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Mining
Ain’t that good news, Sam Cooke once sung, a mantra coursing regularly through the veins of Westgold Resources (ASX:WGX) shareholders this year.
The mid-tier gold miner is one of a number of companies viewed as undervalued and tipped by analysts to outperform in 2023 in the context of a rising gold bull market.
The US Fed seems to have pressed pause on that narrative, with increased rumblings rate hikes may not yet be over and that the US debt ceiling overhang may be resolved.
Bullion was off slightly to US$1972/oz overnight, equivalent to around $2964/oz.
That remains highly profitable territory for most gold miners, with stocks like Westgold now in cost control mode to try take advantage of the high prices.
Investors have liked what they have seen so far this year. The Peter Cook founded gold miner is up almost 75% in 2023 so far.
It ran a further 2.75% this morning on news the company could make a final investment decision on the redevelopment of the Great Fingall mine in WA’s Mid West in the first quarter of FY24.
Previously the source of 1.2Moz of historic gold production near the gold rush town of Cue, results from latest assays at the Fingall Deeps included hits of 5m at 5.66g/t from 869m, 4.2m at 5.46g/t from 912.8m, 1.3m at 46.72g/t from 849.7m and 5.5m at 16.68g/t from 925m, among others.
A new mineral resource estimate is due in early June, with the FID to potentially lead to the restart of a shallow decline early in the new financial year.
“Westgold’s latest results at Great Fingall herald a new future for this historic high grade mine. Deep drilling has successfully returned high grade intercepts and defined twin parallel reefs, rather than the previously interpreted single reef,” WGX MD Wayne Bramwell said.
“This new interpretation significantly derisks development plans and has the potential to materially increase Mineral Resources and improve potential mine economics above prior estimates.
“Our confidence continues to grow in this near-term development target and pending a new Mineral Resource Estimate and a Final Investment Decision, we will be ready to recommence decline development in Q1, FY24.
“Great Fingall is an icon in Western Australia that has historically produced more than 1.2Moz of gold. To see it restart under Westgold ownership and become a long term sustainable and profitable operation is the objective.
“Most importantly, it would also show the quality of the organic growth opportunities within our portfolio that drilling can unlock.”
Another mid-tier gold miner on a solid 2023 run, up 45% thus far, is Ramelius Resources (ASX:RMS).
It’s promising a fourth quarter recovery on the back of the development of its Penny gold mine, one of the highest grade products on the market.
But the Mark Zeptner led goldie also has one eye on the future after a $130 million scrip takeover of Breaker Resources (ASX:BRB), which will add another 1.7Moz to its emerging East Kalgoorlie base alongside the 1.1Moz Rebecca deposit picked up in its deal to acquire Apollo Consolidated in late 2021.
That is virtually a wrap now, with RMS passing the 90% compulsory acquisition threshold.
How long it takes RMS to press the button remains to be seen. A PFS is under way at Rebecca, but the additional ounces outlined by Breaker will take the total resource to in the vicinity of 3Moz, bolstering its long term outlook.
ASX investors are on the hunt for another copper hero after the departure of OZ Minerals in its $9.6b sell out to BHP (ASX:BHP), every broker’s favourite exposure to the red metal on the local bourse.
That leaves a gaping hole for local institutions, as touched on by one of the miners hoping to fill it last week, Bill Beament.
READ: Aussie mining legend Bill Beament talks stonker copper hits and facing the future
29Metals (ASX:29M) is a logical option with its ownership of the Capricorn and Golden Grove base metals mines but its shares have cratered 63% in the past 12 months.
Copper hasn’t had a great run at the same time, from threatening all time highs above US$10,700/t in the wake of the Russian invasion of Ukraine, to falling 1.5% to US$8128/t overnight.
“Anxiety over the US debt ceiling weighed on the base metals market,” ANZ’s Felicity Emmett said.
“Copper fell amid a lack of extra stimulus from China.
“Banks kept their benchmark lending rates unchanged on Monday amid calls for more central bank easing to support the economy.”
29M’s challenges are as much operational as market led, after a flood at its Capricorn mine forced the company to close temporarily for renovations and pause guidance.
The company now says it will produce 7000-9000t of copper and 40,000-50,000oz at Capricorn this year and has flagged a potential refinancing early next year.
While the massive rainfall event and flooding happened in short time, taking place over five days in March, the Capricorn recovery will not be so quick.
It will take until the middle of the first half of 2024 to restart the Esperanza South mine, which saw 500ML of water ingress, following the return from the September quarter of the Mammoth and Greenstone deposits.
All up 29M will deliver 24–29,000t of copper, 54–61,000t zinc, 20–23,000oz gold and 0.99-1.1Moz of silver in 2023.
29M has set in motion a plan to expand its tonnages from the Golden Grove mine in WA, with the Xantho extended deposit to ramp up from 250-300,000t in 2023 to 600-750,000t next year and 850,000-1Mt by 2027, the Gossan Valley deposits to account for 200-300,000t of mill feed by 2027 and 575,000t from other sources.
Zinc grades will be higher in the next couple of years before copper production rises progressively from 2027.
Capex at Golden Grove is expected to be $80-110m over 2024 and 2025.
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