Submitted by SD Contributor SRSrocco
I am seeing some very interesting signs that seems to be INVISIBLE to the gold and silver mining companies. They are SLEEPWALKING into a future with the idea that they can keep their business plans going on forever.
In the first 6 months of 2012, Barrick has updated their annual consumption of diesel to be approximately 5 million barrels. This is 210 million gallons per year, or 105 million for 6 months. Here is the following from their Q2 2012 Report:
105,000,000 mil gallons / 3,633,000 oz gold = 29.0 gals diesel per oz gold
So, in just one year, Barrick has increased its consumption of diesel per oz of gold 4.4 gallons of diesel per oz (or 18%), in just 6 fricken months. How about dem apples?
NEW MINES COMING ONLINE MAY BE IN TROUBLE.
I have to tell you… from the researching that I have been doing lately, I firmly believe the gold and silver mining industry is completely asleep at the wheel as it pertains to the future. I have been speaking to some of the folks at Barrick and Newmont and I realize these folks (nice enough on the telly), are so compartmentalized… they have no clue.
I just can’t believe how much South African gold ore grades have fallen in the past 6 years. Barrick and Newmont’s ore grades have stayed virtually flat, but their diesel consumption is increasing at nearly a double rate in the same time period.
For instance, this is Barrick’s Diesel Consumption 2005-2011:
The reason why the listing of overall diesel consumption shows the same figures for several years is the way Barrick provides the data. Most of this info comes from the sustainability reports. However, Barrick does not list their diesel separately in these reports, instead they update it in their quarterly and annual reports.
As you can see from 2006-2008 they listed the same amount (in barrels… I converted it to gallons). Be that as it may, we can see that their consumption of diesel per oz of finished gold has gone up 10 gallons per oz of gold in 6 years (60%). But… it gets even better.
In the first 6 months of 2012, Barrick has updated their annual consumption of diesel to be approximately 5 million barrels. This is 210 million gallons per year, or 105 million for 6 months. Here is the following from their Q2 2012 Report:
105,000,000 mil gallons / 3,633,000 oz gold = 29.0 gals diesel per oz gold
So, in just one year, Barrick has increased its consumption of diesel per oz of gold 4.4 gallons of diesel per oz (or 18%), in just 6 fricken months. How about dem apples?
NEW MINES COMING ONLINE MAY BE IN TROUBLE
I have been glancing over several of the gold mining companies plans for bringing on new mines in the next several years. None of them… ZIP, have any idea of what the energy situation will be like in 2-3 years, or what the costs will be.
It seems like gold costs are going up about 20-21% in the first 6 months of 2012 compared to the same time last year, and silver costs are going up about 32-33% respectively. Now, this is not an exact science, but something I am seeing as an overall basis. I think Coeur d’ Alenes costs went up 32% for the first 6 months but a staggering 71% this past quarter.
You know what they say….WITH COSTS LIKE THAT… WHO NEEDS ENEMAS…
Anyhow, I am seeing some very interesting signs that seems to be INVISIBLE to the gold and silver mining companies. They are SLEEPWALKING into a future with the idea that they can keep their business plans going on forever.
One last thing… Fresnillo is touted as the largest primary silver miner in the world. This may be true in overall silver production, but no longer the case for TOTAL REVENUE. Take a look at the chart from the Q2 2012 update:
This past 6 months, Fresnillo has made more revenue on their gold sales than their silver…LOL. Silver revenue was $516 million, whereas gold revenue was $581 million. Gold revenue now accounts for 51% of Fresnillo’s sales and silver, only 45%.
Things are a changing…
