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The ECR Minerals investment case keeps growing as gold continues to shine in Australia – Harry Dacres-Dixon
by Harry Dacres-Dixon
- Gold prices on the up
- Australia breaks production record
- ECR Minerals promising portfolio
- New Non-Exec Director to strengthen ECR board
- A quality portfolio in a first world operating environment
Gold hits March high
Gold has extended its price gains for March, hitting $1,322.48(XAU/USD) at the end of Monday, it’s highest price since February 28th. This growth reflects safe haven demand as investors hedge against worsening global market conditions as a result of creeping concerns over an economic recession in the US, the continued contraction of the German manufacturing sector and the ongoing Brexit saga.
Gold started 2019 strongly, rising above $1,340 on the 19th of February, before prices temporarily crashed down to $1,292 on the 1st of March. The yellow metal has since gone on to shine again, last week posting its third consecutive weekly gain. No real surprise for some though: these returns are simply in line with numerous bullish forecasts for 2019.
Asset management firm Altana Wealth wrote in a note to clients; “We are entering a period of high uncertainty for fundamentals and risk assets and if this were to heighten further, gold could break out substantially, helped by safe-haven flows, lower yields and expectations of a possible return to quantitative easing,” (Reuters).
INTL FCStone analyst wrote; “The dollar has been a bit weaker along with equities. A lot of macro numbers we have been getting have been deteriorating sharply. Central banks, which are already dovish, will be more dovish, which is good for gold,” (Reuters).
Meanwhile Business Insider revealed that central banks have bought more gold than at any time since the end of World War II, as the commodity becomes an increasingly valuable hedge against growing global instability.
2019 set be a record breaker for Australian gold production?
Australia’s gold production hit a record high of 317 tonnes in 2018, according to gold consultancy firm Surbiton Associates who valued the production at A$17.3 billion at the average spot price.
The previous record of 314.5t was set back in 1997. But with 2019 set to be another big year for Australian production, we may not be waiting long for a new record number.
While global gold production in 2019 is expected to be stable, outputs in Australia-Oceania, Europe and Africa are expected to rise.
New Australian production in 2019 is expected to come from a number of projects, including Gold Fields and Gold Road Resources new 300,000oz per annum Gruyere mine in Western Australia and Kirkland Lake Gold’s Fosterville mine in Victoria, which is en-route to a record year of around 600,000oz of gold production for 2019 (Mining Journal);
Australian gold miners have also benefited from the twin effect of rising gold prices and falling value of the Australian dollar. Evolution Mining, Northern Star Resources and Newcrest Mining have also seen their share prices pushed higher (Forbes).
Australia’s biggest gold producer, Newcrest Mining, revealed last month that it had raised its ‘underlying profit in the six months to December 31st by 104% to $168 million ($A237 million) thanks to a 6% increase in gold production and a 13% reduction in costs’ (Forbes).
ECR Minerals quality portfolio
Another company making moves in Australia is AIM listed precious metals exploration and development company ECR Minerals (AIM:ECR).
Focusing their attention on the Central Victorian Goldfields and the Yilgarn Craton in Western Australia, ECR have amassed a growing portfolio, which has not gone unnoticed by the mining industry and investing community, particularly following the appointment this month of Australian mining industry veteran Sam Garrett to the board.
Following oversubscribed fundraising initiatives in 2018, coupled with expected R&D rebates from the Australian government, cash balances are strong and see ECR fully funded through to Q2 2020.
Central Victoria Projects
These are Avoca (EL5387) and Bailieston (EL5433) held since 2016; Timor (EL006278) and Moormbool (EL006280) since 2017; and Creswick (EL006184) since early 2018. ECR also applied for three additional tenements around Bailieston and one near Creswick at the end of 2018.
ECR’s Victoria projects are sited close to mines and projects owned by some of the largest gold producers in the world. Fosterville, Australia’s fifth largest gold producer is located just 50km to the west of the Bailieston project, while Newmont Mining has applied for a mining license on ground adjacent to ECR’s Bailieston project.
