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Gold majors should focus on technology, M&A - McEwen

Bnamericas Published: Thursday, November 20, 2014

Major gold miners should snap up juniors and use technology to improve operations given the current metals price environment, according to Rob McEwen, CEO of McEwen Mining.

McEwen, who founded fellow Canadian miner Goldcorp, said many large gold mining companies such as Barrick Gold are weighed down by debt and struggling to maintain margins following falls in the gold price.

As a result, they are mining higher grades, significantly shortening reserve life, while canceling exploration and selling off high-cost assets, McEwen told the Goldman Sachs Annual Global Mining & Metals Conference in New York.

Asked what he would do as CEO of a debt-laden major, McEwen said he would resist cutting exploration while aggressively expanding the production portfolio.

"If I had cash on the balance sheet or lines of credit right now I would be snapping up the juniors," McEwen said. "They can be had quite inexpensively, particularly for a major with the capital markets behind it."

In order to cut costs, McEwen said he would look to technology to improve mining and ore processing, an area the sector has broadly resisted to date.

As an example, Peru's Hochshild Mining, McEwen's JV partner at the San José gold mine in Argentina, has improved recoveries to almost 99% through using an optical sorter to separate ore from waste material.

McEwen also has the El Gallo gold mine and El Gallo 2silver project in Mexico, the Los Azules copper deposit in Argentina and projects in the US.

Gold has declined from a high of almost US$1,900/oz in 2011 to below US$1,200/oz. The metal closed at US$1,196/oz in London on Wednesday, up US$3.25/oz on the previous day.

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