Iain Little: Fund Managers Diary: Boring Laser Surgery for Exciting Miners
Comment of the Day

March 05 2014

Commentary by David Fuller

Iain Little: Fund Managers Diary: Boring Laser Surgery for Exciting Miners

Here is a sample from the opening, plus his comment on The Markets Now:

Many's the time I've sat glued to the dentist's chair praying for merciful escape, or a laser fast treatment. Any fate but "drill and blast". Gold mining companies in South Africa now have new know-how. AngloGold Ashanti, the world's number 3 gold miner, is abandoning drill and blast techniques and now expects to double the life of its S African mines -that means 30 more years of revenues- by using reef-boring technology (RBT). RBT taps new ore from old areas. It drills directly into the gold veins, like a laser drill, and extracts the most valuable content without blasting the entire rock. RBT could be, at least for gold, the new "fracking", a concept we introduced to readers several years ago when most people thought we were just talking dirty. "South Africa is going to long outlive me and probably the next five CEOs of the company," says Anglo's main man. The boring machines, which AngloGold developed with its suppliers, can single out gold-bearing ore from the reef, replace it with cement and chemicals that stabilize the mining structure, and thus take in ore that used to be lost amongst the pillars that supported the structure. Using technology rather than manual labor means AngloGold can operate 24 hours a day. And it should please unions by giving workers less dangerous tasks to do instead. "Effectively, gold that is written off comes back into the books", he says. OK, so how will the books of gold miners change? Start with increased grades (read "margins"). We're talking about raising grades by as much as 15 times, from 6/10 grams per ton to 90 grams per ton. Then add in increased volumes, lower labour costs, reduced environmental impact, and greater extraction speed, and you've got, well, a gold mine. Like so much new technology, RBT comes about because of man's need to meet a challenge: how to excavate deeper and deeper mines. 

Roll up, roll up for this Friday's "Markets Now" seminar in the East India Club (at 1700h prompt, the bell rings for Round One). About 20 are coming to hear Global Strategist David Fuller, supported by yours truly, tackle the major investment issues of the day in a Town Hall free-for-all. There's room for a few more. Here's the email address of the organizers: seminar@investment-strategy.net 

David Fuller's view

Here is the rest of Iain Little’s Diary.  

If you would like to meet him and are anywhere near London this Friday, do come along to The Markets Now event.

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