Mining Companies Need To Focus On Building Assets - Revival Gold
(Kitco News)- The mining sector continues to face a dearth of investorinterest, but gold mining companies need to focus on what is within theircontrol, according to one junior explorer executive.
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| Hugh Agro, president and CEO of Revival Gold |
In a recent interview with Kitco News, Hugh Agro, presidentand CEO of Revival Gold (TSX.V: RVG) said that companies need to build out new deposits andfocus on critical market fundamentals and eventually investors will come backinto the marketplace.
He explained that the mining sector is at a criticaljuncture as the supply of quality gold projects start to decline and major goldproducers see a drop in production. He added that the expected imbalance insupply and demand will eventually drive gold prices and mining shares higher.
“There is a deficit in projects to feed the growing appetitefor metals production,” he said. “At current rates of discovery we aregenerating about 10 million ounces of gold a year, but at current rates ofproduction, we are consuming about 110 million ounces of gold. There is a bigdisconnect in the industry.”
In the current market environment, Agro said that juniorexplorers could be the biggest beneficiaries as major producers need to findprojects to add to their dwindling production.
“I can tell you these big guys are nervous about theirsurvivability,” he said. “Without new deposits to replace reserves, theindustry is going to struggle.”
Agro added that he sees two scenarios that will eventuallydrive gold prices higher in the long-term.
“The price of metals is going to go up, so companies spendmore money on discovery or the price of metals is going to go up, so thedeposits that are out of the money become economical,” he said. “It’sinvestable.”
Instead of focusing on the current price of gold, Agro saidthat his company is focused on building out the reserves of its Beartrackproperty, a brownfield project in Idaho.
The mine produced 600,000 ounces of gold between 1994 and2000 and was eventually closed because of low gold prices.
Agro explained that technological advances made in the last18 years and a greater understanding of the geology in the area is helping thecompany expand the property’s resource. In an updated report in July, thecompany identified 1.2 million ounces of indicated gold and 800,000 ounces ofinferred gold resources.
“We are just going to keep our nose to the grindstone andone day these general investors are going to realize that the gold in theiriPhones and other electronics they buy on Amazon has to come from somewhere,”he said. “They will come back in droves as they have done in earlier cycles.”
The one upside Agro said he sees in the current marketenvironment is that now is an excellent time for miners to build value.
“When everyone else is running for the exit and asset pricesare trading cheaply, that is when you want to build a growth company in gold,”he said.
By Kitco NewsFor Kitco News
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