Getting sexy back: A gold quarterly perspective

Is gold getting its sexy back? 

Following a strong year for the precious metal in 2023 in terms of pricing, industry analysts began pondering whether 2024 will follow suit.

Last year the mysteries of the precious metal became evident when despite the spot price breaching $3,000 gold continued losing much of its allure to many investors. Global investment demand was the lowest since 2014, largely due to global gold ETFs registering its third consecutive year of net negative tonnage demand.

The start of 2024 has been no different but as industry executives polled by Mining.com.au explain, the gaze of investors seems to be returning to the precious metal. Or perhaps it never left.

The gold price historically is one of the most mysterious commodities to try and forecast,” Great Boulder Resources (ASX:GBR) Managing Director Andrew Paterson declares. 

“We were all coming back to work in January thinking that the momentum that started to develop in December would kick on into a positive first quarter for 2024. In February, that really started to dissipate.” 

To start the quarter, the gold price hit US$2,005 as of 17 January 2024 before slightly declining to US$1,992 on 13 February, as reported by Trading Economics.

The Perth Mint General Manager of Commercial Development Cameron Alexander says when gold retracts the market often finds another gear “and we are inundated with requests for stock”. 

“The price pullback was a clear buy signal across Asia and we saw a strong demand for bullion from key markets in the region as a result.”

In a wide-ranging interview with Mining.com.au in October 2023, Paterson describes how gold no longer being sexy, having lost investors’ interest and fallen out of favour for the likes of battery metals. 

So, is the yellow metal at least still in vogue?

One indication of the market’s status is production volumes. The World Gold Council reports total supply in 2023 increased by 3% year-on-year, the second successive year of modest increases. Annual production of 3,644 tonnes was the highest since 2018 as major production disruptions were generally absent.

The Perth Mint in Western Australia in February 2024 sold 47,086 troy ounces of gold in minted products, which is down from 52,241 troy ounces sold February last year further illustrating gold’s mysteriousness. 

Bringing sexy back

Paterson suggests while the sector is mysterious indeed gold seldom ever loses its allure for long –“I think it’s definitely getting its sexy back!”

On 7 March, gold’s lustre shone through as the spot price broke a new record at about $3,259 per ounce. It is continuing to reach new heights and at the time of writing was sitting at about $3,331, according to the ABC Bullion.

While views may differ on its current attractiveness as an investment, one thing few can dispute is that as far as metals go gold indeed ages quite well.

Hamelin Gold (ASX:HMG) Managing Director Peter Bewick reminisces walking the streets of Kalgoorlie watching the ticker slide across the top of the Palace Hotel and people dancing in the streets when the price reached $400 per ounce. 

“Now we’re seeing an absolutely eye watering AUD gold price at close to $3,300. It certainly seems like the trend is moving in the direction that it was looking like last year and it’s just now catching up.”

The last time the price was $400 was back in 2004 — the same year Facebook was founded.

The Perth Mint’s Alexander explains this fresh record price paired with the USD spot price increasing 6% is driven by strong retail demand and central bank buying. 

“Gold in Australian dollars has also reached an all-time high with spot gold also up 9% since the beginning of the year. The year-to-date average is up 14% year-on-year.”

This is nothing new to MineLife Founding Director and Senior Resource Analyst Gavin Wendt. He tells this news service there’s really been no surprises with what is happening in the market particularly in terms of pricing.

“Everything we expected to happen with respect to gold in 2024 is happening, but perhaps even faster than we thought. We expected gold prices to reach record highs during 2024 above $2,100 per ounce, but the trajectory of gold’s ascent has really surprised me.”

Pacgold Drillcores

Long overdue attention

It appears not all investors have lost interest in the allure of gold.

On 26 March 2024, specialist mining investment vehicle Lion Selection Group (ASX:LSX) invested $2.75 million into several gold companies, Brightstar Resources (ASX:BTR), Sunshine Metals (ASX:SHN), and Koonenberry Gold (ASX:KNB). 

