The world’s gold miners will be running on the spot for years to come as a surge in gold prices prompts them to secure new production from less profitable projects, according to Bloomberg.
“In my mind, the industry is ex-growth,” said David Harquail, chief executive officer of Franco-Nevada Corp., the largest mine streaming and royalty company.
After a downturn that squeezed capital investments, most gold producers have no choice but to invest in new projects as existing mines are depleted. They’ll be faced with options that are, cumulatively, unlikely to boost global gold production or lower the sector’s overall costs.
“None of those projects are really great. They would have been built by now if they were,” said Harquail.
As a result, Harquail said Franco-Nevada plans to do more deals in the non-precious metals space, with a particular focus on oil and gas. The company’s mandate allows it to have as much as a fifth of its portfolio outside precious metals, and he would like to deploy capital to get to that level soon. Currently, 94% of Franco-Nevada’s holdings are in precious metals, he said. (Source: Bloomberg)
Articles are chosen for summary in this Market Intelligence blog based on newsworthiness in conjunction with The Infinite Loop themes. Any opinions and views expressed in the articles are generally those of the underlying author from the source listed, are not necessarily current as of the date of this blog, may change as market or other conditions change, and may differ from views expressed by Ivy Investment Management Company and its associates or affiliates. Actual investments or investment decisions made by Ivy Investment Management Company and its affiliates will not necessarily reflect the views expressed in the articles. These articles are distributed for educational purposes only and are not investment advice or a recommendation to purchase, sell or hold any specific security mentioned in the article or to engage in any investment strategy. Investment decisions should always be made based on each investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Securities discussed may not be suitable for all investors.