OCT 2019 GLOBAL SUMMARY MINING · 2019. 10. 28. · Spain Atalaya Mining Proyecto Riotinto Copper Has reported that the mine is expected to reach its expanded throughput rate of 15mnt/yr

GLOBALSUMMARY MININGWeek Commencing 21st October

OCT 2019

ContentsGlobal ................................................................................................................................................................................................. 4

Mining - Weekly Projects Round-Up And Developments ............................................................................................................................................. 4

Africa................................................................................................................................................................................................10

Africa Mining: Resource Nationalism To Remain A Key Challenge.........................................................................................................................10

Asia...................................................................................................................................................................................................14

India Iron Ore: Production To Fall In 2020 ........................................................................................................................................................................14

Mongolia Mining: Industry Growth Soon To Surpass Australia And China...........................................................................................................16

Australian Gold Mining: Solid Project Pipeline And Increasing Prices Promote Positive Outlook.............................................................19

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Global Summary Mining | 20191021

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Global

Mining - Weekly Projects Round-Up And Developments

In this week's mining round-up we explore the challenge of resource nationalism in Africa, highlight the impact of disruptions in

Chile on copper prices and explore our growth forecast for the Mongolian mining industry.

Africa Mining: Resource Nationalism To Remain A Key Challenge

Resource nationalism will continue to pose challenges to existing operations and discourage new investments within the mining

sector in Africa. While we expect most metal prices to remain subdued over 2020, a string of upcoming elections is likely to maintain

or cause new tensions between a number of SSA governments and mining companies in the near term. We highlight Ghana,

Guinea, Burkina Faso and Côte d'Ivoire as potential risk hotspots in 2020 due to upcoming elections. A new mining code in Mali and

mining license suspensions in Sierra Leone in recent months will put current operations and future mining investments at risk.

Restrictive mining legislation introduced between 2017 and 2019 in Zambia, Tanzania and the Democratic Republic of Congo look

set to remain in place, driving out existing miners due to higher costs and expropriation risks.

Commodities Price Movements To Steady In Coming Years

Global - Gold, Copper and Iron Ore price, ave, % y-o-y

f = Fitch Solutions forecast. Source: USGS, Fitch Solutions


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Weekly Commodities Strategy: Copper Prices To Receive Short Term Boost From Chile Disruptions

Supply-side disruptions at major copper producers due to widespread protests and strikes in Chile will support copper prices in the

short term. While these actions are providing some immediate support to prices it is too early to say whether this will have a longer

term impact, given the thus far limited impact and temporary nature of the strikes. Our Country Risk team is expecting the upheaval

to continue in the short term and as such, we will be monitoring the reaction of local mining and port unions as well as firm

announcements to gauge further production and price risk ahead. For now we retain our neutral to bearish outlook on copper

prices over the remainder of 2019 (USD5,900/tonne annual average) and into 2020 (USD5,700/tonne annual average) as

sentiment remains weak.

Supply Disruptions Supporting Prices In October

LME Three-Month Copper Price (USD/tonne)

Source: Bloomberg, Fitch Solutions

Mongolia Mining: Industry Growth To Surpass Australia And China

Mongolia will register the fastest mining industry value growth in Asia with high-grade reserves of gold, copper and coal, and a

strong pipeline of large projects. Mongolia will surpass Australia as the top coking coal exporter to China, aided by new rail

infrastructure and consequent increase in cost competitiveness. Mongolian gold and copper production will increase in coming

years as new projects comes online and additional exploration initiatives remain strong. Considerable delays, declining ore grades

and increased financing needs will impact the feasibility and timeline of the Oyu Tolgoi copper-gold project, posing downside risks

to our positive outlook for Mongolian copper production.


