Gold mine output set to reach record, disappoint bulls

Wed Nov 20, 2013 6:16am EST
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* Gold mine production set to reach record this year

* Slide in prices unlikely to cut output until 2015

* Weak demand likely to offset any prospect of supply cut

By Jan Harvey and Clara Ferreira-Marques

LONDON, Nov 20 (Reuters) - Output from the world's gold mines is set to hit record highs this year, disappointing bulls who are impatiently waiting for production cuts following this year's 24 percent plunge in prices.

Some gold miners have felt the squeeze of lower prices this year, and a number, including Canada's Kinross and Russia's Polymetal, suspended marginal mines and projects after a dramatic first-half price drop.

But as prices fall, others are actually increasing output to maintain revenue and profit levels. In some cases, they are targeting higher grade ore to keep marginal mines operating and generating cash, at the expense of future production.

Furthermore, several large projects put into motion during gold's 12-year rally, which took it as high as $1,920 an ounce in 2011, are coming to fruition.

"Our expectation is that we're going to see a fresh record high in gold mining output this year," GFMS analyst William Tankard said.   Continued...