Lassonde Gold

Pierre Lassonde, president of Franco-Nevada. Illustration d'André Rivest

Eric King of King World News interviewed Franco Nevada Chairman Pierre Lassonde yesterday. Here's the audio link ->

Commenting on the capital markets for miners, Lassonde told the interviewer, "We're in a period where essentially the market is closed for junior and the smaller, intermedia, one mine companies, they can not raise any money. The valuations are probably the cheapest they have been EVER since I have followed this business, and the banks are not really lending either."

On the current commodities cycle, Lassonde said, "I think this bull market is going to be longer than the last two bull markets. The last bull market was essentially from 1966-1980, so about 14 years. We're already 12 years into this bull market and going on to our 13th year. So you can see clearly that this is more like, if you look back over the last 200 years, the average bull market for commodities has been more like 20 years, and I think this one is more likely to be in that range. I think patience is required. It's going to come in due time. Don't rush anything here."

On gold stocks, Lassonde commented, "Even though the gold price has gone up by a factor of 5 since 2001, production has been flat, and the reason for that is because of the lack of discoveries, the lack of quality discoveries. I remind people the Hemlo discovery in 1982 was 20 million tonnes of 1 ounce gold, the grade was 1 ounce. If you look at Goldstrike that Barricks owns, the originally discovery was 100 million tonnes at essentially a third of an ounce per tonne, open pit. of Today, people think a tenth of an ounce is high grade. Well, that's nothing compared to these fabulous discoveries, and I think that's the issue, there's been a lot of disappointments. But what it means, if you look at the flip side of it, even though the gold price is up substantially, we are not seeing production increase, therefore that is very very supportive of higher gold prices. The companies that have the higher margin mines, they are the ones who are going to benefit. The companies that have the higher grade mines are going to make a tonne of money, and those stocks are going to perform."

Listen at ->