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Mongolia Mining Growth to Surpass Regional Peers

Select Countries - Mining Industry Value, USbn, % y-o-y

f = Fitch Solutions forecast. Source: National Sources, Fitch Solutions


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PROJECT DEVELOPMENT - MINING PROJECT UPDATES: 16 OCTOBER - 22 OCTOBER 2019

Country Company Mine Commodity Update

Australia Panther Metals Marrakai Gold Has secured an exploration license for the project

Australia Aeon Metals Walford Creek CopperA scoping study has reported that the project will deliver

42kt/yr of copper over a mine life of 11years

AustraliaMitsubishi Corporation,

Sinosteel CorporationJack Hills Iron Ore

Mitsubishi Corporation has handed over the full

ownership of the project to Sinosteel Corporation

Brazil Horizonte Minerals Vermelho NickelA prefeasibility study has reported that the project will

deliver 25kt/yr of nickel over a mine life of 38years

Canada Puma Exploration Jonpol Gold Has signed an agreement to acquire the project

Canada Pembridge Resources Minto Copper, Gold Has resumed operations at the mine

CanadaPershimex Resources

Corporation

Pershing-

ManitouGold Has reported positive gold recovery tests at the project

Canada Goliath Resources Golddigger GoldHas discovered large high-grade polymetallic zone at the

project

Canada Osisko Mining Windfall Gold Has intersected three high-grade zones at the project

CanadaScottie Resources

CorporationBow Gold Has completed a drilling program at the project

CanadaScottie Resources

CorporationScottie Gold Has completed a drilling program at the project


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Canada Goldstar Minerals Lake George Gold Has completed diamond drilling program at the project

Canada Marathon Gold Corporation Valentine GoldHas reported positive results from the ongoing infill

drilling campaign at Marathon deposit of the project

Canada Fireweed Zinc Macmillan Pass Lead, ZincHas announced results from the first 2019 drill hole at

the project

Finland Nordic Gold Laiva Gold Has finalised a drilling programme for the project

Greenland Bluejay Mining KangerluarsukCopper, Lead,

Zinc

Has applied for an additional exploration license at the

project

Mali Cora Gold Sanankoro GoldHas reported positive metallurgical testwork results at

the project

MaliAfrican Gold Group, Epoch

ResourcesKobada Gold

African Gold Group has contracted Epoch Resources to

undertake the feasibility study of tailings storage facility

at the project

Peru

Anglo American, Mitsubishi

Corporation, Siemens,

ThyssenKrupp

Quellaveco CopperThyssenKrupp has employed Siemens’ new gearless

drive technology for conveyor to access the mine

Spain Atalaya MiningProyecto

RiotintoCopper

Has reported that the mine is expected to reach its

expanded throughput rate of 15mnt/yr by the end of

2019

Sweden Sienna Resources SlattbergCopper,

NickelHas completed a drilling program at the project

United States Stantec, Taseko Mines Florence CopperTaseko Mines has awarded the basic engineering

contract for the project to Stantec


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United StatesMillrock Resources,

Northern CobaltGoodpaster Gold

Northern Cobalt has struck an agreement with Millrock

Resources to acquire 80% interest in the project

United States Revival Gold Arnett Gold Has completed 2019 drilling program at the project

United States Revival Gold Beartrack Gold Has completed 2019 drilling program at the project

United States Allegiant Gold Bolo GoldHas announced results from the first hole drilled at the

project

United States Otis Gold Corporation Kilgore Gold Has commenced a drilling program at the project

Zimbabwe Great Dyke Investments Darwendale

Gold,

Palladium,

Platinum

Is expected to start construction at the project in Q120

Source: Company announcements, Fitch Solutions


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Africa

Africa Mining: Resource Nationalism To Remain A Key Challenge

Key View:

• Resource nationalism will continue to pose challenges to existing operations and discourage new investments within the mining

sector in Africa.

• We highlight Ghana, Guinea, Burkina Faso and Côte d'Ivoire as potential risk hotspots in 2020 due to upcoming elections.

• A new mining code in Mali and mining license suspensions in Sierra Leone in recent months will put current operations and

future mining investments at risk.

