Furthermore, most of the current projects in the gold mining pipeline were evaluated on the basis of prices above US$1,200/oz and the fall in prices to US$1,100/oz will result in a significant cut in future supply. We estimate that nearly 40% of project production capability is uneconomic at current prices.

With major gold miners struggling to replace reserves, production may begin to decline and higher prices will be required to justify the next round of large capital expenditures.