Both are now partners in Cook's Exploration Insights newsletter and suggest that after a wide ranging review of the sector they can find no more than a dozen quality deposits the majors will buy.
If the price of gold can climb ahead of costs some of the "low quality" deposits may become much more attractive although of course in developing these mining companies have to believe that prices can be maintained for a long life of mine.
The hesitation of companies in developing the large low grade deposits will surely only contribute to gold supply problems and price pressures. It is understandable however as companies have received a good deal of criticism for poor investments and cost controls with Regent and Burt being ejected from Barrick and Kinross.
Somewhere at higher gold prices I expect to see a scramble for these assets as companies are valued for their ounces in the ground aswell as immediate production cashflows, when investors begin to see "optionality" on gold through the miners and explorers.
Brent Cook
Quinton Hennigh
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