In Q1 2019, ECR currently has two ongoing drilling campaigns across three prospects in the Victoria region.
Subsequently high grade gold assay results were reported from the Blue Moon prospect at the Bailieston gold project. Significant intersections reported include 2 metres @ 17.87 g/t gold from 57 metres down hole in BBM007 within a zone of 15 metres at 3.81 g/t gold from 51 metres.
ECR CEO Craig Brown commented: “These results quantify the field geologists’ assessment of visible gold at Blue Moon during drilling of BBM007 and provide great encouragement for the Company and the Bailieston gold project
To achieve an intersection of 17.87g/t gold over 2 metres is notable. But also of significance is that this was part of an intersection of 15 metres at 3.81g/t gold from relatively shallow depth”
ECR also announced on the 4th March that an additional 250 meters of rotary air blast drilling had been completed at the Company’s Black Cat prospect in the Bailieston project area. The 10 target holes were drilled immediately south of territory included in the Newmont Mining license application.
ECR expands Windidda gold project, WA
Despite the high profile nature of their Victoria projects, ECR have remained both ambitious and strategic in their exploration plans. The company announced at the beginning of January that it had applied for 9 new exploration licences covering approximately 1600 km2 in the Yilgarn region, Western Australia.
The Yilgarn Craton geology is extensively documented. The region is known to host around 30% of the world’s known gold reserves and produces two-thirds of all gold mined in Australia. Unsurprisingly the area attracts more than half of Australia’s minerals exploration expenditure.
As such, ECR have been very lucky to pick up such prospective potential undercover greenstone acreage, in one of the world’s most productive gold provinces.
Sam Garrett ECR’s new Non-Exec Director commented; “This is one of the great provinces of the world and as a consequence the ground position is pretty much flooded, it’s almost impossible to acquire ground.”
New Non-Exec Director to strengthen ECR board
As already stated, ECR announced the appointment of Sam Garrett as the new Non-Executive Director at the end of February, a move that brings substantial credibility to ECR and significantly strengthens the team led by Craig Brown.
With 30 years of exploration management, project assessment and operational experience working for large multi-national and junior mining and exploration companies in ten countries, Mr Garrett is an excellent addition.
Craig Brown commented:“Sam brings extensive geological experience onto the board, not just in Australia but also in South America and the Philippines, where the Company has existing business interests.
The timing of Sam’s appointment is key, as we look to rapidly advance our existing interests and continue to identify new strategic acquisition opportunities.”
A quality portfolio in a first world operating environment
With the yellow metal firmly back in the spotlight and likely to stay put, going digging for gold looks like a no-brainer option for investors, with Australia probably offering the richest cross section of opportunities at this time. With a highly educated workforce, the latest technology, fantastic infrastructure and a pro mining government, Australia is the premier destination for doing business when it comes to gold.
If you’re looking for a gold small cap with experienced management, strong finances and sites that have the potential to deliver big then ECR looks a great buy. Their exciting Victoria projects have already began to demonstrate their huge potential, whilst additional sites in an in demand Western Australia offer a massive opportunity and great potential upside for the company.
‘The company is well resourced and planned exploration only makes a relatively small dent in funds. This implies little to no dilution in the short term. Therefore we have rated ECR Minerals as a Long position with a 12-month target price of GBP 2.5 pence’ (Hallgarten & Company).
