The Asia Miner

JUL-SEP 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 3 32 FEATURE: Gold producঞon is expected to conঞnue declining from a peak in 2018 due to aging mines depleঞng in Russia, South Africa, Mexico and Australia," said Mr Aravanis. WHY IS OUTPUT EXPECTED TO DECLINE? Over the next five years, several prominent Australian gold mines are anঞcipated to be decommissioned due to rising operaঞonal costs and declining reserves. In Western Australia, this includes Gold Fields' 7.5 tonnes per annum Agnew project, Regis Resources' 11 tonnes a year Garden Well gold project, Northern Star's 9.4 tonnes per year Jundee gold project and Newcrest's 13 tonnes per year Telfer gold operaঞon. Currently, several major miners do not have known gold resources available to replace their deterioraঞng reserves, which IBISWorld believes will present a threat the Mining Support Services industry. According to IBISWorld, the current shortage of known gold resources is a•ributable to a significant reducঞon in exploraঞon over the past decade. "When the price of gold reached a peak of $1,895 per ounce in 2011, Australian miners aggressively expanded capacity through taking on significant debt. However, the halving of the gold price between 2011 and 2015 forced these debt-laden miners to take heavy impairments and implement intense cost-saving measures. As mineral exploraঞon was considered an expensive high-risk high-reward acঞvity, it was significantly reduced," said Mr Aravanis. THE FUTURE OF THE GOLD INDUSTRY IBISWorld believes that the gold industry has reached a turning point where it needs to significantly ramp up expenditure in the Mineral Exploraঞon industry, or risk running out of viable gold reserves to mine. "This trend is global, with a recent McKinsey & Company report showing reserves declined by 26 per cent between 2012 and 2017. "In Australia, mineral exploraঞon acঞvity is currently at its highest point in the past five-year period. Gold exploraঞon expenditure increased by 18 per cent in 2018, to AU$891 million. Gold exploraঞon accounted for 41 per cent of total mineral exploraঞon acঞvity in 2018, which is why its performance is so impacul to the industry as a whole," said Mr Aravanis. "However, even if major gold resources are quickly discovered, this is unlikely to provide sufficient support to the industry. This is because gold resources typically take over a decade to be developed into operaঞonal mines. Despite the benefit of a rising gold price, the gold mining industry is likely to struggle," he concluded. A Melbourne exploraঞon company barely two years listed on the ASX is to step-up its fledgling gold-silver hunt in one of the most southern but richest mineralised provinces in the world – Argenঞna's Santa Cruz. E2 Metals' Managing Director, Mr Todd Williams, said the Company recognised only too well it was operaঞng in the shadow of gold giants. In the past two years, however, it has garnered and begun to progress a large and unique porolio of walk-up drill targets across four gold-silver projects within Santa Cruz. "These holdings now amount to an 80 per cent interest across 90,000 hectares of the Deseado Massif gold and silver province. This covers the Corona, Sierra Morena, Angostura and Conserrat projects," Mr Williams said. "The region's world-class deposits are held by majors such as Anglogold, Goldcorp, and Yamana so we are in well credenঞaled company," he said. "But it is now ঞme to li[ the momentum." One of the first schedules will be maiden drilling in the second half of this year on Conserrat, which is a first mover opportunity in a mature mining district but one where there has been no prior systemaঞc exploraঞon. "Our target hosts four kilometres of untested gold-silver veins including high grade targets directly upstream from Anglogold Ashanঞ's mining operaঞons. "Rock sampling there has idenঞfied returns of 7.46 g/t gold and 7510 grams per tonne silver from mulঞple high- grade epithermal veins." In April, the Company completed first drilling on the Sierra Morena prospect, with results pending. An expanded work program is under consideraঞon. The Corono project has been land banked for the past 10 years but there was no drilling prior to that period even though it is just 30 kilometres from the +8 million-ounce Cerro Negro gold project. The immediate work focus will be to generate drill targets. E2 Metals to chase new gold-silver future in Argentina E2 Metals controls a unique mix of highly prospecve but underexplored ground along trend from the largest gold

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