Gold: universal challenges

A COMMON theme among gold miners presenting at Mining Indaba in Cape Town this year was a desire to grow through the drillbit amid an expected decline in gold production.
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Mark Bristow

The World Gold Council noted global gold production dropped by 1% in 2019, the first decline since 2008.
According to a slide shown by Barrick Gold's Mark Bristow, global gold production will peak this year, while the WGC now believes it may have peaked in 2018.
"Even if all the projects in the pipeline come to fruition, it's all downhill from there," Bristow told delegates.
He later said his personal prediction was that gold production would drop 30% by 2029.
"So we're in for a big decline.
"First of all, we don't explore. We confuse dropping our cut-off grade for exploration and that's done, that game."
Both Bristow and Resolute Mining managing director John Welborn said the projected decline was an opportunity for Africa.
"There just aren't going to be major gold belts discovered in Australia," Welborn said.
"While global gold has peaked, African gold has a big future."
Exploration was seen as the key driver of growth for other gold miners operating in Africa.
AngloGold Ashanti CEO Kelvin Dushnisky said the company favoured growth via exploration over "expensive and complex M&A".
He said the completion of the major Obuasi mine in Ghana allowed the company to shift its focus.
"We'll look to reinvest in the portfolio this year," he said.
Dushnisky said the focus was on extending mine lives.
Over the past 15 years, AngloGold geologists have discovered 49 million ounces of gold outside South Africa, averaging 3.3Moz a year for a brownfields discovery cost of US$34 an ounce and greenfields cost of $13/oz.
"We hope to add to that again this year," Dushnisky said.
B2Gold boss Clive Johnson also indicated a desire to grow through exploration, with plans to spend $50 million this year, after reviewing over 6000 projects over the past decade.
"Why would you do M&A? Because it's not getting easier, it's getting harder," he said.
"We're not seeing any Fekolas out there."
Fekola is the project in Mali B2Gold acquired through its $500 million takeover of Australia's Papillon Resources in 2014.
"We did the heavy lifting when no one else was doing it," Johnson said.
Johnson believes the company got a bargain thanks to a weaker market and a lack of interest.
"I'd suggest bidding would start at $1 billion today," he said.
Fekola has produced 1 million ounces since starting production in 2017 and is set to produce 600,000oz this year as B2Gold's flagship mine.
The endowment has grown from about 5Moz to 7Moz over that time.
B2Gold has discovered another 770,000oz 20km away at Anaconda, which looks similar to early intercepts at Fekola.
"It's early days but we think we may be onto another major discovery," Johnson said.
Despite recently proposing a merger with Centamin, Endeavour Mining is focusing on exploration, according to CEO Sébastien de Montessus.
"We don't have to do M&A because we still have a strong portfolio for growth," he told 121 Mining Investment Cape Town.
He said West Africa was first in the world for new gold discoveries, with 79Moz discovered in 10 years.
"As my good friend Mark Bristow says, we're chasing elephant mines in elephant country."
Unlike other gold miners, Endeavour reports a discovery guidance with 10-15Moz targeted to be found in five years.
"I'm proud to say that after three years, we've discovered 6.3Moz and we're tracking well for 10Moz," de Montessus said.
"It's not an exploration program where I say ‘oops, we got lucky and discovered ounces'."
Endeavour is spending $45 million on exploration per year.
"We believe our next key projects will come from our own discoveries," de Montessus said.
While Resolute is one company that has recently acquired an operation (Mako in Senegal), it has a different model to some of its peers.
It doesn't do greenfields exploration, instead preferring to invest in junior explorers like Mako Gold, Orca Gold and Oklo Resources.
"What we want from the junior mining sector is discovery," Welborn said.
"The ecosystem only works if bigger companies are going to eat up those discoveries."
Bristow agreed, saying he had an issue with explorers becoming producers.
"That's toxic in the gold industry because juniors don't have the capacity to produce," he said.
"Explorers should stay explorers."