Commodity Online
When crude oil prices climb, it is a textbook law that exploration efforts too would climb. But the case may not be same with gold sector, where discovery rates have not climbed beyond a point. In gold it would be difficult for the exploration frenzy to reach a feverish pitch as the challenges in gold exploration linger.

"I don't see a surge in gold production if we saw a gold price of $3,000," Jamie Sokalsky, head of Barrick Gold said. "At a higher gold price, we'd still be experiencing the same challenges. I'd suggest there'd be very limited response to that higher gold price."

As companies spend around $8 billion last year in exploration, there were just 3 discoveries last year compared to 11 in 1991.

None of these discoveries could be termed super-giant, or above 20 million ounces, Sokalsky said at a conference in Hong Kong. He also observed that break-even costs in gold mining are also on the rise.

The challenges

"It's getting harder to find large deposits and to get those deposits into production takes at least twice as long as it might have taken a decade ago," Sokalsky said in an interview to The Economic Times. "We're not going to see new mines coming in as fast as we thought to replace old mines that are closing." he added.

Further, getting clearances for mines, dealing with governments and communities, tackling environmental issues etc are takinng much longer, Sokalsky, who took over as CEO in June added.

"It also costs multitudes more to build a mine and to finance that." he concluded.