Welcome to Hungover Wednesday. It didn’t apply to all delegates at the Diggers & Dealers Mining Forum yesterday but it was the greeting from Evolution Mining (ASX: EVN) boss Jake Klein to those who had ventured into the Goldfields Arts Centre for the 8.30am (first) session of the last day of the conference.
Mr Klein, one of the most accomplished presenters in the gold space, fired back at those pesky lithium and rare earths stocks that dominated Days 1 and 2 of Diggers by launching into “the revenge of the gold miners”.
“Do not forget about gold,” Mr Klein said as he pulled out a slide highlighting the top 10 commodities worldwide based on market size (2022 production multiplied by spot prices). Gold was pipped for top spot by iron ore.
“Amanda, rare earths aren’t even on the chart, neither is lithium,” Mr Klein said to much laughter – and in reference to Lynas Rare Earths (ASX: LYC) boss Amanda Lacaze who beat the battery metals drum at Diggers on Tuesday.
It set the scene for a Golden Wednesday to end this year’s talkfest.
LOVE RALLY
Raleigh Finlayson introduced his Genesis Minerals (ASX: GMD) story and focus on consolidating Leonora, conceding that his initial plan to call his growth-through-interesting-and-challenging-acquisitions company Hoover House had polarised people – “there were those who loved it and those who hated it. More specifically, I loved it and everyone else hated it.”
So much hilarity so early on a Wednesday morning is unusual. Unlike the half-empty auditorium because it was, well, Wednesday morning at Diggers.
In a sign of some of the great ESG work that gold miners can do to help preserve Western Australia’s mining history, Mr Finlayson said the Genesis crew had started fixing up the historic 120-year-old Gwalia State Hotel. I look forward to the opening night invitation.
So as the curtains closed on the 2023 rendition of Australia’s premier mining investment conference, what did we learn?
BULLION BETTER
Firstly, gold is not dead – certainly not in investors’ minds.
For all the chatter around the battery metals boom, which no doubt is here to stay, the positive outlook for the gold price driven by some macro negativity suggests some bullish bullion days ahead.
Granted, easy ounces are a thing of the past – a very strong gold price has been offset by rising and sticky costs – but there is growth in the sector.
Market leader Northern Star Resources (ASX: NST) has set the pace with its $1.5 billion commitment to upgrade, modernise and simplify the Fimiston processing circuit at its KCGM operations, en route to growing production to 900,000 ounces a year at a much-reduced all-in sustaining cost of $1425 per ounce.
A well-attended KCGM site visit on Sunday highlighted the market interest in the growth story as the reality settles in that Northern Star has only had the full set of keys to the Mt Charlotte and Super Pit mines for 2½ years. Tapping the assets’ full potential was always going to take time though the positive progress to date has surprised many.
Evolution is also investing in the Goldfields.
Just west of Kalgoorlie-Boulder, Evolution is spending $250 million upgrading the plant at Mungari to drive production to an average 155,000oz a year at AISC of $1750/oz.
NEXT
Bellevue Gold (ASX: BGL), meanwhile, used its spot in the sun at Diggers to flag the imminent start of production at its namesake mine, near Wiluna. All eyes will be on whether actual costs match the DFS promise.
A side note to Bellevue – the company and lithium hopeful and neighbour Liontown Resources (ASX: LTR) jointly hosted investors on site on Sunday. This double-act and Northern Star’s KCGM visit were the only trips on offer on Sunday – remember the days when up to a dozen companies took stakeholders to site on the Sunday before Diggers started? Maybe this year’s high-profile and well-attended pre-Diggers-week, State-wide mine sites roadshow will become the new norm.
But back to gold.
A bit further down the development schedule from Bellevue is De Grey Mining (ASX: DEG), the owner of the large, low-grade Hemi deposit in the Pilbara.
A long-awaited DFS into Hemi’s development, including updated financials, is due later this quarter, delegates were told yesterday, alongside an indicative development schedule.
