Australia Is Set To See Another Major Gold Rush
FN Media Group Presents GlobalInvestmentDaily.com Market Commentary
Oct 30, 2020, 08:00 ET
LONDON, Oct. 30, 2020 On a nearly 1,000-square-kilometer property in New South Wales, a team of top geologists is in the midst of an exploration project. The project's goal is to identify and exploit unmined potential gold resources on properties that may contain hundreds of thousands of ounces of gold. The starting point for this gold exploration is the 198 historic gold mines and showings on the property, many of them high-grade, dating from the 1880's to the 2000's. Mentioned in today's commentary includes: Corvus Gold Inc (NASDAQ: KOR), Freeport-McMoRan (NYSE: FCX), Gold Fields (NYSE: GFI), Compania de Minas Buenaventura (NYSE: BVN), Harmony Gold (NYSE: HMY).
All 198 of these abandoned gold mines and showings are on 8 NSW concessions, recently acquired by junior Canadian mining company Sentinel Resources Corp (SNL; SNLRF), on 945 square kilometers of land.
Most of these historical mines, all predating the 1970's, are shallow. The reason: Back in the 19th as well as much of the 20th century, miners weren't capable of going deep. So once the mineral load was exposed and mined at the surface, the mine's production and useful operating life were at a dead end. But no longer. Thanks to modern methods, these African miners are drilling down another kilometer and a half, and frequently finding additional gold reserves at these lower depths.
Reactivating historical sites by using the new high-impact, deep-drilling techniques has also proven to be a successful business strategy in Australia.For instance, in Victoria, Fosterville South (FSX) has 3 projects – Lauriston, Golden Mountain, and Providence -- all of which contain recognized historic gold fields.
Located on 1,300 square kilometers of prime prospective land for gold exploration, FSX is working to identify prime targets for deeper drilling on these 3 gold fields – to enable the properties to once again yield high-grade production. When the company initiated the Lauriston, Golden Mountain, and Providence projects, Fosterville South's market cap was $20 million. Within only half a year, FSX's market cap has already grown sixfold to $120 million.
Sentinel Resources Corp (SNL; SNLRF) with a $15 million market cap, is where FSX was only 6 months ago. When ore bodies of economic scale are located and developed by Sentinel's exploration team, the most promising will be reopened and then mined at far greater depths than they were previously —targeting untapped veins with significant potential gold reserves.
Millions saved in exploration costs
Sentinel Resources Corp (SNL; SNLRF) is in the process of amalgamating the extensive historic geological data already obtained from Australian surveys.
These valuable government records contain about 3,000 data points and have an estimated replacement value of over $30 million. But given the sheer bulk of data, they are not easy to research without the right, experienced geological team. A top Sentinel geologist says, "We understand the type of rocks and deposits. Once we have the regional structures, then we start to hone in."
For example, one review of the extensive data has helped locate a potential resource on the Sentinel package. It's a historic deposit where 50,000 to 100,000 ounces of gold have already been reported. The company estimates they will have as many as 20 or more high-value targets to follow-up on. One license in their package is located just 2 ½ kilometers west of the historic Broken Hill mine, which has produced over 60 million ounces of silver.
Mines getting a "second life"
NSW has already produced 40 million ounces of gold. Total in-ground gold endowment in the state is estimated between 70 million ounces to over 100 million ounces, with much of the area unexplored.
For decades, New South Wales has been attracting some of the industry's premier mining companies--including Newcrest Mining, Saracen Mineral Holdings, Silver Lake Resources, and Northern Star Resources-- with no signs of slowing down. In addition, Sentinel has acquired, by staking, 7 silver exploration concessions in NSW. These silver concessions will be 100% owned by Sentinel, with no royalties or back rights owed after completion of the acquisition.
A Plan For Success
With over 10 years in corporate financing and consulting, and extensive capital markets experience, CEO Rob Gamley, along with the company's aforementioned distinguished technical team, has formulated a 3-phase strategy for maximizing ROI from Sentinel Resources Corp (SNL; SNLRF) gold and silver packages:
>> PHASE ONE: EVALUATION -- of all 198 historic mines and prospects via multi-criteria analysis of the expansive regional database.
