While global industry languishes in a fog of uncertainty, and steelmakers like Nucor
As the world struggles beneath a Mt. Everest of debt and a reserve currency in crisis, the long-term fundamental picture for gold glimmers across an unshrouded horizon. Global gold production hit a 12-year low amid soaring investment demand. Now emerging gold miners like Gammon Gold
Gammon Gold delivered a three-year outlook this week that sheds some light the kind of production growth investors can expect from this mid-tier gold miner and its two operating mines in Mexico. Gammon is targeting completion of a mill expansion at the flagship Ocampo mine by the third quarter of 2009. The upgrade is expected to boost production by at least 32% from 2008 levels, to 333,000 gold-equivalent ounces (GEOs) in 2009. From there, the projected production growth levels off substantially, but the company expects significant reductions in the byproduct cost of mining gold to as low as $14 per ounce by 2011.
With larger mid-tier rivals like Agnico-Eagle Mines
Because the company used what I consider an extremely conservative price target of $12 per ounce of silver through 2011, I find the projections reasonable, as long as mining input costs don't experience another run like we saw last year. Then again, if my long-term expectations for silver prices pan out, Gammon Gold's anticipated annual production of more than 8 million ounces of silver could offset a whole heap of rising input costs. With more than one-third the estimated silver production of primary producers like Pan American Silver