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DJ Harmony: Exploration Budget Cuts To Shrink New Gold Supplies

Publication: Dow Jones Newswires
Journalist: Andrea Hotter

London (Dow Jones Commodities News via Comtex)- Exploration budgets at gold mining companies are coming under pressure because of the global financial turmoil and this is likely to translate into less troy ounces of the precious metal being dug from the ground, Harmony Gold Mining Co.'s (HAR.JO) chief executive said Friday.

The supply situation won't be helped by the fact that economic deposits of gold in tried and tested mining locations are drying up, Harmony's Graham Briggs added.

"With economic deposits in mining locations harder to come by and exploration and development budgets under extreme pressure, supplies of new gold into the market are likely to continue to shrink," he noted.

In the short-term, however, gold price volatility will continue "until the financial storm starts to abate," Briggs said. Spot gold prices have been on a rollercoaster since the financial market turmoil escalated, trading in a massive $250/oz range in September and October.

But Harmony said the gold market nonetheless still fulfills its historic role as "the investment of last resort for many nervous investors" during the financial turmoil.

"We remain bullish about the fundamentals for the metal in the medium and longer term," Briggs added.

Harmony is Africa's third-largest gold producer.

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