The outlook for industrial metals has remained bearish this year as economic data from China continues to point to a sharp slowdown. This year China will barely manage to grow at 7%.
While this is more than respectable by developed world standards, it is well below the double-digit growth one has become accustomed to with China.
China’s double-digit growth was driven by significant spending on infrastructure. This spending on infrastructure also boosted demand for industrial metals. But as China is slowing down and transforming into a consumption-led economy, demand for industrial metals has been hurt.
Precious metals have also struggled. Gold prices rose to record high levels in 2011, driven by the Federal Reserve’s ultra-loose monetary policy measures. But the Fed has already wound down its QE program and at its December meeting is expected to hike rate for the first time in nearly a decade. Gold prices may get some support due to geopolitical tensions in the Middle East, but the days of gold’s bull run are long over.
The gloomy outlook for industrial and precious metals does not augur well for mining companies. The key for them is to adjust to the new environment by keeping costs down.
This morning, Vancouver, Canada-based Monument Mining Ltd. (TSX-Venture:MMY) reported its financial results for the fiscal first quarter of 2016. For the quarter, MMY reported gold production of 5,063 ounces, down from 9,745 ounces reported for the same period in the previous year.
The important thing for MMY though was a significant reduction in its cash cost per ounce. The company’s cash cost per ounce for the quarter fell by 33% to $468 per ounce in the fiscal first quarter.
MMY’s gross revenue from gold sales totaled $8.33 million. Robert Baldock, President and CEO of Monument Mining, said that MMY continues to maintain its low cash cost gold production at the Selinsing gold mine. Baldock further said that cash flow from the Selinsing production has been invested in the acquisition, exploration and development of the expanding project portfolio.
He added that the business strategy continues to be the strategic acquisition of mineral resources to take advantage of under-valued mineral properties to develop a diversified project portfolio with a clear focus on gold.
Baldock noted that despite the decline in commodity prices, the company believes that acquiring high quality undervalued resources and developing cash flow from multiple production sites and jurisdictions is the key for its growth and success.
Shares of MMY have been in a tight trading range for all of 2015, possible indicating that the multi-year slide in share value might be coming to an end.
