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High Grading Strategy Not Good For Long-Term Mining Assets – Thomson Reuters GFMS

As mining companies continue to cut costs to adapt to lower metals prices, one Thomson Reuters GFMS research director for mining tells Kitco News that high grading strategies may not be the best option for long-term success. ‘If the solution is they move to a high grade mine plan than what they are going to do is more rapidly sterilize the ore bodies,’ William Tankard said at the London Bullion Market Association (LBMA) conference, this year held in Vienna. ‘I would say that if you’re looking at long term assets then you probably don’t want be moving down the high grading strategy,’ he added. According to Tankard, the problem right now is that mining companies are passively cutting costs instead of looking to slash core costs. ‘We’ve seen producers cut their costs but a lot of what we’ve seen so far has been either foreign exchange related with the strong dollar…so you’ve seen a lot of passive cost cutting as a result of that,’ he noted. ‘What we haven’t really seen a huge amount of is producers really cutting operations very dramatically in terms of reducing their core costs.’ Looking ahead, Tankard said that if the price of gold remains between the $1,050-1,100 range, then mining companies may gradually begin to taper off production. ‘If we saw prices dropping below $1000…and staying there, I think we’d start to see quite rapidly production falling off from current record levels around 3100 tonnes.’ Kitco News, October 26, 2015.

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Posted by: Antm1954

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