Gold bulls still buying the dips as these explorers get closer to production

While sentiment has come down from previous records, analysts and investors remain bullish about gold with prices continuing to trade above the $US1,800 ($2,572) mark.

Kitco News found that 69 per cent of Wall Street professionals who took part in last week’s poll believed that gold prices will rise this week, down from 88 per cent the previous week.

RJO Futures senior commodities broker Bob Haberkorn says that dips continue to be bought and that shows the underlying strength of the market.

“Since people are buying gold as an insurance or hedge, the price becomes less important, so gold can move significantly higher,” Adrian Day Asset Management chairman Adrian Day said.

Gold production getting closer

The continuing strength of gold is a positive for Classic Minerals (ASX:CLZ), which has taken another step towards becoming a gold producer with the purchase of a modular gravity concentration processing plant for its Kat Gap project in Western Australia.

The Gekko plant is mounted on containerised sections that allows for mobility and is capable of processing ore at a rate of 30 tonnes per hour (tph).

Its modular design allows the plant to be scaled up to a processing capacity of 250tph to increase throughput if required.

Classic Minerals says the plant is ideally suited to Kat Gap ore, which is amenable to gravity gold concentration.

The company has also begun negotiations to toll treat any initial ore from Kat Gap while the full-scale plant is being configured to suit the project’s ore.

Kat Gap currently hosts a resource of 93,000 ounces of gold and Classic Minerals reckons there’s plenty of exploration upside and scope for high-grade open pit mining.

Last week, Classic Minerals joined other gold players seeking to raise funds after it unveiled a share purchase plan for existing shareholders to raise $4m to accelerate exploration at its Kat Gap and Forrestania gold projects.

Meanwhile, Theta Gold Mines (ASX:TGM) has selected Digmin Group as the preferred mining contractor for trial mining at its namesake project in South Africa.

Digmin is certainly not short on experience having completed over $US2bn worth of civil and mining works in South Africa alone.

The appointment will allow the company to rapidly start trial mining operations once final permitting is received, which is expected in the fourth quarter of 2020.

This will involve two box cuts in the future Iota and Brown Hills pits during which final mining equipment and grade control practices will be selected.

While Theta has initial reserves of 205,000 ounces of gold for the starter pits, they make up just a small portion of its global resources of 6 million ounces of contained gold.