Kitco MINING

What will it take to get generalist investors to exit their current portfolios and add some gold equities, asked Warren Irwin, president and CIO of Rosseau Asset Management. 

Last week Iriwin spoke to Kitco Mining at the 2024 Precious Metals Summit Beaver Creek in Colorado. Rosseau is a money management firm based in Toronto. 

Irwin noted the subdued atmosphere at the summit, despite gold reaching record highs. He said the lack of enthusiasm stems from capital flow challenges, as many investors are still more inclined toward safer, high-performing sectors like Vanguard ETFs, making it difficult to attract investment into mining stocks.

“The mood here is not exactly super exciting and people aren't rolling in money,” noted Irwin. “They're not all jacked about what's ahead of us.”

Irwin said the generalist investor needs a reason to be driven out of their existing investments and embrace gold. 

“Gold equities haven't moved [much], but gold has,” noted Irwin. “There's a reason to invest in gold, but we also need a reason to drive people out of the market…such as an interim market crash where people see the valuations are a bit stretched in the S&P and look at getting into something a little bit more defensive, like maybe buying some gold equities.” 

While Irwin likes gold, he doesn’t see much promise in critical minerals. He criticized the unpredictability of battery metal compositions and the lengthy process of mining development, making it hard to justify investments. 

“I think battery metals and the whole battery metals theme is possibly the stupidest thing I've ever seen in the mining sector,” said Irwin. “How on earth can you run a battery metals fund when you have no idea what metals are going to go into batteries? They're changing every three to six months.” 

“And that whole EV nonsense—any copper company I'm involved in, I say, ‘whatever you do, please don't put a stupid EV in your presentation,’” said Irwin. 

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold.

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

While M&A is heating up due to good gold prices, there is not a lot to acquire, said Ari Sussman, executive chair of Collective Mining.

This week Sussman spoke to Kitco Mining at the 2024 Precious Metals Summit Beaver Creek in Colorado.

Collective Mining Ltd. (NYSE: CNL) is a copper, silver, gold and tungsten exploration company with projects in Caldas, Colombia. The company has options to acquire 100% interests in two projects located directly within an established mining camp with ten fully permitted and operating mines. Collective’s management team was formerly at Continental Gold Inc., which was sold to Zijin Mining for approximately $2 billion.

Collective Mining’s flagship project, Guayabales, is anchored by the Apollo system, which hosts the large-scale, bulk-tonnage and high-grade copper-silver-gold-tungsten Apollo porphyry system. The company says it has strong insider ownership at 45%. 

With gold hitting several all-time highs, Sussman said M&A is heating up. 

“I can tell you from my experience, I've never seen the cupboards this bare with quality projects,” said Sussman. ”I suspect we're going to see M&A turn aggressive very quickly.”

Sussman said it is an opportune time for the big gold producers to start acquiring. 

“If you're a gold producer and you're not active in M&A, I think you need to fire yourself as management, because you're trading at decent multiples, and the…multiples of non-producers are a fraction of yours. So effectively right now, just about any transaction is accretive.” 

Sussman admitted that mining in Colombia is challenging, but the government system helps investment. 

“Well, I don't want to get up here and say it's gone amazing, because I think the government's been horribly disorganized,” said Sussman. “But what has come out of this is very positive. The most important thing is the government system is set up the same as the United States, meaning there's strong check and balances…and the constitutional court in Columbia is actually very independent.”

Sussman said some of the more challenging mining laws have been “properly thwarted by either the Congress or the constitutional courts. 

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold.

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Despite high metal prices, it is still a challenging market for juniors, said Luke Alexander, president and CEO of Newcore Gold.

Last week Alexander spoke to Kitco Mining at the 2024 Precious Metals Summit Beaver Creek in Colorado.

Newcore Gold Ltd. (TSX-V: NCAU) is advancing its Enchi gold project in Ghana. In April the company released an updated preliminary economic assessment. At a gold price of $1,850 per ounce, the company showed a $586 million pre-tax net present value discounted at 5% and a 77% pre-tax internal rate of return. The average annual gold production was estimated at 120,000 ounces.

In June the company announced that it was starting a 10,000-metre drill program focused on infill and resource expansion drilling. In September the company announced a $5 million private placement financing at 29 cents.

“We've been able to continuously move the project forward, despite it being a difficult market,” said Alexander. “This capital raise is another example of where we'll be able to deploy this capital to create a lot of additional value for the project.”

“There's a significant disconnect between the value of our project and where the company is trading today,” said Alexander. “So I think that's part of the reason why we saw such strong support for the financing.”

Ghana has embraced mining, said Alexander. The Chirano Mine, owned by Asante Gold (previously Kinross Gold), is located 50 kilometers to the north. Chirano produced ~155,000 ounces of gold in 2021 and ~165,000 ounces of gold in 2020. Other mines are being advanced nearby.

“So that really speaks to the government's desire to see mines being built and a recognition of how important it is for the economy,” said Alexander.

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Maintain fiscal discipline, warns Mark Bristow, president and CEO of Barrick Gold.

