As the economy around the world continued to recover from the effects of the Covid-19 pandemic, Russia’s invasion of Ukraine created global uncertainty, which drove a rally in gold prices. During the first quarter of the year, the precious metal was set for its best performance since August 2020 when prices were over US$2,000/oz. But gold lost some of those early gains as investors shifted focus to monetary policy and higher bond yields.
In
mid-May, the gold price found a balance in response to the tug of war between
rising interest rates and a high-risk environment. The latter was the
combination of persistently high inflation as well as the prolongation of the
conflict in Ukraine and its possible spill over effects on global growth.
Gold's
status as a safe haven and inflation hedge provided support in 2022 as the
yellow metal battled against the headwinds of a strong US dollar and the US
Federal Reserve's attack on inflation. During the June quarter, US inflation
reached a four-decade high of 9.1%, the US dollar index jumped 6.5% and gold
investment was down 28% on year.

In
the September quarter, demand for gold was up 2.5% on-quarter, reaching
24.5Moz. A significant chunk driven by central banks, which appear to be
turning to gold as a store of value. Central banks bought 399t in the September
quarter, which is up 341% on year and a record quarterly amount. The pace at
which central banks have accumulated gold reserves this year has not been seen
since 1967.

The
gold market saw another positive move early in November following midterm US
election news after preelection polls pointed to the Democrats losing the House
and Senate. Successful holding of the Senate by Democrats provides some
opportunity for avoiding a complete halt to enacting legislation. This has led
to a perceived reduction in macro-uncertainty and legislative risk and provided
a slight boost to gold.
The
latest hawkish Federal Reserve of 50bp has knocked gold back below US$1,800/oz,
but the precious metal is starting to retrace its gains and its setting itself
up for a healthy start in 2023.
ETFs
Gold-backed
ETFs lost out overall in 2022, with net global outflows of 82.7t (-US$2.4bn).
Losses were eased by inflows in the March quarter with 274t (US$17bn). The
outflow trend started in May (-52.3t) and continued along the year. The outflows
were primarily driven by negative flows from North American funds with -81.4t
(-US$3.3bn) but eased from European funds which saw inflows of 19.4t
(US$2.1bn). The outflows from North American funds reflected decreased investor
demand for gold, increasing the opportunity cost of holding gold. Negative
flows also reflected the declining price of gold during this period.
Production
AME
forecasts 2022 global gold supply to rise by 1.63% to 113.2Moz, driven by increases
in gold output from China, Australia, and North America. China’s gold output
increase is expected to be 0.24% in 2022 owing to the gradually return to
normal of mining operations in the Shandong province, after operations were
suspended for safety inspections in 2021.
The
world’s largest gold producers – Newmont Goldcorp, Barrick Gold and Agnico
Eagle Mines – are expected to produce a combined 13.7Moz of gold in 2022.
Within existing ownership arrangements, Newmont and Barrick are expected to
maintain its respective position over the short term. However, Agnico Eagle is
expected to be over passed by PJSC Polyus.
Several
additions to gold supply from large-scale commercial mines are expected in the
short to medium term, particularly in Canada. AME forecasts medium-term mined
gold production to peak in 2023, after which a weak project pipeline is
expected to see mined output decline as a result of reduced greenfield
exploration spending and the winding down of colossal mines.
In addition, a
spike is expected in artisanal mining in the short term, driven by countries
with high ratios of small-scale mining like Sudan and Uganda seeking to profit
from the rising price of gold. Scrap production, linked closely to the resale
value of gold, is expected to rise in the short term on the back of a forecast
rise in prices.