• Restrictive mining legislation introduced between 2017 and 2019 in Zambia, Tanzania and the Democratic Republic of Congo

look set to remain in place, driving out existing miners due to higher costs and expropriation risks.

Resource Nationalism will remain an obstacle facing Africa's mining sector over the coming quarters. Trends ofresource nationalism have historically coincided with commodity cycle booms that prompt governments to shift their focus to

correcting outstanding fiscal deficits through higher taxes and royalties on the resource sector. Additionally, election cycles can

contribute to the trend, as incumbents often attempt to drive campaign support by promoting a resource nationalism platform to

appeal to voters. For example, in February 2019, Ghanaian president, Nana Akufo-Addo motioned for African governments to stop

employing fiscal incentives to attract foreign investment in the mining sector. Akufo-Addo, who is running for re-election in 2020,

stated that foreign mining companies should not expect to make monumental profits off of Africa's resources.

While we expect most metal prices to remain subdued over 2020, a string of upcoming elections is likely to maintainor cause new tensions between a number of SSA governments and mining companies in the near term. Ghana,Guinea, Burkina Faso and Côte d'Ivoire will all hold general elections in 2020, and Zambia is scheduled to hold its next presidential

election in 2021. Of the nations mentioned, Côte d'Ivoire has the most investor-friendly mining code in place. In regards to

commodity prices, we forecast iron ore prices to embark on a downtrend in the long term as ample supply from major producers

combines with poor demand from China's steel sector. On the other hand, we expect higher gold prices to be sustained over the

medium term due to remaining policy-induced volatility, suggesting countries with a high reliance on gold exports and a less stable

political environment such as Tanzania, may witness ongoing tensions over the coming year.


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Commodities Price Movements To Steady In Coming Years

Global - Gold, Copper and Iron Ore price, ave, % y-o-y


We also note rising risks in Sierra Leone and Mali, where the operating environment for mining companies hasbecome significantly more challenging in recent months. In Sierra Leone, a series of mining license suspensions will call thesustainability of the nation's iron ore production into question. In October 2019, the government of Sierra Leone revoked the

mining license of SL Mining, a subsidiary of Gerald Group. The company previously suspended operations at the Marampa minein September due to a legal dispute with the government following a temporary, government ban on Marampa exports imposed

in July 2019. SL Mining had acquired the license two years prior, in March 2017, on the basis of a 25 year term. A bearish outlook on

iron ore prices, coupled with the high risk of mining license cancellations will harm domestic iron ore production in Sierra Leone, as

current producers have left the sector and regulatory and market conditions deter new investment.

Sierra Leone Production Growth To Suffer

Sierra Leone- Iron Ore Mine Production

e/f = Fitch Solutions estimate/forecast. Source: USGS, Fitch Solutions


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As the iron ore production outlook in Sierra Leone dampens, firms may shift their investment focus to Guinea wherethe government displays a stronger willingness to cooperate with foreign firms. In October 2019, the governments ofGuinea and Liberia signed an agreement that will permit mines in Guinea to export through Liberia. Miners in Guinea have

previously struggled with attempting to transport materials between domestic ports and remote mine sites. Guinea's Minister of

Mines and Geology, Abdoulaye Magassouba, demonstrates an increasingly cooperative attitude towards miners, stating that the

mines in question would be unable to profit if limited to exporting through Guinea when asked about the recent agreement. Despite

the government's continued insistence that the eventual developer of the Simandou Iron Ore project export through Guinea via a

"Transguineen" railway, the international agreement is a positive sign for miners who are hesitant to explore investing in Guinea.

