GOLD: Navigating the Investment Opportunities & Understanding the Risks

Company Interviews

Interview with Gerald Panneton, Executive Chairman of Gold Terra Resources, and Dustin Perry, CEO of Kingfisher Metals

Recording date: 13th June 2024

The current high gold price environment presents significant opportunities for mining companies and investors, but it's not without challenges. While elevated gold prices are boosting revenues and cash flows, mining CEOs Gerald Panneton of Gold Terra Resources and Dustin Perry of Kingfisher Metals highlighted that the industry is also facing substantial cost pressures.

"The gold price is great, don't get me wrong," said Panneton. "But all-in cost is hovering between $1,400 to $1,600 an ounce, some mines are $2,000 an ounce already." Perry echoed these concerns, noting that cost inflation is impacting every aspect of the business, from drilling to labor.

In this environment, the CEOs emphasized that grade is king. High-grade deposits, typically those with gold grades above 5 grams per tonne, are the most attractive because they require processing less ore to achieve the same production. This can translate into lower costs and higher margins. "I switched to high-grade, smaller investment, big margin - that's my goal," said Panneton.

But grade isn't the only consideration. Jurisdiction and infrastructure are also critical. Companies operating in mining-friendly districts with existing infrastructure, like power and roads, have a significant advantage. Panneton pointed to the benefits of operating in the Northwest Territories, while Perry highlighted the appeal of British Columbia's Golden Triangle, despite its remoteness.

To find the next big discovery, the CEOs stressed the importance of leveraging new technologies. Machine learning and artificial intelligence can process vast amounts of exploration data, helping to identify patterns and prioritize targets. "We're applying machine learning," explained Perry. "It's taking bias out of the desktop exploration, but it's also going to save us a lot of money."

For investors, the key is to be highly selective. Focus on companies with high-grade projects in attractive jurisdictions, led by experienced management teams with a track record of success. Look for those that are applying innovative exploration techniques and have high-quality data to support their efforts.

While the high gold price is a rising tide that can lift many boats, not all companies will be successful. Those with high-margin projects that can be mined profitably even in an inflationary cost environment are best positioned to outperform.

Ultimately, investing in gold mining stocks still carries significant risk, particularly for exploration-stage companies. But for those willing to do the due diligence, the potential rewards are substantial. With new discoveries becoming increasingly rare, companies that can find and advance high-grade deposits have the potential to create significant shareholder value in the current market environment.
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