Nov 30, 2020

Australia on track for bumper gold year

Australia on track for bumper gold year

Australia is still heading for a record year of gold production despite a slight drop during the September quarter, according to consultant Surbiton Associates’ latest report.

Australian gold production was worth a little over $7 billion for the three months, Surbiton Associates director Sandra Close said

She said Australian dollar gold prices averaged around $2670 an ounce in the September quarter, with the Australian dollar averaging 73 US cents for the period.

“The weighted average cash cost of production was less than half the average gold price, indicating that many gold producers have enjoyed healthy profit margins,” Dr Close said.

Surbiton Associates director Sandra Close.

“However, because fewer ounces were produced, weighted average cash costs and All In Sustaining Costs (AISC) rose.”

Gold output across Australia in the September 2020 quarter totalled 81 tonnes, down four tonnes from the June quarter, mainly due to lower production at some of Australia’s largest gold mines.

“For the January to September period in 2020, Australian gold production totalled around 244 tonnes,” Dr Close said.

“So output for the full 2020 year should be close to, or may even exceed, the record of 326 tonnes set in 2019. Often the December quarter has the highest production of the year.”

Market interest in the gold sector remains high and this has also been reflected in greater exploration expenditure and activity.

“Many exploration and producing companies are taking advantage of buoyant gold prices and the greater interest in the gold sector, to raise additional funds from shareholders,” Dr Close said.

“The increased drilling activity and property deals are leading to some excellent gold discoveries but not all of these will become new gold mines.”

Amongst the promising discoveries are De Grey’s Hemi project, 80km south of Port Hedland and the Newcrest/Greatland Joint Venture’s Havieron project, 45km east of Telfer. Another is Stavely Minerals’ namesake Stavely project, about 250km west of Melbourne.

Given the border constraints this year, there was now a real shortage of mining industry workers in Western Australia,” Dr Close said.

“So there are plenty of job opportunities, whether it is in the trades, the professions or a wide range of support roles. For example, drilling contractors are flat out and having trouble getting staff such as drillers and particularly drillers’ off-siders. Remember also that the Super Pit is planning to recruit several hundred people as its production expands.”

Among the operations recording lower output in the September 2020 quarter was Newcrest Mining’s large Cadia East mine, down 40,000 ounces; the Kalgoorlie operations of Northern Star Resources (excluding the Super Pit), down 29,000 ounces; Newcrest Mining’s Telfer mine, down 27,000 ounces; and St Barbara’s Gwalia operation down a similar amount due to a rock fall in the Hoover decline.

Those operations with improved gold output included AngloGold’s Sunrise Dam mine, up 15,000 ounces, Newmont Corp’s Boddington gold operation, up 10,000 ounces and Kirkland Lake Gold’s Fosterville mine, up 6,400 ounces.

Two small operations in NSW recently joined the list of producers. One is Auralia Metals’ Dargues Creek venture near Braidwood, south-east of Canberra. The other is Manuka Resources’ Mt Boppy/Wontawinta operation, east of Cobar.

Australia’s largest producing gold mines for the September 2020 quarter were:

Operation                 Ounces                     Owner

Cadia East                 196,504          Newcrest Mining Ltd

Boddington                178,000          Newmont Corp

Fosterville                  161,498          Kirkland Lake Gold Ltd

Tanami                       131,000          Newmont Corp

Super Pit                    110,379          Northern Star Resources

There are plans to recruit hundreds of people as Kalgoorlie’s Super Pit production expands.