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Gold shines in North America

Gold companies are dominating positive mining-stock movements on the Toronto and New York exchanges at present, with the likes of Detour Gold, Seabridge Gold, Endeavour Mining and Kinross building on gains over the past year, and other sector leaders clawing back losses for the same period.

The latter basket features Semafo, Centerra Gold and Osisko Gold Royalties, still down 12%, 31% and 41%, respectively, on levels of 12 months ago, but solid gainers over the past week.

Kinross gained more than 13% in the past week (up 39% in the past year), Seabridge was 10% stronger (plus-71.5% for the past 12 months), and Detour added a further 9% gain to the previous week's move (up 31.3% from a year ago).

RBC Capital Markets said this week it expected to see North American gold companies rebuilding mineral-reserve positions impaired over the past 3-4 years by lower exploration and development expenditure.

“We have seen growth capital expenditures contract since 2012 as optimising cost structures became a priority over production growth, and companies have reduced discretionary sustaining capital and exploration budgets in a weaker gold price environment,” the firm said.

“The estimated average reserve life of producing assets dropped from 18 years at year-end-2012 to 13 years at YE2015, with the impact of lower gold price assumptions and reduced exploration and sustaining capital spending.”

A slight rebound at the end of last year reflected new reserve additions by the likes of Barrick Gold, Detour and New Gold.

“We would expect this trend to continue as producers generate free cash flow at higher gold prices,” RBC said. (Mining Journal)

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