Nordgold NV, the producer controlled by Russian billionaire Alexey Mordashov, said a recovery in prices for the metal to $1,500 an ounce is possible by 2014.
“Physical demand from the jewelry industry and central banks in emerging markets is still in place, although we saw an outflow of investors” from exchange-traded funds, Chief Executive Officer Nikolai Zelenski said in an interview today. He sees the price recovering in the next 12 to 18 months, “with $1,500 an ounce possible if not this year, then in 2014,” he said by phone from Moscow. Gold may trade in a $1,100-to-$1,500 range for the rest of the year.
Gold has tumbled 24 percent this year after some investors lost faith in the metal as a store of value and amid speculation that the Federal Reserve will end its stimulus program. Gold futures reached $1,297.20 in New York yesterday, the highest since June 24, and are up 5.4 percent this week.
Nordgold plans as much as $1.2 billion of new investment in projects by 2015, according to a memorandum on its Eurobond program distributed to investors in April. The company will carefully consider all investments, given bullion prices, Zelenski said.
“We have a good portfolio of assets and we would feel comfortable starting to develop several projects simultaneously if the price rises closer to $1,500 an ounce,” he said. “Now we have to assess carefully whether we should start one development or another one.”
Nordgold’s financial status is secure, Zelenski said. “We don’t regard ourselves as working at the edge of break-even.” The company also sees no need to revalue its reserves, because it used a price of $1,250 an ounce when assessing this, he said.
Nordgold’s second-quarter output rose 41 percent from a year earlier after the company started its Bissa mine in Burkina Faso, it said today.