Gold is considered a safe asset amid political tensions and recession worries with its price strengthening this week to more than US$1800 on safe-haven demand as China-Taiwan-US tensions escalate.
The LBMA (London Bullion Market Association) gold price averaged US$1,871 per ounce in the June 2022 quarter, 3% above the June 2021 quarter average, as per World Gold Council data.
However, this comparison conceals the 6% decline in the price in the June quarter, pressured by rising interest rates and the rocketing value of the US dollar.
High interest rates tend to reduce gold’s appeal, as the metal doesn’t pay interest.
Much of the weakness was also related to the strength of the US dollar, which explains the contrastingly different gold price performance across major currencies.
Gold’s H1 2022 price performance was positive across major currencies.
Although gold’s year-to-date performance may seem weak, it was nonetheless one of the best-performing assets during this period.
Gold not only delivered positive returns, but it did so with below-average volatility.
Gold has held up well so far in 2022: year-to-date nominal asset returns and annualised volatilities in USD.
Gold’s performance compares well against both equities and bonds, which usually make up the largest portion of investors’ portfolios, as both the asset classes posted negative returns during the first half of the year.
In the spotlight: ASX gold mining stocks
Exceeding their gold production guidance and starting new mine operations were among the highlights in the June 2022 quarter for Australian gold miners.
Alkane Resources Limited
Alkane Resources Limited (ASX:ALK)'s Tomingley Gold Operations in New South Wales had a strong June quarter with both the underground and open cut operations performing well.
A total of 23,091 ounces of gold was poured for the quarter. Gold sold for the quarter was 21,135 ounces at an average sales price of A$2,481 per ounce, generating revenue of A$52.4 million.
The site cash costs for the quarter were A$940 per ounce with an all-in sustaining cost (AISC) of A$1,150 per ounce.
Encouragingly, FY2022 full year production of 66,802 ounces exceeded guidance of 55,000 ounces to 60,000 ounces, with AISC of A$1,460 per ounce below cost guidance of A$1,500 ounces to $1,650 ounces.
FY2023 guidance for Tomingley is 55,000 ounces to 60,000 ounces production at an AISC of $A1,650 per ounce to $1,900 per ounce.
Bellevue Gold Ltd
Bellevue Gold Ltd (ASX:BGL) completed several important milestones during the June quarter in the development of the Bellevue Gold Project in Western Australia, de-risking the cost, production and cashflow outlook.
The life-of-mine (LOM) reserves and project LOM inventory have increased to 1.85 million ounces, underpinning an increase in mine life to 10 years.
Bellevue is set to generate an average LOM free cash flow of $231 million per annum (pre-tax) for the first 10 years at a gold price of A$2,500 per ounce.
The company’s underground development continues to advance well with Develop contract underway, fully resourced and achieving expected productivities from the outset.
Bellevue is currently 62% through the development timeline (from portal to first production) that commenced in July 2020.
Project development timeline to gold production at the Bellevue Gold Project; pathway to production.
Gascoyne Resources Ltd
Gascoyne Resources Ltd (ASX:GCY) delivered June quarter production of 16,298 ounces from its Dalgaranga Gold Project in Western Australia, with full-year gold production of 71,153 ounces achieved within the guidance range.
The company sold 16,882 ounces during the quarter at an average realised price of A$2,620 per ounce and an AISC of A$2,396 per ounce.
Gascoyne managing director and CEO Simon Lawson said: “The big news during the quarter was the success of our near-mine exploration efforts, particularly at Gilbey’s North and the Gilbey’s Eastern Footwall.”
RC drill rig on the Eastern Ramp drilling the Eastern Footwall prospects (looking north).
“The newly discovered near-mine zone at Gilbey’s North continues to grow and deliver impressive intercepts, and we are confident that it will become the next source of 20 higher-grade ore feed at Dalgaranga.
“We are currently working hard on permitting and development activities to bring it into the mine plan as soon as possible.”
Pantoro Ltd
Pantoro Ltd (ASX:PNR)’s gold operations at the Halls Creek Project in WA improved substantially during the June quarter with production of 6,544 ounces compared with 5,452 ounces in the previous quarter.
