AngloGold Ashanti Ltd., Africa’s largest producer of bullion, March 2 said it will explore under the sea for the precious metal as mining companies scramble to replace increasingly scarce reserves, according to a Bloomberg report.
AngloGold founded a marine exploration company with diamond producer De Beers and will spend US$40 million in the next three to five years to explore undersea deposits, CEO Mark Cutifani said in an interview at BMO Capital Markets’ annual Global Metals & Mining Conference in Hollywood, Florida. The venture started operations off New Zealand’s coast and may move to sites off South America and Canada, he said.
Bullion producers are trying to boost reserves after gold rose more than fourfold during nine straight years of gains. A dearth of high-grade deposits in traditional mining regions such as the U.S., Mexico and Australia is pushing miners into more difficult terrain, physically and politically, analysts and executives attending the conference said.
“New discoveries are declining, and the replacement ratio is going down,” Gijsbert Groenewegen, a partner at Gold Arrow Capital Management, said in an interview. “That’s why these producers have to go to more challenging areas, even offshore.”
The search for deposits has been aided by new alternatives to the pick and shovel.
“Remote sensing and satellite technology has enabled the mining industry to look in places it had never gone before,” David Christensen, CEO of ASA Ltd., a $5.25 billion closed-end fund that invests in mining companies, said in an interview at the conference. “Subsea research is a natural extension of these changes and companies that get in first will have an advantage.”
Bloomberg said gold futures in New York, which touched a record $1,227.50 an ounce Dec. 3, rose 24 percent last year as the dollar dropped 4.2 percent against a basket of six major currencies. Bullion rose to the highest price in almost six weeks yesterday, with futures for April delivery climbing $19.10, or 1.7 percent, to $1,137.40 on the New York Mercantile Exchange’s Comex unit.
The undersea search for gold by Johannesburg-based AngloGold “shows you how tough it is to replace reserves; you’re basically fighting nature now,” Sean Boyd, chief executive officer of Agnico-Eagle Mines Ltd., said in an interview at the conference. His Toronto-based company is in the process of opening a mine, Meadowbank, in Canada’s remote Nunavut territory this quarter.
Toronto-based Kinross Gold Corp. increased its investments in Russia’s Far East in January with the purchase of two properties near its Kupol mining operation.
“People are going to increasingly remote and risky locations to find gold,” CEO Tye Burt said in an interview. “Folks are investing in mining in Pakistan when it’s in the middle of a conflict.”
Tethyan Copper Co., a joint venture between Antofagasta Plc and Barrick Gold Corp., is conducting feasibility studies at its Reko Diq project in Pakistan.
Rio Tinto Group and Ivanhoe Mines Ltd. fought for more than six years to win an agreement with Mongolia’s government to mine the nation’s Oyu Tolgoi deposit. Rio has described it as the world’s largest untapped gold and copper resource.
Pakistan and the ocean’s depths may not be the final frontiers for gold explorers.
“I don’t know what’s next,” ASA’s Christensen said. “As far as I know, no one has started lunar exploration yet.”
