Amid the Australian gold price reaching $3680 per ounce on August 5, Evolution Mining executive chair Jake Klein predicted that the price will continue to soar.
“Since we emerged from the fog of COVID-19 in 2022 and the associated travel restrictions, I’ve stood at this podium for the last two years telling you that the price of gold would be higher the next time we meet,” Klein said while speaking at the 2024 Diggers & Dealers Mining Forum on August 6.
“And fortunately for me, I’ve been correct this year. I come with the same good news. I’m going for a hat trick: the gold price will again be higher in 2025.
“In an excellent recent research piece, Citigroup forecast a base case gold (price) for 2025 to be between $US2700 and $US3000 an ounce. That’s up between $US200 and $US500 an ounce from current prices.”
The predicted increase comes at a perfect time for Evolution, which has five Australian gold operations: two in New South Wales, two in Queensland and one in Western Australia. Klein shed light on how Evolution has advanced over the years.
“We’ve established an outstanding portfolio of gold and copper assets,” Klein said.
“10 years ago, Evolution had a market capitalisation of around $650 million, which is less than 10 per cent of our market cap today. Average mine life – based on reserves – was about seven years, and (we) were producing 440,000 ounces of relatively high-cost gold.
“Today, we have 33 million ounces of gold and 4.1 million tons of copper in resources. We produce over 700,000 ounces of very low-cost gold, and our average mine life – based only on reserves – is at least 15 years.”
Klein credited Evolution’s growth to its significant exposure to copper.
“We have added 75,000 tons of annual (copper) production. (We also credit) our very long mine lives with high quality ore bodies,” Klein said.
“The lowest cost investment and highest rate of return is always going to be organic growth. We don’t have to go out and buy new resources to grow production or to extend our mine lives. We already own them.”
In December 2023, Evolution acquired China Molybdenum Co’s (CMOC) 80 per cent stake in the Northparkes copper-gold mine in NSW. The purchase was the main driver of Evolution’s mineral resource growth.
“The attractions for us in 2020 were evident and remain the same,” Klein said. “(These include) a 30-year reserve life, an excellent team with deep technical knowledge of caving, great geological upside and immediate cash generation.
“The first seven months of ownership have exceeded our expectations in almost every way. We’ve generated $74 million of net mine cash flow, and there is a lot more to come.”
Evolution is currently implementing a lower capital-intensive sub level cave option at the E48 ore body within Northparkes. It is also currently sourcing ore from Northparkes’ E26 Lift 1 North block cave.
Klein said that Northparkes has “abundant resources” equalling a 70-years mine life, if all the resources are mined.
“Therefore, our focus is on near surface, high-grade mineralisation that can leapfrog its way into the production profile,” Klein said.
“And here, even having only owned the asset for seven months, we’re having great early success. This is undoubtedly an asset that would fit well in any gold or copper company in the world. And we are very, very happy owners.”
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