Lion says gold continues to demonstrate its strength while the prices of many other commodities have been weakening. As such, it is actively assessing gold investment opportunities.

“In combination with declining liquidity in the equity market over recent years the prices of microcapitalisation miners and explorers as a group have fallen materially, which has increased the purchasing power of Lion’s available cash, and the flow of opportunities to Lion has also increased,” the company says.

“Lion places greatest emphasis on projects that have strong growth and development prospects coupled with people that have high levels of capability and integrity.”

Paterson notes Lion’s investment rationale highlights why gold’s current return to investors’ gaze is two-fold. 

“One is that gold is touching all time highs and so that is getting some long overdue attention. Then the second aspect is also in the context of a lot of other commodities being in the toilet. So it’s kind of a contract.”

Commodities such as lithium have seen better months, as previously reported. The battery metal has fallen out of favour with the market during H2 2023 — mainly due to oversupplied markets in Asia fuelled by the adoption of electric vehicles. 

This news service reported in December 2023 the price of lithium carbonate had plummeted more than 81.23% since the start of 2023. 

The Perth Mint’s Alexander explains core inflation data in the US is forecasted to simmer down, which could potentially weigh on the US dollar and further boost the gold price.

“The expected pivot by the Federal Reserve from aggressively raising interest rates to actually lowering them is expected to kick off in the coming months and this is likely to boost the argument for holding gold as borrowing costs will decline.”

Match made in heaven

The current market appears to be pointing towards gold’s allure returning amid a parade of mining companies keeping the yellow metals in vogue.

Brightstar Resources, which has a market capitalisation of $37.92 million, recently reported a total gold doré pour weighing 119kg from its Selkirk joint venture within the Menzies Gold Project in Western Australia. 

Brightstar has finalised its gold pours, totalling to 430.7kg of doré, which equates to about $13.982 million. 

Brightstar recently launched an off-market takeover bid for privately held Linden Gold Alliance, which Lion Selection Group says “will be transformational for Brightstar.”

Alexander says this deal is just part of an M&A trend that is “likely to continue as mid-tier producers in particular look to expand by adding additional resources from nearby assets that will boost output and extend mine life”.

On the flipside, Spartan Resources (ASX:SPR) is making ‘significant’ advancements and exploration discoveries, which has caught the eye of some in the sector.

Hamelin Gold’s Bewick is one. He says Spartan made a discovery literally in the shadow of the headframe and are now completely absolutely market darling status.

“They’re building their company to being a $600 million company, from being in administration. So, grade and discoveries are being rewarded.”

Spartan’s share price has climbed over the past year. In March 2023, it was trading at around $0.105. Just one year later, as of 18 March 2024 it was sitting at $0.580. 

These are just but a few examples. Market sentiment is the current attitude or mood of investors regarding a stock, an industry, or the entire financial market.

Often emotion drives the market and changes in prices occur for a plethora of reasons beyond what a fundamental analysis would deduce.

An undesirable sentiment

Bewick explains that his Hamelin Gold benefits in sentiment, but as the company is not producing and therefore “not digging the stuff up out of the ground” it’s a different mindset among some investors.

“So if the sentiment is still cautious and volatile, commodity prices don’t make things a lot easier. That volatility can actually work against us, even if it is a general trend upwards, volatility is not good for changing sentiment towards the commodity.”

As such, Bewick validates Lion Selection Group’s investment rationale, saying there is ‘very little’ market interest from investors and corporates on companies with early stage assets. 

“The exploration industry does lag behind the sort of reaction in commodities which then leads to reaction in repricing producers. You won’t see a change in sentiment in the gold explorers, until the rerating and recognition of the producers happens … and how long is a piece of string? Market sentiment is a weird thing.”

Wendt adds there is a dominant theme within the gold sector amid the mysteriousness and weirdness, and that is equity valuations continuing to lag behind the increase in underlying gold prices. 

