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$1,200 Marginal Production Cost for Gold Miners Forecast by Morningstar Analyst Joung Park

67 WALL STREET, New York - December 17, 2012 - The Wall Street Transcript has just published its Gold and Precious Metals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investment and Central Bank Demand - Gold Producers vs. Gold ETF - Midcap and Small-Cap Consolidation Activity - The Rise of Gold ETFs - Central Banks as Net Buyers of Gold

Companies include: Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC), Newmont Mining Corp. (NEM), Eldorado Gold Corp. (EGO), Gold Fields Ltd. (GFI), Agnico-Eagle Mines Ltd. (AEM), Yamana Gold, Inc. (AUY), AngloGold Ashanti Ltd. (AU), IAMGOLD Corp. (IAG)

In the following excerpt from the Gold and Precious Metals Report, a Wall Street Journal Number 2 out of 98 Ranked 2012 "Best on the Street" Metals and Mining Research Analysts discusses the outlook for the sector for investors:

TWST: Gold seems to be stuck at plus or minus $1,700. Is it politics or is it fundamentals that are keeping things in place?

Mr. Park: I think for gold prices near term, it's usually driven by a lot of noise from political and economic events. So as for forecasting near-term gold prices, we view it like eating crawfish: a lot of effort for not a lot of meat. We prefer to focus more on finding and identifying companies that can produce at a cost well below the highest-cost producers.

Right now the highest-cost mines are largely in South Africa. The high-cost mines there have cash costs at or just above $1,000 per ounce, and if you add in about $200 per ounce for capital spending needed to keep the operations going, then you end up with all-in production costs of $1,200 per ounce as the marginal cost in the industry. We also use $1,200 per ounce as our long-term assumption in our valuation models, but we test a range of scenarios.

TWST: Is South Africa the high-cost producer at this point?

Mr. Park: Yes, absolutely, and you've seen the costs there continuing to surge obviously because of the mining strikes. But the cost inflation in South African gold mining has been ongoing for many years now.

TWST: $1,200 seems to be at the low end of anybody's expectation at this point?

Mr. Park: I think $1,200 is at the low-end of the consensus, but I also don't think most of the consensus forecasts are projecting the current $1,700 gold price into perpetuity. And just to add a little more color from a supply-and-demand perspective too, most of the gold price increase that you saw over the past 10 years was caused by investment demand growth. And in fact, over the past decade, gold jewelry demand has actually shrunk, so it's all been driven by the investment demand growth.

And there are a few components to the higher investment demand. There has obviously been the proliferation of gold-backed ETFs such as the GLD, as well as central banks switching from selling bullion to buying it. But just to sum it up, for gold investment demand to continue to increase further from here, we have to see these central banks and ETF investors not only keep the gold that they currently have but continue to accumulate more and more gold. It's the delta of the demand that really matters for the gold price, and I think it will be difficult to see the...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.