by Andy Hoffman, MilesFranklin.com:
In recent weeks, essentially all major PM miners have announced MASSIVE asset write-downs, care of the PAPER PM raids that have taken gold and silver costs below their respective costs of production. Not to mention, we have seen development delays, capital expenditures and dividend cuts; with the “granddaddy of them all – RESERVE and RESOURCE write-downs – waiting “on deck.”
Alarmingly, one of the largest write-offs was $1.9 billion from Goldcorp’s “crown jewel” Penasquito project in Mexico; i.e., the raison d’etre for acquiring Glamis Gold for $8.6 billion in 2006. Heck, even Fresnillo, the world’s third largest silver miner – and more importantly, the largest primary silver producer, with ALL its operations in Mexico – announced a series of dramatic cost cuts and a 68% dividend reduction earlier this week. Fresnillo is likely the world’s low cost silver producer; and thus, if it is slashing costs, you KNOW the industry production outlook is dire.
