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Gold SWOT: Many mining companies are expanding their efforts & reach

Commentaries & Views

Strengths

  • The best performing precious metal for the was gold, even though it was down 2.2%. K92 Mining reported the latest assay results from its ongoing drilling program at the Kora deposit at the Kainantu Mine. These 32 diamond drill holes once again showcased the high-grade and continuous nature of Kora, with eight intersections exceeding 20 grams per ton (g/t) of gold equivalent grade (AuEq), 24 intersections exceeding 10 g/t AuEq and 41 intersections exceeding 5 g/t AuEq.

  • Pure Gold is now formally guiding to operating rates of 1,000 tons per day by year end, 25% above the original design of 800 tons per day, with increased production rates from both the Main and East ramps. The net impact is that 2022-2024 free cash flow estimates have increased.

  • Montage Gold announced the granting of a new exploration license and results from the Petit Yao Central target, both within trucking distance of the Kone Gold Project in Cote d'Ivoire. With infill drilling at Kone complete, Montage's geological team is now focused on district exploration. The discovery of high-grade satellite deposits within trucking distance of Kone could have a material impact on the economics.

Weaknesses

  • The worst performing precious metal for the week was palladium, down 11.8%. Gold slipped as Treasury yields advanced following the Labor Day holiday, ahead of auctions that will test appetite for U.S. government debt. Rates on the bonds had already surged following last Friday's weaker-than-expected jobs report, limiting the upside for non-interest-bearing gold. Some investment banks have cut forecasts for U.S. growth this year, citing a "harder path" ahead for American consumers than expected.

  • Exchange-traded funds (ETFs) continue to sell gold, bringing this year's net sales to 7.27 million ounces, according to data compiled by Bloomberg. Total gold held by ETFs fell 6.8% this year to 99.8 million ounces.

  • Sibanye Stillwater's gold output may decline from 2025 with the planned closure of its Beatrix mine, head of the company's South African gold division, Richard Cox, said on a call with investors. Beatrix's remaining reserves support a five-year mine life.

Opportunities

  • Gold Royalty Corp. (GROY), Abitibi Royalties (RZZ) and Golden Valley (GZZ) are combining, reports Yahoo! Finance. Under the terms of agreement, each RZZ shareholder will receive 4.61 shares of GROY, while each GZZ shareholder will receive 2.14 GROY shares. This implies a price of $25.33 per share of RZZ and $11.76 per share of GZZ, representing a premium of 22% and 86%. Post the transaction, the combined company is expected to have six royalties owned on operating mines with an additional 14 Feasibility/PEA stage royalties. The combined company is also expected to have $47 million cash and no debt.

  • i-80 Gold Corp. said that it will create a comprehensive Nevada mining complex by acquiring certain processing infrastructure and gold deposits in Nevada. The gold producer and developer said it agreed to an asset exchange with Nevada Gold Mines LLC, which will include an autoclave as well as the Lone Tree and Buffalo Mountain gold deposits. The company also entered a definitive membership interest purchase to acquire Ruby Hill Mine from affiliates of Waterton Global Resource Management. As part of the agreement with Nevada Gold Mines, i-80 will exchange its 40% ownership in the South Arturo Property in Nevada and assign its option to acquire the adjacent Rodeo Creek exploration property.

  • Silver Mines Ltd.'s Bowdens project in New South Wales -- set to start operations in 2023 -- will have an initial output target of 6 million ounces a year, said Managing Director Anthony McClure. That will make it the country's biggest new mine for the metal in more than two decades, and Australia's No. 2 silver producer behind South32 Ltd.‘s Cannington mine in Queensland.

Threats

  • Oceana Gold said that Mr. Michael Holmes has resigned as the President and Chief Executive Officer of the Company, as well as from the Board of Directors, effective September 8, 2021. The Board has engaged a leading executive search firm to commence a global search for the Company's next President and CEO. In recognition of leadership continuity, the Board has appointed Mr. Scott Sullivan who has recently joined the Company as Chief Operating Officer, to act as the Acting President and CEO of the Company.

  • At Americas Gold and Silver Corp. (USA), the ongoing illegal blockade at Cosalá prohibited any exploration activity over the past year. With the lack of commercial operations, USA continues to issue shares at a dilutive level to stay cash positive.

  • Owners of the Ballarat Gold Mine have been accused of contravening Victoria's top workplace safety law by failing to keep updated safety plans and by appointing people to senior underground mining roles without the required qualifications. Victorian regulators have given the Singaporean-controlled mine until October 15 to fix the breaches, adding to doubts over the financial health of the mine after tens of millions of dollars were lent to doubtful debtors offshore in the past decade.
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