Major Gold Producers to Turn to Junior Gold Miners to Replenish Reserves

The world’s major gold mines are reaching peak gold and majors are looking to junior gold miners to shore up reserves.

Junior gold miners are playing a significant role in the gold industry as the majors struggle to uncover new discoveries.

Major gold producers know that sustainable production levels are the key to long-term growth, which requires balancing your reserve base with mine output. You must rebuild your inventory to balance the rate of depletion. However, much of the world’s largest gold mines have either shut down or are nearing the end of their mine life and today’s major gold producers like Barrick Gold (TSX:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (TSX:G,NYSE:GG) are finding new gold discoveries to be an increasingly difficult prospect, and are now turning to junior gold miners.

With reserves now being mined much faster than they are being replaced, many are wondering if peak gold is here. Exploring and developing economically viable gold deposits has become much more difficult and expensive — and risky since not many of the unexplored regions are in mining-friendly jurisdictions. To fend off the supply shock, major gold companies are likely to begin focusing on M&A deals as well as strategic partnerships with junior gold companies with economically viable gold projects in mining-friendly districts.

World Gold Council (WGC) analysts have noted in a 2018 gold demand trends report that despite the recent lows in the price of gold, the supply-demand fundamentals moving forward are highly supportive of increased gold prices, which should benefit major and junior gold stocks alike. The WGC cites growing demand from India and China (which together represent 50 percent of the global gold market) as one of the demand side gold supports, along with increasing geopolitical risks, low interest rates amidst rising inflation and uncertainty in the equity markets.

Peak gold: Supply shock looming in the global gold market

Barrick Gold, which operates three of the world’s most prolific gold mines including Cortez and Goldstrike in Nevada and Pueblo Viejo (40 percent Goldcorp) in the Dominican Republic “is running out of gold,” reports the Globe and Mail. “In the past five years, its reserves – gold in the ground that it can mine economically – have fallen 54 per cent, from 140.2 million ounces to 64.5 million.” Goldstrike, one of the world’s largest gold mines, is nearing the end of its mine life and production is noticeably slowing down. Having produced 2.5 million ounces of gold in 2000, Goldstrike’s output totalled 865,000 ounces in 2017.

Declining gold production is a problem that the Globe and Mail’s Niall McGee acknowledges is not Barrick’s alone. Many of the world’s major gold producers are facing the same dilemma as their biggest producing operations are now shuttered or nearly tapped out. Newmont’s Yanacocha mine in Peru, which produced 3.3 million ounces of gold in 2005, has seen production decline by 84 percent to 535,000 ounces in 2017. Goldcorp’s production has been falling since 2015 with an output of 3.4 million ounces of gold, dropping to 2.5 million in 2017. Goldcorp’s Chairman Ian Telfer told the Financial Post, “If I could give one sentence about the gold mining business…it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years. Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down. We’re right at peak gold here.”

It seems gold is at a tipping point — what analysts and industry insiders are calling peak gold — and we may be on the precipice of a sustained drop in global gold output. We may look back on 2018 as the year gold production started a sharp decline.

New discoveries hard to come by

Barrick’s declining reserves — and that of its major producer peers — are attributed in large part to its lack of new discoveries in the way of the large gold deposits the company built its business upon. “Yes, our reserves are going down. Yes, it’s something we have to deal with,” said Barrick CFO Catherine Raw. “We’re just not finding the big megadeposits that we found in the previous generation of discoveries. The easy gold has been found.”

The number of new global gold mine discoveries has been declining since the early 1980s, according to MinEx Consulting. Even the rising trend in exploration spending over the past decade and a half hasn’t helped to boost the rate of new discoveries.

“The future pipeline is almost devoid of ‘world class’ projects,” said Mark Fellows, Metals Focus Head of Mine-Supply, in the World Gold Council’s Gold 2048 Report. “As the sector evolves, gold production will be sourced from a greater number of smaller operations, or face a sharp contraction in capacity.”

Junior gold companies are the heavy lifters in exploration

One strategy major producers have in replenishing their gold reserves is acquiring, investing in or partnering with junior gold companies, ideally those with local projects near their mills. For one thing, letting junior-stage companies take on the high risks and costs of exploration is an attractive proposition for today’s major gold producers. Even more attractive is finding high quality gold projects in North America’s premiere gold jurisdictions, with mining-friendly policies, well-established local infrastructure and access to skilled labor. Some of the world’s best gold jurisdictions are found in North America, including Quebec and Nevada.

