Gold Mining Execs Predict $1,500/oz Gold Price


"Rising gold price, increase in M&A activity parallels 1980's boom."

A survey of executives at 44 mining companies by PricewaterhouseCoopers predicted gold prices will continues to increase until the Q411. However, 40% of those executives believe the price of gold will peak around $1,500 per ounce.

In their analysis, PwC's Canadian Mining Group found one area of similarity between today's rising gold prices and the 1980s, the correlation between the rising price of gold and the increase in M&A activity in the mining sector. "Currently, our Deals team is seeing a surge in M+&A activity in the mining sector, and the 1980s were no different."

The survey also determined that 44% of the companies surveyed that anticipate needing financing indicated they will use equity sources, while 41% intend to use debt/project financing. "Only 22% of the surveyed companies indicated that they do not anticipate the need for financing."

"Since investors want their shares in mining companies to benefit from gold prices increases, and since there are no clear signs of adverse price movements, why lock your company into such a contract?" PwC's Canadian Mining Team asked.

Out of those companies responding to the survey, 82% expected their forecasted production levels will increase given the market and commodity price in the past year. "It will be interesting to see in the coming months if companies that have located marginal deposits of gold will kick-start their production-moving forward faster with a project then they would under ‘normal' circumstances," PwC observed.

PwC's Canadian Mining Group noted "many more of the juniors listed on the TSX-V are also showing the affects of a booming gold trend. 56% of mining companies listed are exploring for, developing, or mining the precious metal. This is up from 50% in 2009 and 42% in 2008."

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