[miningmx.com] -- THE gold price is unlikely to fall as far as $500/oz and could instead rise to between $1,000 and $1,200/oz, new Gold Fields CEO Nick Holland said on Friday.
“One of the things that gives me some comfort, so that I think the gold price is not going back to $500 like some people would have you believe, is that the all-in cost of production of the sector has risen significantly,” Holland said at a results presentation in Johannesburg.
The all-in cost for world number four producer Gold Fields, which Holland refers to as the notional cost expenditure (NCE) per ounce comprising operating cost plus all capital expenditure, was $869/oz in the June quarter against a received price of $895/oz.
Gold Fields intends bringing down to $725/oz in the 2009 financial year as it winds down its capital programme and increases gold production by bringing new projects on stream.
This compares to an industry average of around $780/oz for its peer group including Barrick, AngloGold Ashanti, Newmont Harmony Gold and Gold Corp.
“If we are still going to have a gold sector I think you’ll find gold should hold up at these prices,” he said.
The current spot price for gold is $912/oz.
“If I’m wrong and gold goes back down, what’s going to happen? The exploration budget is going to be slashed, capex will be slashed, rationalisation will take place and you may find you have this bounce-effect,” Holland said. “Gold goes down and bounces, overshooting on the upside.”
“I don’t think that’s going to happen. I think gold has got a strong floor at $800. I think it could go a lot higher. I wouldn’t be surprised to see gold at $1,000 to $1,200,” he said.
