NetworkNewsWire
Editorial Coverage: In times of economic crisis, there’s no
safer investment than gold.
Gold’s historic reputation as a safe haven asset looks promising
for mining companies as the global economy witnesses the volatile
valuation of currency. Kingman Minerals Ltd. (TSX.V: KGS)
(KGS
Profile) has been preparing operations on a historic
mine site in Arizona, benefiting from the cost efficiencies of
revitalizing an already established exploration site. After a brief
suspension of mining activities in order to evaluate operational
risks associated with the COVID-19 pandemic, McEwan Mining (NYSE: MUX) recently
announced it has restarted operations. Freeport-McMoRan (NYSE: FCX), a
leading international mining company, boasts a strong portfolio of
assets—including the Grasberg minerals district in Indonesia, home
to one of the world’s largest copper and gold deposits. Newmont Corporation (NYSE: NEM), with
the industry’s largest gold reserve base, recently announced its
acceleration of operations at four of its sites. Despite the
hindrances inflicted by the COVID-19 pandemic, Barrick Gold Corporation (NYSE: GOLD)
reported a robust first quarter performance.
Click here to view the
custom infographic of the Kingman Minerals Ltd. (TSX.V: KGS)
editorial.
A Golden Future
Gold has long been one of the most reliable assets for
investors, a safe haven in the storms of economic risk. With the
world facing a global health crisis in the form of COVID-19, and
the prospect of a deep and extended recession looming in its wake,
investors are renewing their interest in the precious metal.
Bank of
America recently raised its 18-month gold-price target to
$3,000 an ounce, while others believe that gold is on the cusp of a
new decade long bull market that will push the price well past
$5,000 an
ounce. Little wonder there’s such strong interest in gold
companies such as Kingman
Minerals Ltd. (TSX.V: KGS).
While gold initially had a
small retracement at the onset of the current crisis, it was
just part of a pattern historically seen in every period of
economic turmoil—one from which gold always returns, and one that
has done nothing to undermine the asset’s worth as a safe
investment in a crisis. Gold has many advantages – it holds its
value better than stocks, is more liquid than bonds, and as the
original measure of wealth, it has retained its position of value
while other alternatives have risen and fallen. Though it lacks the
blockbuster returns of some stocks during boom times, it has always
been a good hedge against a crisis and a reliable option in times
of trouble.
Gold’s sturdy staying power and strong potential has sparked
keen interest in Kingman Minerals, which intends to very profitably
extract new gold from old mining sites. Gold always has intrinsic
value, whether for use in jewelry, electronics, or as an
investment, and that value tends to climb relative to other
investments during financially difficult times. Even before the
COVID-19 crisis took full hold, commentators
were predicting that gold would beat the market this year, and
when gold rises in value, the mining companies typically see a
corresponding rise in demand.
As national banks frantically print money to cover the costs of
the COVID-19 crisis, these currencies and any assets tied to them
will likely suffer devaluation. If history is any guide, the
intrinsic value of gold should soar and only be impacted positively
during the devaluation process. These market conditions situate
gold in an incredibly advantageous position over the next few
years, presenting a compelling opportunity.
Location, Location, Location
Knowing where to dig is critically important when mining for
gold—this concept may seem obvious, but it’s actually a complicated
proposition. Profitable mining involves identifying accessible,
financially viable deposits within mining friendly jurisdictions,
and on sites that are accessible for the transportation of
equipment, staff, and the gold once it is extracted. Kingman’s
Mohave project, satisfying these requirements, poses promising
potential for the company.
Located in Mohave County, Arizona, the Mohave Project benefits
from being located in a mining friendly jurisdiction. This support
makes it easier for mining companies to work within the state.
Kingman has chosen ground for its work that is known to contain
valuable deposits and that is accessible enough to support a
new mining operation. The Mohave site is located 35 miles outside
the town of Kingman, from which the company takes its name, and it
has direct road access from Historic Route 66 and Antares Road.
