Gold still has more room to run as IGO reviews future of Tropicana stake

The price of gold has traded in a narrow $US30 range this week between $US1,930 and $US1,960 per ounce and was around $US1,944/oz ($2,676/oz) in Friday’s morning session.

“The weaker dollar in the very short term and other uncertainties in the long term is keeping the metal supported,” independent commodities analyst Robin Bhar told Reuters.

Analysts at ANZ bank said gold’s recent price setback was likely to be short-lived, and they expected the yellow metal to reach $US2,300/oz in 2021.

“Ample money supply, lower interest rates and macro uncertainty should support gold investment,” the ANZ bank analysts were reported as saying on FXStreet’s news website.

Numerous approaches for Tropicana gold mine

IGO (ASX:IGO) has begun a strategic review of its 30 per cent interest in the Tropicana gold mine after receiving “unsolicited approaches from a number of parties”, it said.

“Tropicana is clearly a high-quality and significant asset within IGO’s portfolio, however, IGO’s strategic focus is on commodities that are critical to clean energy,” managing director and chief executive Peter Bradford said.

IGO’s current share price did not fully reflect the value of Tropicana, he added.

Tropicana is a tier-one gold asset operated by 70 per cent owner AngloGold Ashanti (ASX:AGG) and is located 330km east-northeast of Kalgoorlie in WA. It started production in 2013.

Gold production at Tropicana has averaged 450,000 to 500,000 ounces per year of gold.

The mine has all-in sustaining cash costs of $1,171/oz and an EBITDA margin of 60 per cent.

IGO has advised its Tropicana joint venture partner, AngloGold Ashanti, which is to work collaboratively on the review. The process is expected to take up to six months.

Stockhead flagged some potential takeover possibilities in the Australian gold space a couple of weeks ago.

Avenira and Los Cerros progress gold projects

In the junior exploration sector, two gold companies announced some progress on their projects in WA and South America.

Avenira (ASX:AEV) has kicked off drilling at its Jundee South gold project, covering 60km of strike in WA’s Yandal Greenstone belt near Wiluna, to test priority targets identified from historic drill results.

Executive chairman Brett Clark said it was a time of high demand in WA for drilling equipment and personnel.

Los Cerros (ASX:LCL) said drilling at its Tesorito gold prospect in Colombia demonstrated gold mineralisation of more than 1 gram per tonne (g/t) over an area of 300m by 250m.

Results from drilling include 18m at 2g/t gold from surface, including 6m at 4.1g/t from 6m, supporting interpretation of an anomaly starting from 100-150m below surface.

The company is exploring in the Mid Cauca belt in southern Colombia. The Miraflores project has an estimated net present value of $US89m ($122.5m) at a gold price of $US1,400/oz.

Meanwhile, some smaller Australian gold companies have been active in West Africa.