By Andrew de Souza

Gold prices good news for local producers

Jul 28, 2011 | 8:35 AM

Gold prices are reaching record highs on commodity markets and that means more opportunities for Saskatchewan producers.

For Golden Band Resources Inc., the increase in gold prices mean that the company can continue to expand its operations into the future.

As prices rise, it means two things for the company, said chief financial officer, Mike Thiel. The first is that they’re able to extend their operations into deposits that previously weren’t viable to mine.

“The more cash you’re generating the more cash you’re going to put back in the ground and the more deposits that become profitable,” he said.

“The higher the gold price, then the lower (the) grade that you can mine in a profitable way.”

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Secondly, he said as profit margins increase, the more they can focus on finding now deposits all together to extend operations.

“The lifeline of all mining operations is their exploration. Every day that you’re in operation, you’re depleting your known reserves,” Thiel said.

“So you’re constantly having to replace the reserves that you’re mining and at different price points we’re looking at adding deposits into our development plan.”

While its price increases were good, the company wouldn’t immediately react to jumps in the market, Thiel said. He said the company uses plans on longer time frames to ensure long term profitability.

“Mining companies typically have three to five year development plans and incorporated into those plans will be assumptions about prices,” he said.

“So in this market the plan that we’re currently working with was developed using lower price assumptions and our plan wouldn’t necessarily change in the short term.”

adesouza@panow.com