The price of gold could reach $1 500 per ounce by the end of the year, the chief executive officer of South Africa’s third-largest gold producer, Harmony Gold Mining, said on Monday.
Graham Briggs’ comments came as the gold price hit a record high for a third consecutive day, with spot gold reaching $1 283,70 per ounce.
“I don’t think it’s going to stop,” he told Reuters during an interview on the sidelines of the Denver Gold Forum industry gathering. “You’re never disappointed as a gold bull.”
Gold has risen 25% in the last year and, asked to hazard a guess at how high the price might go, Briggs said: “Three thousand dollars is unlikely at the end of the year, but if someone said fifteen hundred, that wouldn’t strike me as too crazy a statement.”
Briggs cited several factors driving the price of the precious metal, including Asian central banks buying gold and production declining over the past few years, although he noted it has risen recently in China and Australia.
“I think gold financial issues in the world demonstrate the basic principle of gold — that it’s basically a good investment.”
The possibility of Fed stimulus kept many traders bullish about gold, which remained sharply below its inflation-adjusted all-time high above $2 00 an ounce.
Briggs said Harmony Gold, which operates 10 underground mines and one open pit in South Africa, is transitioning to a lower-cost company by closing high-cost mines and is on track to produce two million ounces per year.
In 10 years, Briggs said he expected the company to be producing about 2,7-million ounces annually.
Harmony is also looking to grow organically through exploration, especially in Papua New Guinea, where it has one mine, Hidden Valley, and is developing a copper/gold project at Wafi-Golpu.
“Internationally there are lot of opportunities in mergers and acquisitions, but not in South Africa — other than acquiring maybe offshore assets,” he said. “We’ve done a lot of due diligence work looking at projects in areas of South-east Asia and that’s where the focus is.”
That meant Papua New Guinea, Indonesia and the Philippines, he said.
“Last year we acquired about 8 000 square kilometres of exploration tenure in PNG,” said Briggs. “So we’re pretty active in exploration.”
He said Harmony’s exploration budget had risen to about $40-million per year from $5-million to $8-million five years ago.
Asked why a South African-based company was not looking at other parts of the continent like rivals Newmont Mining which is in Ghana, he said Harmony had looked in West Africa several years ago.
“We were very much latecomers there. But there are some other areas of Africa that are opening up, like Eritrea and Ethiopia.
“We are keeping a watching brief on some of those.” – Reuters