- Miners keeping the supply constant
- Golden Star looks to revamp Prestea, expand Wassa
As the world gets ravaged by coronavirus with no end in sight, gold – despite some jitters – has become the preferred safety destination of investors as they move capital from highly volatile options such as stocks, bonds, futures and other commodities such as oil.
Prices on the world market went as high US$1,700 an ounce a couple of weeks ago before dropping to the US$1,500 region this week; but some analysts have noted that with the risk of the virus still prevalent, gold could reach the US$2,000 per ounce mark this year – a level that would excite mining companies.
Compared to the more than 50 percent fall in crude prices since beginning of the year, partly fuelled by Covid-19, and continued decline in stocks on all major stock exchanges around the world, gold – even as it feels some pressures – seems to have held its own and is quietly becoming the preferred safe haven for investors, which is making mining companies very happy.
Andrew Wray, President and CEO of Golden Star Resources, a mining entity with operations in Wassa and Prestea in the Western Region, told B&FT that the gold sector, with the prevalence of coronavirus, is in a rather privileged position.
“Given all of these, there is actually a strengthened gold price. Think of any other industry where demand has fallen off a cliff, consumption has dropped and prices of commodities have fallen, the price of gold has actually increased and the demand is there.
“We have that benefit, and we clearly need to make sure we continue producing. That is why we are putting measures in place to protect the mine sites. As a business, we will see some restrictions; but generally the gold price has held up, and in times like these people trust the value of gold,” he said.
Golden Star’s plan against Covid-19
To Mr. Wray, Golden Star Resources is putting in all contingency measures to make sure production is not affected by coronavirus; and with the benefit of experiencing the scare of Ebola and making provisions, the company is poised to keep the risk of coronavirus to operations at a minimum.
“As a business that has lived through Ebola, we have clear protocols and programmes in place and are ensuring that we monitor the risk levels and trigger-points. This means protecting the people and the business.We are already screening people on site to ensure they do not pose a risk, and we have an isolation facility on site.
“We are trying to be as prepared as we can. In London [the company has moved its head office from Toronto, Canada, to London, United Kingdom] we will allow people to work from home, given the risk of travelling on cheap trains. We will definitely see some impact to supply chains, given the number of supplies coming from China – but we are putting in contingency plans,” he added.
Mr. Wray, touching further on the company’s long-term prospects in a post-Covid-19 world, explained that the Wassa Mine will be expanded while Prestea’s operations are streamlined to become profitable.
Currently, he noted, US$10million has been invested in new equipment, decline or access development, extensional drilling and other operations to bring Prestea up to speed and running efficiently.
Apart from this significant investment in Prestea, Mr. Wray added that to take Wassa to the next level, about US$45million is being invested in equipment, decline development, extensional drilling to grow that mine.
Asked about other areas in West Africa and the rest of Africa, Mr. Wray stressed that there are a lot of expansion and exploration options in Ghana before looking beyond these shores.
“Exploration within Ghana is high priority for me; but if we want to move out of Ghana, it is more expensive. However, over time we will move elsewhere in Ghana and outside Ghana and Africa. What we need currently is about three more operations to become more robust as a business. But if you have four of five mines, you can afford to have one or two not doing well as others would cover up.
“Now we are seeing a much clearer plan for Prestea, and now we are developing plans to revive it – and even sell it,” he said.