Quebec: one of Canada’s most prolific gold provinces

Quebec ranks sixth in Fraser Institute’s 2017 index of the best mining jurisdictions on the planet. Majors in the area include Quebec’s largest gold producer Agnico Eagle (TSX:AEM,NYSE:AEM), IAMGOLD (TSX:IMG,NYSE:IAG), and mid-tier mine Eldorado Gold (TSX:ELD,NYSE:EGO). Agnico’s Lapa and Goldex mines in northwestern Quebec posted lower production results in 2017 compared to 2016 on lower throughput and lower grades; the Lapa mine is approaching the end of its mine life.

Quebec is home to one of Canada’s most prolific mining hubs: the Cadillac gold trend. Located in the heart of the Abitibi greenstone belt, the Cadillac region has produced more than 50 million ounces over the past century and yet remains far from exhausted as deposits are still being discovered. In fact, the Cadillac area is experiencing a revival in activity, from exploration and development to acquisitions and strategic partnerships.

Last year, Eldorado Gold acquired Integra Gold along with the Lamaque project located near Val-d’Or, with plans to commence commercial production in 2019. Emerging gold producer Monarques Gold (TSXV:MQR) recently acquired a portfolio of Quebec assets from Richmont Mines including the Beaufor Mine and the 1,600 tpd Camflo mill at which the company now offers custom milling services.

In May 2018, Chalice Gold Mines (TSX:CXN,ASX:CHN) moved to expand its position along the Cadillac trend by securing an 80-percent option on Renforth Resources’ (CSE:RFR) prospective package of land located near Chalice’s East Cadillac gold project. Renforth holds two other highly prospective gold properties both located on 1.5 kilometers of the on the Cadillac trend with compliant resource estimates: New Alger near Agnico’s LaRonde mine and Parbec, which sits on the border of the Canadian Malarctic mine. Unlike some of the other properties in the area, these two have been left largely unexplored with limited drilling.

Nevada, where the world goes for gold

Nevada is another attractive gold mining jurisdiction, ranking as one of the top five global gold producers. The state’s three major gold belts — the Carlin Trend, the Battle Mountain-Eureka-Cortez Trend, and the Walker Lane Trend — have given rise to some of the world’s most important gold mining districts. The major players in Nevada’s Carlin Trend are Newmont, Barrick and Kinross Gold (TSX:K,NYSE:KGC).

Barrick’s aggressive stance toward building up its project pipeline has been especially focused in Nevada. In 2017, the company purchased the Robertson Property from junior Coral Gold Resources (TSXV:CLH) for a cash payment of US$15.75 million and a sliding scale 1 percent to 2.25 percent net smelter returns royalty.

The newest emerging gold producer in the state is McEwen Mining’s (TSX:MUX,NYSE:MUX) Gold Bar Mine, scheduled to begin pouring gold in Q1 2019 with a projected production rate of 63,000 ounces of gold annually. Juniors making waves in the area include Fremont Gold (TSXV:FRE), which is breathing new life into the original Gold Bar deposit along with the Gold Canyon deposit, immediately along strike from the McEwen Gold Ridge pit mine.

Looking forward

The world’s major gold producing companies are mining through their reserves faster than they can find replacement ore, leading to calls that peak gold is here. The looming supply shortage may be more of a win for junior gold companies than the majors.

With production levels declining and few new projects in the pipeline, are major gold miners still an attractive investment? Charles Cooper, head of mine economics at Metals Focus, answered this question in an interview with Investing News Network at the September 2018 Denver Gold Forum.

“[T]he question I suppose you would want to ask is, ‘why would I be investing’ or ‘why would I want to look at’ the major mining companies if their production growth is falling … and they’re not returning much money in terms of dividend, or share buybacks to the investor community.” He continued, “the answer is, well, maybe longer term you look at that as a stability factor — you might want to put your money in long-term stability. But at the moment it’s fairly unattractive.” Cooper believes the sector is shifting toward production “growth coming in from the intermediate sector and the junior miners.