The likes of Gold Road Resources (ASX: GOR) will be watching with interest. Gold Road is De Grey’s largest shareholder but also knows a thing or four about developing a large, low-grade gold deposit – the Gruyere mine in the north-eastern Goldfields (a 50-50 joint venture with operator Gold Fields) is starting to hit its straps en route to reaching the long-term 350,000oz a year profile.
KIDS
But the next generation of WA gold developers?
Maybe BMG Resources (ASX: BMG) is able to build on its maiden 518,000oz resource at Abercromby, near Wiluna.
Maybe M3 Mining (ASX: M3M) can build on its May discovery of the El Capitan prospect – including a hit of 10m at 241gpt from 27m – at the Edjudina project north-east of Menzies.
But enough of gold because stealing all the thunder at Diggers this year, including at last night’s gala awards dinner, was the lithium sector.
WINNERS
Lithium stocks took out all three company awards, a reflection of where the (renewable) energy was these past three days.
Congratulations to the dealer Allkem (ASX: AKE), the digger Pilbara Minerals (ASX: PLS) and the emerging company Patriot Battery Metals (ASX: PMT).
Combined, the three companies reflect all the excitement in the sector:
- lithium is a globally sought-after commodity and driving top-level consolidation and vertical integration;
- once spodumene concentrate operators hit their straps, they make more money than Elon Musk; and
- a big exploration success is amply rewarded by the market – before the challenge of development is factored in.
Adding to the lithium fever was the presence at Diggers of several groups of Asian lithium offtake players and traders trying to get an early peak at the next big thing.
As Diggers veteran and St George Mining (ASX: SGQ) boss John Prineas said, “they came here thinking they could do easy deals on the back of some wishful market speculation of a ‘lithium oversupply’, only to find that the speculation appears wide off the mark. So they are leaving with not much in the bag, though expect more attention on explorers going forward.”
There is no doubt those kinds of groups will stay in touch with stocks like St George, which over the past year has built an impressive portfolio of greenfields lithium exploration properties across the Goldfields region.
HOUSE OF CARDS
What Diggers this year lacked in corporate excitement was made up for with some political intrigue.
The Cook Government’s decision to axe the month-old Aboriginal Cultural Heritage Act – largely in the face of widespread protests from the agricultural sector – was a talking point in the marque and out the front of the Goldfields Arts Centre.
It also added an extra dimension to WA Mines Minister Bill Johnston’s visit to Diggers yesterday.
And things got a bit feisty during a 30-minute press conference, particularly around the issue of whether the axing of the Act was the biggest debacle since … the last (Labor, Liberal or National) debacle.
And leaders in the gold sector used the Diggers platform to make clear their views they want The Perth Mint to remain in WA Government hands.
The Mint’s well-documented historic troubles aside, the gold sector clearly feels there is a reliability and ESG benefit to delivering their doré to a State-owned, fully transparent and accountable refinery.
GRINNERS
As always, there was a strong focus on people at Diggers.
Skills are in short supply but there was also a call, at the Gold Industry Group’s packed breakfast on Tuesday, for the gold sector to better sell itself and the opportunities available to people across the sector.
To paraphrase, let’s get people into the sector because of the value of the experience, not the value of the pay packet.
Great people make a difference, which is a neat-ish segue back to the final three awards presented at last night’s gala dinner.
The Ray Finlayson Award for Leadership and Academic Excellence, which recognises an outstanding student from the WA School of Mines in Kalgoorlie, went to Luca Danovaro Hanza.
A mining engineering student, he will no doubt have his pick of job offers.
Australian Financial Review Perth reporter Brad Thompson was a popular choice for the media award. Apart from being a top bloke, he is also an excellent, ethical journalist.
And finally to the GJ Stokes Memorial Award, named in honour of Diggers’ founder Geoffrey Stokes. Last night’s award went to Neil Warburton, a veteran miner, contracting boss, company director and mentor.
And, of course, a graduate and alumni life member of WASM.
Congratulations to all three for their well-deserved awards.
FRESH
And very finally, the weather yesterday returned to the more normal Diggers conditions – crisp, fresh air in the morning, glorious sunshine during the day and a star-light sky at night.
Only four quarterlies to go until Diggers & Dealers 2024.
