Nov 17, 2020
Demand For Gold During Pandemic Drives Strong Growth In Gold Mining Industry
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FinancialNewsMedia.com News Commentary
NEWS PROVIDED BYFinancialNewsMedia.com
Nov 09, 2020, 08:50 ET
PALM BEACH, Fla., Nov. 9, 2020 /PRNewswire/ — During periods of crisis, gold has proven to be a time-honored safe-haven asset. Scarcity and built-in utility have made the yellow metal a sought after commodity throughout recorded human history. Whether in physical or paper form, gold bullion is the world’s go to financial hedge against uncertainty. The global gold market is likely to be affected by the fluctuating supply of mined gold as the global gold production is a mix of scrap recovery, central bank supply, and mined gold. More than half of the global gold supply comes from mined gold. In 2019 the U.S. produced 200 tons (6.4 million troy ounces) of gold (down from 210 tons in 2018), worth about US$8.9 billion, and 6.1% of world production, making the U.S. the fourth-largest gold-producing nation, behind China, Australia and Russia. Most gold produced today in the US comes from mines in the state of Nevada. The US is a net exporter of gold. Active stocks in the mining markets this week include Emgold Mining Corporation (TSXV: EMR) (OTCPK: EGMCF), Rio Tinto plc (NYSE: RIO), Newmont Corporation (NYSE: NEM) (TSX: NGT), Hecla Mining Company (NYSE: HL), Troilus Gold Corp. (TSX: TLG) (OTCQB: CHXMF).
A report from IBISWorld, looking at the last five years said that: “The Gold Mining industry comprises operators that extract precious metals to produce concentrate, ore and bullion. Similar to other commodity mining industries, revenue is largely a function of production volume, commodity prices and input costs. While US gold (and silver) production primarily declined in the early 2000s, gold production has been strong since 2014 based on higher demand for gold both as a safe haven for investors as well as a byproduct of increased end market demand. Additionally, while gold prices rose prior to the five years to 2020, they have since climbed to seven-year highs, driving industry revenue. Industry revenue is estimated to increase an annualized 3.1% to $10.9 billion over the five years to 2020.”
Emgold Mining Corporation (TSX-V: EMR) (OTCPK: EGMCF) BREAKING NEWS: Emgold and Partner Rio Tinto Announces Drilling Permit Obtained for New York Canyon Property, NV – Emgold Mining Corporation (“Emgold” or the “Company”) is pleased to announce that Kennecott Exploration Company (“KEX”), a subsidiary of Rio Tinto plc (NYSE: RIO), has obtained approval (the “Permit”) to conduct drilling activities at the New York Canyon Property, Nevada (the “Property”). The Property is subject to an Earn-In with Option to Joint Venture Agreement (the “Agreement”) between Emgold and KEX. Kennecott can earn up to a 75% interest in the Property by completing up to US$22.5 million in exploration expenditures (see Emgold’s February 11, 2020 press release available at www.emgold.com or under Emgold’s corporate filings at www.sedar.com for more details). Under the terms of the Agreement, KEX has a First Option to acquire a 55% undivided interest in the Property by incurring US$5.0 million in expenditures over a 5 year period, of which US$1.0 million is a committed expenditure that must be completed prior to the 18 month anniversary of the Agreement.
The Permit allows for drilling and other exploration activities to be conducted on the Property under a Notice of Intent (the “NOI”). Any surface disturbance on Bureau of Land Management (“BLM”) lands, subject to the NOI, is limited to less than five acres. The Permit allows drilling to occur after October 1, 2020 with an anticipated project duration of two years. KEX has also completed reclamation bonding for the planned drilling program.
About the New York Canyon Property – The Property consists of 417 unpatented claims and 21 patented claims totaling approximately 8,700 acres. It is in the Santa Fe Mining District, Mineral County, in west-central Nevada, about 30 mi. (48 km) from the town of Hawthorne. The claims are divided into two groups – the North and South Groups.
The North Group of claims comprising the Property covers historic past producing copper operations and gold occurrences and is adjacent to the past producing Santa Fe Gold Mine owned by Victoria Gold Corporation (TSXV: VIT) (“Victoria Gold”) The Santa Fe deposit was discovered in the late 1970’s and mined by Corona Gold in the late 1980’s and early 1990’s. Historic production estimated from Santa Fe Mine is 345,499 ounces of gold and 710,629 ounces of silver between 1989 and 1995 (source: The Nevada Mineral Industry, Special Publication MI-2017, Nevada Bureau of Mines and Geology). Note that the vicinity of the Property to a past producing mine does not guarantee that mineral resources or reserves will be defined on the Property.