Narrowing Growth Gap Between Guinea and Sierra Leone

Sierra Leone and Guinea - Iron Ore Mine Production Volumes, % y-o-y


A new mining code in Mali will pose threats to current and future exploration initiatives, as firms reevaluate futureinvestments. In August 2019, the mines ministry in Mali announced a new mining code that removes the previous value-addedtax (VAT) exemption enjoyed during mine production. In addition to eliminating the exemption, miners will now face a shorter

regulatory stability period during which firms are protected from changes to financial and customs regulations. Although the new

stability period is not yet defined, it is expected to fall from 30 years to the duration of the mine life, a change which may adversely

impact smaller miners with assets holding shorter mine lives. This could in turn dissuade new investment from junior miners who

are less likely to be able to bear the increased tax burden or weather unexpected regulatory changes. The changes are less likely

to heavily impact major players, whose production costs usually benefit from efficient economies of scale, however it may cause

them to rethink making additional investments as they are no longer as insulated from future changes.


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Mali Emerges Above Regional Average

SSA - Mining Risk Reward Regulatory Scores

Scores out of 100, higher score = More attractive market. Source: Fitch Solutions Mining Risk Reward Index

Restrictive regulations in Zambia, Tanzania and the Democratic Republic of Congo look set to remain in place, posingthreats to existing miners due to high costs and expropriation risks. In June 2019, the Zambian government sought toliquidate Vedanta Resources' subsidiary Konkola Copper Mines (KCM) following an accusation that the firm had breached itsmining license. In recent years the Zambian government has adopted a more aggressive tax collection policy, including a 5% import

tax on concentrates and replacing the VAT with a non-refundable sales tax, while inflicting harsher penalties on the mining sector. In

March 2018, Zambia assigned First Quantum Minerals a tax bill estimated at around USD7.9bn.

The current mining code in Tanzania, introduced in 2018, requires foreign firms to maintain a bank account in a Tanzanian-owned

bank. In 2017, Tanzania also imposed an export ban on copper and gold which greatly impacted production of Acacia Mining,leading to a substantial decline in output at the Bulyanhulu and Buzwagi mines. Furthermore, the government fined Acacia

USD2.4mn over alleged pollution at the firms North Mara operations in addition to a USD190bn tax bill.

Lastly, the Congolese government enacted a new mining code in June 2018 which raised copper royalties from 2.0% to 3.5% and

gold royalties from 2.5% to 3.5%, in addition to doubling the government's stake in new developments from 5% to 10%. In August

2019, China Molybdenum reported the company was losing money at its Tenke Fungurume operations in the DRC, crediting theunfavourable mining code and lower copper prices. China Molybdenum bought a USD2.7bn majority stake in

Tenke Fungurume back in 2018 from international miner Freeport McMoRan. Glencore also announced in August that it wouldbe shutting down operations at the Mutanda copper-cobalt mine in the DRC, with management stating it is disputing the new

mining code with the Congolese government. As one of the largest mining companies in the world by revenue, Glencore's actions

could set a precedent for other mining firms to follow.


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Asia

India Iron Ore: Production To Fall In 2020

Key View:

• Delays in the auctions of iron ore mining leases set to expire in March 2020 will disrupt domestic iron ore production in India, and

could turn the country into a net iron ore importer.

• The recovery of supply in high-grade markets such as Brazil and Australia, will weaken Chinese demand for lower-grade Indian

ore.

• Despite a recent cut to corporate tax rates, high royalties and taxes will continue to challenge India's mining sector as a whole.

The auctioning of 48 mining leases set to expire by March 2020 will cause considerable disruptions in the domesticsupply of Indian iron ore, raising the possibility of India becoming a net importer of iron ore over the comingyear. Incorporated in 2015 as a means to restrict corruption concerning mine allocations, competitive auctions in India are subjectto slow proceedings as well as additional delays in securing regulatory permits. Delays relating to auctions and subsequent

regulatory procedures therefore tend to disrupt iron ore production, and concerns over production uncertainty in the next year

have already prompted producers to ramp up current production. Reports alleging that the Indian government's mining

department is negotiating with the nation's environmental ministry to prevent supply disruptions will nevertheless present upside

potential to our negative growth outlook for Indian iron ore production. The possible amendment to present mining policy would

grant auction winners permission to begin mining operations immediately, contingent on the mine possessing valid environmental

and forest approvals. We forecast Indian iron ore production to contract 5.0% in 2020, a stark decline from our forecasted growth of

15% in 2019, underpinned by the present ramp up.

