Wednesday, 18 December 2019

Gold In The USA: McKinsey On Gold Mining Reserves Crisis - "Gold In An Era Of Drones, Deep Mines, And De-Dollarization."



McKinsey presents a very interesting podcast: "Gold in an era of drones, deep mines, and de-dollarization." The discussion goes deep into the analysis of main drivers for the gold market analysing as far as 50 years of history for the price of gold. De-dollarization and negative real rates are creating new demand for gold this time. Investors seeking diversification of their assets into gold are facing the competition from Central banks with their record-buying this year. Now you can better understand the wave of Gold M&A we are witnessing these days.




The industry is facing "Gold Mining Reserves Crisis". The 1970s and 1980s were the golden years for gold exploration. "There was at least one 50 MOZ Au discovery each decade and at least ten 30 MOZ Au discoveries. From 2000 industry failed to find any 50 MOZ Au deposits or any 30 MOZ Au deposits." M&A deals are only redistributing the already well-known resources, the industry needs new major discoveries, but giants like Donlin Gold are only a few and far between. TNR Gold is developing Shotgun Gold project in the Alaskan Elephant country in the Donlin Gold mining district and is looking for a strategic partner to grow together.




Gold In The USA And The Gold Mining Reserve Crisis: Global Gold Mining M&A Activity To Continue After $30 Billion Worth Of Deals In 2019.





Gold In The Alaskan Elephant Country: Kirill Klip GEM Royalty TNR Gold Presentation November 2019.




"The Company's strategy with the Shotgun Gold Project is to attract a partnership with one of the major gold mining companies. TNR Gold ("TNR") is actively introducing the project to interested parties," commented Kirill Klip, Executive Chairman of TNR. "We may be at the beginning of a great discovery. There is a clear path on how to move this project forward using the geological and geophysical research currently available to target drilling to expand the resource and form the basis of a preliminary economic analysis. The next step is to acquire a partner that shares our vision and recognizes the growth potential and value to be added to the Shotgun project over time."






Please always read legal disclaimer. There is NO investment advice on any Kirill Klip feeds and blog. Always consult a qualified financial adviser before any investment decisions. Do Your Own Research.





"Gold Exploration Vital For Future Supply": Gold In The USA - Alaskan Elephant Country.






Wood Mackenzie brings attention to the unfolding "Gold Reserves Crisis" as McKinsey calls it. The growing demand for gold from Central Banks, institutional investors and retail is facing the peak gold production and collapsing gold reserves of the major mining companies. Everything is being set for "The Perfect Storm" in the gold market:

"Exploration budgets were slashed following the fall in the gold price from the highs that were reached in 2011/2012 and they have since failed to recover. The slight rebound in exploration spend we have seen over the past couple of years has largely been focused on brownfield projects and near-mine development. This has not been sufficient to replenish mined ounces and as such peak gold supply is now a very real possibility. Wood Mackenzie."



M&A activity will only redistribute the well known and already developed reserves. The industry needs new major discoveries which are very few and far between. Years of the Gold Bear market have not only burnt alive the whole generation of investors but made mining companies extremely cautious with any exploration and investment activities. All exploration budgets were cut to the bone. The industry suffered not only dramatically reduced exploration budgets, but the return on the money invested in exploration produced very few major discoveries.




After the recent wave of M&A activities among the major gold miners, mining companies are increasingly entering into the JVs with junior miners in order to develop the new resource base:

"To secure their longevity as pillars of the gold industry, we have seen heightened M&A activity and miners focusing on their core assets. Whilst this may help to bolster balance sheets through improved operational performance and realised “synergies”, it seemingly does little to address the problem the industry is facing with regards to how to sustain current production levels. We have, as of late, noticed an uptick in some majors opting to increase their footholds in a select few juniors with promising exploration opportunities.
Agnico Eagle, AngloGold Ashanti, Kinross and Newcrest are actively investing in, or entering into joint-ventures with junior gold companies to create long-term value. Wood Mackenzie"



News about Electrum Group partnering in the new venture with gold mining legends Rob McEwen and Eric Sprott for exploration in Alaska will ignite the new wave of interest to the juniors operating in Alaska. Alaska jumped to the 5th place among safe mining jurisdictions and giant 39 Moz Donlin Gold project is getting more and more attention. Electrum Group is the major shareholder of Nova Gold which is developing Donlin Gold in JV with Barrick Gold.




With gold prices reaching new highs this year some mining analysts are starting to apply the old metrics to value "gold in the ground" when comparing juniors and their projects. Nova Gold was trading as high as $2.4B reflecting its 50% stake in Donlin Gold. It gives more than $120 valuation per oz in the ground. All projects are different, but previous Gold Bull market valuations started at $20 per oz of the inferred resources - the very initial level of resources. New mining deals will give us a better sense of the valuations. Eric Sprott and Rob McEwen will make sure that Alaska is shining bright on the radars of investors now. Increased gold prices are making the great state of Alaska as one of the most attractive in the industry: "leverage in the place where you can keep the rewards". And their own gold price projections can bring real fireworks to the exploration opportunities. As always do your own research and you will have to pick up the winners.





TNR Gold is developing the Shotgun Gold project in the Alaskan elephant country near Donlin Gold mining district. On the links below you can find more information. Barrick Gold received crucial permits to advance Donlin Gold and this new developing mining district in the US can make the promise of "Gold In the USA" providing stable supply feasible again and it can become that solution to "The Gold Mining Reserve Crisis" McKinsey is talking about:
"The Company's strategy with the Shotgun Gold Project is to attract a partnership with one of the major gold mining companies. TNR Gold ("TNR") is actively introducing the project to interested parties," commented Kirill Klip, Executive Chairman of TNR. "We may be at the beginning of a great discovery. There is a clear path on how to move this project forward using the geological and geophysical research currently available to target drilling to expand the resource and form the basis of a preliminary economic analysis. The next step is to acquire a partner that shares our vision and recognizes the growth potential and value to be added to the Shotgun project over time."


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