This INNspired article is sponsored by Renforth Resources (CSE:RFR). This article was written according to INN editorial standards to educate investors.

Royalty Financing and Investing In Rapidly Emerging Commodities Outside of Gold and Silver

Investing in royalty financing and emerging commodities outside of gold and silver is increasingly attractive due to lower risk and the ability to provide commodity price leverage and exposure to in-demand commodities and their price movements.

In recent years, royalty and streaming companies have quickly emerged as a popular choice among a broad spectrum of investors. They provide the capital to finance many of the most highly prospective mining projects around the world to provide investors with a perfect storm of minimized risks and economic upside.

With unparalleled exploration, diversification, and project acquisition opportunities, this particular type of alternative financing could be set for significant expansion over the next decade.

What is royalty streaming?

Marin Katusa, chairman of Katusa Research, told Kitco News in an interview, “I would start at the royalty side of things … that’s the easiest place to start because these are teams that are de-risking themselves.”

Royalty agreements and streams have similar structures at face value but key differences set them apart.

  • Royalty agreements: Also known as net smelter returns, these agreements provide royalty holders with a percentage of a specific mine’s revenue generated from production, typically hovering around one to three percent. Another common type of royalty agreement includes net profits interests, where the royalty holder receives a percentage of the profits rather than the revenue.
  • Streams: These contractual agreements provide the right to purchase a certain percent of metal production directly from the mine, typically ranging from five to twenty percent. Streams often will have a predetermined purchasing price for the metal, which is usually either a fixed dollar amount or a fixed percentage of the spot price.

An important distinction between royalty and streaming companies is that these entities are not mine operators. Instead, they seek to find untapped value through financing and working with miners to curate agreements that provide their shareholders with steady exposure to various mineral and metal markets. These agreements enable recipient mining companies to further develop or expand projects, providing greater returns for vested interests and the companies with royalties and stream agreements on the projects.

For junior mining companies, having the financing and support from more established royalty and streaming players can be especially beneficial as it may significantly boost development and exploration efforts and improve balance sheets across highly prospective project portfolios.

Risks and rewards to royalty streaming

In the case of royalty streaming, outlining major pros and cons can paint a clearer picture as to what potential downfalls these agreements have and what makes them one of the most popular financial strategies in 2021.

One of the main downfalls of royalty streaming relates to the structure of the business. Royalties and streaming companies have traditionally had intense competition competing within the precious metals space and needed a large amount of capital to invest in mines, which are raised through stocks or debt. Either companies accumulated debt on their balance sheet or issue stocks, which can involve some unfavorable stock dilution. However, there are very few royalty groups focused on clean energy metals and the costs of deals has been much lower thus far.

Another risk involves actual spot prices and mine production. If spot prices fall, so can revenue generation for royalty companies and metal selling prices for streaming. Additionally, in the case of mine delays, both types of companies may be impacted by a delay of commodity flow. Luckily, there are no costs to holding a royalty so there are no operating costs associated with shutdowns and the G&A required for running royalty companies is very low. .

By avoiding many of the operational costs, royalty and streaming companies cut out significant risks commonly associated with mining investments. While mining companies’ operational costs may rise, royalty and stream holders simply reap the potential benefits of high margins during peak pricing periods for their metals, having acquired them at lower fixed prices according to their agreement.

Another key advantage royalty and streaming companies have is advantageous portfolio diversification and the ability to be selective with their agreements. With the right management and strategic acquisition team, companies can minimize concentrated jurisdictional or asset risk and make agreements with mines already at near-term production staging. Since costs per ounce are contractually defined, this also protects streamers from cost overruns across the life of a mine.

Electric Royalties (TSXV:ELEC) is a royalty company focused on building a premium portfolio that takes advantage of the demand for a wide range of commodities and critical metals like lithium, vanadium, manganese, tin, graphite, cobalt, nickel and copper. Its focus on vital battery and base metal elements leverages the growing demand and global drive toward electrification across virtually all sectors, including transportation, rechargeable batteries, large-scale energy storage, renewable energy generation and more.

The company has a robust commodity portfolio, which helps to diversify investment and mitigate risk for investors and shareholders while leveraging exploration upside, revenue-driven business modelling and more. It currently has a portfolio of 12 royalties with exceptional exploration potential and four additional royalties currently under acquisition.

