Even though the year 2020 has not been off to a good start for gold producers, things may turn around in the second half of the year. Australia, while forcing most mines to reduce output or shut down due to COVID-19, is on track to become the world’s top gold producer.
Australia is Moving up the Ranks
It is a well-known fact that Australia is home to ample gold production these days. It is already ranked in the top three of higher-producing countries, and that trend shows no signs of slowing down just yet. Despite seemingly harsh conditions in terms of weather and nature, Australia has plenty of gold-rich ground to offer to those willing to set up a mining operation.
All of the currently existing mining operations have yielded very prominent numbers. Not just in terms of the overall production, but the firms are also noting a relatively high cost-effectiveness. Based on the average price per ounce, most gold producers note margins of over 25%. In some cases, those margins can go as high as 49%, making for a very profitable operation indeed.
In fact, it is this cost-effectiveness that will come into play for this decade. Due to this unique advantage over major rival China, Australia is well on track to overtake the Eastern nation in terms of becoming the world’s leading gold producer. The margins provided in the recent Resource Monitor report will undoubtedly attract even more attention from companies looking to set up shop in other regions.
One factor that can’t be overlooked is the gold price, however. If the price keeps rising like it did over the past 18 months, Australia might overtake China even sooner than originally expected. Although the value of gold has stagnated a bit in recent weeks, yet there is still a healthy profit margin for companies to explore.
Ongoing Expansion Plans
It is equally worth noting that various gold producers are looking to expand their operations moving forward. More specifically, several existing mines are looking to expand, whereas new mine development plans are also entering the final stage. All of these ongoing developments hint at a bright future for gold mining in Australia, as well as Australian firms looking to expand in the near future.
Firms that may be worth keeping an eye on include Newcrest Mining, Red5, Saracen Mineral Holdings, Bardoc Gold, and Regis Resources.
Assuming the prediction of a gold price of up to $3,000 per ounce will come to pass by late 2021, next year can prove to be incredibly bullish for this precious metal. All of that will hinge on several different factors, but the starts appear to be aligning in favor of gold.