This week Bristow spoke to Kitco Mining at the Gold Forum Americas / XPL-DEV 2024 in Colorado.  

Gold has hit several all-time highs in 2024. The gold miners, measured by the GDX, are up about 32% year to date. Barrick has been lagging its peers, up just 18% over the same period.

The run in gold has spurred some big transactions, notably AngloGold Ashanti buying Centamin for $2.5 billion and Gold Fields acquiring Osisko for $2.16 billion in an all-cash deal—all in the past month. Bristow warns that the sector could be getting ahead of itself.

“If you recall…back in 2010 when the gold price started moving materially, and it went through the $1,000 mark for the first time, everyone chased it,” noted Bristow, who was running Randgold Resources at the time. “Everyone was updating, using higher and higher gold prices. [We] decided to stay at $1,000, because there was no change in input costs.”

“That's really fundamental, because you can raise the gold price, but what it does is often takes you outside your old body and really dilutes the value of your asset,” warned Bristow.

The run up early last decade ended with a crash by 2013. The GDX dropped by nearly two-thirds.

“If you use a gold price that goes beyond your all body boundaries, then the risk is you dilute your feed grade. That means you've got to spend more capital to expand your processing facilities to produce the same amount of gold. That doesn't make a lot of sense.”

Coverage of the Gold Forum Americas / XPL-DEV 2024 is sponsored by Metalla Royalty. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

The CEO of Kinross Gold, Paul Rollinson, is feeling vindication for his early call on Great Bear Resources.

 Last week Rollinson spoke to Kitco Mining at the Gold Forum Americas / XPL-DEV 2024 in Colorado.

Founded in 1993, Kinross Gold is a senior gold mining company with a diverse portfolio of mines and projects in the United States, Canada, Brazil, Chile, and Mauritania. Last decade the miner suffered some setbacks having to exit Russia and Central America. In 2022 Kinross had to divest from Russia after the country was sanctioned due to the Ukraine-Russia war. In 2013 Kinross exited Fruta del Norte in Ecuador after Kinross couldn’t come to terms with the government on advancing the project.

In 2021 Kinross Gold bought Great Bear Resources for C$1.8 billion in a cash and stock deal. The deal raised eyebrows, since Great Bear was still an early story with no PEA.  

“The challenge with Canada: it gets competitive and expensive quickly,” said Rollison. “So if we're going to be successful in getting quality [assets] in Canada, we're going to have to make a call—a geologic call—early.

“There was no declared resource, and so the market was saying—as expected: ‘Oh my God, what have you done? What did you buy? There's no declared resource,’” said Rollison. “We knew there was a mine.”

 Just before Beaver Creek, Kinross was able to release a preliminary economic assessment on Great Bear. In the company’s news release, the PEA outlined a high-grade combined open pit and underground mine with an initial planned mine life of approximately 12 years and production cost of sales of $594 per ounce. The project is expected to produce over 500,000 ounces per year at an all-in sustaining cost of approximately $800 per ounce during the first 8 years through a conventional, modest capital 10,000 tonne per day (tpd) mill.

“I'm happy to say, 30 months later, what we see is a very high-quality mine,” said Rollison. “It will be one of the best gold mines in Canada. So, it's just been a great example of getting in early, doing the technical work, having the confidence.”

Coverage of the Gold Forum Americas / XPL-DEV 2024 is sponsored by Metalla Royalty.

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Not all junior companies are going to benefit when investors return to the sector, said Michael Gray, partner at Agentis Capital. 

Last week, Gray spoke to Kitco Mining at the 2024 Precious Metals Summit Beaver Creek in Colorado. 

Gray highlighted key factors for evaluating junior mining stocks, emphasizing the importance of “grams times meters intercepts,” which measure the quality of gold deposits. He noted that the metric can indicate strong investment opportunities. Gray uses this metric to track and benchmark the performance of junior gold stocks.

In terms of market dynamics, Gray believes the juniors are due to make a big move due to the high gold price, but he observed that gold stocks are experiencing significant volatility. He cautioned that the sector is likely to see a bifurcation: the best-performing companies will attract substantial investment, while others may struggle. 

“It's going to be asymmetric, but there's going to be the haves and have-nots,” said Gray.

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Junior resource stocks will lag the metal price, because the past run up disappointed investors, said M. Stephen Enders, executive chair at Brooks & Nelson. 

Last week Enders spoke to Kitco Mining at the 2024 Precious Metals Summit Beaver Creek in Colorado. 

Enders emphasized that while technical, legal, and ESG (Environmental, Social, and Governance) due diligence are crucial, understanding the management team is even more critical.

“People on the buy side in particular need to do a better job at management due diligence,” said Enders. “This industry does a really good job of technical due diligence and legal due diligence. But our research has shown that the biggest issue that mining investments suffer from is poor management. And yet very few companies invest the amount of time required to understand the kind of team that they're going to be investing in.”

Enders also discussed systemic issues contributing to poor management in the mining sector. He noted that too many junior companies spread human talent too thinly. 