- FXStreet– Gold Price Forecast: Why it is rising on US recession fears and the big levels to watch
- Bullion Vault– Gold Prices Start 4th Week of Gains as US Yield Curve Inversion Signals Recession
- Reuters– PRECIOUS-Gold hits 3-week high as global growth fears lift safe-haven appeal
- Bloomberg– Industry Insiders Bullish on Gold, Forecast of $1585
- Business Insider– Central banks are buying the most gold since the end of World War II — here’s why
- Mining Journal– New high for Australian gold output
- Kitco– Global Gold Mining Expected To Remain Stable In 2019
- Forbes– Rising Gold And Falling Currency Delivers Strong Profits For Australian Gold Miners
- Brand Communication– Gold Drilling Update – Creswick & Blue Moon Australia
- Brand Communications – High Grade Gold Assays from Drilling at Blue Moon Prospect Victoria, Australia
- Brand Communications– ECR Minerals plc (ECR) Gold Drilling Update – Bailieston Black Cat Prospect Victoria Australia
- Brand Communications– Central Victoria gold rush revival continues as ECR Minerals applies for licensing at an additional four sites following Newmont’s application a few weeks ago
- Brand Communications– Windidda gold project to further expand ECR Minerals’ #ECR Australian gold portfolio
- Brand Communications–ECR Minerals #ECR – Experienced Geologist Sam Garrett joins ECR Board as Non-Exec Director
- Hallgarten & Company– Initiation of Coverage Research Report for ECR Minerals
ECR Minerals PLC’s (LON:ECR) new non-executive director Sam Garrett speaks to Proactive London’s Andrew Scott
ECR Minerals looking to replicate Havieron success at Windidda project in Yilgarn region, Western Australia
Garrett’s a geologist with experience in multi-national and junior mining firms and was one of the first to identify the potential of the Havieron project in Western Australia which was later acquired by Greatland Gold PLC (LON:GGP).
Garrett says he’s now looking to replicate that success within ECR’s portfolio.
Zak Mir: Small Cap Highlight ECR Minerals #ECR – Gold back in the spotlight as slowing global economic growth spikes renewed appetite
By Zak Mir, Financial Journalist
- Positive forecast for gold prices
- Australia Gold production ramp-up
- MicroCap Australian Gold explorer focus
Positive forecast for gold prices
Sharp declines in global stock markets over the past few weeks saw Gold hit a three month high as political uncertainty continues to grow across the world.
In August prices for the precious metal fell below $1,200 per troy ounce mark for the first time in more than two and a half years’, down 12% since April. The turn largely caused by the US Dollars unexpected performance and aggressive monetary policy marked it’s worst losing streak since 2013.
However, October has seen a marked turnaround in the Gold price: the yellow metal grew by 3.3% in October, and continuing into November saw $1,233 per ounce as investors and hedge funds continue selling off global equities in search of reduced risk amidst geopolitical and economic uncertainty. Safe haven demand for gold has been driven by ongoing fears of a trade war between the US and China, growth concerns in China and the ongoing Brexit saga amongst a number of other issues.
Observers have been universal in their support. Mark O’Byrne, research director at Dublin-based GoldCore said: “Safe-haven gold is again acting as a hedge and safe-haven asset, exactly when investors need one.” “Throughout its history, Gold has served as a stable, safe haven investment during times of economic slowdown and following the International Monetary Fund (IMF) downward revision of the global economic growth for next year we might see more investors buying up the commodity.”
Others have noted how the nature of intra-year seasonal cycles may are likely to lead to increase in the price of gold. The Street says “massive washouts like the one we’re experiencing in gold right now are the fathers of subsequent rallies”.
Speaking on the Bloomberg Markets podcast Ruth Crowell CEO of the London Bullion Market Association discussed how the groups Annual Gathering this year predicted the most bullish forecast since 2012 with a forecast of $1,585 per ounce for next October. Ruth explains that this years price is reflected by ‘the macroeconomic outlook, ultimately talking about a lot of concerns’. Meanwhile a poll conducted by Reuters this month they found that of the 39 analysts and traders polled they expected gold prices to average $1,300 an ounce in 2019.
Australia Production Ramp Up
On the supply front, according to Bloomberg the world’s largest miners look set to increase spending for the first time since 2013 while the value of sector M&A activity has hit the highest levels in six years.
As a result, Gold production looks to set for further ramp ups through the end of 2018 and into 2019.
