The gold price has a “natural floor” of about $US1200 an ounce, says Ian Spence, chief executive of Compass Gold, who is unsurprisingly bullish on bullion.
“A lot of money has been printed around the world,” Spence told Markets Spectator. “The world is still turbulent.”
At 1431 AEST spot gold was at $US1318.06. Gold has declined 21 per cent so far this year. On June 27 gold fell to $US1200.65, its lowest level in almost three years, but has since risen 9.9 per cent.
Oklo Resources is paying $4 million for the six Mali gold exploration assets of Compass Gold whose shareholders will own about 60 per cent of Oklo after Compass delists from the Toronto Stock Exchange.
James Henderson, Oklo’s chairman, told Markets Spectator the prospects of gold mining in Mali, home to Africa’s third-biggest gold industry, are much more attractive as average costs to produce an ounce of gold are $US600 compared with $US1000-$US1300 in Australia.
The six Mali gold projects cover 1138 sq km in south and west Mali, according to an ASX statement. Two of the Mali projects are ready for drilling.
Oklo shares jumped 33 per cent to 4 cents at 1443 AEST. They last traded on July 23, when they closed at 3 cents.
“Australia understands early exploration development better than Canada,” says Spence, who may remain at the merged company. “Compass was not getting any transaction on the Toronto exchange.”
Compass has spent four years exploring for gold in Mali. Madani Diallo, a geochemist and consultant to Oklo, has been responsible for 35 million ounces of gold discoveries in Mali and selected the six Mali prospects, Spence says.
If gold is discovered in sufficient quantity then large-scale production in Mali could begin in 2016 at the earliest, says Spence. He says small-scale production could begin before that date.