Gold
Even at high gold prices, financing eludes gold juniors
Gold prices are reaching historic highs, and producers are reaping the benefits. Aura Minerals has since 2020 had Brazilian depository receipts, making it the first gold company listed in Brazil, in addition to its TSX listing. High prices have allowed Aura Minerals to deliver US$170 million in value to shareholders through new dividends and share buybacks in the last three years. The company is targeting production of 450,000 oz/y by 2025. According to Rodrigo Barbosa, CEO of Aura Minerals: “We are focused on unlocking value in three areas: developing three Greenfield projects (Almas, Borborema and Matupá) on time and on budget, significant investment in exploration, increasing our mineral resources and reserves, and growing through M&A."
Aura Minerals' exploration efforts include the Serra da Estrela project in Carajás, Pará, a copper IOCG deposit that the company wants to develop into a copper mine. According to Barbosa, this development will contribute to Aura Minerals' diversified metals strategy, maintaining a balanced portfolio with 30-40% of revenue from copper and the rest from gold.
In Brazil's north, Canadian companies such as the TSX-V listed Bravo Mining are developing projects in Carajás. The exploration and development company is advancing its Luanga PGM+nickel deposit. Following a drilling and aerial mapping campaign and identification of anomalies, 17 high-priority targets for exploration were confirmed. Luis Azevedo, CEO of Bravo Mining, said: "T5 delivered the best yet copper-gold intercept of 2024 globally and top five over the last five years. The subsequent drilling on T5, hole 004, also ranked as the third-best intercept globally."
Bravo Mining recently submitted environmental reports for the Luanga project. Azevedo said: "With clear evidence of mineralization at depths up to 450 m, Luanga's resource potential could feasibly double or triple, underpinning our long-term mine life projection of +20 years… Carajás represents a frontier mining region where significant deposits are still viable."
Kinross, another major gold producer in the country, is riding the wave of high prices. The company produced 588,000 oz of gold in 2023, equivalent to 22% of Brazil’s total gold production. Gilberto Azevedo, president of Kinross Brasil, commented: “For 2024, we hope to maintain the same level of production… In 2024, we project an approximate investment of US$ 146 million.”
“Since last year, we have focused on advancing our pre-feasibility study on the economic viability of the gold-in-oxide mineralization at our Cuiú Cuiú project.”
Alan Carter, CEO, Cabral Gold
High gold prices have allowed the major gold producers in Brazil to fund expansion efforts within the country and elsewhere. In the case of Equinox Gold, for whom Brazil accounts for around 40% of its annual gold production, the company has completed construction and began production at its new Greenstone mine in Ontario this year. According to Greg Smith, Equinox Gold's CEO, the company has committed considerable financial resources to this project, and its Brazilian portfolio, which in 2024 will contribute some 265,000 oz, has acted as an engine for this expansion. Turning the company's attention to Brazil, Smith said: "We are considering merging our Santa Luz and Fazenda mines into a single mining complex to maximize their potential and increase operating efficiencies," adding: "At Aurizona, we are focusing on both surface and underground expansion opportunities. The primary expansion in Aurizona is underground. Although we had to delay the project slightly, we plan to start initial portal construction and decline into the ore body in 2025."
Hochschild Mining, the Lima based LSE listed gold miner, has entered commercial production at its Mara Rosa mine, based in Goiás state. The company, which entered Brazil for the first time in 2022, plans to produce over 100,000 oz/y of gold for the first four years of production. Hochschild also recently signed an agreement with Cerrado Gold, giving the miner the option to purchase 100% interest in the Monte do Carmo gold project in Tocantins, covering 21 mineral concessions.
In Minas Gerais, Jaguar Mining, a gold producer listed on the TSX and with over 20 years of history operating in the region, is also riding the wave of high gold prices. Since 2017, the company has consistently produced over 70,000 oz/y of gold; looking to the future, it is investing the fruits of high prices to expand its portfolio. Marina Fagundes de Freitas, VP of finance and projects at Jaguar Mining, said: “We have directed most of these margins towards new projects and are currently developing a new mine, Faina, near one of our existing complexes. We are already extracting some ounces from this site and anticipate achieving stable production in the next few years.”
