Kitco MINING

Minera Alamos will see a big step up in production over the next handful of years, said Doug Ramshaw, the company's director and president. 

On Tuesday Ramshaw spoke to Kitco Mining. 

Minera Alamos (TSX.V: MAI) is a Mexican-focused gold miner. The company's expertise is in heap leach operations. Its Santana operation will produce 2,000 ounces this year. The company's two other projects, Cerro De Oro and La Fortuna, are scheduled to start production over the next few years. The company expects to be producing 140,000 ounces annually by 2027. 

Ramshaw said Minera Alamos is built to operate in a low-cost environment. 

"Build mines that can work in whatever gold price environment is thrown at you," said Ramshaw. 

Ramshaw was surprised by gold's move. He expected gold to go up in 2024, but towards the end of the year. The metal has already hit several all-time highs. 

"I think there's still probably upside on gold," said Ramshaw. "If you're building mines that can't make money at these prices, then you're probably building the wrong kinds of mines."

Ramshaw has 25 years as a mineral analyst and mining executive. He was a former director of Great Bear Resource, which was acquired for $1.8 billion. 

Ramshaw said that Mexico is a very prospective country to operate. 

"We want to build many more mines in Mexico."

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.

As more money comes into mining, this will push dollars down to the juniors, said David Garofalo, chair and CEO of GoldRoyalty.

Garofalo has a multi-decade career leading large mining companies. He was CEO of Goldcorp prior to its sale to Newmont for about $10 billion in 2019. He was also CEO of Hudbay Minerals. Garofalo is now at GoldRoyalty (NYSE:GROY), a streaming and royalty company. Some of its key assets are the Odyssey Mine, the Cote gold project and the Borborema project. The company forecasts revenue of about $15 million mid-decade, growing to three times that level by 2029. 

Garofalo spoke to Kitco Mining on May 21. He said that despite gold hitting several all-time highs this year and copper futures hitting their own record last week, gold equities are still underperforming. 

"We're starting to see profitability and margins starting to expand," said Garofalo. "But the big overhang for the producer universe is the fact that reserves have been declining steadily for a dozen years. We haven't seen the leverage to the gold price that equity should be providing."

Garofalo said broader interest in resources is needed for the sector to be healthy again. He believes a good Q2 performance by the major gold miners resulting from high metal prices and better cost control could see generalists return to the sector. 

"I know the juniors are waiting for the seniors," said Garofalo. "Hopefully [we] see some generalist capital come into the space and buy the most liquid names. If that happens, the specialists who are kind of hiding out among the large caps will start to come down the food chain and start to invest in juniors.

Mining needs more money coming into the sector, he said. 

"The specialists have been hiding out because they face significant redemption pressure, so they've had to stay in large liquid names,” said Garofalo. “But when generals start coming in and displacing them, then we'll start to see some risk capital put the work in the juniors. And that's an existential necessity for the industry."

Garofalo said the uptick in mining M&A points to a poor pipeline of projects. 

"Juniors have had very inconsistent access to capital, and they're the ones that do all the heavy lifting when it comes to grassroots exploration," said Garofalo. "They make the major discoveries. The bigger producers build and operate those mines, but they don't discover them. And that's resulted in a 40 percent decline in gold reserves over the last dozen years. So, you have a shrinking pie, and that's led to cannibalization. That's led to merger activity."

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.

Gold has hit several all-time highs this year, but the metal has further to go, said Simon Marcotte, president and CEO of Northern Superior Resources. 

Last week Marcotte spoke to Kitco Mining. 

Marcotte attributes the recent rise in gold prices to central bank buying and increased demand from Asia, particularly due to the weakening yen. He predicts that as real rates decline, gold will gain further momentum, leading to increased equity valuations in the sector.

"I don't even think this is the first inning," said Marcotte. "We're going to see gold do well. Gold is going up right now because central banks are buying...and also there's been a lot of the Asian demand for gold. [The yen] is deflating very rapidly. I don't want to say it's collapsing, but it's breaking down. The central bank of Japan is having a hard time maintaining its currency. 

"Real rates starts going down, and that's where the equity price will play catch up. [The] real estate market is not going to be able to sustain higher rates, therefore real rates go down and gold goes up."

Marcotte also talked about the recent surge in M&A activity in the mining sector, driven by increased profitability and the need for larger companies to replenish reserves. Marcotte sees this trend as indicative of a new commodity cycle and a positive outlook for the industry.

Northern Superior Resources (TSX-V: SUP) is a Quebec-focused company with the goal of consolidating the Chibougamau gold camp. The company has a land package of about 62,000 hectares. The company also spun off a new business, ONGold Resources that is focused on the TPK property in Ontario. 

