Did we miss this very interesting piece?

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striketheroot2

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Did we miss this very interesting piece?

posted on Jul 28, 2012 10:24AM

Due to some time constraints, I have been racing through this very relevent paper this morning. Let me throw out some quotes, thoughts, etc. (Print in bold text is a quote from the article; regular text is me.)

Let me point out that his ounce totals include inferred resource claims. So the universe of 439 deposits over 1 million oz would be smaller if the cutoff were to include P & P and Measured and Indicated only.

Some points:

1) Ormsby is still # 295 by his more expansive metric

2) Ormsby is ranked #96 in the 166 "independent junior companies" et al (!)

3) Remember the last quote below refers to the inflated resource base including inferred ounces. Ormsby alone is 2.2 million oz by that metric. The crucial issue is financing IMO, and of course permitting. If more African countries impose 30% tax rates as even Tanzania did today, and more nations like Venezuela and Ecuador nationalize mines, TDC's little deposit in friendly Canada will look better and better to the majors as POG resumes its uptrend.

http://www.nrh.co.il/i/pdf/NRH_Research_2012%20World_Gold_Deposits.pdf

Another data point we found fascinating was that out of 439 mines or deposits, 189 are in fact producing mines owned by companies with an average market capitalization of $1.8 Billion. This leaves us with a universe of undeveloped deposits over 1 million ounces of just 250. Of course some of these 250 deposits are owned by miners (84) while just 166 are owned by independent junior companies, private companies, or government sponsored enterprises. Investors seeking leverage to gold should focus on these companies as they provide the best exposure to a rising gold price environment. We have attached a table with these deposits and companies at the end of the report titled "Undeveloped Deposits over 1mm oz owned by Independent Juniors".

It is interesting to note that in Canada we were able to find only 59 undeveloped deposits over 1mm ounces owned by 49 companies (41 Independents). In the United States we found only 33 deposits owned by 26 companies (23 Independents).

Realistically, 50% or more of the deposits in the database will most likely remain deposits 25 years from now for a variety of factors including: permitting, ability to finance a mine, and attractiveness to a producer (producer balance sheets are so large they require significant projects to be accretive , making even most 1mm-2mm ounce deposits unattractive).