- Some major miners have underperformed the gold price for a decade
- London miners and royalty companies could provide better value
Last month, explosives and chemicals company Orica (AU:ORI) doubled its exposure to the North American gold industry by buying a fellow sodium cyanide manufacturer.
The logic is sound: cyanide is used to extract gold from rock, and behemoths such as Barrick Gold (US:GOLD) and Newmont (US:NEM) are unlikely to cut back on their use of the chemical any time soon. They even run a mine complex together: Nevada Gold Mines, which has triple the entire production of London's top gold producer, Endeavour Mining (EDV), at around 3mn ounces (oz) a year. It needs a lot of cyanide. London-listed Capital Limited (CAPD) has also expanded its operations from Africa to the US through two contracts with Barrick, having initially worked with the mining giant in East Africa.