What’s the gold forecast for 2016? CEOs from Colombian Mines, Radisson Mining, Calibre Mining and Energold Drilling weigh in here.
The year is nearly over, and at this point it’s no secret that 2015 hasn’t been great for the gold price. While it nearly breached the $1,300-per-ounce mark in January, by midway through December it was down about 10 percent year-to-date.
To find out more about the trends that impacted the gold market in 2015, the Investing News Network (INN) reached out to execs in the gold space (read their thoughts here). Of course, investors are understandably ready to look beyond 2015 and into the new year, and with that in mind, INN also made sure to ask about the gold forecast for next year.
Below, Robert Carrington, president, CEO and director of Colombian Mines (TSXV:CMJ); Hubert Parent-Bouchard, director of finances at Radisson Mining (TSXV:RDS); Greg Smith, president, CEO and director of Calibre Mining (TSXV:CXB); and Jerry Huang of Energold Drilling (TSXV:EDG) share their thoughts on that topic. They also discuss the milestones that are in store for their respective companies.
INN: What do you expect for the gold market in 2016? More of the same? A better market? Worse?
Carrington: Despite the current weakness in gold and other metals, I expect gold, and silver in particular, will rebound by mid-year 2016, with investor sentiment following, first into the major producers and trickling down to the juniors. By the end of 2016 I anticipate a much stronger market if for no other reason than there will likely be far fewer junior companies remaining.
Parent-Bouchard: It would be difficult to see a worse market for gold, especially in the junior sector. In Canadian dollars the price of gold is doing fairly well, but my view is that the gold price has to break out of the US$1,300 range for investors to start looking at juniors.
Smith: 2016 looks like it could be another difficult year for the gold market. The main issue continues to be the strength in the US dollar, and any weakness there would certainly be positive for gold. Some encouraging signs do exist as overall demand for metals continues to be healthy and producers have made strides reducing costs. Also, we have seen some of the required mergers and a reduction in the overall number of companies. In general, I see the gold market staying the same for much of the year with some modest recovery from the current level.
Huang: The early part of the year should be optimistic as usual, with gold and credible, quality miners (producers) seeing a good lift after tax-loss season.
The market should continue to improve for miners since so many companies have gone under or delisted, lessening the pool of potential investment choices for investors pulling money out from the overvalued broad markets. Seeing the Dow Jones Industrial Average (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX) and NASDAQ Composite (INDEXNASDAQ:.IXIC) pulling back, it means there are investors looking to lock in their gains and buy something out of favor for the next wave up. Materials is certainly it.
INN: What do you tell investors who are concerned about the state of the gold market?
Carrington: The reality is the gold market is not the problem. When gold first went above $1,180 in November 2009, the S&P TSX Venture Composite index (INDEXTSI:JX) was over 1,500 points; today with gold at $1,184, the index is at 525 points. Mines make just as much money in 2015 with gold at $1,180 as they did in 2009 at $1,180 gold. Junior explorers need to focus on quality assets with appropriate grades, metallurgy and mining characteristics — like our El Dovio and Mercedes projects — to be attractive at foreseeable prices.
Investors need to focus on companies working on appropriate deposits, and investors and analysts need to be aware that “losing it on grade, but making it up on volume” never did and never will work. The ultra-large, high-capex, low-grade deposits and analysts that sold these to the public are as much to blame for the massive losses in the markets and the current investor sentiment.
Parent-Bouchard: You have to look at gold as geopolitical and as a currency diversification. In the long run, the gold price won’t stay as depressed as it is right now. The environment is not what it was between 2006 and 2011, but Canadian producers are still making money. Investors should look for advanced, quality projects in major mining camps to leverage their investment in the gold sector.
Smith: I think it is very important to stress the cyclical nature of the gold market. Gold and metals prices in general will recover, and what investors need to look for are companies that are positioning themselves to benefit when the recovery starts to happen. It is very difficult to not only survive, but continue to be active under the current conditions. I believe companies like Calibre Mining that can continue to make discoveries and advance their projects now, without crippling dilution to current shareholders, will benefit once the rebound starts to occur.
Huang: Gold has always been there, through dynasties and civilizations, and continues to be a constant in our world today. With inflation kept artificially low, along with interest rates, it’s only a matter of time that faith in US dollar dissipates; we are already seeing evidence of that with China becoming a powerhouse in the world.
INN: Does your company have any catalysts on the horizon that investors should be excited about?
Carrington: For our current and potential shareholders there are really two exciting catalysts. For one, we plan to put the company into a position where it will be self sustaining on a non-diluting basis in this market, while being ready to rapidly execute when the market returns; that [plan] will likely include a 43-101 technical report with a maiden resource and preliminary economic assessment (PEA).
The other is that Colombian Mines owns 100 percent of both its high-grade flagship projects at El Dovio and Mercedes. Until the markets and investor interest return, responsible companies are going to carefully shepherd their resources.
Parent-Bouchard: We are finalizing the PEA for the O’Brien project [Editor’s note: The PEA has been published since this interview was conducted] and will be moving the drill on the project quickly. Our team has identified over 60,000 meters of drilling in and around the PEA for resource expansion and definition. Pure exploration targets have also been identified in areas where we have never worked before. 2016 will be an exciting year, moving from studies to develop this project on the ground.
We also need to work on environmental studies and permitting to build an exploration decline. A decline would allow us to drill the project at a lower cost, and complete bulk sampling to confirm the grade at different levels. Our resource estimate is standing around 6.53 g/t gold in the indicated category and 6.38 g/t gold in the inferred category. Our metallurgical study returned an average feed of 11.13 g/t gold. This is the effect of a lot of free gold in the deposit, hence we will only really know what we are sitting once we are underground.
Smith: Calibre has several catalysts in 2016, and we will have a number of concurrent exploration and drilling programs. Calibre also has a couple more sets of drill results pending from 2015 programs, including the ongoing drilling funded by Centerra Gold (TSX:CG) on the La Luz project. In early 2016, we will be restarting the drilling campaign on the Eastern Borosi project with IAMGOLD (TSX:IMG,NYSE:IAG) following up on the discoveries made in 2015. Additionally we expect further exploration on the B2Gold (TSX:BTO,NYSEMKT:BTG) joint venture and on the Rosita D project with Rosita Mining.
Especially given the continued downturn in the gold market, Calibre’s high level of activity with multiple concurrent exploration and drilling programs should continue to keep us ahead of our peers in terms of news flow. The goal of all of this activity is further discoveries, and strong partners and multiple programs give Calibre a great chance for success in 2016.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Calibre Mining, Colombian Mines and Radisson Mining are clients of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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