Gold Mine Discoveries Decline

On Friday we brought you the World Gold Council’s demand trend report for the first quarter of 2018.  Whilst that report finished saying mine supply rose a modest 1% there are reports of broader trends that overshadow that for future supply.

In an article by Gold Telegraph in reference to a dataset prepared by S&P Global Market Intelligence they said:

“Funds for exploration are historically high, $54.3 billion, up 60 percent over the past 18 years.

The increased spending, however, has not produced the equivalent in new gold discoveries. During the past decade, 41 discoveries have resulted in a mere 215.5 million ounces of the precious metal. Even counting recently discovered but unexplored mines, which may hold as-yet major discoveries, the total available amount of gold in these discoveries are not expected to surpass 363 million ounces over the next ten years.”

For context, 363m oz is around 11,290 tonne.  Over 10 years that is just 1,129 tonne per year against 2017 demand of around 4,100 tonne.

And it’s not just yield but also the number of discoveries in decline:

“Gold discoveries have followed a predictable pattern. 263 major gold discoveries have been made in the past 28 years, but half of those discoveries happened in the 1990s. This boom lasted until the turn of the century when the rate of discovery began to decline. Only 16 discoveries were reported from 2000 to 2002, which produced 108.3 ounces of gold. That amount was below the average finds of the 1990s. This decline has continued, with both new discoveries and the amount of gold mined decreasing steadily. By 2010, only 18.6 million ounces of gold was discovered, a severe drop from the 61.5 ounces found in 2009.

Old sectors are being depleted, while active exploration for new discoveries has been slow. The amount of available gold has not met expectation and remains far below the 2009 high.”

Throwing more money at the problem won’t necessarily bring about a quick fix either.  We’ve reported previously on the blow out of time taken from discovery to production doubling to around 20 years due largely to red tape in the way of planning and environmental approvals etc.

“Unless significant new discoveries are made, the amount of available gold could decrease in the near future, raising the demand for the metal even further. Scarcity invariably results in higher prices, and the decline in global gold makes a price increase almost certain.”

They report too that Australia will feel this in particular:

“Much of the available gold in Australia’s northern Goldfield has been depleted, and companies are drilling to unprecedented depths of 3 kilometers below the surface hoping for new discoveries as new finds are becoming rarer and more expensive to pursue. 

According to Richard Schodde, managing director of MinEx, Australia gold mining output could decrease by 50 percent over the next eight years, with only four mines remaining open by 2057.

The need to drill deeper will make gold harder to find and more expensive to produce.”