Following the reverse takeover of Kopy Goldfields by Amur Zoloto in September 2020, the new Kopy boasts production of >50koz pa of gold from two hard rock mines and a number of smaller placer deposits. Kopy also retains a 49% interest in the Krasny project and 100% of the Maly Patom exploration licences.
Despite a challenging Q1 following a COVID-19 outbreak at Yubileyniy in December 2020, Kopy Goldfields reported a competent set of H1 results, with EBITDA of US$14.0m (H120: US$17.8m) giving an EBITDA margin of 38% despite production down 14% y-o-y. Costs were well contained at US$859/oz (H120: US$861/oz). Kopy expects higher H2 production driven by the ramp-up of heap leach and placer operations and commissioning of Yubileyniy expansion. FY21 production guidance remains 56–59koz.
In our last note on the gold price (The gold rush, published on 11 June 2020), we argued that the sharp increases in the total US monetary base might be expected to support a nominal gold price of US$1,892/oz and potentially as high as US$3,000/oz. While there is a historically strong and statistically significant correlation of 0.909 between the gold price and the total US monetary base from 1967 to 2018, there is very little visibility as to how, or to what extent, the total US monetary base may be expected to evolve. In the four months to November 2020, the US monetary base was expanding at an average rate of approximately US$98bn per month, which would equate to an expected increase in the gold price (using the historical correlation) of approximately US$391/oz per year.