(Kitco News) - The chief executive of low-cost, mid-tier gold producer Alamos Gold Inc. (AGI) says Turkey wants to become a significant mining jurisdiction, and he also looks for more mergers within the gold-mining sector. Canada-based Alamos Gold owns and operates the Mulatos Mine in Mexico and produced 200,000 ounces of gold at a cash operating cost of $355 an ounce in 2012, which company officials have described as their best year ever. Alamos also has advanced-stage exploration projects in Turkey.
The company obtained its Turkey properties in 2010 and has increased inferred resources from 1 million to 3 million ounces, John A. McCluskey, president and chief executive officer, said at the 2013 BMO Global Metals and Mining conference taking place this week in Florida. The company, currently involved with the environmental-assessment process, is aiming to construct a mine and have a first gold pour at Kirazli in late 2014, with production at Agi Dagi in 2016. It is also working toward development of the Camyurt deposit.
McCluskey said he often hears skepticism from investors about mining in Turkey.
“Turkey is giving a full-court push. They really genuinely want to build a mining industry,” he said. In fact, the country is planning to send a large delegation to the upcoming Prospectors & Developers Association of Canada conference in Toronto to discuss tax incentives and new mining laws, he said.
The country seeks economic prosperity, McCluskey said. “Wherever Canada has brought its mining expertise throughout the world, it’s brought prosperity in its wake,” the CEO said.
Further, the country’s current account deficit is 9.9% of its gross domestic product, one of the worst ratios in the world, McCluskey said. “The only way they’re going to be able to address that is by bringing foreign investment into the country and producing products they can export,” he said.
There are currently five producing gold mines in Turkey and Alamos aims to bring in three more, McCluskey said. “I’m quite confident there will be many more coming in behind us,” he added.
On another subject, the CEO looks for more consolidation among smaller gold companies.
McCluskey, who has been Alamos CEO for 10 years, described current conditions as “really tough” in the industry, with gold prices themselves in a corrective phase. However, he also described this as a good time for acquisitions. Alamos has made an offer to acquire Aurizon Mines Ltd.
“I think the market is going to clamor for these kinds of things to happen,” McCluskey said. “There is just too many companies. There are 78 companies that produce under 200,000 ounces of gold. And most of those produce less than 100,000 ounces of gold. And there is only 24 companies producing more than 400,000 ounces of gold.”
He envisions a change.
“Those 78 companies (under 200,000 ounces) just can’t get enough investor attention to justify their existence,” he said. “So we’ve got to consolidate some of these companies and create more companies that produce over 400,000 an ounce.”
Larger companies would mean less volatility in output for individual producers and thus less volatility in share prices, he continued.
Last modified onSaturday, 06 May 2017 10:07
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