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Newmont Mining Corp., the world's second-largest gold producer by volume, said discoveries of deposits of the precious metal of more than 5 million ounces are dwindling as exploration costs gain.

''Only 4% of gold deposits in the world are now above 5 million ounces in reserves,'' Adriaan van Kersen, Newmont Australia's general manager of its Tanami operations, said at Paydirt's Gold Conference in Perth today. ''Newmont depletes its reserves at 10 ounces a minute and needs a replacement discovery rate of near 14 ounces a minute.''

Global output fell to a 10-year low of 2,479 metric tons in 2006, according to London-based researcher GFMS Ltd. The firm expects 2007 production of 2,444 tons. Gold mining costs increased 24% last year because of more expensive fuel, labor and equipment, van Kersen said.

''Exploration is not only becoming tougher and riskier, but more expensive,'' van Kersen said. ''As an industry, we are spending more and more on exploration, but even in a high demand and high price environment, and more drilling happening, the gold sector is not discovering the same ounces as it used to.''

Bullion for immediate delivery gained as much as $US8.25, or 0.9%, to $US890.95 an ounce, and traded at $US884.79 at 2:40 p.m. Perth time. The precious metal, which touched a record $US1,032.70 on March 17, dropped 7.5% in the past four days.

Newmont will spend as much as $US230 million ($254 million) this year on exploration, he said, without giving a comparative figure.

Bloomber