Gold still holds shine among miners despite push for battery metals

Despite a cry for more battery metals to feed the energy transition, many junior miners remain focused on the opportunities presented by a gold price that keeps notching new record highs.

The London Bullion Market Association gold price was $2,660.62 per ounce on Oct. 1, just off its all-time high of $2,666.50/oz on Sept. 26 and 28.8% higher than the start of 2024. Still, industry observers believe the price of gold has room to climb even higher. That means greater profits on every ounce for smaller gold miners and exploration companies often looking to market their assets to larger mining companies.

"The price of gold has really soared," James Hesketh, president and CEO of Viva Gold Corp., said during the Battery & Precious Metals Virtual Metals Investor Conference held Oct. 1–2. "An ounce of gold in production can get an extraordinarily high level of profit that we haven't seen in years. There are opportunities if you can move rapidly towards a productive state in this market today."

Macroeconomic and geopolitical factors drove gold prices upward through much of September, with the US Federal Reserve issuing its first interest rate cut since early 2020 and the Israel-Hamas conflict expanding into Lebanon. The factors pushing the gold price are "intensifying and multiplying," S&P Global Commodity Insights analyst Aude Marjolin wrote in a Sept. 20 Commodity Briefing Service report.

"This is our main effort right now, the emphasis on gold. Obviously, everybody is excited about the future of gold and how it's taking off in terms of price," Paul Cowley, president and CEO of Phenom Resources Corp., said during the conference. "I think there are great opportunities for exit strategies for ourselves for buyouts, big potential buyouts from majors as we advance with success."

Phenom Resources' main assets include the Carlin gold-vanadium project in Nevada.

In a Sept. 30 note, JP Morgan Commodities Research wrote that their strategists maintain a bullish outlook on gold, saying the precious metal is "among our highest conviction trades across commodities." The research team said it is targeting a peak $2,850/oz gold price for 2025.

"Most of the commentators still think the gold price goes up. So, I think it is a great time to invest in gold," Michael Spreadborough, executive co-chairman of gold explorer Novo Resources Corp., said during the conference.

"We are an explorer," Spreadborough said. "We don't hide from the fact that we are a speculative stock, but we always think that you should have a gold explorer within your portfolio. And why not have one in a great sovereign risk area like Australia, where we could really explore and mine gold without any sovereign risk at all?"

Turmoil in the Middle East continues to drive capital toward the precious commodity, TD Securities analysts wrote in an Oct. 1 note, despite slowing activity from central banks, already-high prices, and other factors that could weigh on gold.

Gold holds appeal

Gold exploration budgets have been on the rise, but the number of new discoveries has trended lower as many exploration companies work to extend known deposits rather than seeking out new ones, according to Commodity Insights research. Out of the top 30 largest gold discoveries since 1990, none have occurred in the past 10 years.

Despite battery metals getting an increasing share of exploration budgets, as of 2023, gold is still the top target for miners, according to Commodity Insights' World Exploration Trends 2024 report released in March.

Exploration budgets for gold totaled $5.92 billion in 2023. They had doubled to $7.01 billion in 2022 from $3.32 billion in 2016, according to a July 31 research report by Paul Manalo, an analyst with Commodity Insights.

"This trend is likely to continue as long as gold prices remain high," Manalo said.

North Bay Resources Inc. operates primarily in the western US, specializing in high-grade, small-scale gold deposits. The company also has interests in assets hosting copper, a material that is considered critical to electrification but expected to be in a shortfall in coming years.

"Since we have significant copper interests, we may end up putting that in a subsidiary and really have a sister copper company," North Bay CEO Jared Lazerson said during the virtual conference. "But right now, with the strength of the gold price, we're really focusing on our gold production asset."

Cowley acknowledged that having assets with ties to the energy transition still remains a major benefit to mining companies as they look forward to future demand in that sector as well.

"It kind of brings me to a comparison of Reese's Pieces," Cowley said. "Because it's like two great flavors that work even better together. Having battery and precious metals is like that."