http://www.mineweb.com/mineweb/view/...

In their analysis, Citigroup found that mine supply is less relevant to gold prices.

Meanwhile, the analysts noted that "there are many smaller miners (<400,000 oz/year) planned near term and relatively few larger scale projects."

"M&A among gold developers has been less fervid than in Copper," they said. "This is likely related to political factors (tougher locations) as well as commodity outperformance that provided copper mines excess cashflows, plus better ROI on projects."

"Gold mines tend to show high cash margins but poor ROI due to short mine lives," Citigroup advised. "As such, the wave of M&A for gold developers has been less impressive with more current availability of single asset gold developers. Key examples that could be considered targets include Osisko and Detour Gold in Canada, Minefinders and MAG Silver in Mexico, Guyana Goldfields in Guyana, Crystallex and Gold Reserve in Venezuela, and Greystar Resources in Colombia, among others."

Meanwhile, Citigroup noted that "financing risks are a bigger concern for gold developers as the senior gold companies are less flush with cash than copper competitors. This will likely result in more juniors attempting to go to construction with others banding together."

The analysts also found that the higher capital cost trend is less clear in gold "where there is a greater variance in mine life (more short lived operations)."

"Recent updates suggest upfront capital costs per annual ounce of $1,000 to $2,000/oz per life-of-mine ounce or about $125-$150/oz (excludes sustaining capital). New feasibilities are likely to step higher," Citigroup concluded.