- The economic uncertainty and market volatility induced by the COVID-19 crisis have skyrocketed demand for gold investments. Spot gold recorded a return of ~24% on a YTD basis, as on 12 November 2020.
- Golden State Mining has undertaken several key developments at its flagship Yule Project that are fuelling its growth momentum.
- The Company has completed its maiden Yule South aircore program with encouraging results and commenced the phase 2 drilling campaign.
- A significant aeromagnetic dataset has been acquired for the Yule Project.
2020 has proven to be quite a glittering year for gold investors as the yellow metal continued to witness an impeccable rise in its prices. The pandemic-induced economic uncertainty, volatility of the markets and low asset returns have together created a conducive ground for investments in the safe haven. Meanwhile, amidst high demand, spot gold recorded a return of ~24% on a YTD basis, as on 12 November 2020.
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Time and again, gold has emerged as a safe-haven asset for the investors, especially during the periods when the uncertainty and the crisis have overwhelmed the world. While it looks that the situation is under control across the Australian states, a spike in COVID-19 cases in other regions of the world could trigger the upward movement of gold prices to new levels.
What is Upholding Gold Lustre in the Market?
The growing appetite of the market for gold is underlined by its unique attributes and market dynamics that ensure the continued strategic relevance of gold.
A Dual Appeal
Gold is used both as a consumer good and as an investment vehicle. While the period of economic contraction and high volatility backs the positive gold price movement, financial bonanza also boost the demand for gold in the form of jewellery. Thus, irrespective of the health of the economy, which is anticipated to recover in 2022, the diversified demand sources would continue to provide cushion to gold prices.
Diversification and Higher Risk-Adjusted Returns
Gold is sitting on a sweet spot as institutional investors are adding gold-related investments into their asset portfolio. The imperfect correlation of gold with other assets ensures diversification and plays a significant role in hedging against financial risks. Apart from investments in gold futures and physical gold, indirect investing has also skyrocketed through the purchase of structured products such as gold mining stocks and gold-backed ETFs.
Falling Supply Side
The pandemic restriction reduced the workforce available for the gold mining industry, leading to a significant impact on gold mining and processing operations. As per the World Gold Council, overall mine production fell by 3% against pcp during the first quarter of the year 2020. It represents the most significant y-o-y fall since Q1 2017. Meanwhile, the recycling counter, which contributes over one-fourth of the global gold supply chain, also declined.
In a nutshell, gold players are enjoying the perks of the lucrative landscape with the yellow metal and gold-related stocks witnessing an impressive trend.
Meanwhile, gold and base metals exploration company Golden State Mining Limited (ASX: GSM) with its remarkable exploration endeavours appears committed to leverage the encouraging potential. Let us look at some of the critical developments that are fuelling the growth momentum of the Company.
Successful Completion of Maiden Yule South Aircore Program
The phase 1 Yule South aircore drilling program was completed over five gold target areas with 199 holes drilled for 13,275m. Multiple +100ppb gold intersections were observed along with broad zones of hydrothermal alteration and quartz veining.
The phase 1 drilling program has boosted the understanding related to the interpreted lithologies, metamorphic grade and structure while also unveiling encouraging alteration assemblages at Yule South. The Company plans to apply the new knowledge to follow-up drill planning as well as new drill target research in the greater Yule project area.
Furthermore, two new target corridors have been interpreted based on initial results and geological observations. They would be subject to future drill planning in the months to come.
The Commencement of Phase 2 Program
Golden State Mining has also launched its phase 2 Yule aircore reconnaissance drill program. The second phase of the program will comprise up to 15,000m of AC drilling to test target areas at both Yule South and Yule North. The duration of the program is anticipated to be six weeks, and the first results are expected during late November and December.
As GSM’s Managing Director Michael Moore commented, ~700km2 of tenements strategically positions the Company while it embarks on the phase 2 drilling program with an enhanced understanding of the significant exploration potential in the Mallina Basin.
Acquisition and Reprocessing of Geophysical Data
An aeromagnetic dataset was purchased, aiming to obtain far greater resolution for interpreting additional structurally hosted gold targets with a focus on intrusive environments. Under a multi-client licence agreement, Core Geophysics Pty Ltd held the dataset for the aeromagnetic survey flown by Fugro Airborne Surveys in 2006.
An enhanced geological interpretation would be produced with the merger of the recently acquired aeromagnetic data with GSM’s existing open file dataset.
Way Forward for Yule Project
On 13 November 2020, GSM traded at $ 0.240, moving upward by more than 2% from its previous close. The Company has a market capitalisation of 13.30 million.