The latest billion dollar business on the ASX
The ASX has a new billion dollar company.
Gold Road Resources (ASX:GOR) joined the exclusive billion dollar club, when its shares reached $1.14 on Friday 5 July.
The rise in share price and its market cap milestone, came on the back of joint venture partner, South Africa’s Gold Road, pouring its first gold bars at the Gruyere (yes, named after the cheese) Gold Project in Western Australia.
Gruyere’s first gold pour comprised three bars containing an estimated 1,139 ounces — worth about $2.2 million at today's gold price.
Gold Road Resources is developing Australia’s newest goldfield, the Yamarna Belt, 200 kilometres east of Laverton in Western Australia and holds interests in tenements covering approximately 6,000 km2 in the region.
The Yamarna Belt is historically underexplored and highly prospective for gold mineralization, which is what attracted Gold Road to the region. In November 2016, the company entered a 50:50 partnership with Gold Fields for the Gruyere Joint Venture covering 144 km2.
Gold Road’s ascendancy comes at an interesting time.
There is a modern day gold rush occurring and it is reflected in the price of gold which is sitting above $1400. The Australian dollar gold price hit a record $2,044 an ounce in June, up from a 12-month low of $1,615 per ounce.
The outlook is certainly bullish as DJ Carmichael’s Davide Bosio points out in this Finfeed podcast.
Further to this, the Department of Industry, Innovation and Science has forecast Australia’s gold exports to peak at more than $22 billion in the 2020-21 financial year, yet it comes at a time when analysts predict a fall in gold production.
The ABC reports, “there are concerns the industry will struggle to sustain current levels of production with mining leaders and analysts pointing to a lack of major new discoveries”.
The ABC goes onto report, “Behind only China, Australia's gold mines will produce an estimated 10.7 million ounces this year — the equivalent of about $19.2 billion worth of the precious metal.
But analysts predict Canada and Russia will overtake Australia, with production to fall more than 40 per cent to 6.3 million ounces over the next five years.”
Suffice to say any Australian company with a producing mine would be in a strong position to further improve its share price.
Gruyere has a 12 year mine life and is expected to create 350 full time jobs, making Gold Road one of the premier gold producers.
There are other Australian listed gold explorers enjoying the current climate.
Shares in Shree Minerals (ASX:SHH) lifted 14% on the back of promising auger soil assays at its Golden Chimney project.
Following the release of the latest results, Executive Director Sanjay Loyalka said, “We have entered an exciting period as the early indications from Golden Chimney highlight the fact that this project is mineralised and we move towards drilling these targets.
"Our gold and iron ore assets now represent two sectors that have been very strong in Australia and we look forward to updating shareholders as we add value to each of our key projects in the near term.”
Mako Gold (ASX:MKG) also experienced a slight rise this week following news that its entire Board acquired additional shares in the company, highlighting its confidence in its Napie Gold Project in Cote d’Ivoire.
These companies have a long way to go before they reach the heights of Gold Road, but they are representative of the generally positive sentiment surrounding the gold industry.
A new billion dollar capped, ASX listed gold company is certainly a noteworthy, newsworthy moment that could have broader industry ramifications.