×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Small miners flock to Asia, bullish on gold price

Small miners flock to Asia, bullish on gold price
Comment E-mail Print Share
First Published: Wed, Mar 28 2007. 07 24 PM IST
Updated: Wed, Mar 28 2007. 07 24 PM IST
Reuters
Singapore: Small miners have flocked to Asia in search of gold deposits, driven by prospects of further rises in the price of the metal used in jewellery and investment.
“I am very bullish on the gold price. I think $1,000 an ounce is going to happen sometime in the next year or so,” said Tony Truelove, exploration manager of Indo Gold Ltd, which is conducting an exploration in Rajasthan. “I think gold will remain a metal of choice,” he told Reuters on the sidelines of a mining conference. The Australian-based miner expects production to start in the next five years in the Bhukia project, which is estimated to hold as much as 10 million ounces of gold.
“We are concentrating on India but there are also countries around India we’ll be interested in ... Southeast Asia, China,” he said.
Gold rallied to its highest level in 26 years at $730 an ounce in mid-May as investors diversified their portfolios on Middle East tensions, record-high oil prices that raised fears of inflation as well as uncertainties in the US dollar’s outlook. It hit a record high of $850 an ounce in 1980.
“I think one of the reasons the fundamentals of gold look solid moving forward is because the worldwide cost of production has gone up dramatically in sync with all the other commodities like copper, iron ore, oil and gas,” said Peter Bowler, managing director of Agincourt Resources Ltd.
“We think the actual consumers of gold will have to get used to paying more for gold than they had in the past, otherwise they won’t be any producers out there to keep on producing them,” he said.
Agincourt, which is being take over by Australian miner Oxiana Resources Ltd., develops the Martabe gold project in North Sumatra, Indonesia, which is estimated to hold 5.8 million ounces of gold. Production will start in 2009.
“As a producer, we don’t get into trying to predict what gold’s going to do,” said Bowler. “However, I reckon over the next two to five years, I’d be disappointed if gold price dropped below $550.”
Bureaucracy
But the miners said they are aware of security, political risks as well as bureaucracy when investing in certain countries in Asia.
“Every Asian country has problems with bureaucracy, I think. It takes longer to get things done in India than it does certainly in Australia,” said Truelove of Indo Gold.
“It may not be as bad as Indonesia, I don’t know. It’s a long time since I’ve been there,” he said.
Indonesia, home to some of the world’s largest deposits for minerals, struggles to attract foreign money into a sector which has not seen major flows of new investment for years.
Foreign businessmen have said investment could be much higher if the regulatory environment were simplified and issues such as graft and tough labour laws addressed.
Investors cautiously await the approval of a new mining law by the Indonesian parliament but some remain hopeful.
“There’s no question about the geological potential in Indonesia,” said Colin Loosemore, managing director of Archipelago Resources Plc, which develops the Toka Tindung gold project in North Sulawesi.
Comment E-mail Print Share
First Published: Wed, Mar 28 2007. 07 24 PM IST
More Topics: Money Matters | Commodities |