Gold Miners, Bullion Set to Extend Gains, Northern Star Says

Northern Star CEO on Gold Prices, Valuations
  • Company would take look at Barrick’s Super Pit stake, CEO says
  • Doray Minerals sees chance gold may rise to A$2,000 an ounce

Gold producers will extend this year’s share gains with bullion prices likely to continue to rise on haven demand, according to Australia’s third-largest producer.

“We are on a longer-term trend for the gold price,” Northern Star Resources Ltd.’s Chief Executive Officer Bill Beament said in an interview with Bloomberg Television broadcast Tuesday. “The valuations have still got a long way to go and people are projecting the gold price to go up.”

A Bloomberg Intelligence index of 74 suppliers of the precious metal, including Perth-based Northern Star, has more than doubled this year, after spot prices jumped about 27 percent.

Gold has surged this year on rising demand for havens after the U.K.’s vote to leave the European Union and as the U.S. Federal Reserve refrains from raising rates. A victory for Donald Trump in the U.S. presidential election in November would provide a further catalyst to prices, according to the Perth Mint, an Australian refiner.

Further Gains

Bullion for immediate delivery was little changed at $1,352.80 an ounce at 4:45 p.m. in Sydney, according to Bloomberg generic pricing.

Gold priced in Australian dollars, which rose to a record of about A$1,851 in June, could rise to as high as A$2,000 over the next year, according to Doray Minerals Ltd. Managing Director Allan Kelly.

This is possible “depending on what happens around the world and depending on what happens with the U.S. elections,” he said in an interview Tuesday in Kalgoorlie, Western Australia. “There’s still room to move.”

Northern Star, which on Monday agreed to sell its Plutonic mine in Australia for an initial A$13 million ($9.8 million), won’t target further asset sales, Beament said Monday in the interview also in Kalgoorlie.

The producer would take any opportunity to look at Barrick Gold Corp.’s half-share in the Kalgoorlie Super Pit, the giant 3.5-kilometer (2 mile) long operation it owns with Newmont Mining Corp, he said. Barrick said last week it plans to sell the stake, which may fetch as much as $1 billion, according to people familiar with the matter.

“We always look at everything, and we’d take a look if we get an opportunity,” Beament said. “It would be a risk for me as a managing director not to look at assets that come up, but it’s fair to say we are very disciplined.”

Northern Star fell 3.8 percent to A$5.11 in Sydney trading, trimming its gain to 84 percent this year. Doray fell 3.2 percent.

Ugly Duckling

Rising prices mean deals in Australia are currently at the “top of the market,” according to Doray’s Kelly, who is looking to buy or build a mine to add to two existing assets within the next three years. It’s looking both inside and outside Australia for potential deals and also reviewing assets that others may dismiss as unable to provide value, he said.

“There are some tired assets around, so you need to see a method of innovation, or a different way of doing something,” Kelly said. “It can also be the ugly duckling, where there’s either a funding hurdle or the management have a bad track record.”

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