India Iron Ore Production To Witness Sharp Decline In 2020

India - Iron Ore Mine Production


The recovery of iron ore supply in Brazil and Australia will lead to a weakening of demand for Indian iron ore as steelmills in China switch back to higher-grade sources of ore. The global iron ore market witnessed considerable supply


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disruptions earlier this year stemming from the collapse of a tailings dam at a Vale mine in Brazil and weather-related port

closures in Australia. Consequently, Indian producers of lower grade iron ore pellets observed a surge in exports to China, as supply

constraints and a need to replenish declining stocks gave rise to Chinese demand for lower grade ore. A continuing recovery in

supply, and renewed access to high grade ore in both Australia and Brazil, will likely shift Chinese purchases back to higher grade

ores in order to comply with increasingly strict environmental standards. High grade Indian iron ore exports, those with iron content

exceeding 58%, are also subject to a 30% export duty making them less cost competitive, especially as the iron ore price rally

subsides. Furthermore, a temporary softening of Chinese import demand for iron ore, as a weaker yuan makes the ore more

expensive, will also decrease the attractiveness of Indian iron ore exports.

India Iron Ore Production To Echo Chinese Steel Consumption

Select Countries - Crude Steel Consumption and Iron Ore Mine Production

e/f = Fitch Solutions estimate/forecast. Source: National Sources, Fitch Solutions

High taxes and royalties will remain a barrier to Indian iron ore production growth by constraining firms' financialcapacities and reducing foreign investment. Despite the recent lowering of the corporate income tax rate, miners in India arestill subject to one of the highest effective tax rates of 58% and 54% for existing and new mines respectively. In September 2019,

India's Finance Minister, Nirmala Sitharaman, announced the lowering of the corporate tax rate from 30% to 22% for companies that

do not seek exemptions. Corporations filing for exemptions will witness a tax rate cut from 35% to 25%. Still, mining firms must pay

additional royalties to the District Mineral Fund and National Mineral Exploration Trust established in a 2015 amendment to

the MMDR Act. The amendment requires miners to pay an additional royalty of up to 100% to the original MMDR royalty,

considerably impacting firms' finances. The reduction in the effective tax rate is not likely to have a significant impact on operating

firms, and high royalty and tax payments will continue to weigh on India's overall competitiveness in attracting foreign investment

into the mining sector as a whole.


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Mongolia Mining: Industry Growth Soon To Surpass Australia And China

Key View:

• Mongolia will register the fastest mining industry value growth in Asia with high-grade reserves of gold, copper and coal, and a

strong pipeline of large projects.

• Mongolia will surpass Australia as the top coking coal exporter to China, aided by new rail infrastructure and consequent increase

in cost competitiveness.

• Mongolian gold and copper production will increase in coming years as new projects comes online and additional exploration

initiatives remain strong.

• Considerable delays, declining ore grades and increased financing needs will impact the feasibility and timeline of the Oyu

Tolgoi copper-gold project, posing downside risks to our positive outlook for Mongolian copper production.

Mongolia's mining industry will witness fast growth over the coming years, underpinned by expanding traderelations with China and a series of project developments. We forecast Mongolia's mining industry value to rise fromUSD3.22bn in 2019 to USD15.14bn in 2028, registering an average annual growth rate of 19.5% y-o-y. In the coming years we

forecast Mongolia's mining industry growth to surpass prominent regional producers Australia and China. Chinese support in

advancing Mongolian infrastructure development will be of large benefit to the mining sector, as a lack of sufficient supportive

infrastructure is one of the major impediments to mining sector growth in the country. In April 2019, China and Mongolia signed an

agreement to synergize China's Belt and Road Initiative (BRI) with Mongolia's Development Road through the construction of the

China-Mongolia-Russia economic corridor. Additionally, in the medium term, production at Turquoise Resources', a subsidiary of Rio

Tinto, Oyu Tolgoi copper-gold project will greatly boost the value of the Mongolian mining industry.

