Iran conflict boosts gold value
Genesis Minerals’ merger with Vault Minerals is set to make the company Australia’s third largest gold producer, with 600-700,000ozpa of pro-forma production from three mining hubs in the Leonora-Laverton region of WA’s Northern Goldfields.
Raleigh Finlayson, Genesis’ boss, says the market is “whippy” at the moment, with stocks like Develop and Ramelius Resources experiencing significant fluctuations in value.
Despite this, Finlayson believes there are opportunities for mid-tier gold miners like Genesis to bridge the gap to larger companies like Evolution and Northern Star, which are currently leading the market.
Gold demand remains strong, with the World Gold Council’s latest Demand Trends Report showing Q2 gold demand was flat year-over-year at 1269t, with central banks adding a net 289t to reserves in the first half.
Investment demand dropped to 262t, but over-the-counter demand in Asia was strong, with 327t in Q2 and 571t for the half, indicating a strong market for gold.
Finlayson notes that even at current gold prices, Australian gold miners are making stellar margins that are not being recognized in their share price performance, citing the example of Ramelius Resources, which is currently being “hammered” in the market despite being oversold.
The merger between Genesis and Vault Minerals will reduce Genesis’ capital bill substantially, allowing the company to focus on free cash flow generation and growth.
Finlayson believes that the combined entity will be able to make a significant impact in the Australian gold market, with a market cap of around $11 billion, and position itself for long-term success.
The WA Government-owned Perth Mint has also made headlines recently, with the creation of a giant gold bar that has broken the Guinness World Record for the largest gold bar.
The bar, worth around $94 million, is made from gold from numerous Australian mines and will go on tour before being permanently exhibited at the Perth Mint, showcasing the country’s rich gold mining history.
Despite the volatility in the gold market, some ASX-listed precious metals stocks have performed well in recent weeks, such as Unity Metals, which has seen a significant increase in value after announcing a hit of 40m at 1.9g/t from 82m at the O’Phlay project in Cambodia.
PolarX has also seen a surge in value, with a 31% increase in the past five trading days after releasing its quarterly report, demonstrating the potential for growth in the sector.
According to Finlayson, the next move for gold will be driven by investment demand, with Asian buyers expected to play an increasingly prominent role, and companies that can adapt to changing market conditions will be well-positioned to benefit.
They note that high prices will keep pressure on jewelry volumes, but consumers may continue to hold rather than sell, with recycling showing little sign of increasing, which could lead to a significant boost in demand.
The company is set to make a significant impact in the Australian gold market.
Genesis Minerals is well-positioned to take advantage of the opportunities that arise in the gold market.
