Gold Digger: Australia’s big gold miners are getting bigger, and investors should reap the benefits

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“When you stop growing you start dying,” is a saying the ASX’s largest gold miners have apparently taken to heart.

While hopefully remaining cognisant of the expensive, value-destroying deals which occurred when gold last peaked in the 2010s, cashed-up majors are stepping up the push for cheap ounces via mergers and acquisitions (M&A), project development, and greenfields exploration.

Newcrest Mining (ASX:NCM) produced 512,000oz gold, 35,000t copper in the March quarter at a very low all in sustaining cost (AISC) of $891/oz. That represented a 49% profit on every ounce sold.

Meanwhile, construction at the mammoth 13 million ounce gold, 3.7 million tonne copper ‘Red Chris’ project in Canada and the 3.4moz Haverion project in WA “is progressing to plan”.

This was Northern Star’s (ASX:NST) first quarterly report following the ‘merger of equals’ with Saracen Mineral Holdings (ASX:SAR).

The miner produced 368,273oz at an AISC of $1,598/oz. That’s a solid profit margin per ounce of 28%.

An extensive exploration campaign will feed into the May Reserve and Resource update, which will—in turn – be a central plank of the company’s ‘Strategy Day’ in July.

“We are still three months away from completing this detailed plan, but the huge opportunities we have in so many areas are already very clear and demonstrate the significant benefits of combining the Groups’ assets and people,” Northern Star says.

Following the end of the quarter Regis Resources (ASX:RRL) announced a game changing acquisition — a 30% interest in the Tropicana gold mine for $903m.

Tropicana is a tier-one asset with a production outlook of 380,000oz to 430,000oz in FY21. It has a current 10 year life with additional upside.

The immediate impact is clear: Regis solidifies its position as a top 5 Aussie gold miner with annual, low cost production of ~500,000oz per year.

Then there’s ~700,000oz per annum behemoth Evolution Mining (ASX:EVN), which acquired TSX-listed Battle North for about $360m in cash.

This expands Evolution’s footprint in the Red Lake region of Canada.

The additional processing capacity from Battle North’s new Bateman mill will accelerate Evolution’s long-term objective of producing +300,000 ounces of gold per year from Red Lake (currently ~140,000oz).

Newcrest, Northern Star, Regis and Evolution share price charts

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SMALL CAP STANDOUTS

FIRST AU (ASX:FAU) +50%

Drilling results are about due from the ‘Snowstorm’ gold project in the Victorian goldfields, where initial assays – including 3.1m at 11.6g/t gold from 53m — have been very promising.

FAU geologists anticipated the diamond drilling campaign to be completed in late April 2021 “with results following”.

Snowstorm is part of the historic Swifts Creek goldfields, which produced over 100,000 ounces of gold between 1845-1926.

Many of the workings were producing over an ounce a tonne, FAU says.

ARTEMIS RESOURCES (ASX:ARV) +40%

It has been a busy 7 days for explorer Artemis.

On Friday, it announced high grade drilling results like 5m at 24.32g/t gold, 3.39% copper and 0.24% cobalt from 166m at the 418,000oz ‘Carlow Castle’ project in the Pilbara.

A resource upgrade is due this quarter.

On Tuesday, it kicked off drilling at the 70%-owned Munni Munni project, “one of Australia’s largest undeveloped palladium deposits”.

And on Thursday it said advanced planning was underway to drill test high priority exploration targets in the Paterson Province.

All these targets are interpreted to sit within the same geological and structural corridor as the Havieron gold-copper discovery that is now under development, Artemis says.

GREAT BOULDER RESOURCES (ASX:GBR) +31%

The explorer has picked up a major zinc-lead project right next door to the Rumble Resources (ASX:RTR)—Zenith Minerals (ASX:ZNC) Earaheedy discovery in WA.

Rumble’s recent drilling results underpin a shallow, mammoth exploration target of 40 to 100 million tonnes at 3.5% to 4.5% Zn and Pb over 40km of strike.

Great Boulder’s 1,134sqkm ‘Wellington’ project covers ~60km of prospective rocks.

‘Nearology’ for the win.

But while this project is an “exciting addition” to Great Boulder’s exploration portfolio, its focus remains on the Whiteheads and Side Well gold projects.

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