Gold Digger: Dubai snaps up sanctioned Russian bullion – ‘cos they haven’t painted enough things gold yet
Link copied to
Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
Not from Russia anymore, love.
Despite recent sanctions, Russia is going to remain a top gold producer for years to come, according to the United States Geological Service (USGS).
Russia is endowed with the second largest gold reserves after Australia at 217.6moz – accounting for 13.1% of total global reserves.
On May 19 this year, the US government imposed sanctions on major Russian-based gold producers Polyus and Polymetal JSC (a subsidiary of Polymetal International) – yet another measure introduced to condemn the war in Ukraine.
However, BMI reckons it’s water off a duck’s back since previous sanctions on Russian gold exports have already brought that trade route to decline and new markets have popped up in their stead.
Latest trade data shows Russian producers were able to offset losses in Western demand by pivoting to alternative markets in Asia – primarily through the United Arab Emirates, one of the world’s busiest gold swaps, followed by nearby Turkey and China – all of which are significant supply routes to the enormous Asian markets.
Those three countries now make up 99.8% of the gold exported from Russia since the onset of the war in late February 2022.
BMI says it does, however, see downside risks to Polyus and Polymetals’ profitability in the short term, as persistent pressure from the West is bound to lead consumers away from purchasing Russian metal.
The US recently warned key consumers of Russian gold that they may no longer be able to operate in G7 markets if they continue to work with US-sanctioned Russian businesses, according to Reuters.
“Additionally, the challenging operating environment will also continue to threaten revenue for the two firms,” BMI stated.
“Revenue for Polyus Gold and Polymetal was down 11% to USD4.3bn and 3% to USD2.8mn respectively in FY2022.
“For Polyus Gold, factors contributing to the decline included lower production volumes (in part, due to equipment and part supply-chain woes) and a decline in gold prices.
“Similarly, Polymetal saw revenue decline due to a drop in metals prices and challenges with traditional export routes.
“We also see downside risks from continued difficulties with logistics, financing, insurance and transportation for exports.”
So basically, nothing’s really changed that much, but it’s nice to know why it hasn’t sometimes.
Here’s how ASX-listed precious metals stocks are performing:
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.
Stocks missing from this list? Email [email protected]
NST is planning to spend $1.5bn to turn the Super Pit back into an absolute behemoth again by almost completely upgrading the 30-year-old Fimiston mill from its current capacity of 13mtpa up to 27mtpa.
This would potentially 2X production rate to ~900,000ozpa from 2029.
Australia’s second-largest gold miner reckons it will be able to pay back the investment in 4.6 years at a carried IRR of 19%.
“Today is an exciting day for Northern Star and a historic new chapter for this world-class asset,” NST MD Stuart Tonkin said.
“The board’s decision to approve the KCGM mill expansion and optimisation represents the next stage to revitalise our largest asset as well as the surrounding district for decades to come.
“This project is financially compelling, and a significant enabling step towards delivering our strategy to generate superior returns for our shareholders.
“Our confidence in the economics of KCGM to remain a long-life, low-cost gold mine has been further reinforced through the feasibility study phase.
“Expanding the processing capacity of KCGM will strengthen Northern Star’s portfolio, materially increase our free cash flow generation and progress our long-term strategy to be within the 2nd quartile of the global cost curve.
“Further, the project is important in our sustainability journey and will also sustain hundreds of local jobs, economic and social investment, and local procurement opportunities in the Goldfields region.”
On the back of last week’s big news when De Grey announced a huge resource upgrade at its Mallina project, the new Australian superstar of gold has increased the project’s footprint by an impressive 70% by farming in to TSX-listed Novo Resources’ Egina project and widening Mallina to more than 2,500km2.
That is plenty of room for De Grey Mining (ASX:DEG) to repeat the magic that led to the discovery of the play opening Hemi discovery that it first made in 2019 and now hosts a frankly jaw-dropping resource of 9.5Moz, the majority (6.9Moz) of which is in the higher confidence Indicated category.
Evidence that there is significant potential for new discoveries across the Mallina Basin comes from the fact that although De Grey has been almost fully focused on drilling out the Hemi discovery, the limited regional exploration it has undertaken has returned encouraging results at targets like Charity Well and Withnell South.
Novo has also had some interesting results about 30km south of Hemi at its Becher target and surrounding prospects.
On top of the earn-in, De Grey will also become a significant (11.6%) shareholder of TSX-listed Novo through a $10m corporate investment ahead of a planned ASX listing. De Grey will also have the right to appoint one member to its board.
BTR has proved up an extra 20% increase in resources at its combined Laverton and Menzies project area to tip just over the 1 million ounce mark.
It also comes with a 65% increase to the Indicated ounces to 157,000oz at a grade of 1.6 grams per tonne (g/t) gold, which adds a great deal of certainty as it enables mine planning.
What’s more, the resource estimate upgrade has also highlighted that the model grade improves at depth and confirmed the presence of a higher grade plunging shoot within the Cork Tree Well orebody.
The upgrade also makes the company’s impending entry into the ranks of Australian gold producers that much sweeter, though this is admittedly from its Menzies project about 200km to the southwest.
“We are delighted to see the Cork Tree Well resource grow by over 20%, and more importantly grow our indicated component by 65% to over 3 million tonnes for over 157,000 ounces of gold,” BTR MD Alex Rovira said.
“Additionally, the updated Mineral Resource Estimate model has confirmed the presence of a number of higher grade plunging shoots that are open at depth and will be drill tested in upcoming campaigns.
“These upgrades have seen Brightstar now control a +1 million ounce resource base with tangible growth shown in just one of our many resources at the Laverton and Menzies gold projects.
“We look forward to updating the market with further news on our drilling at our projects and our scoping study which are both presently underway.”
While Brightstar Resources is a Stockhead advertiser, they did not sponsor this article.