Closures and Production Cuts
Chile’s Supreme Court ratified the
definitive closure of Barrick Gold’s Pascua Lama gold and silver project,
located on the border with Argentina. The project intended to build the largest
open-pit gold and silver mine in the world, with an expected mine of life of 20
years. It was initially expected to cost US$8.5m and be operational in 2014 producing
about 615koz of gold and 18.2Moz of silver. The project was the subject of an
extensive legal dispute, leading the firm to halt operations before opening due
to increased costs and criticisms from shareholders.
In Canada, Pure Gold Mining suspended
operations at the mine and has placed it on an undefined care and maintenance
as the mine has not achieved yet consistent positive cash flow to alleviate the
company’s financial problems. The company obtained an initial order for
creditor protection from the British Columbia court.
Consequently, Pure Gold
revoked its production guidance for the December quarter 2022, which was
previously set at 9koz-12.5koz. The Pure Gold mine, located in Red Lake,
Ontario, first began production in 2021 after the successful construction of an
800tpd underground mine and processing facility.
The
Australian’s largest gold miner Newcrest reported a 17% gold production
decrease during the September quarter, following a series of planned
maintenance shutdowns at its mines. The company produced a consolidated of
527koz of gold and 32.5t of copper during the quarter.
Aurelia
Metals will end production at its Hera underground mine in NSW, Australia
towards the end of March 2023. The decision was made earlier than previously
planned following two quarters of negative cashflow from the operation.
A
revised mining plan at Hera will now sequence the highest value ore within the
remaining available ore sources to maximise cash generation. The company
intends to use the substantial installed infrastructure, including process
plant, mine workers camp, tailings storage facility, workshops and core
processing facility, for the capital efficient development of the company’s Federation
project.
New Mines, Restarts and Expansions
In March, Orla Mining begun
commercial production at its Camino Rojo oxide gold mine in Zacatecas state.
The project is an open-pit heap leach operation with Mineral Resources expected
to sustain mine life for 6.8 years. Camino Rojo will produce an average of
94koza of gold and 597koza of silver.
In November, Asante Gold declared
commercial production at its Bibiani Gold mine located in Ghana, following
three months of consistent production. First gold was poured in July, two
months ahead of schedule. All process plant and mine facilities have been
operating on a 24hpd basis from late June, with approximately 220kt of ore
processed in September and about 206kt of ore in October.
The company aims to
produce about 175koz of gold in the first 12 months of operations, ramping up
to 220kozpa in the second year and 200-255kozpa for years three to eight.
In Australia, more than 100 new gold
projects are currently under development in Australia, which are expected to
contribute more than 1,166koz to production by 2025.
During 2022, Red 5’s KOTH
gold project successfully started production on 16th December. For the first
half of 2023, Red 5’s gold production guidance is between 90koz and 105koz of
gold. Calidus Resources' Warrawoona mine has had a significant progress since
first gold poured. During the September quarter reported 12.8koz recovered and
12.3koz sold.
Additionally, Pantoro Limited and its joint venture partner Tulla
Resources, have announced that its flagship Norseman Gold project has pour
first gold on the 13th October. The project’s first phase involves a
centralised processing facility and a combination of open pit and underground
mining, which expects to produce around 108koza of gold during an initial LOM
of seven years.

Merges and Acquisitions
Canadian
miner Kinross Gold sold its Russian assets to Highland Gold for US$340m in
cash. The sale included two operating mines, Kupol and Dvoinnoye, and the
exploration project Chulbatkan. In March, the company was forced to suspend its
mining activities in the country—including the Udinsk development project and
Kupol mine—because of international sanctions against Russia following its invasion
of Ukraine.
Another
significant move during the year was from Newmont – the world’s number one gold
miner – by becoming sole owner of the Yanacocha gold mine in Peru. In February,
Newmont acquired 43.65% interest of the mine from Minas Buenaventura in a
transaction valued at US$300m. Later in April, the remaining 5% from Sumitomo
Corporation for US$48m. Yanacocha is currently producing about 350koza of gold.
As its oxide resources are about to be depleted, the company started a
Feasibility Study (FS) called "Yanacocha sulphides" designed to
continue mining sulphide underground material. The FS plans to extend the mine
life beyond 2040 by developing the Yanacocha Verde and Chaquicocha deposits
and, consequently, the second and third phases of the FS would potentially
extend the mine life for "multiple decades".
SSR
Mining has acquired of all issued and outstanding shares of Taiga Gold for about
C$30m(US$23.8m). The transaction adds five new properties to SSR, covering over
29kha to complement their exploration of the Saskatchewan Province. SSR
Mining's Saskatchewan assets now cover an area of approximately 131kha.
On May, Gold Fields announced the
transaction of the Canadian gold miner Yamana Gold. The deal would have created the
fourth-largest gold mining company in the world. Last month, Gold Fields ended
its pursuit after Yamana received a new joint-offer from Pan American and
Agnico Eagle. The company refused to increase its bid. Yamana owns a portfolio
of five producing precious metals mines located across Canada, Brazil, Chile
and Argentina that generated 884.8koz of gold in 2021.
AngloGold Ashanti has announced the definitive agreement with
Coeur Mining to acquire Coeur’s wholly owned subsidiary, Coeur Sterling. The
company owns the C-Horst, SNA, Secret Pass and Daisy ore bodies, as well as the
decommissioned Sterling Mine and all tenements that surround these properties
in Nevada.
The Crown and Sterling holdings comprise approximately 35,500
net acres and are located adjacent to AngloGold's existing gold projects in
Beatty County – Silicon and Merlin. The company has published a 2021 Mineral
Resource for Silicon of 3.37Moz of gold.