Gold mining: 5 things to look for in 2017 Report

Insight 27 January 2017

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Report summary

Despite the increasing likelihood of rising global interest rates, we expect gold prices will be supported by continued global political and economic uncertainty. After nearly half a decade of cost deflation, this year is likely to see a modest return of inflation for gold miners. Despite this, we expect sustaining cash margins to remain robust. We expect project development will favour small to mid size capital efficient projects with relatively high rates of return as the gold industry continues to pursue efforts to undo years of balance sheet expansion and strain. While the asset disposal theme of the past few years has seen asset specific M&A deal values peak in 2016, we do not expect a repeat this year. The trend of non-core asset disposals from majors is likely to slow into 2017 as the sector aims to take steps toward arresting a continued decline in reserve life. This suggests 2017 may mark a modest return to acquisition-led growth in the gold mining space.

Executive summary
Gold price drivers and expectations
Cost and margin drivers for 2017
Capex trends and Project pipeline
Trends in M&A
- Gold industry M&A activity
Production outlook
Conclusions

Tables and charts

This report includes the following images and tables:

Gold price movement in relation to the US$ trade weighted index and cross Atlantic Sovereign debt yields
Cost waterfall chart between 2016 and assumptions for 2017
Gold project capital intensity and life of mine (LoM) capital intensity by status (excluding base case projects)
Global production and price relationship
Gold mining: 5 things to look for in 2017: Image 4