The one thing gold miners are not worried about right now

September was a challenging month for gold. After a strong August rally, the metal traded as high as US$4,473/oz in early September. But a confluence of factors, namely the Federal Reserve raising interest rates by 25 basis points, a stronger US dollar and a surge in Treasury yields created significant headwinds for the bullion price.

Gold closed September at US$4,157.41/oz, down 6.1% for the month. Gold equities felt pressure too, with the NYSE Arca Gold Miners Index (AUD) declining 8.2%.

Colorado gold conferences: Business as usual

The annual Colorado Precious Metals Summit conference drew a record attendance. A mix of companies, institutional investors, banks and corporate development teams were present.

Participants appeared to have no anxiety about the gold price. We didn’t discuss the gold price outlook at any of the 35 meetings we held, while companies are not pitching bullish gold price scenarios to justify their plans. At current price levels, many of the producers we met with have strong balance sheets, are experiencing near-record margins and can fund capital programs through internal cash flow. The conversations were instead about operations, execution and growth.

More than that, we got the impression that this is a sector which has matured. The industry has internalised the lessons of past bull markets and is now more focused on delivering value. For long-term investors in gold equities, this discipline supports the case for gold miners as a way to get exposure.

Juniors and developers

The Precious Metals Summit’s record attendance reflects to us how much the environment has changed at current prices. Capital is no longer the constraint it once was for this part of the market, and most developers we met with have been able to raise sufficient funding to advance their projects.

Having said this, a well-funded junior sector can also support lower-quality projects. Access to capital does not guarantee that a project will become a profitable mine, and development risks remain significant.

Execution is the differentiator

If there was a single dominant theme across our producer meetings, it was execution. At current prices, the debate has moved well past "can the sector generate cash flow?" to "can management teams deliver against their targets?" In our view, the gap between companies that are executing and those that are stumbling is reflected in share price performance.

Several companies also navigated operational incidents during the year. All this shows that sometimes things go wrong, even with the best companies, and that management's response matters as much as the incident itself. Companies need to communicate, quantify the impact and demonstrate how their broader asset base can help offset the weakness of the troubled unit.

Dividend initiations and share buybacks are becoming more common, even among smaller companies. Hedging programs are being wound down or allowed to expire although companies with large capital commitments are establishing programs that protect cash flows on the downside while preserving upside exposure to the gold price.

Reserve and resource estimates as well as project economic studies continue to use gold price assumptions at a discount to spot. This conservative approach suggests that companies are committed to profitable operations and delivering value through the cycle.

Gold Fields and Northern Star

Gold Fields' offer to acquire Northern Star Resources (ASX: NST) was the biggest corporate news at this year’s conference. The deal, if completed, would create the second-largest gold mining company in the world by production. Northern Star Resources has rejected the proposal although Gold Fields could return with a revised offer.

The strategic rationale includes operational synergies from overlapping Australian assets, meaningful tax benefits and enhanced scale.

But the complexities are just as significant. Integrating large and dispersed operations would be a challenge, not to mention working across different corporate domiciles and shareholder registries as well as navigating the required regulatory approvals. We believe there are many opportunities for consolidation across the sector. However, companies must evaluate every transaction based on value creation, grounding decisions in numbers and reason. At the same time, they need to assess the increased risks that come with operating on a larger scale.

The biggest challenge in the gold mining space

Labour remains one of the most cited challenges across the sector. Skilled trades are the most constrained category, and the pressure is intensified for new construction projects. Tier 1 project engineers, consultants and construction managers are in short supply in some regions. Canada, the United States and Australia have been the regions reporting the most pressure for some time now.

Companies are responding with a range of approaches: sign-on and retention bonuses, incentive programs, expanded training and moving experienced personnel across operations to name a few. They are also focused on managing project pipelines effectively, so that construction and project teams can move from one site to the next, optimising the use of in-house and contracted talent.

Open-pit operations appear better positioned on labour availability than underground mines.

Where you mine matters

The jurisdictions in which companies operate, and management teams’ ability to navigate local conditions, are recurring themes across our meetings.

In the United States, the FAST-41 permitting framework is beginning to demonstrate its value as an effective accelerator. Development-stage projects that have embraced the process are reporting streamlined permitting timelines and more structured federal agency engagement, marking a welcome shift for a sector that has long viewed US permitting as one of its most difficult risks.

In Africa, companies operating in Morocco and Côte d'Ivoire offered constructive commentary. Ghana, in contrast, generated more questions. Regulatory changes around contractor mining, combined with upcoming lease renewals at major operations, are creating meaningful uncertainty for companies with significant exposure there.

Elsewhere, Colombia has emerged as a surprise positive. Potential policy changes from the newly elected government seem to be reviving interest in development projects that had been shelved. Meanwhile, Mexico continues to be flagged with caution.

The share price performance of Australian-listed gold producers as a group has lagged that of their North American peers. The reason for this underperformance appears to be a combination of factors including elevated near-term capital expenditures, a general market perception that Australian producers may be more exposed to fuel cost pressures as well as speculation about the impact of changes to capital gains tax laws.

Nonetheless, the overall picture from Colorado 2026 is of a sector in good health. We believe that provides a sound foundation and the opportunity set for gold equities remains compelling.