Australia’s leading gold miners are sitting on war chests of cash and bullion worth hundreds of millions of dollars as record gold prices swell balance sheets and prompt questions about how companies will deploy their growing reserves.

New analysis by gold consultancy Surbiton Associates, timed with the yearly Diggers and Dealers conference, shows that companies including Northern Star Resources, Ramelius Resources and Evolution Mining have seen their financial positions dramatically boosted by surging gold prices – now hovering around $3 300/oz, or A$5 100/oz.

“The rise in the price in the last two years alone has been remarkable,” said Surbiton director Dr Sandra Close. “This has been due to factors including increased world-wide economic and political uncertainty, as well as wars in the Ukraine and the Middle East, gold buying by some central banks and buying by private investors.”

The dramatic uplift in bullion valuations has lifted gold from $1 912/oz, or A$2 884/oz at end-June 2023 to more than $3 300 today. That’s nearly a 95-fold increase in US dollar terms since gold was first free-floated in 1971, and an even more extraordinary 165-fold rise in Australian dollars.

“When you look at historical gold prices, gold was so extraordinarily cheap compared with current prices,” said Close. “Had it been possible to predict the future, we could all now have become very rich indeed.”

Among the industry’s cash-heavy leaders, Northern Star is holding A$1.91-billion in cash and bullion. Ramelius has A$810-million, and Evolution Mining holds A$760-million in cash alone. Other standouts include Vault Minerals  with A$686-million, Regis Resources with A$517-million and Westgold Resources with A$364-million, with various combinations of cash, bullion, and investments.

“These numbers raise the question as to the final purposes of such massive cash balances,” said Close. “In most cases they are well in excess of the funds needed for plant expansions.”

With acquisition costs climbing and valuations of exploration assets inflated by high commodity prices, miners may face pressure from shareholders to consider alternative uses of capital.

“Perhaps they could be used for further acquisitions although prices now paid to obtain such new assets are very high,” Close noted. “The concern is that the larger the cash reserves become, the more the company may become a tempting takeover target.”

“Of course there is another rather obvious solution,” she added. “I am sure that shareholders would love to see higher dividends.”

Surbiton’s commentary arrives as the gold sector celebrates decades of growth. “To summarise what has happened since the gold price was free-floated in August 1971, the US dollar price per ounce has risen around 95-fold, while the rise in Australian dollar terms has been even more extraordinary,” Close said.

Surbiton has made two historical publications on Australia’s gold industry available on its website and at the Como Engineers booth during Diggers and Dealers, which is under way in Kalgoorlie this week.