“My personal take is that there are too many companies,” said Enders. “And there's a dilution of the talent that's out there. In any organization, you're going to have top people, whether it's top students in a class or the top employees in a company. But there’s a small subset overall. When talent's diluted across the whole industry…we see a talent shortage and a performance problem.”

Enders said metal prices are good, but a lot of investors soured on resource stocks the last time, so will be reluctant to enter the sector again. 

“I think that not all junior stocks are the same and not all projects are the same,” said Enders. “The projects that are of value and have potential will eventually get funding, and the share prices of those companies will eventually rise, but there's a lag. And there's a lag because of the lack of performance of the junior sector in the last super cycle, where it was over promised, under delivered, and it took a lot of people out of the investment.”

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

With the gold majors generating lots of cash from high metal prices, M&A should heat up, said Scott Berdahl, CEO of Snowline Gold. 

On Wednesday Berdahl spoke to Kitco Mining at the 2024 Precious Metals Summit Beaver Creek in Colorado. 

Snowline Gold Corp. (TSX-V: SGD) is a Yukon Territory focused gold exploration company with an eight-project portfolio covering roughly 360,000 ha (3,600 km2). Snowline’s project portfolio sits within the Tintina Gold Province, host to multiple million-ounce-plus gold mines and deposits. 

The company is exploring its flagship 111,000 ha (1,110 km2) Rogue gold project in the Selwyn Basin.

“It's incredible to see how much of that is very high grade right at the surface,” said Berdahl. “You know exactly what you'd want to see when you're turning on a mine.”

With gold hitting several all-time highs, Berdahl said M&A is heating up. 

“There's a lot of cash flowing around out there right now,” noted Berdahl. “M&A might heat up. There's been an underinvestment in exploration for so long—basically since the crash in 2012. The junior markets haven't really ever fully recovered. There's some great companies out there doing a lot of great things, but it's a fairly small pool now.”

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Forget worries that the economy is facing a hard landing, debt levels are the bigger risk, said Joe Foster, gold strategist at VanEck.

Foster spoke to Kitco Mining on Wednesday at the 2024 Precious Metals Summit Beaver Creek in Colorado. 

Gold hit several all-time highs in 2024. Foster attributes the historically high gold price of $2,500 per ounce to increased global risk, strong central bank demand, and geopolitical uncertainties. He believes that the Federal Reserve's expected interest rate cuts will further boost the gold price. Foster also anticipates economic turmoil due to high debt levels and potential geopolitical escalations, which could drive gold prices even higher.

While central bank buying has been the primary driver of the gold rally, Western investment in gold ETFs has also picked up recently, signaling growing interest from institutional investors.Despite gold hitting several all-time highs, interest in the metal by the broader investing community remains tepid. 

Foster said investors need to be shaken up for interest in gold to pick up. 

“I hate to say it, but I think we need a crisis,” said Foster. “I think the market really needs to get worried about the outlook for the economy, for the debt situation or… some escalation on the geopolitical scene. I think that's the type of thing that would really shake people up, and get them to go to gold.” 

Regarding the gold mining sector, Foster observed that M&A activity has been lower than expected, but he anticipates an increase as companies adjust their base price for gold and become more attracted to acquisitions. He also highlighted the challenges faced by junior gold developers, who are now required to do more in terms of permitting and feasibility studies before attracting the interest of larger companies.

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Margins are still a struggle for the miners despite energy costs coming down, said Rick Rule, president and CEO of Rule Investment Media.

Rule Spoke to Kitco Mining on Wednesday at the 2024 Precious Metals Summit Beaver Creek in Colorado. Rule is also the former CEO and President of Sprott U.S. Holdings.

Rule said it is a good market to invest in. He sees opportunities due to the disparity between rising commodity prices and stagnant equity prices. He focuses on companies with proven management teams and large-scale projects. Rule is open to investing in jurisdictions with perceived political risk.

But a lot of juniors are too small to make it, said Rule. 

“Most of the juniors are subscale. They are so small that general administrative expenses consume most of the capital they raise,” said Rule. 

“Those companies are doomed to fail. I suspect that three quarters of the juniors that are public worldwide — Australia, Canada, the United States, Great Britain — are valueless, absolutely valueless.” 

Rule said the cost of oil has dropped, which helps, but other costs keep climbing. 

“Energy costs have moderated, which is a good thing,” said Rule. “But the social take, which is to say taxes, royalties… things like that are increasing — at about 15 percent compounded. Labor costs are going up, spare parts are going up, finished steel is going up. 

“I think there will be continued disappointment among investors about the fact that the margins, the producing margins, aren't increasing as fast as one would hope, given the increase in gold price.”

Rule said investors have to keep scale in mind. Bigger is better. 

“Everything that can go wrong with a big mine can go wrong with a small mine,” said Rule. “But a small mine can never make you big money.”

Standing out is key, Rule said. It is a crowded field. 

“I ask companies today about their social media strategy,” said Rule “If they don't have one, that's the end of the discussion.” 

Coverage of the 2024 Precious Metals Summit Beaver Creek in Colorado is sponsored by Newcore Gold. 

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.