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Gold rebounds with prices topping $400 an ounce
The Associated Press
Gold is rebounding for the first time in more than seven years with the price topping $400 an ounce the week of Nov. 17.
Local industry leaders predict the higher prices will lead to increased exploration in the state.
“There’s a lot more interest in funding these very aggressive exploration companies to go out and search, and those are the ones who are going to be finding the new deposits in Alaska as well as elsewhere,” said Paul Metz, a University of Alaska Fairbanks geological engineering professor and chairman of the school’s Department of Mining and Geological Engineering.
A weakened U.S. dollar and increased investor interest in the metal, among other factors, have helped fuel the current rebound.
Gold sold in 1980 for as high as $850 an ounce but fell to well below $300 by 2001. The industry saw a few bull markets, with prices reaching $400, $500 and $600 an ounce, but prices began to fall again in 1996, said Greg Johnson, vice president of corporate development for NovaGold Resources Inc.
The Vancouver, Canada-based company is involved in potential Alaska gold mines such as the Rock Creek project near Nome and the Donlin Creek project in southwestern Alaska.
Finding a way to encourage smaller-scale businesses such as placer mining outfits was a focus at the annual Alaska Miners Association convention held in Anchorage in early November.
Association President Tom Bundtzen said placer mining has produced more than 8 million ounces of gold in the Fairbanks area. Exploration also captured attention Along with high gold prices, exploration of the Donlin Creek and Rock Creek projects captured the attention of major mining companies not yet in the state, Metz said, and revived interest in the state from the Canadian stock exchanges, which bodes well for exploration companies looking to get money to explore Alaska.
“It’s much, much easier for those (junior) companies to raise capital today than a year ago and it’s due to the near $400 price of gold,” he said.
Several factors may now contribute to the current rise in gold prices, including a weakened U.S. dollar, fewer companies producing gold and fewer mining projects in the development stages.
“You’ve seen consolidation in the gold business. Companies taking over other companies, so you have fewer players,” Johnson said.
Also, demand may be up as more investors seek to diversify by putting money in gold, hedging against the decline of the U.S. dollar, he said.
While gold gets all the attention in Alaska, zinc is one of the major reasons that the value of the state’s mining production topped $1 billion last year, according to a state Division of Geological & Geophysical Surveys report. The base metal’s price has been on the rise for months, selling at about 44 cents a pound Nov. 19.
Red Dog Mine in western Alaska, the world’s largest zinc mine, employs about 560 people.
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