“Investors are still sitting on the sidelines to some degree in the gold sector, perhaps waiting to take the plunge in a more meaningful way in 2024.”

Record high gold prices therefore are not great for the financial markets globally. But what it means for the gold industry and certainly those that are exploring is, one would think it would respond to a change in sentiment for investment in gold. 

“For companies like Hamelin, we’re not seeing any inflow of interest into the stock whatsoever. Investment communities are talking gold and looking for that next gold discovery story to be a part of, but they are all looking cautiously from the sidelines.”

Hamelin Gold’s share price has remained relatively unchanged throughout Q1 2024, as at the beginning of January its share price was trading at $0.075 and is now sitting at $0.072, as of 26 March.  

A similar situation applies to Great Boulder, in which the company’s share price was sitting at $0.066 on 8 January and is now trading at $0.056 as of 26 March. 

Paterson describes it like this: “The sentiment for explorers has been very much in the toilet as well.”

He says Australia is most likely in a ‘technical recession’ and as a result investors are unable to buy shares at the moment. Yet, if the current surge in the gold price is sustained, Paterson says that investor sentiment should begin to peak. 

“As soon as it starts to flow it’ll really take off, because there is still money in the investor space and people are looking for the best place to put it. I think there will be a bit of FOMO development in the market and people will be looking for the next best thing.”

What’s next for gold?

Industry leaders and experts are unsure of what investors could be chasing as the second quarter approaches. Yes, gold may have brought its sexy back, but Paterson compares the next quarter for gold to the chicken and egg situation. 

“As soon as people start putting money back into, particularly the junior gold space, then those companies will start investing that money into the ground, regions, communities, and there will be a flow and economic benefits from that. And that creates its own momentum.”

The Perth Mint’s Alexander says given the current geo-political and economic environment remain supportive for an elevated gold price, the nation’s official bullion expects investment demand in the sector to remain ‘strong’ through 2024 and going into 2025. 

“Ongoing global conflicts have heightened geopolitical risks, boosting demand for safe haven investments and this should remain a feature of the market into the foreseeable future.”

Similarly, Saxo Head of Commodity Strategy Ole Sloth Hansen notes without a notable uptick in demand from investors in ETFs to pick up the baton from hedge funds (which will soon reach their desired level of exposure), gold may yet hit a plateau followed by a period of nervous trading, as recent established longs may reduce exposure.

“Overall, we maintain our US$2,300 target, with the technical picture potentially pointing to an even higher level around US$2,500.”

MineLife’s Gavin Wendt reiterates the views held by most in that while at times gold may lose its allure it will always be in vogue.

“Gold has been on a very strong price run for the past 20 years, so there is no reason why its upward trajectory won’t continue, especially as central banks remain strong buyers.”

There are no crystal balls that can forecast what’s going to happen in the gold space or ASX-listed precious metals explorers. One thing that is looking likely is that gold is very much bringing sexy back. 

Write to Aaliyah Rogan at Mining.com.au   

Images: Great Boulder Resources, Lion Gold & Pacgold
Author Image
Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.

Larvotto eyes new targets at Mt Isa

Larvotto Resources (ASX:LRV) has uncovered multiple new drill targets via an induced polarisation (IP) survey undertaken at the Mt Isa Copper-Gold-Cobalt Project in Queensland. 

The $13.19 million market capitalisation company reports the ‘strong’ conductors identified are namely the Ballara Saddle, Bass, and Portal Creek targets, with the ‘highest’ chargeability exhibited at Portal Creek. 

Managing Director Ron Heeks says: “The survey tested the validity and usability of this type of geophysical survey, commonly used for iron oxide copper gold (IOCG) systems, and we are delighted with the outcomes achieved with promising targets identified.

The targets generated exhibit significant IP anomalism and excellent chargeability and have created some tantalising targets.”

Follow-up work on these projects will be carried out to better define and confirm the presence of copper mineralisation. 

