Gold Miners Hunker Down Amid Financial Storm

DENVER (AP) - North American mining companies are hunkering down
to ride out a global economic slowdown, looking to rein in spending
and perhaps delay some projects and exploration.

The world's largest gold producers -- Barrick Gold and Newmont Mining -- have been forced to wrestle with volatile commodities prices, fluctuating oil prices, inflation and frozen credit markets.

Some analysts believe the industry will lower 2009 production forecasts but the impact primarily will be felt overseas, where most of the world's gold mines are located.

Executives this week were blunt about the immediate economic

Newmont CEO Richard O'Brien said his company and the entire industry are operating in what he described as "an unprecedented
macro business environment." He says it consists of "extreme commodity price volatility, mass portfolio liquidation, global inflation and limited, if any, access to capital."

Research analyst Bill Selesky says that while major projects already under way will continue, the expansion of existing mines and some smaller projects will likely be put on hold.

The year began well as gold prices jumped to a record $1,000 an
ounce in March.

But the global economy began to falter as the U.S. mortgage crisis spread. Gold has fallen to around $720 an ounce this month. At the same time the costs for diesel used to power giant machines spiked.

Newmont this week reported a 51 percent drop in third quarter net income, blaming higher production costs, plummeting copper sales.

Barrick reported a 26 percent drop in net income largely due to $97 million in impairment charges, but it also faced higher production costs and sold less gold.

JP Morgan analyst John Bridges says gold is competing with the dollar as a safe haven for capital.

UBS now has revised its 2009 forecast for gold to $700 an ounce
from $825 an ounce.

(Copyright 2008 by The Associated Press. All Rights Reserved.)