The South Group of claims contain the Longshot Ridge, Champion, and Copper Queen deposits, which consist of copper skarn oxide, copper skarn sulfide, and copper porphyry sulfide mineralization. Copper mineralization is hosted primarily within the Triassic-age Gabbs Formation limestone sequence with some in the underlying Triassic-age Luning Formation limestone units and overlying Jurassic-age Sunrise Formation limestone sequence. Mineralization in skarns is adjacent to Cretaceous age felsic intrusive rocks. Read more news about Emgold Mining at: https://emgold.com/index.php/news/
Other recent developments in the markets include:
Rio Tinto Group (NYSE: RIO) Rio Tinto Chief Executive J-S Jacques recently said “We have delivered a good operational performance across most of our assets catching up on planned maintenance activity, particularly in iron ore, and continuing to adapt to new operating conditions as we learn to live with COVID-19. We have maintained our capex guidance and our 2020 production guidance across our key products.
“We are focused on regaining the trust of the Puutu Kunti Kurrama and Pinikura people (PKKP) with a focus on remedy. On Tuesday 13 October we wrote a letter to Traditional Owners in the Pilbara detailing that we will review all heritage disturbance in consultation with them; and shared our intention to modernise our agreements which includes modifying clauses to ensure respect, transparency and mutual benefit.
Newmont Corporation (NYSE: NEM) (TSX: NGT) recently announced third quarter 2020 results. Third quarter 2020 highlights were: Produced 1.5 million attributable ounces of gold* and reported CAS* of $756 per ounce and AISC* of $1,020 per ounce and produced 273 thousand attributable gold equivalent ounces from co-products; Generated $1.6 billion of cash from continuing operations and $1.3 billion of Free Cash Flow; Reported $4.8 billion of consolidated cash with $7.8 billion of liquidity and a net debt to adjusted EBITDA*ratio of 0.4x; All sites operational with wide-ranging controls and safety protocols continuing to manage the Covid pandemic while placing the health, safety and wellbeing of our people and communities above all else; On track to finish 2020 strong and meet full-year guidance; Declared third quarter dividend of $0.40 per share, an increase of 60 percent over the prior quarter; Formed exploration joint ventures with Agnico Eagle Mines Limited in Colombia and Kirkland Lake Gold Inc. in Canada; Announced sale of royalty portfolio to Maverix Metals for total consideration of approximately $90 million; and Achieved gender parity amongst independent non-executive Board Directors.
Hecla Mining Company (NYSE: HL) recently announced production results and its cash position at the end of the third quarter. Highlights included: Silver production of 3.5 million ounces and gold production of 41,174 ounces; Equivalent production for silver of 9.0 million ounces or gold of 114,998 ounces; Lead production of 9,750 tons; zinc production of 17,997 tons; Cash and cash equivalents of approximately $97 million at September 30, 2020; Reaffirmed increased annual silver and gold production guidance; and Planned increase for fourth quarter exploration program.
“Hecla’s strong operating performance was from increasing silver production at Greens Creek and Lucky Friday and managing COVID-19 at all the mines,” said Phillips S. Baker, Jr., President and CEO. “This operating performance combined with higher silver prices allowed us to close the quarter with $97 million of cash and cash equivalents while fully repaying our revolving credit facility. Given our free cash flow generation, we expect to spend about $5 million more in exploration, and based on our realized silver price for the quarter being above $25, we expect the silver-linked dividend to be triggered.”
Troilus Gold Corp. (TSX: TLG) (OTCQB: CHXMF) recently reported that it has filed the technical report supporting the Preliminary Economic Assessment (“PEA”) for the Company’s 100%-owned Troilus Gold Project, located within the Frôtet-Evans Greenstone Belt of northern Quebec (the “Technical Report”). The Technical Report, titled “Preliminary Economic Assessment of the Troilus Gold Project, Quebec, Canada” dated October 14, 2020 (the mineral resource has an effective date of July 20, 2020 and the PEA has an effective date of August 31, 2020) was prepared by Gordon Zurowski, P. Eng. Principal Mining Engineer, AGP Mining Consultants Inc. (“AGP”), Paul Daigle, P. Geo, Senior Associate Geologist, AGP and Mr. Andy Holloway, P. Eng. Principal Processing Engineer, AGP. The positive PEA, announced August 31, 2020, demonstrates the potential for Troilus to rank among the top gold producing assets in Canada.
Troilus Gold Project PEA Highlights (all results are reported in U.S. Dollars*): After-tax IRR of 22.9% and NPV5% of $576 million based on $1,475/oz gold, increasing to 32.2% and $915 million at $1,750/oz gold; Projected average annual gold production of 220,000 oz for the first 5 years and 246,000 oz for the first 14 years; Open pit mine life of 14 years and total mine life of 22 years with future underground development; Initial capital of (“CAPEX”) of $333 million, including all mine pre-production costs, net of existing infrastructure (access road, power line, tailings facility, substation, camp, water treatment plant); After-tax payback of 4.0 years at base case $1,475/oz gold; Average cash operating costs of $919/oz gold and all-in sustaining costs of $1,051/oz gold; Cumulative cashflow of $1.27 billion after tax and $2.04 billion pre-tax over 22 years on base case assumptions; Payable Gold of 3.8 million ounces, payable Copper of 265 million lbs and payable Silver of 1.5 million ounces; and Average strip ratio for the open pit life of the mine estimated at 3.9:1
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