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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Spot the Difference Between These Giant Gold Deposits

Very interesting data points this week on two of the world's largest gold projects.

First, the negative. In Alaska, major producer Anglo American announced it is pulling out of the Pebble gold-copper project. Anglo is writing down $300 million spent on the project since 2007 and walking away.

Contrast this with (possibly) positive news from the massive Minas Conga gold-copper deposit in Peru.

Peruvian Mines and Energy Minister Jorge Merino said at a recent mining conference that round table discussions with dissident residents near the deposit may be making headway. Potentially paving the way for its owners (including gold major Newmont) to develop the stalled project.

Interesting that we have one major throwing in the towel while another appears to be persevering. What does this tell us about the current project development environment?

Both Pebble and Conga are world-class geologically. Pebble is probably the world's largest undeveloped gold deposit. Conga is likely in the top ten.

Both are controversial. Vigorous protests have been a material impediment to development, costing owners time and money.

Here's one difference that may explain the differing tack of each project's big player: infrastructure.

Conga is located in the shadow of the massive Yanacocha mining district. Newmont has stated it plans to "leverage existing operations" here to help with capital and operating costs.

Pebble by contrast, is hundreds of kilometres from major road infrastructure. And distant from any significant mining operations.

Is this factor causing one project to shovel on while the other is shelved? There's no way to know for sure. Perhaps Anglo American and Newmont have different world views. Or maybe it's other interveners like local costs or permitting environment.

But in the current mining downturn it's interesting to see which projects are emerging as the survivors. There's a lot of talk today about cost management and rationalization. You'd think that in such an environment, good infrastructure would be climbing the "most desired" list for developers.

Here's to being in the right place at the right time,

By. Dave Forest




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Leave a comment
  • Gordon Steingart on September 20 2013 said:
    The Pebble project was doomed many years ago. Teck Resources once owned it and very correctly abandoned it. It's a good sales pitch by Hunter Dickinson,imo. Buy Northern Dynasty stock because ; Pebble is the Largest gold and copper resource in the world in mining friendly Alaska . Anglo American as a 50% partner sewed up the deal. Just buy NAK and wait .

    Then later,we find tailings ponds could destroy a fishery ,which could lead to multiple problems for the area and beyond. Extremely low grade means a lot of waste.
    Alaska has plenty of mining opportunity ,I guess they can live without that one ,despite its size.

    I think Hunter Dickinson really believed the Pebble could work, but in case it didn't ,issuing ,then at high priced times with promotion in full gear , having insiders selling shares and having salaries paid for many years has likely been beneficial to Northern Dynasty and Hunter Dickinson people. The real losers are the retail investors.
    I'm surprised Anglo American ever bought in. They must have realized the potential for failure was very high. After all ,they are pro's. I'm not surprised at all that this project is likely shelved permanently.

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