We just need a confident announcement from IK and co about merger going ahead and tangible details of gold opportunity:
Courtesy of ABC
West Australian gold producers say they are experiencing an unprecedented "perfect storm" of favourable market conditions.
A low Australian dollar, low fuel prices and import costs, a decrease in labour expenses and a strong gold price have occurred in rare confluence, resulting in a situation miners have not seen for decades.
Doray Minerals managing director Allan Kelly said he had not experienced anything like it in his 25 years as a geologist.
"Back in 2011 the US gold price was up around $1900, but we had a high Australian dollar," he said.
"We also had all the pressure from other parts of the industry too; iron ore was going crazy, you had the nickel price pretty high, and you had copper and other things as well.
"So it is a bit of a unique situation where you have got that weaker Australian dollar giving you that nice high Aussie gold price.
"And then because there is general disinterest in the resources sector, things like drilling is really cheap at the moment and there is good competition for jobs."
Mr Kelly said a drop in the cost of diesel was also benefitting local producers.
"For most West Australian gold producers who are remote operations, we generate our own power through diesel and also use diesel for trucks," he said.
"We are seeing diesel prices down at the 50c level, compared to around $1.15 last year.
"So we have had the gold price go up and our main import costs come down substantially."
Miners well positioned to survive price fluctuation
A number of Goldfields producers have seen a big upswing in their share price as a result of these contributing factors.
Saracen Mineral Holdings managing director Raleigh Finlayson said shares in their company had jumped 50 per cent since the start of the year.
"It's fair to say we have a world focus on the Australian gold sector at the moment," he said.
"I think globally if you look at the Aussie gold sector, we are well positioned to be able to survive if the price increases, or if it decreases as well."
Northern Star Resources managing director Bill Beament said he was cautiously optimistic.
"It's fair to say it is very buoyant. The Aussie dollar gold price has spiked up, so it is creating a fantastic opportunity throughout the country," he said.
"Revenue still has some good upside. But the cost base is a little bit better than what it was a few years ago and diesel has come right off.
"That helps open pit operators, but we are an underground operation."
MNM Price at posting:
1.3¢ Sentiment: Hold Disclosure: Held
