Opening the Denver Gold Forum, McKinsey & Company basic materials practice expert Ken Hoffman said companies had been forced to drastically cut costs over the past five years after the gold price declined.
Based on his analysis, Hoffman said miners appeared to be high-grading deposits, with average grades rising between 2012 and 2016.
“It tells you one of two things; either a) they need to increase their reserves or b) there’s going to be a comeuppance,” he said.
Gold sector all-in sustaining costs had dropped by 20% in the past five years, but Hoffman believes the cuts have likely run their course.
He noted that only companies that had cut costs substantially (ie mor...