Mongolia Mining Growth to Surpass Regional Peers

Select Countries - Mining Industry Value, USbn, % y-o-y


The country's coal industry stands to benefit from increasing exports to China, underpinned by increasinginfrastructure projects and continued trade tensions between the US and China. In September 2019, the 1800kmHaoji Railway commenced operations. The railway links China to Mongolia via China's Inner Mongolia autonomous region and will

subsequently decrease transportation costs, improving the competitiveness of Mongolian exports to China vis-à-vis Australia.


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Chinese coking coal imports from Mongolia have already witnessed a substantial rise this year, reaching an all-time high of 3.74mnt

in August 2019, while imports from the US faced a considerable monthly decline of 89% due to continuing US-China trade

tensions. In August 2018, China imposed a 25% retaliatory tariff on US goods including coking coal, bringing the total coking coal

tariff to 28%. In terms of production, South Gobi Resources will continue to drive coal production through its flagship OvootTolgoi mine and through the expansion of other domestic resource opportunities in 2020. Aspire Mining is also scheduled tocomplete the definitive feasibility study for the Ovoot coking coal project in May 2020, with the potential to begin pre-stripping

activities in Q220. The mine will produce 4.0Mtpa of fat coking coal over its 12.5 year mine life, supporting production growth in the

medium to long term.

Mongolian Imports on Steady Rise In China

China - Coking Coal Imports From Mongolia

Source: Bloomberg, Fitch Solutions

We also hold a positive outlook for Mongolian gold and copper production in the country as the Oyu Tolgoi copper-gold project and additional mines come online and miners continue to evaluate exploration and expansioninitiatives. The Oyu Tolgoi copper-gold project is one of the largest global copper-gold deposits, and with a mine life of fifty years,the project stands to impact the long term production capacity of Mongolia's copper and gold sectors as well as the nation's

economy as a whole. According to some reports, Oyu Tolgoi will average an annual production of 430kt of copper and 425koz of

gold annually for 20 years. Construction began in 2011, however the project has since been subject to considerable delays and

obstacles. Other projects that will further support our positive production outlook include Steppe Gold's Altan Tsagaan Ovoo (ATO)gold-silver mine. In July 2019, Steppe Gold completed the heap leach development at the ATO mine in Eastern Mongolia. The mine

has measured and indicated resources of 587koz of gold and SG plans to provide a resource update in 2020, highlighting upside

potential to the sustainability of the gold sector. Furthermore, Erdene Resource Development (ERD) announced a USD5mnfunding agreement with the European Bank for Reconstruction and Development (EBRD) in October 2019 which will assist the

firm's development of the Khundii gold project in Southwestern Mongolia. The two deposits, Bayan Khundii and Altan Nar, will

contribute a cumulative average annual production of 109koz of high-grade gold, and Erdene plans to commence production in

late 2021. Additionally, Xanadu Mines reported significant oxide mineralisation results at the Copper Hill deposit within the firm'sKharmagtai Project in Southern Mongolia. The project represents one of Asia's largest undeveloped copper projects, containing an

open-cut mineral resource estimate of 1.9Mt of copper and 4.3Moz of gold.