Electrification: Growing market for royalty streaming companies

The mining royalty and streaming sector have grown steadily from US$2.1 billion in 2010 to more than US$15 billion in 2019. While gold and silver take up a large portion of the streaming market, up-and-coming metals like copper and cobalt continue to show exceptional growth potential as the world shifts to greener alternatives to energy, power and more. Market researchers expect bright futures for both commodities despite disruptions in production in 2020.


  • Lithium prices are up 313 percent
  • Copper prices are up 25 percent
  • Zinc prices are up 22 percent
  • Nickel prices are up 18 percent
  • Tin prices are up 82 percent
  • Cobalt prices are up 75 percent

These raw materials expose prospective investors and many royalty streaming companies to multiple sectors, including new economy drivers like electric vehicles, batteries, energy storage, personal electronics and renewable energy platforms including wind and solar. .

Nova Royalty (TSXV:NOVR) is a royalty company focused on copper and nickel discovery as the foundational building blocks in clean energy decarbonization. With a rich portfolio of base metal royalty assets operating out of mining-friendly and highly prospective mining jurisdictions, Nova could become a leading royalty company in the transition to the future of sustainable energy.

With the battery revolution and growing demand for copper and nickel, the company has also strategically positioned itself as a potential frontrunner in the transition to an electric-powered world. As a royalty company, it has a decreased risk across a global portfolio.

Royalty financing: Economic upside potential for investors

For investors, royalty and streaming companies continue to be increasingly attractive due to their lower risk and ability to provide commodity-price leverage and exposure in-demand commodities and their price movements. In addition, investors in streaming companies advantageously leverage the ability to contract metal prices and delivery and tailor metals exposure more than royalty companies can.

Innovative companies are leveraging the momentum behind the transition for decarbonization into green power and investing in these companies outside of precious metal markets like gold and silver. With unprecedented demand and growth in prices for these raw commodities, market researchers predict more money investment opportunities coming into the sector for royalty and streaming companies exposed to these commodities.


Royalty and streaming companies present unparalleled investment opportunities with benefits of low risk, stable metal and mineral market diversified exposure and support for highly prospective mining projects across the globe. With no exposure to issues such as operating cost pressures or capital cost overruns due to predetermined metal pricing and revenue generation agreements, it comes as no surprise that royalty financing has become a significant strategy utilized by new and experienced investors.

read more Show less

ESG investing best fits socially conscious investors looking for ESG companies focused on environmentally friendly practices to benefit from carbon credits.

Investing in companies based solely on in-depth financial analysis isn’t the only way to evaluate a company these days. Environmental, social and governance (ESG) investing is a trending investment strategy in which an investor assesses a company’s social presence as it relates to profitability and future returns before making an investment decision.

In 2020, the total worldwide. According to Bloomberg, global ESG assets are on track to exceed $53 trillion by 2025 –– showing no sign of slowing down any time soon. Some of the top ESG stocks, according to RBC Capital Markets, include large companies like Salesforce (NYSE:CRM), Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA) and Gilead Sciences (NASDAQ:GILD) — to name a few.

It is clear that ESG investing has a role to play for the more socially-conscious investors out there. Read on to learn more about the basics of ESG investing and why this trend continues to grow in popularity.

What is ESG investing?

ESG stands for environmental, social and governance. ESG includes a variety of actions and responsibilities that a company takes towards building a more sustainable future. ESG initiatives typically come in the form of company policies, dedication to best practices or responsible operations.

Environmental impact includes all investments that support preservation and conservation of the natural world including climate change, carbon emissions, air and water pollution, biodiversity protection, deforestation, energy efficiency, waste management and water supply.

Social impact includes all investments that support the people and communities affected by a company’s operations including customer satisfaction, data protection and privacy, gender and diversity, employee engagement, community relations, human rights and labor standards.

Lastly, governance issues include investments in standards in which the company operates by, including board composition, board diversity, board independence, audit committee structure, risk and governance committee structure, compensation committee structure, health & safety committee structure, anti-bribery and anti-corruption bodies, lobbying, political contributions and whistleblower schemes.