Larvotto says the company is particularly interested in the eastern anomaly at Portal Creek, which is coincident with the response from the previous versatile time-domain electromagnetic (VTEM) survey. 

A short, closely spaced soil sampling program will be undertaken, followed by a series of drillholes targeting the conductors and VTEM responses for iron oxide copper gold (IOCG) potential. 

Meanwhile, at Ballara Saddle, follow-up work will include mapping, extending the soil anomaly, and then a final drill design using all datasets in search of copper mineralisation, 

Drilling is also planned to be conducted at the Bass target. 

The Mt Isa project lies in northwest Queensland and covers a 900km-square area. 

Larvotto Resources is an Australian explorer and developer focused on discovering copper, gold, antimony, cobalt, lithium, and platinum group elements. 

As of 31 December 2023, the company had $2.428 million cash and cash equivalents at hand, according to its latest quarterly report. 

Write to Aaliyah Rogan at Mining.com.au   

Images: Larvotto Resources
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Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.

Catalina wraps up Laverton drilling

Catalina Resources (ASX:CTN) has completed an aircore drilling program at the Laverton Project in Western Australia. 

The $4.95 million market capitalisation company says drilling tested gold and rare earths targets, encompassing 25 holes for 1,593m. 

All of the holes have been sampled and submitted to the Bureau Veritas Laboratory in Perth, Western Australia, for analysis for low level gold, nickel, and rare earths using methods AR001 and AR102 – and Aqua Regia digest with ICP-MS finish. 

Assays are expected to be returned in 8 weeks. 

The project is a 45km-square area that sits 20km southeast of Laverton within the Laverton Gold Province in the Eastern Goldfields, Western Australia. 

Catalina Resources is an Australian diversified mineral explorer and mine developer. The company is focused on discovering gold, base metals, lithium, and iron ore. 

As of 31 December 2023, the company had $3.023 million cash at hand, according to its latest quarterly report.

Write to Aaliyah Rogan at Mining.com.au   

Images: Catalina Resources
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Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.

Turaco Gold secures majority Afema stake

Turaco Gold (ASX:TCG) has secured ministerial approval for the acquisition of an initial 51% of the Afema Gold Project in Cote d’Ivoire, from multinational mining company Endeavour Mining (TSE:EDV). 

The country’s Minister of Mines, Petroleum and Energy agreed to extend the existing mining convention that supports the granted mining permit, making up 227km-square of the total 1,267km-square project area. 

This provides Turaco with a 3-year period to conduct a new Feasibility Study. 

Turaco, which has a market capitalisation of $70.57 million, will now complete the Afema acquisition with customary conditions including share transfer, and appointing Turaco nominees as directors to the project and holding companies. 

On completion, Turaco will issue 46.5 million shares to Endeavour, resulting in a US$1.5 million payment. 

Managing Director Justin Tremain says this is the start of an ‘exciting’ period for the project as it is rapidly advancing this project in West Africa’s premier jurisdiction. 

“Field preparation is already advanced with drilling to commence in the coming days. We expect to have 2 drill rigs turning by mid March 2024.”

In January 2024, the company’s team relocated to the Afema exploration company to facilitate community introductions, camp refurbishment, drill site preparations, and begin geochemical sampling. 

A 3,500m diamond core drilling contract has been signed, with the rig expected to mobilise to site next week. 

Further, a 10,000m reverse circulation drilling contact is expected to be awarded this week with JORC resource drilling anticipated to begin at the Woulo Woulo discovery within the next 2-3 weeks. 

Drill core samples from Woulo Woulo have been expired and received in Perth. Metallurgical testing is currently underway. 

Turaco Gold is a gold-focused explorer with a ‘highly prospective’ Birimian greenstone terrain tenement package proximal to ‘major’ mines and discoveries. 

As of 31 December 2023, the company had $8.067 million cash and cash equivalents at hand, according to its latest quarterly report. 

Write to Aaliyah Rogan at Mining.com.au   

Images: Turaco Gold
Author Image
Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.