Day two of a recent three-day mining industry event ahead of the 2022 PDAC (Prospectors & Developers Association of Canada) meeting included a fireside chat about gold with Equinox Gold's Ross Beaty and more corporate presentations.
Equinox Chairman Beaty discussed the outlook for gold this year and how it fared in 2021. Looking forward, the overall macroenvironment for gold remains positive, he noted, especially given the current conflict in Russia-Ukraine conflict and high inflation rates around the world.
Last year, performance of the gold mining sector was unexpectedly disappointing, Beaty said. He ascribed it to higher inflation, stress on the U.S. dollar and high market volatility having tamped down the gold price.
As for base metals, including nickel, copper, zinc, cobalt, uranium, and lithium, Beaty said, demand should strengthen as the world continues shifting toward electrification of cars, electronic devices and household items. Given that, along with the likelihood of long-term inflation, investors should put their money in precious and base metals, excellent stores of value during times of high inflation.
Though junior explorers comprise a small market, it should grow, Beaty purported. This is because it will be many smaller explorers that provide the projects that majors will continue to snatch up to expand their existing resource base.
The chairman also expressed that investing in the mining markets requires a long-term view because of the typical lengthy time period between discovery and production. Despite this being the case, he said, investors continue to make the mistake of doing the opposite.
Shifting to the company presentation portion of this pre-PDAC event's day two, these two gold and copper mining enterprises participated:
Aura Minerals Inc. (ORA:TSX; AURA33:B3): Chief Financial Officer Kleber Cardoso described Aura as a mid-tier gold and copper producer with an operation each in Brazil, Mexico and Honduras and four growth projects in Brazil and Colombia.
By 2024, Aura intends to produce 400,000–480,000 ounces of gold equivalent per year.
To achieve this, it will increase production at Aranzazu and bring Almas and Matupa online, three projects with industry leading net present value:capex ratios and unlevered internal rates of return. In 2021, the company produced 269,000,000 ounces (269 Moz) of gold, yielding $445 million in revenue and $185 million in EBITDA.
Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT): Chairman and CEO Rudi Fronk noted Seabridge's primary projects are KSM and Iskut in British Columbia, Courageous Lake in the Northwest Territories, Snowstorm in northern Nevada and 3 Aces in the Yukon.
KSM is a large project with Proven and Probable reserves of 10,200,000,000 pounds of copper, 38.8 Moz of gold and 183 Moz of silver.
Seabridge would like to partner on KSM and maintain as large of a minority interest in the project as possible. Formation of a joint venture would be a major catalyst for Seabridge's share price.
Other possible stock moving events include an updated resource estimate and prefeasibility study for KSM, expected in Q2/22, drill programs at 3 Aces and Iskut this year and ongoing drilling at Snowstorm.
Don't miss Streetwise's coverage of day 1, featuring Anna Bryndza, executive vice president of UxC, a company that covers the global nuclear fuel cycle markets.
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