What a wonderful time to be a gold miner. The rising price of gold has pushed their second quarter revenues up to record, or near-record levels. And it doesn't matter if you are a big producer or a small one.
The world's largest gold miner, Barrick Gold of Toronto, reported that Q2 2011 earnings were up 35% to $1.2 billion from $859 million in the same quarter last year. (All figures in U.S. dollars.) Revenues in Q2 2011 were $3.4 billion, and for the first six months of this year, $6.5 billion.
Vancouver-based Goldcorp, the world's second largest gold miner, noted that the price it received per ounce of gold rose 25% to US$1,516 in Q2 2011 over the same quarter in 2010. That led to quarterly revenues were $1.3 billion, a 62% increase from a year earlier.
Small producers also had a banner year, such as Vancouver's B2Gold that posted record gold revenues of $54.5 million on sales of 36,000 oz.
Agnico-Eagle Mines, a mid-tier producer based in Toronto, also reported a healthy increase in revenues from mining operations - $434 million in Q2 2011, compared to $347 million for the same quarter of 2010. However, Agnico's quarterly net earnings were down approximately 30% to $69 million due largely to the fire that destroyed the kitchen at the Meadowbrook mine and cut into production.
The long-term solution to falling production is to put a new producer in the pipeline, and that is what Agnico has done with its C$70-million investment in shares of Rubicon Minerals of Vancouver. The investment gives Agnico a 9.2% interest in Rubicon. Rubicon's flagship property is the Phoenix project in the Red Lake Gold Camp. The high grade F2 zone at the property has returned assays such as 24.5 g/t Au over 17.0 metres and a whopping 891.1 g/t over 2.0 metres. Production is targeted for Q1 2013.
As good as the second quarter was, Q3 2011 promises more of the same for the gold sector. The price keeps going up, from $1,483 on July 1 to the July 27 close of $1,625. The price is unlikely to take much of a hit even if the United States solves its debt mess next week. I expect by the end of September, the gold price will see further gains.
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