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EDITORIAL

Gold still unremarkably

remarkable

t was a long time The mid-tiers have been even more hampered by cost
Iago, but I remember inflation and although they still enjoy wide margins by long-
in my early days as a term standards, investors have marked them down for being
GMJ reporter being unable to expand them further. This is the nature of the
shocked and excited speculative end of capital markets; if you are not constantly
by the enthusiasm and surprise of my much older colleague growing production, increasing margins and promising to
as we saw the Australian gold price hit $400/oz. become bigger and better, investors lose interest.
He couldn’t believe the spot price had reached such giddy It is the same in the exploration space. As our GMJ award
heights and was certain we were at the start of an Aussie panellists discuss in this issue’s cover story, there have been
gold boom. some impressive exploration results in the last six months,
It is remarkable then, that as we enter 2023 with an but investors are just not listening.
Australian price of more than $2,600/oz, the general feeling Not only have explorers been hurt by an investor malaise,
in the Australian gold mining space is one of confusion and they are also struggling by comparison. In late 2019, De Grey
uncertainty. Mining Ltd made a discovery which has proven inspirational
What should be boom times for the sector, feels more like to the entire gold exploration industry, but it has also set a
the end of a cycle. True, the ride ASX gold equities enjoyed bar which is basically unreachable for most other explorers.
for the six-year period from 2014 to late 2020 was among the Investors are comparing every new discovery to De Grey’s
most remarkable in history, Australian miners benefitting from Hemi, but that is a generational asset and any other find
several factors pushing in their favour; an upward trending would only pale in comparison.
gold price, investors who were still punishing North American In these circumstances, explorers would usually find support
gold companies for their previous avarice and a relatively from larger gold miners but given their current travails, they
weak Australian dollar which helped cost structures. are in no state to offer scrip or even cash for acquisitions.
The emerging mid-tier miners played a brilliant hand with The outlook couldn’t be tougher, but again I will remind you
the cards dealt, attracting an international shareholder base that the Australian gold price is at record highs.
which eventually allowed them to become genuine world- So, what can we expect to change in 2023?
class operators.
Perhaps the natural cycle of market sentiment will provide
Behind them, companies which only a few years ago would’ve relief. Gold has been overshadowed by lithium and other
been considered junior miners now boasted multibillion battery minerals over the last 18 months and while supply/
market caps, pushing them to hunt further growth. demand in that sector appears set for decades of imbalance,
The Australian gold price steadily climbed during this time, investors’ attention spans rarely hold for that long.
from $1,406/oz in January 2014 to $2,570/oz in January 2020. An international gold equity renaissance could also provide
Despite a slight slip over the course of summer 2020/2021, support. Barrick Gold Corp recently reopened a Perth
this ascendency has continued, with the price sitting above office with rumours they are considering a bid for De Grey
$2,600/oz at the end of 2022. and having been usurped by Agnico Eagle Mines Ltd in the
This, then, should be the period when these miners – with acquisition of Yamana Gold Inc, Gold Fields Ltd is cashed up
their strong balance sheets, upwardly mobile production and looking for options.
profiles and supportive share registers – reap the rewards of So, despite the glum feeling around Australia’s gold sector
high prices. at the end of 2022, if we squint hard enough, we can see the
Instead, the opposite happened in 2022. The lower tier miners greenshoots of a 2023 recovery.
have struggled with costs, exposing the marginal nature of
the lower grade orebodies they acquired in search of more
ounces.

dominic@paydirt.com.au @Paydirt_Media @paydirtmedia @PaydirtMediaAustralia

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