Craig Hempky and Joe Mazumdar discuss March’s sharp pullback in gold and mining shares, tying it to war-driven energy costs, shifting rate-cut expectations, and financing stress. Mazumdar argues higher energy costs may be the bigger margin risk than lower gold prices, while still saying better-quality, well-funded projects can hold up and even benefit from the shakeout.
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This is an end-of-month wrap focused on the precious metals/mining sector after a volatile March. Craig Hempky opens with the month’s reversal: gold and mining shares were strong into late February, but both pulled back sharply as geopolitical conflict and energy costs hit sentiment. Joe Mazumdar frames the period as a transition from pre-PDAC optimism to a post-PDAC shock, noting that the market was already seeing strong retail participation, elevated financings, and major M&A activity before the sudden escalation in the Middle East. Mazumdar’s core point is that the immediate issue for miners is not just a lower gold price but the rise in operating costs, especially diesel, heavy fuel oil, and sulfur-related inputs. He says large remote open-pit mines, off-grid operations, and processing-heavy assets are most exposed. …
Tactically, miners look vulnerable if energy costs stay high and rate-cut odds keep fading; the most exposed names are remote, diesel-heavy operators and marginal developers. Strong balance sheets and strategic-backed names may outperform on dips, but the group can remain choppy until the macro and war risk calm down.
Over the next few months, the sector’s path depends on whether fuel and sulfur inputs normalize and whether gold steadies enough to restore financing confidence. If costs stay elevated, capital will likely concentrate into higher-quality assets and the weaker end of the market will continue to lag.
Structurally, this reinforces a regime where mine economics are shaped as much by energy security and supply-chain reliability as by metal prices. The long-run winners are likely to be projects with strong jurisdictional support, infrastructure, and access to dependable inputs.
March’s pullback in gold and miners was driven in part by the sudden war-related shock and the market’s surprise around it.
Craig links the move to the war that started as March began; Joe says most of the market was caught by surprise.
The market had entered March with strong mining-sector momentum, including high attendance, heavy financings, and strong M&A activity.
Joe describes strong pre-PDAC conditions and transaction activity before the shock hit.
Higher diesel, sulfur, and fuel costs will squeeze margins most severely for remote, open-pit, off-grid mining operations.
Joe repeatedly identifies diesel exposure and off-grid power as the main cost problem for certain miners.
As this month has gone on, what has entered your mind and what will you be watching now going forward?
Joe says the market was caught by surprise by the US-Israel-Iran conflict, then shifts to the broader commodity and mining implications from fuel, sulfur, and financing pressures.
Can you speak generally to the margin squeeze and whether that justifies the pullback in mining shares?
Joe says the pullback is partially justified, but much depends on each company’s fuel exposure, hedging, and asset quality; some names may be bargains while others are more vulnerable.
Is the bigger risk to mining companies a falling price of gold and silver, or higher energy costs?
Joe argues higher energy costs are the bigger margin risk because lower cutoff grades require mining and processing more tonnage, which increases diesel and power consumption.
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