Vol. 3, No. 17
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July 1, 2006
Nevada's Online State News Journal
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Nevada's Mining Industry Strong Despite Recent Price Drop
Research And Development Projects And The Quest For More Will Continue
The price of gold surged over the $700 per ounce mark and immediately there was a similar surge of profit taking by those holding reserves of the shiny metal. The drop in price was not enough to affect the current search for more gold, for better ways to get it, and for increases in mill and mining development projects around the Silver State. The drop leveled off in the mid $500 an ounce range well above anything that might cause a problem with current operations.
Most operations today use a base figure of $250 an ounce as the cost to mine and mill gold. Russ Fields, executive director of the Nevada Mining Association said operations probably won't be affected. "If it goes under $400 the ounce, there might be a bit of worry."
Between profit taking and the cost of a barrel of oil dropping, the price plummeted over a short period of time, but stopped in the mid $500 an ounce range and has started creeping back up. There are many exploration projects either underway or being planned that could have been affected, but those in the industry say those projects will for the most part continue.
When fuel costs began their strong increase followed by energy costs, some mines and mills started reexamining their cost per ounce figures. Several mining operations have built their own power plants. Mines and mills use a tremendous amount of electricity, as much as 25 percent of that manufactured in Nevada and the increased costs have been noticed.
Gold has been a hedge against inflation for years, but today, many of those that buy large amounts of gold are oil producers in the Middle East, and Asian buyers in China. Oil went well over $70 a barrel recently and that caused a rush for gold driving the price well above $700 an ounce. Oil has dropped again, profit taking has popped into the picture, and the price of gold is stabilizing once again.
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