(Kitco News) - Only half of the total resources in major gold discoveries since 1990 were converted into reserves or put into production, suggesting that finds are not keeping up with global gold production, a Canadian research firm said.
SNL Metals Economics Group said in a study looking at gold reserves replacement that total gold found in major discoveries, defined as a minimum of 2 million ounces of contained gold, hasn’t kept up with global gold output over the past 15 years.
“Based on a 75% resources-to-reserves conversion rate and a 90% recovery rate during production, the estimated potential future production from discoveries made from 1990-2012 averaged 57.3 million ounces per year — only 75% of the global gold production average of 76.3 million ounces per year over the same period. While it is reasonable to expect resources in these discoveries to grow over time with further exploration, to date only half the total resources in discoveries since 1990 has been converted into reserves or put into production,” they said.
Their research shows that from 1998-2012, gold explorers found 107 major gold deposits, averaging 7.5 million ounces each, in 36 different countries, adding 800.8 million ounces of gold to global reserves and resources. This was 56% of the 1.2 billion ounces of gold produced during the period, after allowing for conversion of resources to reserves and recovery losses, they added.
Not only is mine production not being replaced, but “the amount of discovered resources that will reach production will inevitably be reduced due to factors affecting their economic viability such as location, politics, market conditions, and capital and operating costs,” they said.
The firm said it takes at least three years to define a major discovery, so it’s too early to determine how effective the recent exploration efforts will be regarding discoveries in the 2010-2012 period.
Money spent on finding new deposits increased, too, they said. From 1990-1997, companies' annual discovery-oriented gold exploration budget total more than doubled to almost $2.2 billion, from $930 million. The average cost per discovery of the 103 discoveries made during that period was $94.4 million, they added.
Follow me on Twitter! If you want to keep up with metals news and features, then follow me on Twitter. It's free, too. My account is @dcarlsonkitco .
By Debbie Carlson of Kitco News; email@example.com,