>> PHASE TWO: EXPLORATION – extensive field exploration of the top 50% of projects including mineralization expression, deposit types, resource bracket estimates -- as well as constraints such as maximum depths and strike continuity.
>> PHASE THREE: GEOLOGY -- geochemical surface sampling, geophysical surveys, and mapping to develop and consolidate linear trend outlines by historical mines and prospects.
Phase 3 identifies laterally extensive gold systems and anomalies. Sentinel's technical team will then review the historic data. The objective is to fast-track recon follow-up and rapidly pinpoint the locations of high-grade drill-ready targets.
Gold Prices To Continue Climbing
As the world's second-biggest gold-producing country—right behind China, which is the planet's leading gold producer—Australia has the largest gold reserves on Earth. With its handsome profit margins, and gold prices climbing above $1,900 an ounce, Australia's explorers can economically develop new mines – or, as is the mission of Sentinel's NSW project, wring more production out of high-grade historic mines.
When it comes to identifying targets for drilling, Sentinel enjoys a dual advantage. One is a huge pre-existing exploration database, available courtesy of the Australian government.Even more important, Sentinel has assembled an unsurpassed technical team possessing the experience and skills to accurately identify the prime drilling targets in the company's nearly 1,000 square kilometers of concessions.
Corvus Gold Inc (KOR) is a Canadian gold miner with a major presense in the United States, particularly Nevada. Though it just began trading on the NASDAQ only three months ago, the company is quickly drawing the attention of investors. Though it has fallen back slightly from its NASDAQ IPO debut, it has a surprisingly consistent volume, suggesting that there is definitely some interesting in the company's works.
Launching an IPO in the middle of the most crazy market in over a decade is no easy feat, but Corvus is making all the right moves the ensure it is constantly adding value for its shareholders. And tho it's dipped slightly from its yearly high, it is still up by 45% year-to-date on its Canadian ticker.
While Freeport-McMoRan (FCX) is primarily known for its significant copper mining operations, the resource giant also has a fair influx of gold as well. In fact, its Grasberg mine in Indonesia holds of the world's largest deposits of copper and gold. But that's just scratching the surface of the miner's global assets. Freeport-McMoRan also has extensive operations across the Americas, including mines in Arizona, Mexico and Peru.
Though its business struggled as global demand for copper took a hit, panic-buying from China has lifted prices higher in recent months – and that's good news for Freeport-McMoRan. In addition to climbing copper prices, gold prices hit record levels, which will add even more to the mining giant's bottom line.
Gold Fields (GFI) has catapulted itself into the global mining elite in recent years thanks to its forward-looking vision and exceptional management. Based out of Johannesburg, South Africa, Gold Fields is one of the de facto leaders in the region. With operations in South Africa, Ghana, Australia and Peru, Gold Fields is well-diversified.
In 2019, Gold Fields produced over 68 tons of the precious metal, up nearly 8% from the year before. And thanks to this year's rally in gold prices, it's on track to produce even more by the end of 2020.
It's rare to see miners from outside of North America on the New York Stock Exchange, but Peruvian Compania de Minas Buenaventura (BVN) is an exception. Listing on the NYSE in 1996, Minas Buenaventura has clawed its way up the ranks of the global mining elite. Currently valued at $3.30 billion, the mining giant is far from its all-time highs. But it's not down for the count just yet.
Minas Buenaventure is exposed to six different mining properties around the globe which bring in an estimated 945,000 ounces of gold every year. But that's not all its got going for it. It is also has exposure to a number of silver mines which produce as much as 26.5 million ounces per year, and tens of thousands of metric tons of industrial metals such as zinc, lead and copper from its domestic mines.
Harmony Gold (HMY) is a South African miner which has exploded onto the radars of investors this year. Though it's only the third-largest miner in the country, it has made some stellar moves in the marketplace. Domestically, it has nine underground mines in the resource-rich Witwatersrand Basin and one open-pit mine in the Kraaipan Greenstone Belt. It also has a major joint-venture with Newcrest Mining in Papua New Guinea.
Earlier this year, Harmony raised a whopping $200 million to partially fund a key acquisition of AngloGold's assets in its home country.
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