Modern Mining January 2025

COMMODITIES OUTLOOK

years. As it stands, it is becoming increasingly difficult to build new gold mines in certain jurisdictions, and in some instances, it can even take decades to bring a project into production. Another key challenge relates to AISC, which while it has shown significant decreases from double-digit levels experienced a few years ago, remains a concern. M&A on the rise – gold projects ripe for the picking in 2025 Although the gold price is sizzling, the production profiles of many large mining companies remains “pretty flat”. Given the difficulty associated with fast-tracking new gold discoveries to production, industry consolidation is anticipated as majors target early-stage gold projects to bump up their production portfolios. “In terms of mergers and acquisitions, we expect that going into 2025 there will be more mid-tier and large-scale gold producers looking to make acquisitions. There have already been several majors that have made a play for smaller gold projects in 2024. This includes AngloGold Ashanti, which acquired Centamin for $2.5-billion and Minera Alamos, which is in the process of purchasing ASX listed Sabre Gold Mines Copperstone gold project in Arizona, to add a further 150 000 ozpa to its portfolio.” Further to this, ASX-listed entities, Aurum Resources and Mako Gold have announced their intention to unite their flagship Napié and Boundiali gold projects in Côte d’Ivoire through off market takeover bids. “Aside from the notable deals that have been inked, there have been several smaller deals that have also been made – all of which is an indication of the robustness of this precious metal,” says Reade. So, is the industry anticipating gold sector growth in the years to come? “Although 2024 is set to be a record year for gold production; this is not an industry which is demonstrating that it can report strong, sustained growth. This is an industry which is showing evidence of plateauing globally,” concludes Reade. n

Over the past two years, strong demand for gold has emanated from emerging markets.

Although consumers bought reduced quantities, their spend on gold jewellery increased.

and continue to take advantage of the unprecedented high prices by processing material at speed. “In instances where mines have spare capacity, we are seeing lower grade stockpiled material being processed,” explains Reade, who expects mines to fast track debottlenecking initiatives in 2025 as they look to ramp up production volumes. Given that new discoveries, new projects and expansion initiatives take years to come online, with “very little the gold mining industry can do to rapidly increase production”, Reade believes that going into 2025, miners will target expansions that deliver incremental production increases and quick fixes, such as plant de-bottlenecking initiatives. Discussing challenges facing the gold mining industry, Reade flags the long lead times to getting greenfields projects into production and ongoing cost inflation, which sees all in sustaining costs (AISC) increasing by 6% year-on-year “Even though a miner with a gold discovery may be eager to bring a project into production, in some countries gaining the necessary permits often takes

to be growing, product manufacturers continue to seek innovative ways to use less gold, including efforts to miniaturise components. So, while there are more chips being required, manufacturers are using gold more efficiently, in other words, less gold per chip.” Africa and gold production The World Gold Council’s Q3 2024 World Gold Demand Trends report revealed that total gold demand increased 5% year-on year to 1,313 t, a record third quarter, with total demand exceeding $100bn. According to Reade, quarter three of 2024 delivered record gold mine production of 989 t – with Africa being the biggest contributor to gold production. In 2023, the African continent produced over 1 000 tons of gold, representing 28% of global gold total. “And whilst we’ve seen growth from other regions, notably Canada, it is not of the scale to displace Africa as the largest regional gold producer.” According to Reade, with the gold price averaging over $2474/oz in 2024, gold mines have been profitable for some time

14  MODERN MINING  www.modernminingmagazine.co.za | JANUARY 2025