The coronavirus pandemic has affected Canadian mining companies as measures taken to combat the spread of the virus have restricted operations of miners. Several Canadian companies have either suspended operations in their mines or slowed mining activities in response to social distancing directives and lockdowns. Although stock markets have been battered by the COVID-19 pandemic gold prices have benefitted from the market volatility.
Gold miners enjoying a surge in gold prices
Since the beginning of the year, gold prices are up over 15% and exceeding the $1,700 per ounce mark in seven years. The surge has been mostly due to the coronavirus pandemic that has triggered concerns about the possibility of a global recession and thus investors are rushing for safe-haven assets. with the Federal Reserve slashing interest rates to almost zero an opportunity of holding gold has emerged with investors considering it’s over other currencies.
For Canadian gold mining companies such as Barrick Gold (NYSE:GOLD), Kirkland Lake Gold (NYSE:KL) and Newmont Corp (NYSE:NEM) among other miners this is good news and with oil prices dropping the companies will lower their production costs. As a result, this will translate to high cash flow and an increase in operating margins for gold miners. For instance, Newmont which is the largest gold producer globally has seen its stock surge 47% this riding on high gold prices despite the on-going market turmoil. The surge in gold prices to $1750 per ounce means strong margins for Newmont and increase profitability.
Mining Companies resume operations as government labels mining essential
Interestingly after suspending operations in recent weeks, it seems that mining companies are resuming operations. For instance, on Monday the Quebec provincial government announced the mining is an essential service and after a three-week shutdown, it seems miners will commence operations. The Malartic mine in the province co-owned by Agnico Eagle and Yamana Gold commenced operations on Wednesday.
In a statement, Yamana Gold (NYSE:AUY) indicated that it will resume activities over several coming weeks. This will be after they have ensured all safety and health measures for its workers, suppliers as well as contractors. Â IamGold Corp (NYSE:IAG) Â has also indicated that it will take around a week to ramp up its operations at the Westwood Gold Mine located in Quebec as it trains its employees on new sanitary measures and procedures. This includes adjusting work scheduled as well as availing protective equipment.
Mining industry helping in efforts against COVID-19
As the coronavirus continues to affect communities the mining industry has also shred up efforts to help support in the fight against COVID-19. For instance, the Mining Association of Canada has brought together various industry players to donate around $36,000 expected to go to food banks as well as helping needy families.
Similarly in Toronto, the Young Mining Professionals launched a program called Mining Cares designed to bring together its participants to help make a difference against coronavirus. The Young Mining Professionals are expected to match the $5,000 donated to the Mining Cares program.
