Gold Digger: Gold is back on the menu amidst market chaos

There is a lot of uncertainty in the market due to tensions in China, rising interest rates and continuing economic recovery of the global COVID-19 pandemic, with investors fleeing for safe havens to park their cash in.

Safe havens like gold, that is.

Perennial Partners portfolio manager and resources analyst Sam Berridge says in the short-term gold looks “a little drab” but in six months if inflationary pressures continue, the precious metal could do very well.

“High inflation could create problems for central banks – if they increase rates to try and smother that inflation it could cause issues because of the massive amount of debt [accrued].

“We may have a scenario where inflation starts to tick away, and central banks prevent rates from increasing as fast as they normally would.”

He said under that scenario, things could start looking better for gold.

“At the moment inflation is elevated but the market is looking through it because we are comparing it with quite an unusual year in 2020, which was COVID impacted.

“This means year-on-year comparisons are being discredited and as we move forward to calendar 2022, the year-on-year comparisons for inflation are going to carry more weight.”

ASX gold news

Gold’s resurgence comes as the precious metals is acknowledged as one of the main contributors to Australia’s resource export earnings of value.

It is expected to contribute $29b of the record $349b in resource sales in 2021-2022.

Other noteworthy bits of news this week include an upcoming IPO for Hawkstone Mining (ASX:HWK) spin-off Diablo Resources.

The company aims to join the ASX boards in the coming weeks with a few US-based gold and copper projects up its sleeves – all of which are drill ready and close to other projects of significance in their region.

These include the Lone Pine Gold Project in Idaho, the Western Desert Gold Project in Utah, and the Devils Canyon Gold Project in California.

Evolution Mining (ASX:EVN) shares were up 4% in early trade after receiving the green light from the New South Wales Government to launch its underground Cowal Operations.

The gold mine in the central west region of NSW is now permitted out to 2040, something which will enable a long term shift to higher grade underground ore sources.

Australian and Canadian listed mid-tier Kirkland Lake Gold (ASX:KLA) will be one of the world’s largest gold miners after announcing a C$24 billion deal to combine with Canada’s Agnico Eagle in a friendly, nil-premium merger.

This means KLA will have a mineral reserve base that has more than doubled over the past decade to 48Moz, including Kirkland Lake’s large Detour Lake mine in Canada and its ultra high grade Fosterville operation near Bendigo in Victoria.

And Westgold Resources (ASX:WGX) aims to become a 500,000ozpa gold producer in its plans to take over Gascoyne Resources (ASX:GCY).

It would involve the cancellation of Gascoyne’s merger with Firefly, which Westgold claims is dilutive and does not represent value for Gascoyne shareholders.
 

Winners & Losers

Here’s how ASX-listed gold stocks are performing:

Top weekly gold performers

Several small cap gold companies made big returns over the last week:

Red Dirt (ASX:RDT) returned a whopping 117% over the last week and at the time of writing its share price was around $0.64.

The company discovered new lithium pegmatites from historic drilling and surface rock chips within the Mt Ida Project in Western Australia’s Goldfields region.

Predictive Discovery (ASX:PDI) released a maiden resource estimate of 3.65 million ounces for the Bankan Gold Project in Guineas Siguri Basin in Africa, which saw weekly returns up 53%.

The company said the MRE has been defined in only 17 months since the discovery drill-holes were reported.

PDI managing director Paul Roberts said: “Our gold discovery success in such a small time period invites comparisons with the best gold deposit discovered in West Africa in the last decade – Fekola in Mali, also announced 17 months after first discovery.”

Brightstar Resources Limited (ASX:BTR) returned 46% over the last week after launching a reverse circulation (RC) drilling campaign at its Cork Tree Well Project in the Laverton district of Western Australia.

The company also announced the completion of an oversubscribed placement today which raised $2.3 million to fund the drilling program which it hopes will “increase the size and confidence of the current JORC resource.”

Another positive return of 30% has been made for Metalstech Limited(ASX:MTC) after intersecting 19 metres at 5.08g/t and 12.9g/t gold at the Sturec Gold Mine in Slovakia.

MTC chairman Russell Moran said: “It’s great to see we have hit nice, thick mineralisation with excellent gold grade right out of the gate on this program.

“The next hole looks fantastic based on the visible gold seen in cut core and we look forward to reporting on that in a couple of days when assays come in.”

Lastly, Evolution Mining (ASX:EVN) has made some positive returns (about 3% at the time of writing) after receiving approval to develop the underground Cowal Gold Operation by the NSW Department of Planning, Industry & Environment (DPIE), extending the operation’s permitted mine life to 2040.