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Mongolia Gold Production Slated To Rise

Mongolia - Gold Mine Production (RHC) & Growth (LHC)


Nevertheless, we highlight that challenges at Rio Tinto's Oyu Tolgoi copper-gold project will pose downside risks toour positive outlook for Mongolian copper and gold production. In July 2019, the firm revealed project costs would increaseto USD6.5-7.2bn, excluding additional financing for the mine's power station. Rio Tinto also reported in July that the underground

mine would need to be redesigned due to suggested stability risks with the design implemented in the 2016 feasibility study, further

delaying production by 16 to 30 months. Moreover, declining copper and gold ore grades constrain the project's current cash

generation , as the company will need to wait until the underground mine reaches sustainable production in approximately 2022 or

2023. In July 2019, Rio Tinto reported a USD0.8bn impairment charge related to the project.

It is highly likely that the project will proceed, however the benefits to Mongolia's copper and gold sectors will not berealized in the near term. Additionally, the firm did assure that it was making substantial progress on key mine infrastructure thatwill not be obstructed by redesign changes. The commissioning of the underground primary production shaft, scheduled for

October 2019, further contributes to the likelihood of project progression. Until then, lower ore grades will strain present production

as the project has already extracted the majority of higher grade ores from the open pit.


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Australian Gold Mining: Solid Project Pipeline And Increasing PricesPromote Positive Outlook

Key View:

• Australian gold production will remain strong in 2020, underpinned by improving gold prices.

• A strong project pipeline will also support our continued positive production forecasts for the coming years.

• Nevertheless, a possible gold royalty imposed by the Victorian Government could deter regional sector development in the state,

thus presenting downside risk to our positive outlook.

We at Fitch Solutions forecast Australian gold production to grow 6% y-o-y in 2019 and 3% in 2020, to reach 10.9million ounces (moz) in 2020 on the back of unprecedented production figures. Australian gold production reached arecord high of 10.3moz in FY2019 (year ended June 2019), with the June 2019 production quarter alone contributing 2.6moz of

gold. Strong production drivers include Newcrest Mining’s Cadia Valley operations and Newmont Goldcorp’s Boddington andTanami operations, accounting for nearly 15% of gold production in FY2019. In April 2019, an USD10bn merger between Newmont

Mining and Goldcorp created Newmont Goldcorp and established the newly-formed entity as the world’s largest gold producer. The

firm’s position as a market leader affords it the resource capacity to commit to investing in the longevity of its mines that are

essential to Australian gold production.

GOLD PRODUCTION FORECAST (AUSTRALIA 2017-2022)

Indicator 2017 2018 2019f 2020f 2021f 2022f

Gold Mine Production, moz 9.68 9.97 10.57 10.88 11.21 11.54

Gold Mine Production Volumes, % y-o-y 3.79 3.00 6.00 3.00 3.00 3.00


GOLD PRODUCTION FORECAST (AUSTRALIA 2023-2028)

Indicator 2023f 2024f 2025f 2026f 2027f 2028f

Gold Mine Production, moz 11.78 12.01 12.25 12.50 12.75 13.00

Gold Mine Production Volumes, % y-o-y 2.00 2.00 2.00 2.00 2.00 2.00


A solid project pipeline will buoy Australian gold production in the coming years which we expect to average 2.3%annual growth from 2020-2028. In regards to this, in May 2019, Anglogold Ashanti commenced the Boston ShakerUnderground Project at its Tropicana joint venture with Independence Group, a development that will enable the operation toachieve a steady, annual gold production of 480koz for the next five years. Furthermore, autonomous drilling trials at Tropicana

could boost production efficiency by reducing the number of necessary operators and drills as early as 2020. In June 2019, GoldFields also reported pouring the first gold at its Gruyere joint venture with Gold Road Resources which is expected to produceapproximately 250koz per annum when operating at full capacity, further supporting our long term growth forecast.


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Gold Production To Grow Steadily

Australia - Gold Mine Production & Growth


Upward momentum in gold prices, supported by a shift in interest rate expectations and policy-induced volatility,will incentivise project investment in the Australian gold sector. We at Fitch Solutions forecast gold prices to averageUSD1,375/oz for 2019. High gold prices translate into an Australian gold output valued at nearly USD23bn for FY2019, leading to

high returns for miners. Gold prices will be sustained in the coming years by the demand for safe haven assets as geopolitical

tensions ensue with the US-China trade dispute, Brexit negotiations and US-Iran military confrontation. Sustained gold prices will

encourage new investment and protect current projects underway, as evidenced by Northern Star Resources’ AUD76mnexploration budget and AUD116mn capital budget for FY2020.

