A few days ago the World Gold Council announced the launch of a set of mining principles supposed to promote responsible mining. The Gold Council indicated that the “responsible mining principles” will offer a new framework that spells out the expectations for consumers, investors and gold suppliers. The principles are an indication that the mining sector has committed to enhancing social, environmental and governance strategies surrounding gold mining. The Council presented the mining industry with a set of 10 principles that companies should follow for them to get recognition for sustainable mining.
World Gold Council seeks to provide a framework for gold mining companies
According to the Gold Council, their aim is for the principles to become a credible and widely accepted framework that can provide gold mining companies with the confidence that they are embracing responsible practices in the production of their gold. The council acknowledges that environmental, governance and social issues are increasingly becoming important to gold consumers. Therefore the principles intend to recognize and amalgamate the current standards and instrument s into a universal framework that companies can follow.
Terry Heymann the Chief Financial Officer of then Gold council indicates that having responsible gold mining practices is important in reinforcing trust in the precious metal and the gold mining sector at large. It will ensure that investors, consumers, and downstream gold distribution chain are all confident that their gold production adheres to practices.
The CFO added that the council came up with the principles after extensive research and cooperation from mining companies in the past two years. He said that this was a major collective achievement for the gold mining industry which outlines clear expectations for investors. Gold mining companies will from now onwards be accountable for their activities based on the principles the council has come up with. Gold mining companies implementing the Responsible Gold Mining Principles will have to receive external assurance from a third party preferably an independent assurance provider. This will ascertain that the company is producing the gold responsibly and thus boost trust among consumers that they are buying responsibly sourced and mined gold.
The principles of governance
Ethical Conduct: The companies will have to carry out their activities with integrity which includes complete disapproval to corruption.
Understandingthe impacts of activities: Companies will engage their stakeholders and agree to the implementation of management systems. This is to ensure they understand the impacts of their mining activities. They will also ensure they realize opportunities and also offer redress where necessary.
Supply chain: The companies should ensure their suppliers carry their businesses responsibly and ethically as a requirement of conducting business with the company.
Safety and health: companies will have to protect and promote the safety and occupational health of their employees and contractors. Equally, they will empower the workforce to speak up whenever they encounter unsafe working conditions.
Human rights and conflicts:the mining company has to respect the human rights of its workforce, affected communities as well as all people that they interact with.
Labour rights: gold mining companies will have to ensure that their operations are places where their employees and contractors receive equal treatment free from abusive labor practices and discrimination.
Working with communities: companies should contribute to the socio-economic development of communities associated with their operations and treat them with respect and dignity.
Biodiversity, Land Use, and Mine closure: companies should work towards protection of fragile ecosystems, critical habitat and endangered species from damage. The companies should also plan for responsible closure of mines.
Environmental Stewardship: responsible utilization of the environment should be at the core of how the gold mining companies work.
Water, Energy and Climate Change: Companies have to enhance the efficient use of water and energy. Equally, they should acknowledge the effects of climate change and how water constraints may become a threat to the areas where the companies operate and a risk to the company’s license.
Newmont Goldcorp CEO Gary Goldberg was in charge of the initiative on behalf of the World Gold Council Board. He stated that strong adherence to the environment, social and governance principles are an important aspect of any responsible gold mining company. Therefore the industry key stakeholders in collaboration with the members of the Gold Council to come up with principles to guide industry activities.
He added that the Responsible Gold Mining Principles are a natural evolution of companies’ daily working practices as members focus on sustainable environmental, social and governance performance. Goldberg asserted that his wish is for massive adoption of the Principles not only by gold mining companies but also in the mining sector at large.
Mid-tier gold companies to merge
Besides responsible mining, gold investors are advising gold companies to reduce wasteful corporate spending. Large investors have indicated that there so many mid-tier gold companies that should merge to cut on their spending. According to the Shareholder’s Gold Council, these mid-tier companies should merge and in the process, they can generate a lot of money in savings for investors.
The SGC’s push has the backing of 19 investors including New York-based hedge fund Paulson &Co. The group said that the SGC is encouraging the companies to enter nil-premium mergers of equals. This means there will be the elimination of duplicate corporate structures and thus ensure shareholders benefit from the merger. There has been outperformance of the gold price from gold miners in the past year which has seen a gain of 53% according to VanEck Gold Miners ETF. This is much higher relative to the 26% gain in the price in the past 12 months.
However, the SGC that launched last year to enhance returns in the industry indicated that corporate costs should be minimized for companies to boost their returns. The SGC said that reducing the number of mid-tier gold companies by 50% will unlock around $2.4 billion to $3.2 billion of shareholder value. This represents around 7% to 10% of its market value.
Currently, mid-tier gold miners are spending close to three times more than what miners of other metals are spending. The SGC indicates that it looked at close to 24 mid-tier gold mining companies such as Endeavour Mining (OTCMKTS: EDVMF), B2Gold Corp (NYSEAMERICAN: BTG) and Petropavlovsk among others to reach this conclusion. Some of the largest gold producers such as Barrick Gold (NYSE: GOLD), Newcrest (OTCMKTS: NCMGY) and Newmont Goldcorp (NYSE: NEM)are spending almost twice what non-gold mining companies are spending. The Shareholders’ Gold Council affirms that management teams and boards of gold mining companies should immediately seek ways of mining excessive spending levels to maximize returns.
One company that has been making moves to enhance operations and maximize returns is Crystal Lake Mining (OTCMKTS: SIOCF). Crystal Lake recently announced the addition of Rob McEwen as a strategic investor to the company. The company announced that it had closed $1.44 million worth of units as the first tranche of the proposed $1.5 million private placement of units at $0.3 per unit subject to the approval of TSX.
McEwen acquired units worthy $500,000 of the private placement through his company Evanachan Limited. He is the founder, former chairman and CEO of Goldcorp Inc. that Newmont acquired recently. He is also the chief owner and chairman of McEwen Mining Inc. (NYSE: MUX). Proceeds of the placement will go into the advancement of the New lake Projects where currently drilling is on-going in Northwest British Colombia’s historic Eskay Camp. The company intends to use the rest for general working capital operations.
Crystal Lake Mining taking steps to enhance high-grade gold production
The company continues to enhance its gold mining operations in the Newmont Lake region. Recently it gave updates on the progress of exploration and drilling designed to test the Newmont lake corridor for the presence of gold mineralization. The company operates a 700 km2 project in Newmont Lake at the Heart of British Columbia’s Golden triangle. According to a geological survey in the region the company has established the possibility of known deposit to be open along strike. The Newmont Lake Corridor where Crystal Lake is currently carrying exploration activities of the gold mineral resource is at the western flank of the strongly endowed Eskay Rift.
The company has established high-grade gold targets in the region with several boulders having mineralization of up to b84.4 g/tonne gold in the Arsenio Zone. Also, similar mineralization can be traced to a possible source said to be covered by ice. The target is step-out along with trend from the Newmont Lake deposit where drilling is being guided by outcropping mineralization, alteration as well as chargeability response in the IP survey.
The exploration company seeks to enhance shareholder value through the discovery of high-grade gold mineralization in the British Columbia region. Crystal Lake has the option of earning 100% interest in the Newmont Lake project which is the largest package among miners in the region in the heart of British Columbia’s golden triangle. The company’s VP Exploration Maurizio Napoli stated that their goal is to expand their present resource and to establish new high-grade gold zones along the McLymont rift.