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