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Gold SWOT: the world's top miners confident in their mission to eliminate emissions from operations by 2050

Commentaries & Views

Strengths

  • The best performing precious metal for the week was palladium, up 8.19% despite hedge funds taken their net-short position to record levels. Gold extended gains after a key U.S. jobs report fell well short of expectations in September, complicating a potential decision by the Federal Reserve to begin scaling back monetary support before year end. The U.S. added fewer jobs than forecast for a second month in a row, pointing to weakness in the labor market recovery. Nonfarm payrolls increased 194,000 last month after an upwardly revised 366,000 gains in August, a Labor Department report showed Friday. The unemployment rate fell to 4.8%, partly reflecting fewer Americans looking for work. Meantime, average hourly earnings jumped. The dollar and Treasury yields slumped in response, boosting bullion's appeal.

  • Platinum Prices Continue to Fall Due to Weak Auto Production

  • On the back of production from Judd commencing this quarter, increasing operating flexibility and a very low capital cost expansion opportunity, K92 Mining has approved a 25% production increase to 500,000 tonnes per annum, an interim bump ahead of the larger Phase 3 expansion that will commence later in 2023. The company anticipates the low cost ($2.5M) expansion to commence commissioning in Q3 2022.

  • Calibre Mining pre-reported strong third quarter production results, beating consensus expectations for the quarter. The company maintained 2021 guidance (170,000-180,000 ounces) and with the fourth quarter anticipated to be the strongest quarter of the year, the company expects to achieve the top end of the guided range. The company reported a strong quarter-end cash position of $72.9 million (with no debt), up $6.6 million from $66.3 million in the second quarter, and remains well positioned to generate significant free cash flow while progressing with its exploration and development programs.

Weaknesses

  • The worst performing precious metal for the week was gold, down 0.22%. Gold Road cut its production forecast. As a result of the lower production rates in the June and September quarters, annual guidance has been revised to between 250,000 and 260,000 ounces from original guidance of between 260,000 and 300,000 ounces.

  • The World Gold Council (WGC) provided updated ETF data showing net outflows of 15.2 tons in September, with outflows in North America and Europe only partially offset by inflows in Asia. Global gold ETF holdings at September-end were 3,592 tons, the lowest level since April 2021.

  • As U.S. approaches its debt limit, some analysts have suggested the Treasury Department could simply mint a platinum coin in a value of $1 trillion or more and deposit it at the Fed to give the government greater borrowing authority. “I'm opposed to it, and I don't believe that we should consider it seriously," Treasury Secretary Janet Yellen said on CNBC about the idea of minting the coin to avoid breaching the debt limit. “It's really a gimmick," she says.

Opportunities

  • According to Stifel, Great Bear Resources has upside with its Dixie gold project. They strongly expect this to be a 10-million-ounce deposit. With a four-kilometer strike length, drilling down to 400 meters regularly hitting the expected and predictable mineralization, high-grade and consistent domains within a much larger, lower grade mineralized envelope.

  • The world's top miners are confident they can eliminate emissions from their own operations by 2050 but aren't yet sure their customers can do the same. The International Council on Mining and Metals' 28 members, which include producers like BHP Group and Glencore Plc, on Tuesday pledged to cut so-called Scope 1 and 2 emissions from their own operations and the electricity they use to net-zero by 2050.

  • If the 2021 production guidance is met, the collective production of the top ten global gold producers is expected to recover by around 13.5% in the second half compared to the first half, according to GlobalData. The company notes that total production is expected to be 14.9 million ounces in the second half, compared to 13.1 million ounces in the first half.

Threats

  • Africa is losing new investments in gold mining to a resurgence in risks such as political instability and resource nationalism, Chris Griffith, chief executive officer of Johannesburg-based Gold Fields says. “The risks are increasing and post Covid, we are seeing some of these risks materially rising and because of that exploration is going to other countries. We could see much exploration in Africa but it's being harmed by coups, resource nationalism".

  • Australian Mining reported on Newmont Mining $150 million invested to deliver the gold industry's first Autonomous Haulage System fleet at Boddington, Western Australia's largest gold mine. Expectations are that with the transition to a fully autonomous haulage fleet of 36 trucks, the company will improve mine safety and productivity, while extending mine life. Ramping up the truck fleet to full productivity as the site fine-tunes the technology for operation in a deep open pit mine has been a challenge. During commissioning, the project faced several challenges, including unusually severe weather and heavy rainfall, shovel reliability and operational delays associated with managing bench hygiene as mining moves into deeper sections of the pit. As a result, Boddington delivered lower ex-pit tons than expected, with full-year 2021 gold production anticipated to be approximately 140 thousand ounces, below original guidance estimates of 830 thousand ounces.

  • Members of the National Union of Metalworkers of South Africa started a national strike on Tuesday following a deadlock in negotiations for a new wage deal. Union members didn't report for duty in five of the country's nine provinces and will hold pickets and marches during the morning, Numsa spokeswoman Phakamile Hlubi-Majola said by phone. The union has about 155,000 members and the strike is expected to attract more than 300,000 workers, including from allied unions, she added. “The strike is on, and nothing has changed," Hlubi-Majola said. “As of this morning, workers didn't go to work, so we are on strike."
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