At the second day of the Paydirt 2009 Australian Gold Conference in Perth, Hartleys’ (a financial services company) Lead Director, Corporate Finance, Grey Egerton-Warburton, said the Australian gold industry had changed significantly in the past few years with fewer local operations. He announced that the Australian gold sector can expect a recovery in 2009 as it shakes off negative impacts that have weighed on the sector in recent years despite the metal’s rising price.

“While the high gold price has led to renewed interest in the sector, the high price had not in recent years ensured the profitability for all gold operators. Rising capital and operating costs and staff shortages during the boom had more of a negative impact than the upside from the rising gold price,” Egerton-Warburton said.

“However, Hartleys believes the sector will change significantly again – and for the better – in 2009. An analysis of the share price returns of gold stocks since January 1 this year shows that gold stocks have significantly outperformed the All Ordinaries and the S&P ASX200 resources index, over this time. The outlook for gold stocks appears strong for the foreseeable future. Australian gold companies with domestic and offshore production will be considerably more profitable with the rising US$ gold price and the lower Australian dollar. Australian gold explorers can also expect lower exploration costs, and the talent pool will improve as other mining commodity sectors ease.”

He continued by saying that bank finance, however, would come at the cost of tougher terms and conditions and that a number of junior gold companies, and even mining heavyweights such as Rio Tinto or Oz Minerals, have not and will not be immune from the burdens of debt, but fortunately renewed interests in the gold sector means the availability of equity to allow development, expansion and exploration.

“I encourage gold producers that while the appetite for gold is strong, capital raising strategies need to be better executed than ever before. There is the potential for significant consolidation in the gold sector as larger companies attempt to replace resources and juniors combine to enhance size. Listed gold entities on the ASX should look to use the strength of their listing to also seek opportunities offshore where capital for gold projects is less available,” Egerton-Warburton concluded.