ESG funds and stocks reduce portfolio risk and increase returns

Portfolios that include ESG investments have proven to have greater long-term success than those that do not. Part of this is because ESG funds have had progressively higher returns on investment due to resilience in the face of conventional market disruptions. For example, companies with strong ESG track records had less stock price volatility than non-ESG companies during the COVID-19 pandemic.

Research has also found that ESG stocks produce similar if not better financial results than non-ESG stocks. According to Arabesque, the top quintile S&P 500 companies with ESG initiatives performed more than 25 percent better than the bottom quintile companies from 2014 to 2018.

This reduction in portfolio risk is believed to partly stem from the fact that ESG companies are less likely to be involved in controversies –– whether it be environmental, social or governance due to proactive management.

Environmental is the leading ESG factor

According to recent survey data, among all ESG factors, pollution and waste management ranked top in importance and support from ESG investors. Investor prioritization of pollution and waste management is likely linked to growing concerns around climate change. Both large and smaller companies have responded to this growing concern by either launching or shifting to green models.

Steelcase (NYSE:SCS) is a company that produces furniture and architectural elements. Steelcase minimizes waste through smart product designs that easily allow for product disassembly for use in refurbishing and recycling. Steelcase produces very little waste in addition to reducing pollution through the use of renewable energy and water efficiency.

Hewlett Packard (NYSE:HPE) has also established a recycling program that spans 73 countries and has collected and recycled 90 million kilograms of plastic. The initiative has substantially cut back on landfill waste and reduced heavy metal pollution. Hewlett Packard has also reduced its greenhouse gas emission and water consumption through the use of 100 percent renewable energy in its manufacturing process.

Northstar Clean Technologies (TSXV:ROOF,TSXV:ROOF.WT) is an emerging clean technology company focused on the recovery and repurposing of single-use asphalt shingles. The company has developed a proprietary design process at its Empower Facility in Delta, BC for taking discarded asphalt shingles, otherwise destined for already over-crowded landfills, and extracting the liquid asphalt, aggregate sands and fiber. Northstar’s mission is to become the leading shingle material recovery provider in North America, extracting 99% of the recovered components from single-use asphalt shingles that would otherwise be sent to a landfill.

Carbon credits for ESG investments

The Canadian government recently announced an upcoming Canadian Federal Greenhouse Gas Offset System that will provide carbon credits to a variety of industries. Companies with ESG investments will be well primed for successful carbon credit trading given the expected rising costs of carbon under the Trudeau government.

For companies with ESG-focused models, a federalized carbon credit system will not only provide additional working capital but can improve profitability, growth and ROI potential.


ESG is considered to be crucial to business success. Industries that have not adopted ESG initiatives have received criticism and pressure from various stakeholders. As ESG takes off with billions of dollars in investment, investors may find ESG companies to be of more interest, specifically ESG companies with a focus on environmentally-friendly practices that are well-suited to benefit from carbon credits.

read more Show less

The industrial applications of silver make it an ideal material for driving the green revolution.

Silver is one of the oldest precious metals known to humanity, rivaled only by gold. And like gold, silver demand comes from a variety of different markets that go far beyond traditional jewelry and currencies. This precious metal is heavily used in high-technology, electrical, thermal and many industrial spaces. With such usage versatility, especially in our increasingly electrified world, investors can expect silver demand to grow exponentially.

There are many technology use cases for silver today. Analysts project silver will play a pivotal role in the “green revolution,” playing a fundamental role in green technologies, as well as in the fintech space with its applications in crypto mining and the broader cryptocurrency market.

Before we dive into why silver is a worthwhile investment, it’s important to understand how silver is used in technology today, from its industrial applications to more modern technology products.

Silver’s unique properties in technology

Silver has the highest thermal and electrical conductivity of all metals which makes it highly used in electronics and technological applications today.

Electronics demand silver of the highest purity at 99.99 percent silver. During processing, the precious metal can either be smelted and refined from ore into bars or grains or dissolved in nitric acid to produce silver nitrate, which can be formed into powder or flakes. This material can then be fabricated into contacts or silver pastes, like conductive paste made with a silver-palladium alloy.

How is silver used in today’s technology products?