The focus of production is at Wagtail, where improved personnel numbers during the quarter resulted in the ongoing recovery of developed and drilled stocks following the period of very low personnel numbers due to COVID-19 and related effects in previous quarters.
Meanwhile, construction activities at the Norseman Project in WA (Pantoro 50%) are nearing completion with first gold production expected in the September 2022 quarter.
Construction progress at the Norseman Processing Facility.
Mining is progressing well ahead of the production start-up planned for late August 2022.
Pantoro is well funded with cash and gold of A$53.6 million at the end of the quarter.
Perseus Mining Ltd
Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF)’s three operating gold mines, Yaouré and Sissingué in Côte d’Ivoire, and Edikan in Ghana have produced a combined total of 122,327 ounces of gold in the June 2022 quarter, bringing total annual gold production to 494,014 ounces for the first time.
The company sold 481,075 ounces for the year at a weighted average sales price of US$1,683 per ounce including 111,897 ounces of gold sold during the quarter at US$1,705 per ounce.
Perseus’ weighted average AISC was US$952 per ounce for the financial year while AISC for the June quarter was US$1,004 per ounce.
The company’s notional cashflow from operations of US$361 million during FY2022 included June quarterly notional cashflows of US$85 million.
Notional operating cash flow - obtained by multiplying average sales price less AISC (notional margin) by the ounces of gold recovered.
Notably, Perseus’s strong operating performance is forecast to continue with market guidance for the December 2022 half year of 240,000 to 265,000 ounces produced at an AISC of US$1,000 to US$1,100 per ounce.
Red 5 Ltd
Red 5 Ltd (ASX:RED)’s development of the King of the Hills (KOTH) Gold Project in WA was completed during the quarter within budget and on schedule, with the company pouring first gold on June 5, 2022.
KOTH general manager Neal Valk (centre) congratulates processing manager Chris Witt (right) with mining manager Andrew McRae (left) holding Red 5's first gold bar poured at KOTH.
KOTH and the Darlot Gold Mine have been kind to the company, helping Red 5 deliver a positive final quarter of the financial year.
At Darlot, full-year production for FY22 of 64,667 ounces was within guidance, allowing the company to sell 62,992 ounces of gold at an AISC of A$2,479 per ounce.
Red 5 managing director Mark Williams said: "The June Quarter marked a defining period in Red 5's growth pathway to becoming a mid-tier Australian gold producer.
“The delivery and ramp up to date of the King of the Hills (KOTH) Project, with first gold production achieved on time and on budget, is a huge achievement by our team and business partners.
“All aspects of the KOTH operation are shaping up well. The open pit and underground mines are now operational, and our processing plant is ramping up towards our target throughput of 4.7 million tonnes per annum.”
Theta Gold Mines Ltd
Theta Gold Mines Ltd (ASX:TGM) was moving closer to releasing its DFS for the TGME Underground Gold Mine Project in South Africa at the end of June 2022.
The DFS was subsequently released on 27 July 2022, delivering strong economics from the 6.46 million tonnes of gold resource at 5.95 g/t.
Headlining the financial numbers, the study confirmed a net present value (NPV) of A$432 million at US$1,642 per ounce gold price.
Key project metrics.
The DFS presents a clear pathway to production via the re-development of TGME’s gold assets within South Africa’s renowned gold mining region, with a forecast total LOM production of 1.24 million-ounce of contained gold.
Tietto Minerals Ltd
Tietto Minerals Ltd (ASX:TIE)’s Abujar Gold Project in Côte d’Ivoire is targeting gold pour in December 2022 with Tietto advancing its ‘Drill and Build’ strategy.
The company is aggressively drilling to both extend the resource base and grow the existing reserve while fast-tracking the construction of the Abujar CIL (carbon-in-leach) project.
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Abujar processing plant in construction - 30 July 2022.
Tietto had A$84.6 million cash at the end of June 2022, having completed a A$130 million two-tranche placement to accelerate the development of Abujar, with no debt.
The placement allowed the participation of like-minded investors, keen for the company to realise first gold by the final quarter of this year and produce 260,000 ounces of gold in 2023.