“In Q2 2024, our financial performance was robust, with a significant margin generated due to the increase in gold prices and favorable foreign exchange rates.”
Marina Fagundes de Freitas, VP of Finance and Projects, Jaguar Mining
Pará state is becoming a hub for gold mining. G Mining Ventures, the Canadian TSX listed gold producer, is also present in Tocantins. It entered Brazil in 2021, through the acquisition of the Tocantinzinho gold mine from Eldorado Gold. The mine poured gold for the first time in July 2024, and the feasibility study indicates a projected production of 175,000 oz/y of gold for the next 10 years.
Gold projects are advancing across the north, and the Pará state government's environmental agency has been busy working alongside mining companies trying to advance their projects in the region, including G Mining, Hochschild Mining, Ero Copper, and Aura Minerals. TriStar Gold, a TSX-V listed junior focused on developing its flagship gold Castelo de Sonhos project in Pará state, had its Preliminary License (LP) and Environmental Impact Assessment (EIA) approved this year. Nick Appleyard, TriStar Gold's president and CEO, discussed the attractiveness of Pará as a mining jurisdiction because of its geology and the state government's experience working with mining companies: "This makes the regulatory process smoother compared to regions where mining is less familiar. The history of mining in Pará means that the communities understand and support the economic benefits it brings."
Community engagement has been a critical focus for the company, ensuring the Castelo de Sonhos project has both regulatory and social support moving forward. Appleyard said: "After submitting the EIA, the Pará State Environmental Council (COEMA) reviewed it, conducted a site visit, and held a public hearing or town hall meeting. This meeting allows everyone to have their say. Our recent meeting had about 600 attendees and was very successful, showing strong community and state support."
“Due to market conditions, we have been cautious with spending and have prioritized executing the permitting process well. We have a great asset, and we want to move into a mid-tier gold mine as soon as possible.”
Nick Appleyard, CEO, Tristar Gold
Another TSX-V listed gold developer in the state of Pará is Cabral Gold, advancing its pre-feasibility study at the company's Cuiú Cuiú project. Cabral Gold announced drilling results cutting 11 m at 33 g/t of gold at its Machichie NE target and has hired a new VP of exploration, Brian Arkel. The state, which is famous for its iron ore mining, is becoming a gold destination. Alan Carter, CEO of Cabral Gold, mentioned: "Large scale gold mining is relatively new to this part of Brazil, which is surprising as it was the site of the world's largest-ever gold rush in the 1980s, with estimates of over a million people recovering 20-30 million oz of gold in its rivers, all through informal mining." Gold mining in the state occurs in remote areas, and infrastructure and access present challenges for players across the board. Despite this, Carter from Cabral Gold, is optimistic about the region's development: "The paving of BR-163, a major north-south federal highway, and the installation of a 190 km power line to bring grid power within 20 km of our site, are notable recent improvements in infrastructure."
Just across the state border in Matto Grosso, Altamira Gold, a TSX-V gold developer, is working on its flagship Cajueiro project, which straddles the border between Pará and Matto Grosso. In 2019, the company filed a 43-101 compliant resource of 700,000 oz gold for it. More recently, drilling efforts from Maria Bonita, a goldin-soil anomaly, made a historic discovery: one of Brazil's first gold porphyry systems. Discussing this development, Michael Bennett, president and CEO of Altamira Gold, said: "We are now diligently working to determine the extent of the gold mineralization at Maria Bonita and exploring other areas within our 30,000-hectare claim block for similar deposits."
Junior companies need help attracting long term financial commitments and investments in their projects, regardless of their promise. Access to capital remains an issue, and dilution is a significant concern for junior companies. Altamira Gold has developed a cashflow strategy through small-scale production to mitigate these challenges, as Bennett explained: "With good metallurgy, excellent access, cheap hydro-electric power and the potential for multiple significant discoveries within our 30,000-hectare claim block, we aim to provide substantial value to our shareholders through small-scale production and subsequent exploration funding."
Article header image courtesy of Hochschild Mining