that is pretty good and it has still provided, and continues to provide, insurance against fiat devaluation.

Even though the constant paper gold con tends to kill short/medium term enthusiasm one has to take a longer-term view, as one would with house insurance or any other type of risk management.

If you are only taking a view over the 6 years since the peak at $1,900 then it looks gloomy. I suggest you use a broader scope and consider 20, 30, 40 year views!

I gift all my grandchildren gold every birthday. Ostensibly for possible use when they reach 18+. I would wager that it is one of the most secure ways that I can secure future buying power irrespective of Q/E, inflation, debt defaults, war, financial collapses, et al - all of which look ever more likely in the near future.

Chip

[atlantic57] 01/12/2017 10:31

Chip i dont dispute your comments !

However what will it take to over power the manipulates.
The the 2008 financial crisis lead to the surge in gold.Since then the authorities have succeeded in avoiding what was expected.

There are so many black swans around it is difficult to see what will need to happen to allow gold to move up.

i am certainly disheartened , i will read the link but i have been reading stuff now for 6 years and it has been consistently incorrect in predicting a surge in the gold price,
it is always just round the corner...

[chipperfrd] 01/12/2017 10:19

People have to make their own minds up about PM price manipulation, but to help frame the argument, here is part 1 of a long article by Stewart Dougherty.

[atlantic57] 26/11/2017 13:10

Thank you chip

[chipperfrd] 26/11/2017 12:38

Worth a listen:

[chipperfrd] 26/11/2017 11:41

They did, but demand was so strong because of the financial crisis, they were overwhelmed.

In the case of silver, it began to multiply at such a furious rate the Comex raised margin requirements on a daily basis until they forced a collapse back in early 2011.

With gold, it took a mammoth effort in April 2013 to finally break back down through support. And this was following the Fed QE3 in September 2012 when rationally there should have been strong support for alternatives to fiat.

It has taken a very long while to creep back up again after the gold low in December 2015 at US$1,050/oz. So actually it has been a pretty good upward trend over these last 2 years although on a daily basis it might not appear so.

On a compounded annual rate (CAGR), since 2001, gold has managed 10.2% per annum.
Since December 2015 it has managed 11% per annum.

So one should not lose sight of the actual growth rate of gold against the US$ - or rather the loss of US$ purchasing power against gold - which is really what is happening.

A few more CAGR's:

Gold since 1971 (in GB£) = 9% per annum.
Silver since 1971 (in GB£) = 6.3% per annum.

Gold since 1971 (in US$) = 8.1% per annum.
Silver since 1971 (in US$) = 5.4% per annum.

Gold since 1960 (in US$) = 6.5% per annum.
Silver since 1960 (in US$) = 5.3% per annum.

These long term CAGR's are really showing true underlying inflation because gold's purchasing power remains essentially constant over centuries.

On the other side of the coin it is a different story from 1980 after the stratospheric rise of both metals once the US defaulted on gold conversion and without the London Gold Pool price control. Paul Volker at the Fed brought in ever increasing interest rates until inflation was brought under control and then we had the growing volume of Futures and Forwards trading of paper PMs exerting full control through the 1990s until the 'Browns Bottom' caused the final low of gold at c. US$250/oz in 2000/2001.

Gold since 1980 (in US$) = 2% per annum.
Silver since 1980 (in US$) = -0.5% per annum.

Chip

[atlantic57] 25/11/2017 19:07

One thing why did they not slap gold down
2009 to 2012. My golden period.
Cheers

[deka1] 25/11/2017 18:55

Thanks Chip Good read

[chipperfrd] 25/11/2017 17:24

Just spotted this:


I know that we see loads of articles on alternative media regarding price manipulation, but that should not prevent us from taking it seriously.
Chip

[chipperfrd] 25/11/2017 17:15

Pleased to see I was wrong about a possible paper gold price crash on Friday. It was a pretty unremarkable day for the PMs as it turned out.

No COT report available yet because of the Thanksgiving holiday. It should be available on Monday night - so almost a week after the data was available to CME - ridiculous in this Internet age, but just part of the 'Mushroom Syndrome' which surrounds everything to do with the paper Futures and Forwards markets!!

As for the December PM contracts, obviously there are considerable rollovers being carried out as usual. Thus the next active Gold month being February sees those contracts now reaching 897.6 tonnes!

December gold goes to first notice on Friday. Currently the outstanding obligations are 512.4 tonnes on the Comex with another 272.6 tonnes having been transferred to London via 87,635 December contract to EFP swaps. So total of 785 tonnes due for delivery.

December Silver is 8,735 tonnes due on Comex with another 1,496 tonnes transferred to London via EFP agreements. So total of 10,231 tonnes due for delivery.

Clearly neither London or Comex can supply anything like these levels of metal so the con continues without a murmur from regulators or the financial main stream press - totally disgusting!

Hope everyone has a good weekend.
Chip

[deka1] 24/11/2017 13:36

THANKS Chip,always appreciated , the effort you put into this board research.

[chipperfrd] 24/11/2017 10:53

Well, the fraud has reached epic proportions on the futures market currently.

There are still 639.7 tonnes of paper gold outstanding on the December contract with those contracts going off the board and subject to settlement next Thursday. In addition 230.3 tonnes paper gold on December contracts have been transferred to London via private EFP (Exchange of Futures for Physical) agreements. That's currently a total of 870 tonnes of gold outstanding for December settlement when the physical production annually is only c. 2,700 tonnes. How can all this paper be considered a legitimate market when naked selling creates such enormous misbalances?

Total Open Interest (all open contracts) on the Comex currently stand at 1,653.5 tonnes. The situation in London will be far worse because the LBMA has around 10x the turnover of the Commex, but of course, the LBMA is totally opaque!

I expect there will be another huge paper dump near the end of US trading today and after the London close. If by some fluke the gold price rises into the close then it would probably indicate short closing and a real positive for reasonable price discovery - but I fear it will just be more of the same 'wash/rinse' cycle with longs being forced to capitulate by selling their positions.

But even so, the currently outstanding positions are more extreme than I have seen since 2011, which might indicate that price control is starting to slip as physical demand inhibits the big paper induced price crashes we have seen in the recent past.
Chip

ps. worth noting that the Comex Registered gold inventory (ie gold set apart for delivery) was only 16.5 tonnes when I last checked. So it is fairly clear why lots of EFP's have been invoked in order to deflect possible physical delivery from the Comex - they just don't have the metal to deliver!

[deka1] 24/11/2017 08:43

I just ask myself, how can a known fraud just keep on going ad infinitum, it can't , unless all the people complicit in the fraud are the only players in the futures market for gold ,because who would play in a rigged game.