Gold Mining From the Perspective of a Chief Executive Officer

For the mining industry in general and gold mining in particular, the past few years have been difficult. Economic conditions, coupled with growing regulatory restrictions, have led to increasingly important reasons for managing assets wisely. From a public company perspective, such asset management makes sense because it ultimately provides for an increase in shareholder wealth, and that is why we are in business. Regardless of whether a company is public or not, assets must be managed effectively to remain a player in today's competitive environment. So, as the chief executive officer of a gold mining company, how do we manage our assets to ensure that we are satisfying our obligations to our customer-the Amax Gold shareholder? The gold industry has been under siege. We have just completed the third year with average prices below $12.85/ g ($400/oz). When finding, and/or acquisition costs and development costs to operating costs are added, there isn't much of a profit margin left. What this environment provides, however, is opportunities for growth. In the gold business, you either grow or you die. Today, most North American gold producers have, at most, a 10-year mine life. We are all scrambling to add reserves so we do not become extinct. As prices remain low, opportunities abound for increasing diminishing reserves. This is the time for the opportunistic company to take advantage of market conditions and that is precisely what Amax Gold has done. There are six components to running a successful gold business: • finding reserves through exploration, acquisition or joint venture, • financing the project, • permitting and constructing the project, • operating the project, • cash management and • communication.