Western Australia is experiencing what is being hailed as a “21st century gold rush”, just six months after the coronavirus pandemic sparked fears that mineral exploration would grind to a halt.
- Gold exploration in Western Australia is booming again, 127 years after gold was discovered at Kalgoorlie-Boulder
- Laboratories which test drilling samples are under pressure to keep up, resulting in delays of up to six weeks for results
- Hundreds of mining executives will attend the Diggers and Dealers Mining Forum in Kalgoorlie-Boulder on Monday
The State’s hard border has clearly not deterred mining investment and if anything appears to have provided a catalyst, with millions of dollars flowing into companies exploring for gold.
Just over $209 million was spent on gold exploration in WA in the June 2020 quarter — an all-time record according to the Australian Bureau of Statistics.
Kalgoorlie driller Chris Potts, who runs his own company with a single drill rig, says many drill rigs based in the historic gold mining city are now booked up for months in advance and geologists and experienced drillers are in short supply.
“COVID has had no affect at all, if anything, I’ve had extra work,” he said.
“It’s hard to find drillers because it’s a skilled job and it takes experience.
Activity hits five-year high
The Department of Mines, Industry Regulation and Safety claims activity in WA’s exploration sector has hit a five-year high.
It has reported a 63 per cent increase in the number of applications it is processing, including a record 323 applications in July.
In August, when the US dollar gold price broke $2,000 an ounce for the first time, the department received another 317 applications.
Mines Minister Bill Johnson said gold projects accounted for 70 per cent of applications.
“There is more exploration activity in Western Australia right now than there has been in our entire history,” he said.
The State Budget shows Treasury is also banking on an ongoing resurgence, forecasting gold prices to reach new record highs over the next four years.
Investment dollars flow towards gold
According to business advisory firm BDO Australia, the June quarter saw 28 companies raise funds of $10 million or more — up from 12 companies in the March 2020 quarter — with gold companies leading the field.
Perth-based gold miner Red 5 Limited notably rattled the tin for $125 million for the expansion of its King of the Hills operations in WA’s Goldfields.
Jon Price, managing director of Kalgoorlie gold miner Horizon Minerals, said the pandemic and hard border had delivered a perfect storm for explorers to get on with the job in WA.
“Obviously commodity prices being at record highs is one part of it but it’s also the modern techniques we are using.
“We’ve got the world’s best drillers and the technical people finding deposits that the old timers left behind.”
The stock market’s renewed love of gold was underlined on Thursday when a new discovery near Edjudina, 145km north-west of Kalgoorlie-Boulder, sent shares in a Perth exploration company soaring as much as 422 per cent.
Gibb River Diamonds owns the mothballed Ellendale diamond mine in the Kimberley, but recently switched its focus to gold.
“Diamonds have taken a back seat to gold this year, and being ever flexible, we have moved into the gold space and been extremely fortunate to have made a discovery with our maiden drilling campaign,” executive chairman Jim Richards said.
Dramatic turnaround ‘faster’ than expected
The sudden surge in exploration activity is also affecting the laboratories which test the drilling samples.
SGS Australia’s Kalgoorlie lab typically processes about 50,000 samples a month.
Since June, the company has seen a dramatic increase of 30 per cent in samples.
It means companies are paying up to four times the going rate for same-day turnarounds, while others can be waiting up to six weeks for their results.
SGS Australia’s general manager of geochem, metallurgy and minerals trade Juan Smith said this year’s turnaround had come “faster than we expected”.
“We have four commercial facilities around Australia,” he said.
“I think how we’ve handled COVID in WA has enabled the mining industry to continue and with the turmoil going on globally. Gold is a safe haven.
“Mining is the cornerstone of business in this state, especially in this area [Kalgoorlie], so let’s hope it continues for some time.”
The upswing comes as 1,850 delegates converge on Kalgoorlie-Boulder for one of Australia’s biggest resources conferences, the annual Diggers and Dealers Mining Forum.
This week’s $16 billion merger of Super Pit co-owners Northern Star Resources and Saracen Mineral Holdings, creating Australia’s second-biggest gold miner, has also added to the positive morale of the gold industry ahead of the swim-through.
WA Premier Mark McGowan will be keynote speaker when the three-day forum begins on Monday.