The number one use of silver in the technology industry is in electronics, making up 35 percent of total silver usage in the United States. The precious metal’s unsurpassed thermal and electrical conductivity among metals means it is a superior metal to less expensive alternatives.

Silver’s role as a superconductor makes its uses varied tremendously across the electronic and technology space. Small quantities of silver are used in electronic applications such as contacts in electrical switches and wires, nanosilver conductive inks in printed electronics, automotive innovation, silver oxide high-weight and high-capacity batteries and many everyday consumer devices.

Silver’s versatility also extends to the booming cryptocurrency industry. Unsurprisingly, the metal plays a vital role in the function of circuit boards inside computers and their accompanying keyboards. A computer’s cooling system needs silver’s superconductive thermal properties to keep the system from overheating while expanding the massive amount of energy computers need to compute. Crypto mining rigs run massive clusters of graphic processing units across a network of computers day and night so the necessity for silver conductivity cannot be understated.

Industrial Applications of Silver

According to market research, industrial buyers drive more than 50 percent of silver demand. In 2020 alone, industrial fabrication reached over 486.8 million ounces in demand. With rapid global efforts to decarbonize and electrify the world, three specific areas present highly prospective and high-level silver consumption.

These industries include the automotive sector and electric vehicles, including the associated infrastructure, the solar energy industry and the fifth-generation (5G) broadband cellular networks. By 2025, silver demand in 5G technology could more than double to 16 million ounces and, by 2030, triple to 23 million ounces, according to estimates by Precious Metals Commodity Management.

Additionally, the metal’s high tensile strength and ductility make it an ideal option for brazing and soldering or flattening into sheets for employment across different industries, including chemical production, medicine, photography and more. With so many applications, the highly valuable metal presents exceptional market demand and outlook as a commodity of the future.

Silver in today’s technology markets

At multiple levels of production, silver presents stellar economic growth and investor upside potential. Despite a global pandemic, silver proved its status as a safe-haven asset for investment portfolios, rising to 47.89 percent in 2020. However, before silver becomes a viable resource in the latest technology and industrial applications, markets need silver exploration and development companies to produce the valuable commodity.

Lakewood Exploration (CSE:LWD) is a silver exploration company focused on becoming a multi-mine silver producer. Its growing asset portfolio includes the recently acquired past-producing Silver Strand and Burnt Cabin mines located in the renowned Silver Valley mining district in Idaho, USA–a district that has produced over 1.2 billion ounces of silver and hosts some of the world’s largest silver mines; the Eliza project located adjacent to the historic Hamilton silver district, in Nevada, which produced 40M oz silver in the 1800s; the past-producing Silverton Silver mine also located in Nevada within the same trend as numerous multi-100M oz silver deposits;and the early-stage Lacy gold-silver project in British Columbia.

In August 2021, the company reported high-grade surface samples including 11.79g/t gold and 255g/t silver to further extend the mineralized trend at Silver Strand. “We are very excited with these results which confirm widespread alteration and gold-silver mineralization throughout the property and along the 5.5 km strike,” commented Lakewood Resources President Morgan Lekstrom.

Hecla Mining (NYSE:HL) is a mineral exploration and development company operating silver mines in Alaska, Idaho and Mexico. The company has a variety of exploration properties and pre-development projects in six silver- and gold-mining districts in North America. Hecla leverages North America’s politically stable and mining-friendly jurisdictions to meet the demands of current silver markets.

Santacruz Silver Mining (TSXV:SCZ,OTC Pink:SZSMF) is poised to become Mexico’s next mid-tier silver producer. It currently operates its Rosario project and Zimapan project in top mining districts in Mexico. Both properties benefit significantly from exceptional infrastructure, with road accessibility, utility networks, skilled labor, and significant exploration upside and discovery potential in one of the world’s richest silver-producing countries.


Today, silver presents exceptional versatility in usage across some of the world’s most dominant sectors. As a superconductor, the precious metal boasts the highest thermal and electrical conductivity of all metals, which makes it an ideal material for driving the “green revolution” and meeting the demands of increasingly electrified industries and popular crypto mining technologies. Investors could see tremendous economic upside gaining exposure to this safe-haven asset and the exploration companies that supply it to the world.

read more Show less


S&P 5004538.43-38.67


Heating Oil2.10-0.01
Natural Gas4.09+0.04