Gold Price Bounce Back Imminent: What’s Next for Junior and Mid-Tier Companies?

VANCOUVER – USA News Group – February was an especially rough month for all ten of the mining industry Top 10 Largest Gold Producers, with losses of between ~10-30% across the majority of the giants over the 28-day span. But after 5 consecutive weeks of gold price losses, the bounce back seems underway. What could potentially push gold prices higher for longer could be the two testimonies of Federal Reserve Chair Jerome Powell expected this week to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. As many analysts anticipate gold to rally, the impact will likely push junior and mid-tier gold companies higher and quicker than their giant counterparts, including Torex Gold Resources Inc. (TSX:TXG) (OTC:TORXF), Calibre Mining Corp. (TSX:CXB) (OTC:CXBMF),

Lundin Gold Inc. (TSX:LUG) (OTC:LUGDF), K92 Mining Inc. (TSX:KNT) (OTC:KNTNF), and soon-to-be producer Element79 Gold Corp. (CSE:ELEM) (OTC:ELMGF).

With a near-term production project in Peru underway, Element79 Gold Corp. (CSE:ELEM) (OTC:ELMGF) is actively looking to get cashflow as its Lucero Project that’s already permitted for 350 tpd production and has already produced at solid rates in the past and continues to see small-scale production from artisanal local miners today.

The project’s potential turnkey operation is supported by local infrastructure and outlets to sell to, however it’s also not the company’s flagship asset—that distinction goes to its Tier-1 Resource bearing Maverick Springs property in Nevada, with 3.71 million ounces of gold equivalent Inferred already on site.

However Lucero is making the lives of Element79’s management team much easier, by recently delivering high-grade assay results up to 7.7 g/t Au and 916 g/t ag. Now the company has gone ahead and terminated its other Peruvian project Machacala to further tighten its share structure further, optimize future cash flows, and increase Element79’s its Peruvian efforts solely on Lucero—the more high-value, high-grade, near-term cash flow opportunity of the two.

“This Transaction also helps sharpen our corporate focus on our core properties, mainly restarting the High-Grade Past-Producing gold-silver mine operations at Lucero and further developing the resource at Maverick Springs, and we feel that the beneficial effect of this focus will become more significant as the company grows,” said James Tworek, CEO of Element79 Gold. “We have several milestones to hit in the near future and we look forward to sharing these developments as our team achieves them.”

Intermediate gold producer Torex Gold Resources Inc. (TSX:TXG) (OTC:TORXF) reported what the company called an excellent close to 2022, delivering on full year production and cost guidance, exiting the year with liquidity of $622 million.

“Operational consistency and disciplined cost control resulted in another strong year across all measures for Torex,” said Jody Kuzenko, President and CEO of Torex. “Record gold production of 474,035 ounces was driven by record mill throughput and record underground mining rates. Our steadfast focus on controlling costs resulted in an impressive all-in sustaining costs margin of 44% for the year, with cost guidance achieved despite persistent inflationary pressures.”

Among the highlights for the company in February was its update on the development of its Media Luna Project, which had a Feasibility Study completed on it in March 2022.

“Development of Media Luna is well underway with the project tracking to schedule and to budget,” added Kuzenko. “Project activity is expected to ramp-up significantly in the months ahead, with 2023 expected to be the peak year of spending.”

Another mid-tier gold producer with its Hub & Spoke method of producing in Nicaragua and Nevada is Calibre Mining Corp. (TSX:CXB) (OTC:CXBMF), which closed out February by reporting its own record breaking gold production and revenue in 2022. According to the company, Calibre Mining is on pace for another 20% in production growth from 250,000 to 275,000 ounces in 2023.

Calibre has continued to grow production approximately 20% year over year while Mineral Reserves have grown 370% since 2019 to 1.35 million ounces with record grades in our Nicaraguan portfolio,” said Calibre Mining President and CEO, “ I believe we have set a solid foundation with multiple years of Mineral Reserve life in front of us with strong organic growth opportunities and new gold discoveries to expand our existing assets.”

At its Fruta del Norte gold mine in southeast Ecuadeor, Lundin Gold Inc. (TSX:LUG) (OTC:LUGDF) has been producing as one of the highest-grade operating gold mines in the world. At the end of February 2023, the company added another 1.58 million ounces of gold to Fruta del Norte’s original mineral reserves, and more than replaced the mined mineral reserves since the beginning of operations.

“I am pleased to announce that the Company has successfully replaced all mined Reserves since the beginning of operations and added additional Reserves, a significant achievement for a large scale producing asset like FDN,” said Ron Hochstein, President and CEO of Lundin Gold. “These results demonstrate the exceptional value we have added through our conversion drilling program. Importantly, there are still 1.7 Moz of Inferred Resources at FDN, which we believe will play a significant role in continuing to replace production in the future. We expect that this updated Resource and Reserve estimate is only the first step in continuing to expand the total minable ounces of gold, allowing Fruta del Norte to continue production for many years to come.”

Lundin Gold’s 2022 was highlighted by its production of 476,329 oz of gold at an all-in sustaining cost (AISC) of $805 per oz, beating production guidance of 430,000 to 460,000 oz and AISC guidance of $820 to $870 per oz, respectively, and resulting in free cash flow of $269 million for the year.

Another mid-tier producer expecting increased production in 2023 is K92 Mining Inc. (TSX:KNT) (OTC:KNTNF), which is projecting around 120,000 to 140,000 ounces gold equivalent this year, while incorporating a contingency for supply chain related delays such as those experienced in the latest operational update. Unfortunately due to two notable unplanned maintenance events, K92 Mining had to put its Kainantu Gold Mine in Papua New Guinea under a temporary stoppage.

“We are obviously disappointed to have two unplanned incidents in a short period of time, which has impacted our short-term production,” said John Lewins, K92 CEO and Director. “However, I am extremely pleased at the manner in which our teams have responded and been able to quickly effect repairs and restart operations. Our preparation for these unplanned events in terms of holding critical spares, availability of necessary skills within the Company and commitment of our people has been exceptional. That the process plant has been brought back into production so quickly after each event is a testament to their skills and hard work.”

As per the company’s expected interruptions in the factoring of production for the year ahead, it is not expected that there will be any impact on K92’s 2023 guidance. All the while, the company is reporting high-grade gold and copper drill results at its exploration and development targets in the immediate vicinity of the mine.

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