Gold Fields CEO Nick Holland. Picture: MARTIN RHODES

GLOBALLY, gold miners were not doing as well as thought, and the industry needed to engage in more introspection in order to realise meaningful sector growth.

This is what Gold Fields CEO Nick Holland told the audience at this year’s Denver Gold Forum in Colorado on Thursday.

Despite an increase in the gold price since 2006, growth in the industry had been constrained by rising operating costs, and declining grades.

In his presentation, Mr Holland implied it was high time the industry painted a clearer picture regarding the state of their performance.

"Operating costs over the past six years have increased by 12% each year, while ore grades have declined by about 5% per annum over the same period," he said.

The gold price, he added, is said to have gone up 21% per annum over five years, but total all-in costs have gone up 21% over the same period.

"So we stand up and talk about cash costs, how much money we’re making at the earnings before interest, tax, depreciation and amortisation (ebitda) level, but go and look at what the real picture is.

"The real picture is that we don’t really make that much money. So we don’t kid the investors," Mr Holland said.

In his view, this practice gave governments the impression they could tax the industry.

"We need to re-evaluate how this industry looks at itself and how this industry reports its actual performance," he said.

Mr Holland also criticised what he describes as "the street calling the gold price down year after year."

In his view, the constant downgrades on the gold prices hampered investors from going into the gold industry.

"They are now saying the long-term gold price is going to be around $1,300 in nominal terms against the backdrop of an industry that has an all-in cost already well over $1,300 in today’s money," he said.

"If you look at what has happened over the last six years what I can tell you is if you take the gold price consensus forecast, then in six years out of six the street has got it horribly wrong.

"It frightens them away and a lot of them end up buying the exchange-traded funds and avoid going into the gold stocks," Mr Holland said.

Mr Holland said the top eight companies, which make up 40% of the industry, "have not grown over the last five or six years". In fact, he said, they’ve declined.

"I’ve been coming to these conferences for 15 years, and (we), like everybody else, have been talking about growing production.

"But, in fact, our production has declined by about 2% per annum over the last six years. It hasn’t grown at all.

"In fact, we’re saying again as an industry that we’re going to grow 6% going forward.

"I guess the question is, is it growth just for growth’s sake? That’s part of the problem that we have."