BAY STREET-Lower costs could bring shine to major gold miners

Sun Jan 6, 2013 10:29am EST
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* Diversified miners delay projects, could slow cost inflation

* Cost cuts to give boost to bruised gold seniors

* Gold miners still need to prove lower costs, higher margins

* Analysts see dividends, earning growth as key to recovery

By Julie Gordon

TORONTO, Jan 6 (Reuters) - Sagging demand for non-precious metals - a trend that's beyond the direct control of Canada's embattled gold producers - is shaping up as their best hope for recovery in 2013 after a year that battered their share prices.

The key to restoring investor faith in the gold miners is reining in runaway cost inflation, experts say. To that end, a weakening of prices for base metals, coal and iron ore comes at just the right time for big bullion producers, who can no longer use surging gold prices to justify unrestrained spending.

Barrick Gold Corp, Goldcorp Inc and their top-tier peers are scrambling to pare spending and return more cash to their shareholders even as they gingerly push ahead with major new gold developments.

"There may be a catalyst here and that is cost stabilization," said Adam Graf, a mining analyst with Dahlman Rose in New York. "Because the rest of the mining industry is going to be weaker in 2013, that should benefit the gold guys."   Continued...