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China Gold Mining Technology Forum John Mulligan

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World Gold Council
World Gold Council

In the first half of 2016, gold demand increased 18% year-over-year to reach 2,336 metric tons. Investment demand saw record highs, with gold ETFs reaching 579 metric tons. The gold mining sector showed signs of recovery in 2016 after a downturn in 2015, with commodity prices rebounding and lower energy costs providing support to producers. However, gold mining companies still face risks to future growth from declining ore grades, fewer discoveries, and evolving political and social challenges.

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The state of the gold market in 2016 2016 China Gold Mining Technology Conference, Zhaoyuan Presented by John Mulligan | August 2016
Gold up 25%: strongest H1 price gain since 1980 2
Demand 3
Gold demand reached 2,336t in H1, up 18% YoY 4
Record H1 investment 16% higher than H1 2009 5
Demand for ETFs reached 579t, exceeding H1 2009 6
Chinese gold ETFs: from US$215mn to over US$1bn 7
Negative interest rates: safe investible assets shrink 8
Jewellery consumers have faced a tough 2016 so far 9
Supply and gold mining 10
Total supply up 10% YoY, led by higher recycling 11
Gold mining: production plateau? 12
Lower costs of production 13
Mining current risks 14 Top risks: future growth, productivity and capital access Evolving risks: resource nationalism and social license to operate Constant risks: price and currency, volatility, capital projects Increasing threats: access to energy, cybersecurity, innovation
Exploration: fewer (and more expensive) discoveries 15
Gold mining: lower grades 16
Mining sector: lower value and less activity but signs of recovery in 2016! 17
Mining sector: 2016 a turning point 18 2015 2016 to date Slowing demand from China Record impairments ($53Bn) Record low returns Funding and investment dries up Dividends halved Investors discount long term value Market cap plummets Project pipeline shrinks Cost reduction consolidated Producer currencies lend support Lower energy costs Q1 rebound in commodity prices (gold soars!) Investors return market cap surges Asset values start to rise
Miners had underperformed the broader market 19
But this year, gold miners have outperformed everything! 20
Disclaimer 21 COPYRIGHT AND OTHER RIGHTS 息 2016 World Gold Council. All rights reserved. World Gold Council and the Circle device are trademarks of the World Gold Council or its affiliates. All references to LBMA Gold Price are used with the permission of ICE Benchmark Administration Limited and have been provided for informational purposes only. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced. Other third party data and content is the intellectual property of the respective third party and all rights are reserved to them. Any copying, republication or redistribution of content, to reproduce, distribute or otherwise use the statistics and information in this report including by framing or similar means, is expressly prohibited without the prior written consent of the World Gold Council or the appropriate copyright owners except as provided below. The use of the statistics in this report is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a clear acknowledgement of the World Gold Council and, where appropriate, of Thomson Reuters, as their source. Brief extracts from the analysis, commentary and other World Gold Council material are permitted provided World Gold Council is cited as the source. It is not permitted to reproduce, distribute or otherwise use the whole or a substantial part of this report or the statistics contained within it. While every effort has been made to ensure the accuracy of the information in this document, the World Gold Council does not warrant or guarantee the accuracy, completeness or reliability of this information. The World Gold Council does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, gold, any gold related products or any other products, securities or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of gold, any gold related products or any other products, securities or investments, including without limitation, any advice to the effect that any gold related transaction is appropriate for any investment objective or financial situation of a prospective investor. A decision to invest in gold, any gold related products or any other products, securities or investments should not be made in reliance on any of the statements in this document. Before making any investment decision, prospective investors should seek advice from their financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision. Without limiting any of the foregoing, in no event will the World Gold Council or any of its affiliates be liable for any decision made or action taken in reliance on the information in this document and, in any event, the World Gold Council and its affiliates shall not be liable for any consequential, special, punitive, incidental, indirect or similar damages arising from, related to or connected with this document, even if notified of the possibility of such damages. This document contains forward-looking statements. The use of the words believes, expects, may, or suggests, or similar terminology, identifies a statement as forward-looking. The forward-looking statements included in this document are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the analysis of World Gold Council of the statistics available to it. Assumptions relating to the forward-looking statement involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are difficult or impossible to predict accurately. In addition, the demand for gold and the international gold markets are subject to substantial risks which increase the uncertainty inherent in the forward-looking statements. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the World Gold Council that the forward-looking statements will be achieved. The World Gold Council cautions you not to place undue reliance on its forward-looking statements. Except in the normal course of our publication cycle, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we assume no responsibility for updating any forward-looking statements.

