Global production numbers

The results are finally out and 2012 proved to be another record year for the continued squeeze in the top 5 gold miners. Not only did gold production decline 1.3 million ounces from the top 5 year-over-year, their average yield dropped another 6%. As gold yields continue to decline, it causes more stress for the mining companies. Thus, it takes more energy to produce the same or less gold.

This is indeed the major problem facing the gold mining industry going forward. Below we can see just how much average gold yields have declined in the top 5 gold miners (Barrick, Newmont, AngloGold, Goldfields & GoldCorp):

In 2005, the top 5 miners were producing gold at an average yield of 1.68 grams per tonne (g/t), but by 2012, it had fallen to only 1.22 g/t. In just seven years the average yield declined 27% or nearly 4% per year. However, from 2011 to 2012 the average yield fell an additional 6%

The real problem with declining ore grades & yields is how much gold production is lost every year. If we take the top miners gold production in 2005 which stood at 25.2 million oz and figure a decline in average yield of 27%, we come up with a loss of 6.8 million oz in that seven-year time period (nearly 1 million oz loss per year). Which means the miners either have to mine and process more ore, or they have to add new mining projects to offset this fall in average yield.
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