In particular production in Australia, the world’s second-largest Gold producer, may rise to a record this year and next as a stream of new projects come on line. Comments from Australian mining consultancy Surbiton Associates in the Sydney Morning Herald highlighted how Australian gold miners, among the lowest cost globally, have enjoyed high margins in recent years, with output boosted by the strengthening US dollar, which has in turn ‘supercharged’ Australian dollar prices.
MicroCap Australian Gold explorer focus – ECR Minerals
While the giants such as Newcrest Mining, AngloGold, Newmont Mining and Barrick Gold Corp tend to dominate the headlines, this upturn in sector activity has seen a marked increase in funding for small and microcap Gold exploration companies. Following a strategic financing round in July 2018, microcap Gold exploration company ECR Minerals has delivered a steady stream of exploration news updates, which has resonated among institutional and retail investors during Q3. ECR are conducting exploration activities across their numerous projects in Victoria, which is by far the most accessible and productive area of gold in Australia. In the 70 or so years from the 1850’s until the 1920’s, approximately 2,100 tons of officially recorded gold was recovered from Victoria and today it continues to be a favourite area for metal detector prospecting.
Listed on London’s AIM market, ECR’s exploration projects underway include Avoca, Bailieston, Moormbool and Timor gold projects in Central Victoria.
In mid September, ECR announced that it had ‘identified eight principle targets within the Company’s five exploration licence areas’ and had developed an exploration programme ‘designed to test surface gold mineralisation across the licence areas.’
At the end of September the Company confirmed gold mineralisation, with 22 samples from 76 containing gold grades ranging from 0.5 g/t to 67.4 g/t (2.17 ounces per ton). Their second assay results proved positive too, with 29 samples delivering gold mineralisation ranging from 0.56 g/t Au to 22.9 g/t Au;
ECR’s next rock chip sampling results will come from the Creswick area, where prior mapping has revealed a large gold system. Sounds promising.
So whether you’re buying bullion, investing into Gold majors as a proxy for the yellow metal or speculating on Microcap Gold explorers, the shiny near term outlook for Gold, and in particular Gold explorers operating in Australia looks unlikely to be tarnished
Australia’s gold production is tipped to slump to a “generational low” by 2022 despite it being on track for a 26-year high of 10.2 million ounces next year.
S&P Global Market Intelligence attributed the rapidly slowing production to short mine lives of recent start-ups and other significant mines approaching the end of their lives.
“We are forecasting a 9 per cent fall year-over-year in 2020 and we expect the country’s production to reach a generational low of 6.8Moz by 2022, a 33 per cent drop within only three years,” S&P analyst Chris Galbraith said.
“Many smaller mines are also expected to start winding down, such as Cracow, Mungari, South Kalgoorlie and Paulsens.”
The prediction comes as a trio of Aussie gold miners yesterday reported stellar full-year results from their respective operations.
Saracen Mineral Holdings posted a 100 per cent surge in underlying profit to $67.3 million on the back of a 16 per cent rise in production to a record 316,453oz.
The Raleigh Finlayson-led miner said it would more than triple its exploration budget from $17 million last year to $60 million over the next five years.
St Barbara announced underlying profit of $202 million, up 26 per cent on the previous year, after producing a record 403,089oz in the period at record low all-in sustaining costs of $891/oz.
The Bob Vassie-headed company declared a final dividend of 8¢ a share fully franked, up from 6¢ last year.
Silver Lake Resources posted a net profit of $16.2 million, up from $2 million the previous year. The result was achieved on the back of a 16 per cent increase in gold production to 157,936oz and a 5 per cent reduction in all-in sustaining costs to $1289/oz.
Newcrest Mining’s underlying profit rose 16 per cent to $US459 million. Australia’s biggest gold miner declared a final fully franked dividend of US11¢, up from a partially franked US7.5¢ the previous year.
Find the original article by The West Australian here