More Related Content

China Gold Mining Technology Forum John Mulligan

  • 1. The state of the gold market in 2016 2016 China Gold Mining Technology Conference, Zhaoyuan Presented by John Mulligan | August 2016
  • 2. Gold up 25%: strongest H1 price gain since 1980 2
  • 4. Gold demand reached 2,336t in H1, up 18% YoY 4
  • 5. Record H1 investment 16% higher than H1 2009 5
  • 6. Demand for ETFs reached 579t, exceeding H1 2009 6
  • 7. Chinese gold ETFs: from US$215mn to over US$1bn 7
  • 8. Negative interest rates: safe investible assets shrink 8
  • 9. Jewellery consumers have faced a tough 2016 so far 9
  • 10. Supply and gold mining 10
  • 11. Total supply up 10% YoY, led by higher recycling 11
  • 12. Gold mining: production plateau? 12
  • 13. Lower costs of production 13
  • 14. Mining current risks 14 Top risks: future growth, productivity and capital access Evolving risks: resource nationalism and social license to operate Constant risks: price and currency, volatility, capital projects Increasing threats: access to energy, cybersecurity, innovation
  • 15. Exploration: fewer (and more expensive) discoveries 15
  • 16. Gold mining: lower grades 16
  • 17. Mining sector: lower value and less activity but signs of recovery in 2016! 17
  • 18. Mining sector: 2016 a turning point 18 2015 2016 to date Slowing demand from China Record impairments ($53Bn) Record low returns Funding and investment dries up Dividends halved Investors discount long term value Market cap plummets Project pipeline shrinks Cost reduction consolidated Producer currencies lend support Lower energy costs Q1 rebound in commodity prices (gold soars!) Investors return market cap surges Asset values start to rise
  • 19. Miners had underperformed the broader market 19
  • 20. But this year, gold miners have outperformed everything! 20
  • 21. Disclaimer 21 COPYRIGHT AND OTHER RIGHTS 息 2016 World Gold Council. All rights reserved. World Gold Council and the Circle device are trademarks of the World Gold Council or its affiliates. All references to LBMA Gold Price are used with the permission of ICE Benchmark Administration Limited and have been provided for informational purposes only. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced. Other third party data and content is the intellectual property of the respective third party and all rights are reserved to them. Any copying, republication or redistribution of content, to reproduce, distribute or otherwise use the statistics and information in this report including by framing or similar means, is expressly prohibited without the prior written consent of the World Gold Council or the appropriate copyright owners except as provided below. The use of the statistics in this report is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a clear acknowledgement of the World Gold Council and, where appropriate, of Thomson Reuters, as their source. Brief extracts from the analysis, commentary and other World Gold Council material are permitted provided World Gold Council is cited as the source. It is not permitted to reproduce, distribute or otherwise use the whole or a substantial part of this report or the statistics contained within it. While every effort has been made to ensure the accuracy of the information in this document, the World Gold Council does not warrant or guarantee the accuracy, completeness or reliability of this information. The World Gold Council does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, gold, any gold related products or any other products, securities or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of gold, any gold related products or any other products, securities or investments, including without limitation, any advice to the effect that any gold related transaction is appropriate for any investment objective or financial situation of a prospective investor. A decision to invest in gold, any gold related products or any other products, securities or investments should not be made in reliance on any of the statements in this document. Before making any investment decision, prospective investors should seek advice from their financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision. Without limiting any of the foregoing, in no event will the World Gold Council or any of its affiliates be liable for any decision made or action taken in reliance on the information in this document and, in any event, the World Gold Council and its affiliates shall not be liable for any consequential, special, punitive, incidental, indirect or similar damages arising from, related to or connected with this document, even if notified of the possibility of such damages. This document contains forward-looking statements. The use of the words believes, expects, may, or suggests, or similar terminology, identifies a statement as forward-looking. The forward-looking statements included in this document are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the analysis of World Gold Council of the statistics available to it. Assumptions relating to the forward-looking statement involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are difficult or impossible to predict accurately. In addition, the demand for gold and the international gold markets are subject to substantial risks which increase the uncertainty inherent in the forward-looking statements. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the World Gold Council that the forward-looking statements will be achieved. The World Gold Council cautions you not to place undue reliance on its forward-looking statements. Except in the normal course of our publication cycle, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we assume no responsibility for updating any forward-looking statements.

Editor's Notes