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.

Big mining deals are going to bring needed attention to the mining sector and build more enthusiasm, noted Adam Lundin, chair of Lundin Group. 

This week Adam spoke to Kitco Mining. 

Earlier this month BHP Group announced a surprise takeover bid for Anglo American valued at over $31 billion. 

"When you see blockbuster news like that, it's hard not to get excited," said Lundin. "I think M&A can be good for the sector, and I think it [brings] a lot of attention to the space and gets more eyeballs on it. Let's stay tuned and see how it plays out."

The Lundin Group's Lundin Mining (TSE:LUN) is up 62% year to date this year with a market cap of $13.6 billion thanks to a run in copper and other metals. The company is expected to produce between 366,000 to 400,000 tonnes of copper and between 155,000 to 170,000 ounces of gold in 2024. 

Ludin Mining has a healthy pipeline. The Lundin's Josemaria project is to be developed as a large-scale open pit mining operation. As currently envisaged, over 1 billion tonnes of ore will be mined at average diluted head grades of approximately 0.30% copper, 0.22 g/t gold and a strip ratio of 0.98 over a 19-year mine life.

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.

Copper projects pose substantial hurdles for development, said Alistair Waddell, president and CEO of Inflection Resources. 

In early May Waddell spoke to Kitco Mining at Deutsche Goldmesse in Frankfurt, Germany. 

Inflection Resources (CSE:AUCU) is a copper and gold company focused on eastern Australia. It is exploring Macquarie Arc in New South Wales. The company also has an Anglogold Ashanti partnership. 

Waddell said spurring copper project development is challenging. 

There's a lack of funding for copper exploration because it can be expensive, time-consuming and requires large land positions in sometimes challenging jurisdictions, noted Waddell. Exploring for porphyries requires a lot of time, money, and drilling which can be difficult for junior mining companies.

Higher copper prices are starting spur companies. Interest in the sector is even coming from traditionally gold-focused companies.

Coverage of Deutsche Goldmesse is sponsored by Dynacor. 

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.

Mining has to do more work to attract investors, said Joanna Ponicka, vice president of exploration at Equivest. 

In early May Ponicka spoke to Kitco Mining at Deutsche Goldmesse at Frankfurt, Germany. 

Ponicka said the mining sector has a perception problem and that is leading to less funding. A lack of investment in grassroots exploration is leading to a shortage of new discoveries. 

"As a prospect generator, we definitely see less money in the industry to do early-stage exploration," said Ponicka. "Early-stage exploration is where most of our discoveries come from."

Ponicka said the industry is going through a "pretty dry period." Ponicka said that technology and cryptocurrencies hold more appeal for younger investors.

"This year there is very little testing new ideas and drilling. I think the entire industry is suffering.  It's such a traditional industry. It's also a very risky industry. 

Possible solutions are adopting a more modern style of communication, perhaps with more of a focus on social media, suggested Ponicka. Communications need to be more engaging and less corporate, as well as targeted to shorter attention spans.

She also said that more focus on education and success stories could help to attract new capital to the sector. Lastly, sector events need to innovate to become more engaging and educational. Visual representations of projects and teaching investors how to understand good results could be two beneficial tactics.

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 central bank buying has been supportive of gold prices, interest rate cuts later this year could send the metal higher, said Jeff Clark, editor of the TheGoldAdvisor.com. 

In early May Clark spoke to Kitco Mining at Deutsche Goldmesse in Frankfurt, Germany. 

Gold has hit several all-time highs this attributed to strong central bank buying. 

"This could be a banner year for central bank gold buying," said Clark. "In my humble opinion, that is not why the gold price is higher. I think central bank gold buying actually supports the price though. It's just an important component of this market. "

Clark said central bank buying has reached a "crescendo" after 15 years of increased spend on gold. Clark said that interest rate cuts by the Fed could be a real impetus for the metal. 

"$2, 500 is easily within reach this year," said Clark. 

While gold prices are rising, gold equities haven't shown the same level of growth yet, noted Clark. He said this lag is typical in bull markets, and money is expected to flow into the sector soon.

Mergers and acquisitions are increasing due to limited exploration and development in recent years make M&A a more attractive option than starting from scratch. Clark said M&A activity will likely continue and even accelerate.

Surprisingly, copper hasn't seen the same level of excitement as gold, noted Clark, despite the growing need for copper in green energy initiatives.

"Every week there's a new chart about the deficit that's coming in copper," said Clark. "Take the average of those, and even if that was only half right, that's still a lot of copper that's going to be needed. And so, the rush into copper really hasn't happened yet. And that is something as an investor, I like to hear."

