These Giant Gold Deposits Were Left for Dead

Three years ago, size was king when it came to gold deposits.

The buzzword was “reserves replacement”. Big gold producers needed to replenish in-ground stocks of metal. To ensure their businesses didn’t begin to shrink as mined output ramped up.

The preferred deposits for this environment were bulk-tonnage ores, like porphyries. These came with lower gold grades, but massive, multi-million ounce resources–the kind that would help producers rack up inventory quickly.

Then came exploding costs in the mining business. Over the last few years, excitement over bulk-tonnage ores changed to fear. Fear that big resources also meant big capital costs for mine building.

Investors fled and share prices of development companies tanked. It appeared the days of “big gold” were over.

But a news item this week looks like a “green shoot” on that front.

One bulk-tonnage gold project got a major financial vote of confidence. From a well-respected source.

The developer is Sandspring Resources. Keeper of the 10 million-ounce Toroparu gold-copper deposit in Guyana.

The financier is precious metals darling Silver Wheaton. With this highly-regarded player agreeing to stump up $148.5 million in funding for development at Toroparu. In exchange, Wheaton will take 10% of payable gold production from the mine.

This is a substantial chunk of cash. Especially for a lower-grade project of the type that many observers recently have written off as unviable.

But Silver Wheaton are no amateurs. Management here have built one of the premier precious metals firms in the world by making shrewd financing deals. They know how to analyze geology and engineering. And they apparently think that today, big gold has legs.

That’s the first vote we’ve seen for such projects in some time. Keep an eye on others to see if interest starts creeping back from the leading edge of the mining industry.

Here’s to telling the baby from the bathwater,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

2 Comments

Add a Comment

Your email address will not be published. Required fields are marked *