Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Mexican miner Timmins Gold (TSX:TMM) has lost 22% for the year and hit a 52-week low of $1.58 after releasing its Q1 on Tuesday.
The company reported a 32% increase in profits of Can$12.7 million; however, the company also announced sharply higher cash cost per gold ounce of $759 compared t $516 a year ago due to recurring and non-recurring items.
“The recurring items include planned lower grade ore being extracted, additional cyanide and explosives consumption to aid in achieving higher gold recoveries and the industry-wide increases in key mining consumables prices such as cyanide and diesel,” wrote the company in a news release.
Non-recurring items were currency fluctuations, operational repairs and the strip ratio falling below the life-of-mine average during the current period.
“The company expects cash costs to be $700 per gold ounce for fiscal 2012 as economies of scale are realized as a result of expanded throughput.”
Commentator Peter Grandich said that the shares are at 200-day key support level.
Timmins Gold operates the San Francisco gold mine, an open pit heap leach operations in Sonora, Mexico.