This location allows an ease of access to bring supplies and
resources onto the site as mining operations are established and
expanded.
Water supplies on site will keep down costs for this part of the
operation, while the proximity of a town ensures that there is
support for staff coming in. But perhaps the greatest asset of the
Mohave Project is one that might surprise those fresh on the
minerals sector scene – the ground had already been mined.
The Importance of History
An important part of Kingman’s strategy is the return to an old
mining claim – the 167-hectare Rosebud Mine.
Discovered in the 1880s and mostly mined in the 1920s and 1930s,
the Rosebud Mine is a critical part of the Mohave Project. Previously
worked mines are increasingly being exploited by modern mining
companies as proven sites of minerals. Reactivating existing
sites with new mining techniques offers the potential for easy
picking and bigger profits.
Though the most accessible resources have usually been extracted
from these sites, the land still holds rich potential for
discovery. Modern mining techniques ensure that previously
difficult-to-extract lodes can be accessed safely and cost
effectively. This technique has been applied to extract newly
valuable battery minerals such as cobalt from old copper mines and
to revive abandoned precious metals sites. Kingman will be tapping
into wealth that previous generations of miners left behind.
Those previous generations are one of the great advantages of
renewed digging on old claims. Records from their work help to
direct new operations, providing evidence for metal deposits. At
the Rosebud Mine, records from the original digging era have been
combined with surveys from the 1980s to calculate the likely wealth
on the site – an estimated 664,000 ounces of gold and 2,600,000
ounces of silver.
Equipped with old records, Kingman has set about new sampling
work on the site. Old records—while helpful—can’t be relied on
for modern operations, so companies like Kingman test to confirm
the existence of predicted or previously recorded deposits. Two
rounds of underground reconnaissance and testing, combined with
historic data, will allow Kingman to provide new estimates of the
value of the site in the next few months.
The presence of historic mining workings makes it easier to
exploit deposits once they are confirmed. With workings that
stretch 2,500 feet underground, the Rosebud Mine’s historic
conditions allow for a significant decrease in the costs of mining
gold—increasing the potential profits of a valuable and
sought-after commodity.
Mining Industry’s Bright Future
Another company that will be hoping to benefit from a gold boom
is McEwan Mining (NYSE: MUX). With a seasoned
board of directors and a management team structured for growth,
McEwan has established a diversified
portfolio of gold, silver, and copper producers located across
North and South America. The company’s goal is to create strong and
profitable gold and silver production focused in the Americas, and
the company is well positioned for the anticipated upswell in
demand for gold.
Freeport-McMoRan (NYSE: FCX) is a global mining
leader headquartered in Phoenix, Arizona. The company’s assets are
large, long-lived and geographically diverse with a strong record
of proven and probable copper, gold, and molybdenum reserves. The
current health crisis is highlighting the increasing importance of copper in reducing and
neutralizing the transmission of bacteria, viruses, and other
pathogens, and the company is the leading supplier of copper to the
global economy.
Newmont Corporation (NYSE: NEM), the world’s
leading gold company and a producer of copper, silver, zinc and
lead, has a diverse portfolio of assets, prospects, and talent
anchored in favorable mining jurisdictions located in North
America, South America, Australia, and Africa. Recognizing the
adaptability and multitudinous
uses of gold, copper, and silver, Newmont’s mission is to
create value and improve lives through sustainable and responsible
mining.
Barrick Gold Corporation (NYSE: GOLD) added to
its strong 2019 performance with consistent Q1 gold production and
cost, despite economic challenges created by the global pandemic.
While continuing to ensure safety for its people, communities and
businesses, Barrick still saw a strong operational and financial quarter. Even without new
discoveries, organic growth stemming from the company’s existing
asset base would be enough to sustain its recently released
ten-year plan, company leaders
announced.
As investors turn a fresh eye to gold and other precious metals
in this current crisis, market leaders anticipate a bright
future.
For more information on Kingman Minerals, please visit Kingman Minerals
Ltd. (TSX.V: KGS).
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