SYDNEY – Australia’s gold miners are poised for a successful 2021 as the high price of yellow metal picks up profits, prompting a search for resources that now look far more promising than they did a year or two ago.
Gold hit a record high of $ 2,067 per ounce in August. Although the price has since eased, it has remained above $ 1,800 as investors hold the safe haven amid the pandemic of coronavirus and the impending global economic downturn. come. The weak U.S. dollar and low global interest rates are also helping the price of gold by reducing what is wrong with investing in the metal.
Big gold producers and so-called young explorers have responded by going to capital markets, seeking money to restart closed mines or explore and develop new projects.
“There is more interest in the gold sector and also a growing desire to fund early stage exploration, something we haven’t seen in a long time,” said Anna Nahajski-Staples, executive director at Moneghetti Minerals, which is the drilling plans at two greenfield exploration projects in the U.S. state of Nevada and another in Western Australia.
Moneghetti hopes to raise $ 8 million to $ 10 million in an initial public offering on the ASX, the Australian stock exchange, by mid-2021.
Other gold diggers who have recently raised money for exploration and development in Australia include North Stawell Minerals, Bardoc Gold and DevEx Resources.
“Interest in the food chain has come down significantly. Previously it was a market where investor interest was around near-term production or already making mines, to de-escalation as much as possible, “Nahajski-Staples said. “Now, with such large margins coming into the picture, they are able to look at earlier levels and take higher risks.”
Even old gold mines that stopped production years ago are starting to produce. These include the Katanning project in Western Australia, the Gum Creek project at Horizon Gold and the Morningstar AuStar Gold mine in Victoria.
Investors ’strong desire for gold has also enabled fundraising on the ASX with companies targeting overseas assets, such as Megado Gold, which is drilling in Ethiopia; Mithril Resources, which is developing a gold coin project in Mexico; and Sihayo Gold, which is researching in Sumatra North Indonesia.
The gold sector was the largest share of funds raised among all stock companies on the ASX in 2020.
Gold companies raised 761 million Australian dollars in the fourth quarter of September, followed by another AU $ 812 million in October and November. At least a dozen young researchers have hit the market with initial public offers in the past two months to tie up funding for drilling at upcoming projects.
“We see a need for a lot more capital – especially at the small to medium end – as many more companies are researching because the price makes it profitable to do so,” he said. Romano Sala Tenna, portfolio manager at Katana Asset Management in Perth.
In fact, spending on gold exploration hits AU $ 1.2 billion higher in the 12 months to October 2020, a government study found, making up 42% of mining exploration spending in Australia.
AU $ 3.9 billion worth of gold projects have been “committed” during this period and a further 17 have reached “viability”. If all the projects were completed over time, Australia’s gold production would go up a third, he said.
Falling gold prices and production have been a stimulus to Australian government coffers, with official estimates predicting that coal-producing gold will become the country’s third-largest exporter after iron ore and gas in the financial year ending June 2021.
Australia exported 315 metric tonnes of gold in 2019, accounting for about 10% of world production, second only to China.
Nearly 19% of the world’s gold reserves – mostly for any country. But much of this is located in remote areas with limited infrastructure. The rise in prices, coupled with improved technology, has now made it easier to raise money to develop lower-level assets or those in difficult areas.
The strong price also drives contract making in the sector. Northern Star Resources and Saracen Minerals, Australia’s second and fourth largest gold producers by market value, agreed to merge in October while smaller players Dacian Gold and NTM Gold agreed to merge in November to create a mid-range gold producer.
“I’m pretty sure we’ll see more gold and property unions happening over the next year,” said Sherif Andrawes, head of natural resources at accounting and consulting firm BDO.
“Gold companies, when they come together, can do a lot of collaboration. And M & As gold makes a lot of sense,” Andrawes said. “[It] it’s about growing bigger, accessing indexes and getting the attention of gold ETFs. “