Interest in mining rises with gold price
EXPLORATION: More companies get serious at $450 an ounce.
The Associated Press
(Published: December 2, 2004)
FAIRBANKS -- Gold's hefty price increase is sparking renewed exploration interest among mining companies following several years of restraint.
Gold prices, fueled by the slipping U.S. dollar against the euro, have made a consistent climb to more than $450 an ounce Wednesday. Mining companies maintaining production at current projects are starting to put more money into finding new sites, said Curt Freeman, president of Avalon Development Corp., a Fairbanks exploration company.
"It's really charged up the industry," he said. "At this time last year, it looked like it was going to turn, but nobody was willing to commit. But given it's come up and stayed up for a while, we're seeing more funding going to exploration."
Freeman said his company, for this time of year, is busier than in the past 20 years.
The rise of prices has made the hunt for gold more enticing, said Steve Borell, executive director of the Alaska Miners Association.
"If the price stays up, then we'll expect to see more people come back into mining," he said.
For miners, the most encouraging sign about recent gold prices is that the increase has been a prolonged, consistent climb, not a sudden spike that could be dismissed as an anomaly, Borell said. Miners tend to look for stable prices before committing to a project that requires permits and a host of other investments.
Continuing high gold prices would be good news to companies that are approaching the production stage at several large projects.
High gold prices have not been a factor in Teck-Pogo's aggressive construction schedule at its gold mine northeast of Delta Junction, said Karl Hanneman, a company spokesman. However, prices at current or higher levels wouldn't hurt the company once the mine starts producing gold, expected to occur in December 2005, he said.
Doug Nicholson, vice president of NovaGold Alaska, said his company also has projects under way and could benefit from higher gold prices.
Those projects include the Rock Creek site near Nome and the Donlin Creek site in the middle Kuskokwim River area. NovaGold's efforts have not been driven by the rise in gold prices over the last year, Nicholson said.
For jewelry shop owners, a spike in gold prices doesn't always mean good news.
Customers are sometimes dissuaded from buying gold jewelry during periods of high prices. In reality, a huge price swing makes only a few dollars difference on an average piece of jewelry, given the small amount of gold contained in each piece, said Mike Webb, co-owner of Gold Rush Fine Jewelry in Fairbanks.