As the world comes to grips with a deepening financial crisis and a U.S. balance sheet that's not getting any cleaner, gold remains the talk of the town.
Fortunately, several mid-tier gold miners have positioned themselves to harvest organic production growth just as prices for the yellow metal are beginning to hit their stride once again. Since last October, when gold hovered near $740 per ounce, shares of Yamana Gold
Yamana Gold released two studies late last week evaluating the economic potential of several gold-bearing properties within the company's portfolio. Like a farmer evaluating which fields to till and which to leave fallow, Yamana has identified mine complexes in Mexico and Brazil that offer a truly golden opportunity.
The Mercedes and Klondike properties in Mexico now boast probable reserves of 604,000 ounces of gold and 6.16 million ounces of silver. The average gold grade of 7.58 grams per tonne, or 0.24 troy ounces, is more than 10 times the average grade of reserves for rival Kinross Gold
Further south of the border, Yamana foresees the release of a feasibility study and construction decision for the Ernesto and Pau-a-Pique properties before the end of 2009. The scoping study just released contained such favorable metrics that these properties are being placed on the fast track. With an internal rate of return estimated at 38%, and estimated production of 100,000 ounces per year at a cost of $356 per ounce, Yamana is already accounting for construction of these mines within its 2010 capital spending budget.
While I believe that major producers like Newmont Mining
Further Foolishness:
- Gold holds up despite the dollar's rally.
- A look back at Yamana's third quarter.
- Volatility is not likely to subside.
