Gold guru Lassonde says exploration innovation can lessen threat of peak gold

Franco-Nevada Chairman Pierre Lassonde does not believe peak gold is imminent. However, innovations in exploration technology are critical to keeping gold mining viable as a sector.

TORONTO - 

One of North America's most highly respected gold bugs, Franco-Nevada Chairman Pierre Lassonde told miners and investors that he doesn't believe the industry has achieved peak gold production since 2003.

In a speech to the Prospectors and Developers Association of Canada, Lasssonde warned peak gold could be the outcome if mining does not combat it through investments in R&D technology and exploration.

Responding to a question from Mineweb, Lassonde said he definitely believes the gold price could climb a lot higher in the long-term.

Lassonde noted mining company earnings are non-existent despite the strong gold price. Nevertheless, Lassonde said the mining sector is getting a grip on operating costs. If the situation stays this way, he advised, "Buy gold."

"You may be on the verge of some serious price increase here if they [mining companies] can keep it up" when it comes to controlling costs, he advised.

Meanwhile, Lassonde suggested the global economic recessions "has not affected capital costs" as much as miners and investors may believe. The only input cost that has changed somewhat in the use of contractor miners, he advised.

Despite cost controls and a stronger gold price, Lassonde noted that most, larger-cap mining stocks remain at the same price as 2004. "If gold had stayed at <$600/oz, the industry would be smaller."

The former president of Newmont repeatedly stressed that mining must achieve more investment in drilling and communition. "We have been using, more or less, the same technology for the last 100 years" when it comes to drilling, he suggested.

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Moles Mr. Lassonde is correct when he says we have been using, more or less, the same technology for the last 100 years. We need to develop large, electric underground moles (tunnel boring machines) that can follow the veins, grinding and . .more spitting out the rock onto a trailing conveyor belt. This method eliminates drilling, blasting, mucking, scoop trams, ore cars as well as the ball mill. For most underground mines we need to get the all-in cost per ounce down in the $600 range, without which they cannot survive. . .less by Fred on March 10 2010, 13:38 Find this comment inappropriate? Report it

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