A proposed 2.75% gold royalty in the state of Victoria could increase costs for miners, posing some downside risks toour production outlook. In May 2019, the Victorian government proposed to impose a 2.75% mining royalty on the state's goldsector that would negatively impact the region's already lackluster mining competitiveness. Kirkland Lake's Fosterville mine isVictoria's top gold producer following a significant ramp up initiative which enabled the company to raise FY2019 guidance from

390-430koz to 550-610koz in February of this year. The largely unexpected royalty, effective January 1 2020, would raise costs

across the sector, reducing exploration investment and in turn risking both the longevity of operating mines and the feasibility of

marginal mines. For instance, the Fosterville mine has remaining reserves lasting up to five years. The inability to fund exploration

activities essential to extend its mine life would result in a sizeable loss for future Australian gold production.


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Victoria Lags Regional Peers In Mining Attractiveness

Australia and Oceania - Mining Investment Attractiveness Index

Note: Scores out of 100, with higher scores indicating higher attractiveness. Source: The Fraser Institute, Fitch Solutions

Additionally, a lack of exploration projects due to high costs of developing greenfield assets could potentiallyhamper the sector's long term growth. The Minerals Council of Australia has called for the Victorian government to considersubtracting exploration costs from the royalty to curtail adverse effects. Nonetheless, if Victorian gold production experiences

substantial cuts for which other Australian states are unable to compensate, we would revise our positive production outlook.


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GlobalSummary Mining

ContentsGlobalMining - Weekly Projects Round-Up And DevelopmentsCommodities Price Movements To Steady In Coming YearsGlobal - Gold, Copper and Iron Ore price, ave, % y-o-yMongolia Mining Growth to Surpass Regional PeersSelect Countries - Mining Industry Value, USbn, % y-o-y

AfricaAfrica Mining: Resource Nationalism To Remain A Key ChallengeCommodities Price Movements To Steady In Coming YearsGlobal - Gold, Copper and Iron Ore price, ave, % y-o-ySierra Leone Production Growth To SufferSierra Leone- Iron Ore Mine ProductionNarrowing Growth Gap Between Guinea and Sierra LeoneSierra Leone and Guinea - Iron Ore Mine Production Volumes, % y-o-yMali Emerges Above Regional AverageSSA - Mining Risk Reward Regulatory Scores

AsiaIndia Iron Ore: Production To Fall In 2020India Iron Ore Production To Witness Sharp Decline In 2020India - Iron Ore Mine ProductionIndia Iron Ore Production To Echo Chinese Steel ConsumptionSelect Countries - Crude Steel Consumption and Iron Ore Mine ProductionMongolia Mining: Industry Growth Soon To Surpass Australia And ChinaMongolia Mining Growth to Surpass Regional PeersSelect Countries - Mining Industry Value, USbn, % y-o-yMongolian Imports on Steady Rise In ChinaChina - Coking Coal Imports From MongoliaMongolia Gold Production Slated To RiseMongolia - Gold Mine Production (RHC) & Growth (LHC)Australian Gold Mining: Solid Project Pipeline And Increasing Prices Promote Positive OutlookGold Production Forecast (Australia 2017-2022)Gold Production Forecast (Australia 2023-2028)Gold Production To Grow SteadilyAustralia - Gold Mine Production & GrowthVictoria Lags Regional Peers In Mining AttractivenessAustralia and Oceania - Mining Investment Attractiveness Index

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OCT 2019 GLOBAL SUMMARY MINING · 2019. 10. 28. · Spain Atalaya Mining Proyecto Riotinto Copper Has reported that the mine is expected to reach its expanded throughput rate of 15mnt/yr