Australian gold production drops from all-time highs

Australia’s gold mine output in the September quarter declined by 5 per cent to 78 tonnes, according to Melbourne-based mining experts, Surbiton Associates (SA).

September quarter’s production was the lowest quarterly output since Australia’s weather affected quarter in March last year.

Backtracking to 2018/2019, Australian gold output reached an all-time record high of 321 tonnes, valued at approximately $22 billion at current market value.

Surbiton director Sandra Close said two major factors contributed to the lower production in the September quarter.

“One was due to production factors such as planned maintenance or unexpected technical problems lowering output at some gold plants, while the other was due to the effect of high Australian gold prices,” Close said.

Newcrest Mining’s output was down approximately three tonnes in the September period, with its Cadia East mine in New South Wales falling two tonnes.

Production of Newcrest’s Telfer in Western Australia declined by 37,000 ounces, while Northern Star Resources’ Kalgoorlie operations fell 22,000 ounces against the June quarter.

However, some operations did increase their output sturdily on the June quarter.

“The new Gruyere gold mine, owned equally by South Africa’s Gold Fields and Gold Road Resources, increased production by 28,000 ounces closing towards full production,” Close said.

“Another good performer was Canada’s RNC Minerals which increased production by almost 16,000 ounces, not including another 1800 ounces of gold in specimen stone from Beta Hunt and its newly acquired Higginsville operation.”

Close advised that gold production could recover in the December quarter of 2019 with operational problems being overcome and new operations having joined the list of gold producers.

She further stated that higher gold prices in Australian dollar terms could result in a reduction of gold produced, allowing operations to reduce the grade of ore being treated, thus lengthening the life of the operation.

With lower head grades resulting in less gold being produced, lower output is offset by higher gold price, leading to sales revenue and profitability being affected minutely.

“In the September quarter of 2019, the Australian dollar spot gold price averaged $2150 per ounce, compared with $1870 per ounce in the June quarter,” Close said.

“The costs predominantly in Australian dollars is benefitting from the changes in the exchange rate as the Australian dollar continues to weaken against the US dollar.”

Acquisitions have been resolved, such as Saracen Mineral Holdings and Barrick Gold’s joint venture interest, which has removed the prevailing uncertainty and has contributed to a slow increase in the local control of the gold industry rising to nearly 60 per cent.

“Local control of the gold sector fell to around 30 per cent in 2002, following takeovers by several overseas gold mining companies, but local control has slowly increased to double that low point,” Close said.

Australia’s largest gold producers for the September quarter were:
Operation                   Ounces            Owner
Cadia                             171,730           Newcrest Mining
Boddington                167,000           Newmont Goldcorp
Fosterville                   158,327           Kirkland Lake Gold
Tropicana – JV           123,320           AngloGold Ashanti 70%, Independence Group 30%
Super Pit – JV            116,000           Newmont Goldcorp 50%, Barrick Gold 50%

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