Original Research

Geological occurrence and economic feasibility in closing decisions by gold mines

Stefano Mainardi
South African Journal of Economic and Management Sciences | Vol 2, No 2 | a2576 | DOI: https://doi.org/10.4102/sajems.v2i2.2576 | © 2018 Stefano Mainardi | This work is licensed under CC Attribution 4.0
Submitted: 03 July 2018 | Published: 30 June 1999

About the author(s)

Stefano Mainardi, Department of Economics, University of Natal, South Africa

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Abstract

With successful exploration of deposits often lagging behind mineral extraction, and the international price of gold showing no signs of recovery, mining companies are under pressure to reassess their strategies. The decision whether or not to close a mining activity is the outcome of a process of adapting expectations to a changing economic and geological environment. Part of the literature emphasizes the role of the mineral price and operating costs. However, the extent, pace and intertemporal allocation of metal recovery is in practice determined by a complex interaction of both these with other factors. Following a review of theoretical interpretations, and a reformulation of associated hypotheses, binary-response models are applied to a sample of gold mines in mainly three major southern hemisphere producers (Australia, South Africa and Chile).

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