By Olivier Monnier
Bloomberg
Gold producers are likely to scale back exploration programs as lower prices spur cost cuts, the head of Endeavour Mining Corp. said.
“The industry has just gone through quite a shock in terms of reduction in the gold price,” Chief Executive Officer Neil Woodyer said in Abidjan, Ivory Coast. “Mining expenditure on projects will be down. The industry will be focused on cost containment, essential expenditures and less exploration.”
Bullion has lost 12 percent this year, tumbling into a bear market last month, as the MSCI All-Country World Index of equities climbed 11 percent.
Efforts to boost economic stability have eroded demand for haven assets such as gold as money starts to flow into riskier investments.
The drop in prices has already affected “economic projects and ongoing operations” in the industry, Woodyer said in an interview yesterday. “It’s a process all mining companies are going through, and some are holding their development projects until they see results of changes in the economic environment.”