Gold producers reaping the benefits

It has been a heady past three months for gold; as August comes to an end, producers of the precious metal are enjoying both the better metals price and higher output.

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The proverb "make hay while the sun shines" dates back at least 500 years (it was mentioned in 1546 by John Heywood in his collection of English proverbs) and is strikingly true of gold miners at the moment, with production increasing to take advantage of the prevailing conditions.

As August comes to an end the price of gold is trading at over US$1,500/oz, having been below US$1,300/oz only three months ago (see graph). The performance has been even more dramatic in weaker currencies, with gold trading at a new record of over £40,000/kg (£1,244/oz), compared with £33,200/kg (US$1,030/oz) at the end of May, and below £30,000/kg a year ago. The metal's price in the eurozone has risen by one-third in a year, up from €33,000/kg in August 2018 to over €44,000/kg at the moment.

The world's gold producers are taking advantage. S&P Global Market Intelligence (SPGMI) reported recently that the leading producers have been growing their production bases through a number of high-profile mergers and acquisitions. SPGMI notes that the top 10 producers collectively produced 7.4 Moz in the June quarter, up 8% over the March quarter and 14% over the year-ago quarter. The top 50 gold-mining companies produced 12.7 Moz in the three months to end-June, up 8% over the March quarter and 7% over the year-ago quarter.

After one quarter in the top position, Canada-based Barrick Gold Corp. found itself outgunned in the June quarter by Newmont Goldcorp following its acquisition of Goldcorp in April (see table below). The enlarged company has a heady target of 6.5 Moz for this year. Barrick itself completed the acquisition of Randgold Resources in January.

Pan American Silver Corp. acquired Tahoe Resources Inc. in February (gaining the Escobal silver project in Guatemala and three primary gold mines) and nearly tripled its gold production in the June quarter to 154,600 oz. Pan American is projecting gold production this year of 550,000-600,000 oz.

Precious-metals producers, and companies with gold mines about to enter production, will be at the top of investors' list of targets during the Mines & Money London (MML) conference on November 25-27, 2019. Gold-mining companies presenting at MML include Yamana Gold and Newmont Goldcorp

Chris Hinde

Chief Commentator, Mining Beacon

Previously editorial director of Mining Journal, and more recently head of S&P Global Market Intelligence's metals and mining team, Chris is now Mining Beacon's editor-in-chief and lead commentator. He posts two blogs every week, one on Monday reviewing market conditions over the prior week, and a second on Thursday looking at issues on the global mining scene. There is also a quarterly blog on business opportunities in the sector.