419_gold_051

419_gold_051 - 1 The Gold I ndustr y Presented by: Andreana...

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Unformatted text preview: 1 The Gold I ndustr y Presented by: Andreana Lu Yang Ivy Wai Ting Fung Simon Wisniewski Jeff dAvignon 2 Gold Mining Industry Demand & supply of gold Production of gold Market dynamics Large producers Firm cost structure and revenue composition Firm strategies going forward 3 Demand & Supply of Gold The market dynamics of gold are dominated by short-term supply and demand fluctuations Sudden surge in demand or disruption in supply can lead backwardation , where the spot price is higher than the forward price The gold market is usually in contango , due to the smoothing of supply that is possible due to accessible stocks. 4 Demand & Supply of Gold 5 How Gold is Mined Exploration Exploration Drilling Blasthole Drilling Blasting Underground Mining Ore & Waste Haulage 6 How Gold is Mined Heap Leaching Mining Oxidization Leaching Stripping Electro-winning 7 How Gold is Mined Smelting Gold Bullion Refining Reclamation 8 How Gold is Traded Over the Counter Between principals, not through exchanges Contracts terms are flexible Main centers: London, New York, and Zurich Mining companies and central banks tend to transact their business through London and New York Twice daily during London trading hours there is a fix which offers reference prices for that days trading. 9 The Settlement Process The basis of settlement is delivery of a standard London Good Delivery Bar , at the London vault nominated by the dealer who made the sale. Currency settlement for gold transactions will generally be in US dollars over a US dollar account held in New York. 10 Market Dynamics: Gold Prices 11 Gold Prices Comparisons Like all prices, the gold price reflects not only the inherent value of gold, but also the relative strength of the currency in which it is quoted. 12 Largest gold producers by market capitalization Companies: Anglo American PLC Newmont Mining Corp. Barrick Gold Corp. AngloGold Ashanti Ltd. Placer Dome Inc. Gold Fields Ltd. Market Capitalization: 35.87B 20.28B 13.73B 10.10B 7.76B 6.26B 13 Firm Cost Structure & Revenue composition Cost Structure: Costs applicable to sales of gold and other base metals Depreciate, depletion & amortization Depreciation, depletion, & amortization Exploration, research & development General & administrative Mergers and resturing Writ-down of long lived assets Others Revenue Composition Sales of gold Sale of other base metals Gain on investment Gain on derivative instrument Gain on dividends, interest & foreign exchange income 14 Issues Facing Gold Companies There have been only a few large deposits found since 1998 and none of these have made it to production as of yet Rising costs with gold prices impose questions of the ability to finance and develop projects Copper-gold projects will become more common in gold company portfolios 15...
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419_gold_051 - 1 The Gold I ndustr y Presented by: Andreana...

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