Coverage of Deutsche Goldmesse sponsored by Dynacor. 

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 the Federal Reserve is delaying rate cuts due to inflation, the economy is still getting lots of support, noted Eric Strand, founder and portfolio manager of AuAg Funds. 

In early May Strand spoke to Kitco Mining at Deutsche Goldmesse. 

Strand believes central bank buying, signs of continued monetary easing, and the massive deficits incurred by the U.S. are primary drivers behind gold's surge. 

"Even if we don't have seen the rates coming down, the Fed has been doing some kind of backdoor quantitative easing," said Strand, who noted that the monetary base is going up and the U.S. is running big deficits. "It's a very expense economy. The lower rates are coming, and the market can see it."

While he initially predicted a target of around $2,475, he now believes gold could climb even higher this year, given the market momentum. Strand also points to increased geopolitical risks and the weaponization of the U.S. dollar as reasons why central banks, especially in BRICS nations, are turning to gold as a safe haven asset. When comparing gold's price even at $4,000 per ounce to the combined U.S. debt and federal reserve balance sheet, he argues that gold is still undervalued and therefore likely to continue climbing.

While gold equities haven't mirrored the bullish price movement, Strand expects significant leverage, margin expansion, and strong performance for the remainder of the year, possibly even hitting triple-digit gains. However, he notes the lack of investment in exploration remains a long-term concern and could impact supply down the road.

Coverage of Deutsche Goldmesse is sponsored by Dynacor. 

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 yields and a strong U.S. dollar, gold is moving higher because of the compelling macro picture, said Brien Lundin, editor of the Gold Newsletter. 

In early May Lundin spoke to Kitco Mining at Deutsche Goldmesse in Frankfurt, Germany. 

He called the rally surprising and believes it is driven by a combination of factors, including central bank buying, strong demand from China, increased buying from hedge funds and growing unease about global debt levels. 

"The buying has been strong despite rising yields and strong dollar," said Lundin. "You see big money moving into the sector, and I think it's [due to] the general macro picture out there."

Investors are shifting allocations toward gold as a hedge against fiat currency risks, said Lundin. 

The Federal Reserve is expected to start cutting interest rates, which would be a major catalyst for this gold, but Lundin said big money has already pricing in that eventuality. He sees a fundamental shift with gold acting as a safe haven in an unstable global economy. Lundin believes gold could reach much higher levels, potentially mirroring the 5x to 8x price increases seen in previous bull markets.

One risk factor is the possibility that gold may have already priced in the expected Fed pivot. Lundin believes gold stocks are undervalued because investors both missed the dip while waiting for a correction and don't fully understand what's driving the rally. 

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.

Central bank buyers could be less sensitive to higher gold prices, said Aakash Doshi, NAM Head of Commodities Research at Citi. 

On Tuesday, Doshi spoke to Kitco Mining. 

Jewelry fabrication typically represents about 50% of the gold market, with the rest of the demand coming from investing, central banks and industrial uses. 

“Historically, the demand side of the ledger has been driven and led by jewelry demand. Consumption could be as high as 50% or 55% for gold jewelry,” said Doshi. “[That] started to shift over the last 10 to 15 years. It really started with the Great Financial Crisis. So, for four decades prior to the GFC and following the Nixon shock, central banks were net sellers of gold. They provided net supply to the market. After the GFC period, you saw central banks emerge as net buyers.”

Doshi said central banks have been buying more gold. central banks are now consuming over 1,000 tons per annum, said Doshi. 

“This is supply being taken out of the market. And from a mine production standpoint, that now represents [up to] 28% of annual mine production”

In the past, higher metal prices have led to jewelers curtailing demand. However, central banks may be less price sensitive. Doshi said the buying by the banks is more “strategic,” and the central banks could be “... among the most price inelastic buyers.” 

In a research note Doshi predicted that gold could reach $3,000 per ounce by 2025. Doshi attributes this potential surge to strong investor demand, particularly in physical gold, evidenced by a significant increase in bar and coin sales since the onset of the pandemic. He also notes record-level purchases by central banks, particularly those in emerging markets, as a contributing factor to this upward trend.

Despite a 20% increase in gold prices since February, Doshi emphasizes that it hasn't been driven by typical factors such as a weaker dollar or lower interest rates. He argues that the bullish outlook for gold is primarily due to the convergence of strong physical demand and the anticipation of financial macro factors catching up. Central bank purchases have not only set a higher price floor for gold but also stabilized its volatility.

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.