Prior to the coronavirus outbreak, peak gold supply was becoming a real possibility. Now, with exploration programs halted or cancelled and project disruptions hampering production, the summit is in sight, according to research firm Wood Mackenzie\u2019s latest report. <\/p>\n
As organic growth is waning, miners are looking to buy gold through mergers and acquisitions to secure their future. So far this has failed to significantly increase production. To avoid a perpetual decline in gold supply, the industry must see a rise in project development, the firm says.<\/p>\n
Wood Mackenzie estimates the industry will need to commission 8Moz (262t) of projects by 2025 to maintain 2019 production levels.<\/p>\n Miners are looking to buy gold through mergers and acquisitions to secure their future. So far this has failed to significantly increase production<\/p>\n<\/blockquote>\n<\/figure>\n This equates to roughly 44 projects. Based on the average project capital intensity of $4,610\/ozpa Au, Wood Mackenzie estimates the industry must invest approximately $37 billion on greenfield projects and restarts over the next 5 years.<\/p>\n \u201cIf all our probable projects were to come online before 2025, this would almost meet the requirement to maintain 2019 production levels,\u201d said Rory Townsend, Wood Mackenzie\u2019s head of Gold Research.<\/p>\n \u201cThe likelihood, however, is that we see some degree of slippage among a number of these assets due to permitting delays, prioritisation of other capital projects and changes in scope,\u201d said Townsend.<\/p>\n \u201cSocial and governance considerations are dissuading the exploration of certain jurisdictions and the progression of identified deposits.<\/p>\n \u201cInvestment and exploration in countries such as South Africa has all but dried up, with the gold mining industry plagued by power outages, labour strikes and regulatory uncertainty. This has prompted investors and miners to consider countries they deem to be more mining-friendly,” Townsend said.<\/p>\n \u201cGhana has been a significant beneficiary of this and overtook South Africa to become the largest gold producer in Africa in 2018,\u201d added Townsend. <\/p>\n Wood Mackenzie has identified around 260 projects that gold miners and investors could turn to.<\/p>\n \u201cGiven the size of the resource that is available to be developed, talk of peak gold supply may seem a little surprising. Crucially, however, it is not the lack of gold that is the constraint. Gold miners and investors are carefully searching for the deposit that is \u201cjust right\u201d in order to allocate capital,\u201d said Townsend.<\/p>\n At a time of heightened economic uncertainty, the largest gold projects may struggle to secure financing until there is more clarity.<\/p>\n Miners wishing to benefit from this period of elevated prices may have to consider joint ventures and phased approaches to commission these larger deposits or risk missing the window of opportunity.<\/p>\n If miners do not capitalize on gold\u2019s heightened allure through this bull cycle, Wood Mackenzie says these projects will either continue to trudge toward production for years to come or be rescoped.<\/p>\n Meanwhile, Wood Mackenzie asserts smaller projects are proving an exciting proposition. They have the advantage of a lower initial capital outlay and can be typically brought online with speed and efficiency, particularly open pit deposits and mines that have previously been in operation. <\/p>\n The drawback to these projects, Wood Mackenzie says, is the fact that they will struggle to nudge the needle for a material gold producer.<\/p>\n","protected":false},"excerpt":{"rendered":" Wood Mackenzie has identified around 260 projects gold miners and investors could turn to.<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2648,624,2849,369],"tags":[43],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1190788"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1190788"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1190788\/revisions"}],"predecessor-version":[{"id":1190789,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1190788\/revisions\/1190789"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1190788"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1190788"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1190788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
Where will the supply come from?<\/h2>\n
Which projects are expected to be most coveted?<\/h2>\n