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Another leading miner leaves the World Gold Council -

Tuesday, 16 June 2015

In a little noticed development at the end of March 2015, World Gold Council (WGC) member company Newcrest Mining of Australia ceased to be a member of the WGC, thereby reducing the Council’s membership from 19 to 18 gold mining companies. Newcrest Mining is one of the world’s largest gold mining companies and Australia’s largest gold miner.

This exit by Newcrest Mining from the World Gold Council followed similar exits in 2014 by three other gold mining companies, namely, the very large South African gold miners Anglogold Ashanti and Goldfields, and the mid-sized Canadian gold miner IAMGOLD. These gold miner departures directly impact the World Gold Council’s annual funding because members’ dues constitute an important component of the Council’s total revenue.

The World Gold Council’s annual revenue consists primarily of ‘Member Dues‘ and ‘Sponsor Fees‘. A third income line item, ‘Other Income’, provides a very marginal contribution to the Council’s revenue.

Each gold mining member contributes a US dollar amount each year to the World Gold Council based on the number of ounces of gold produced for that year by that member. Fewer members means less revenue, or alternatively higher members’ dues for remaining members. With the combined Anglogold Ashanti, Goldfields, Newcrest and IAMGOLD producing more than 9 million ounces of gold per year in 2014 (actual production) and in 2015 (forecast guidance), the foregone member dues contributions from these former members will be a big loss to the WGC’s annual revenue, since the lost dues represent about $9 million at $1 per gold ounce members’ dues contribution, or $18 million at $2 per gold ounce contribution.

The departure of Newcrest, Anglogold Ashanti, Goldfields, and IAMGOLD will undoubtedly have been concerning to the Council ‘s remaining directors of the WGC’s board and the Council’s executive management. The departures also leave Barrick, Newmont, Goldcorp and Kinross as the four largest gold miner members in a World Gold Council increasingly dominated by North American, and especially Canadian, gold mining companies.

The WGC’s 18 member list now reads as follows: Barrick, Newmont, Goldcorp, Kinross, Agnico Eagle, Buenaventura, Yamana, Eldorado, Alamos, China Gold, Golden Star Resources,  Primero, Franco Nevada, Acacia, Royal Gold, Silver Wheaton, Newgold, Centerra.

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