Commodities, Copper, Features, Gold

Copper, gold surge excites miners

By Anthony Fensom 

Strong market conditions for two key commodities mined by ASX-listed companies are set to spark an increase in exploration activity. 

Surging prices for copper and gold are exciting Australia’s mining companies, which are ramping up their global exploration plans in response. 

Copper prices hit record highs in May, with three-month copper on the London Metal Exchange soaring to $US10,747.50 ($14,625) a tonne, as bullish investors bet on a recovering global economy and green energy boost to demand.

Meanwhile, in July, the Australian dollar gold price climbed to a six-month high above $2470 per ounce, helped by a weaker local currency.

Confidence boost

Peter Hwang, managing director of Queensland explorer Superior Resources, says the price surge has boosted confidence across the sector

“Higher prices are attracting investors and encouraging increased exploration activity and investment,” Hwang says.

“As an explorer this is an exciting time and we’re ramping up our exploration activity across our Queensland projects.”

In June, Superior announced an 8000-metre drilling campaign at its Greenvale project, located around 210 kilometres west of Townsville. 

The company is targeting gold, copper and nickel in an “aggressive” drilling campaign, with activity planned through to year-end.

Elsewhere, other miners are targeting areas near De Grey Mining’s Hemi discovery in Western Australia, which has sparked a renewed focus on the Pilbara region. 

In June, the company announced a maiden 6.8-million-ounce gold resource for its Mallina gold project, which it described as “redefining the gold potential of the Pilbara.”

Sayona Mining has built a large tenement portfolio in the Pilbara region, where it is exploring for Hemi-style targets near the discovery. 

In June, it announced additional funding for its exploration activities, including drill testing of magnetic anomalies at its Mt Dove and Deep Well projects.

“Our Pilbara gold projects all lie within a 10 to 50 kilometre radius and encircle the expanding Hemi, which is shaping up to be a large footprint, world-scale deposit,” Sayona Mining managing director Brett Lynch says. 

Corey Nolan, managing director of Platina Resources, has increased the company’s gold footprint in Western Australia with a number of merger and acquisition deals.

In June, the company completed its acquisition of the Xanadu gold project, located in the Ashburton Basin and in close proximity to the multi-million-ounce Mt Olympus deposit.

Platina was also buoyed by the discovery of significant grades of palladium at its part-owned Munni Munni project. New drilling is also planned at the company’s Challa gold project, located in between the Mt Magnet and Sandstone gold districts.

Further afield, Adyton Resources is targeting both gold and copper in resource-rich Papua New Guinea (PNG). 

The company, which spun out of Mayur Resources in February 2021 to list on Canada’s TSX Venture Exchange, has reported positive results from drilling at its Gameta gold project on Fergusson Island. It has also mobilised a diamond drill rig at its Wapolu gold project on the island, located within PNG’s “Rim of Fire.”

Adyton’s Feni Island project, Kabang, is seen as prospective for epithermal gold or intrusive-related copper-gold mineralisation.

“PNG is a prime address for epithermal gold and porphyry copper,” Adyton executive chairman Frank Terranova says. 

“We’re excited to be drilling and working to create shareholder value in one of the world’s most prolific gold and copper regions.”

Export boost

Boosted by record high prices, Australia’s copper export earnings are expected to swell to reach $13 billion in fiscal 2022, up from $10 billion in fiscal 2020, according to the Office of the Chief Economist.

“Copper has benefitted from both infrastructure-focused stimulus spending and ‘green’ stimulus spending,” the government forecaster says in its June 2021 ‘Resources and Energy Quarterly.’

“Stimulus spending, including policies to subsidise EVs (electric vehicles), renewable energy generation and transmission, are expected to influence consumption over the medium term due to copper’s use in EVs, batteries and grid infrastructure.

Visible gold from Platina’s Challa gold project.

 

“In line with recovering economic activity, total world consumption is forecast to reach 27 million tonnes in 2023, up an average 3 per cent a year.”

Mine expansions and new investment are expected to drive increased copper production in Australia, which ranks as the world’s sixth largest producer but second for copper resources. In fiscal 2023, domestic production is forecast to reach 910,000 tonnes, up an average 2.2 per cent a year on the estimated 871,000 tonnes produced in fiscal 2022.

New projects including Golden Cross Resources’ Copper Hill project, KGL Resources’ Jervois project and Havilah Resources’ Kalkaroo project are expected to help lift local output, with copper exploration rising 8 per cent year-on-year.

Meanwhile, Australia is projected to become the world’s top producer of gold, with output rising from 332 tonnes in fiscal 2021 to 388 tonnes in fiscal 2023. 

Gold export earnings are seen reaching $29 billion in fiscal 2022, with prices averaging around $US1800 an ounce in the first half of 2021.

The government forecaster also notes the Pilbara had become “Australia’s new gold rush region” following the discovery of conglomerate gold nuggets in 2017.

It points to the success of Newcrest Mining’s Telfer mine in the Great Sandy Desert, together with the Hemi discovery south of Port Hedland, of intrusion-hosted mineralisation.

The Paterson Province has become “one of the world’s most sought-after exploration areas” following discoveries such as the Winu and Havieron copper and gold deposits, it says.

Gold exploration expenditure rose by nearly 32 per cent year-on-year, with Western Australia accounting for nearly 70 per cent of the total.

Positive outlook

Will the good times continue for Australia’s copper and gold miners?

“Rising uncertainty around monetary policies, inflation and increasing risk of equity market volatility should favour safe-haven gold demand,” ANZ Research says in a July 7 report.

“The US bond yield and prospects of a weaker (US dollar) further strengthen our conviction that the gold price will trade higher.”

For copper, the bank’s analysts note that South American supply has improved since bottoming out in February 2021, yet “political and COVID-19 related operation supply risks remain in place.”

With “Dr Copper” now becoming known as “King Copper” due to surging demand and gold retaining its traditional safe-haven status, Australian miners have reason to be confident. 

This story also appears in the August issue of Australian Resources & Investment.

 

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