Make Kitco Your Homepage

Surviving Gold Mining Downturns: One Junior Miner Turns To Hemp For Profit

Kitco News

Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

Kitco Daily Recap

Surviving Gold Mining Downturns: One Junior Miner Turns To Hemp For Profit

(Kitco News) - Lack of investment in the gold mining industry has some companies looking at other revenue streams, including growing cannabis.

One such company is California Gold Mining Inc. — a junior gold miner with unused land in California.

The miner said it will propagate high-CBD industrial hemp seed on a portion of its property located in the town of Fremont, California, citing the recent passage of the 2018 U.S. Farm Bill, which removes any prohibitions on cultivation and sale of industrial hemp.

In the latest press release the company announced that its project was approved by the California Gold’s board of directors and that it “will not be required to (1) seek re-zoning of the Property, (2) obtain a Conditional Use Permit (“CUP”), or (3) complete a California Environmental Quality Act (“CEQA”) review in order to implement its proposed plan.”

The plan is to have an additional revenue stream while the company struggles to find exploration capital, with its cash holdings standing at less than $129,000 as of November 30.

“Given the prolonged down-trend in the junior mining sector, and scarcity of public capital for exploration-stage mineral resource companies, the Company has been contemplating monetization of the Property with a view towards generating positive cash-flow,” California Gold CEO Vishal Gupta said on Thursday.

California Gold also cited data that estimates for the industrial hemp-derived CBD market to top $22 billion by 2022.

Lack of investment in new mining projects is a major concern for the industry as a whole, Wood Mackenzie’s research director Mike Sinden told Kitco News in the beginning of March

“Because of financial discipline, we’ve seen a lack of investment. We don’t see enough supply on the horizon, we see increasing market deficits and we are thinking that we are probably going to enter a period where we will need to see a lot more supply come online,” Sinden noted.

The actual amount of investment needed just to sustain the current levels of output in mining equals to about $200 billion, with copper requiring $115 billion, gold needing $41 billion, and nickel short of $23 billion, Sinden explained.

When it comes to gold specifically, Sinden highlighted a lack of new projects on the horizon. “We are going to see mine supply tailing off in gold. We do need to see more supply come on just to maintain where we are today.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.