THE world gold price has reached record highs last week and this will increase profitability of local gold producers, according to K92 Mining Inc.
Chief executive officer John Lewins said gold price had increased approximately US$500 (K1,708.33)/ounces over the last 12 months and hit record highs over the last week and briefly went above US$2,000 (K6,833.31)/ounces for the first time since 2011.
“PNG produces approximately 2.3 Moz (million ounces of gold), so every US$100 (K341.2)/ounces increase, means that the value of gold produced by PNG mines increases by US$230 million (K784.76mil),” Lewin said.
Lewins noted that: “In 2020, K92 will produce 100,000 ounces, so every US$100 (K341.2)/ounces increases our revenue for the year by US$10 million (K34.12mil).
“As we are a profitable mine and pay corporate tax, this also means an additional US$3 million (K10.23mil) in tax to the Government, plus an additional US$200,000 (K682,399) in royalty payments (two per cent of revenue) and US$50,000 (K170, 600) in levy payments (0.5 per cent of revenue) for every US$100 (K341.2)/ounces increase in the gold price.”
According to Westpac’s financial markets summary for July, PNG export commodities mostly had a strong month in terms of price.
It stated that gold (and copper) were both higher with gold price being supported by ultra-low interest rates and a weak US dollar.
Lewins further noted that in the June quarter, global gold production had been impacted by the coronavirus pandemic, especially in Africa, South America, as well as North America and China to a lesser extent.
While providing an update of the mine, Lewins said it continued operations and exploration, although protocols were put in place to quarantine any person from overseas or outside the mine’s immediate local community.
He added that the mine had mandatory testing of those arrivals prior to being allowed to come out of quarantine and being allowed to commence work.
Lewins said the mine’s surface exploration was put on hold during the Covid-19 state of emergency but was recommenced in June.
“We currently have three diamond drill rigs operating on the surface at two prospects,” he said.
“Production in the last quarter
was a record for the mine (27,000 ounces of gold) and we anticipate similar production for the next two quarters.
“In addition, we have four diamond drill rigs operating underground which were not affected by the SOE and so continued operating.”
The National/ Pacific Mining Watch
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