PERTH (miningweekly.com) – Australian gold production rose to its highest levels since 1999 in 2016, at 298 t, gold mining specialist Surbiton Associates reported.

Gold production in 2016 was worth some A$15-billion at the current gold price of A$1 600/oz, and was up 10 t, or 3.5% from 2015 production levels. During the three months to December 31, Australian gold production reached 77 t, an increase of 3% on the September quarter.

“It was a good year for Australia’s gold miners,” said Surbiton director Dr Sandra Close.

“We are getting very close to the 300 t/y mark but we still have a way to go to break the all-time annual record of 314 t set in 1997.”

Close said that, from its all-time high some 20 years ago, Australian gold production had fallen to 220 t by 2008 but since then has been trending upwards.

According to the US Geological Survey (USGS), Australia is the world’s second-largest gold producing country after China, which it estimated to have produced 455 t of gold in 2016. In third place was Russia, followed by the US, Canada and Peru.

South Africa, once the world largest gold producing country, was seventh with 140 t.

“Overall, the Australian dollar gold price has continued to be attractive, thanks to the combination of the US dollar gold price and favourable exchange rates. This has encouraged the redevelopment of previously mined areas and the refurbishment of mothballed plants, thereby pushing Australian gold output higher,” Close said.

During 2016, several of the larger producers, maintained or slightly increased output.

Newcrest Mining’s Cadia East mine has almost replaced production from Cadia and Ridgeway, while the Super Pit, in Kalgoorlie, continued production as normal, although the previously announced sale of Barrick Gold’s 50% share to Minjar Gold, a subsidiary of Shandong Tianye Group, for a reported $1.3-billion, seems to have stalled.

“Among the smaller to mid-size companies, some of the locals have a good story to tell. Metals X continued its long-term strategy with the December 2016 spin-off of Westgold Resources, while companies such as Saracen Mineral Holdings and Blackham Resources are also contributing to the increase in gold production,” Close said.

She added that Westgold Resources is currently recommissioning the old Fortnum gold operation and is also planning to rejuvenate Big Bell. Its current operations are Higginsville, South Kalgoorlie and the Central Murchison gold project, south of Meekatharra, which continues to ramp up.

As well as its Carosue Dam plant, Saracen Mineral Holdngs has continued to ramp-up production at the rejuvenated Thunderbox operation near Leinster. Blackham Resources, which poured its first gold from the refurbished Wiluna mill in mid-October 2016, is investigating the possibility of almost doubling the plant’s capacity. It recently also raised A$35-million to carry out further exploration.

“There are others in the pipeline too. Around Kalgoorlie, these include start-ups at Eastern Goldfield’s refurbished Davyhurst plant in March and Maximus’ revamped Wattle Dam plant in April, while Canadian company RNC Minerals has plans to increase output from Beta-Hunt substantially.”

Production also continues to increase from some of the junior gold mining companies, which either sell parcels of gold ore to the larger producers with spare milling capacity, or enter into toll treatment agreements and sell the gold on their own account. These include Empire Resources’ Penny’s Find, GME Resources’ Devon and Southern Gold’s Cannon mines.

“The increase in the December 2016 quarter was in line with the generally upward trend in production. But the December quarter is often higher as it contains 92 days and also, companies with a December balance date, sometimes endeavour to make up any shortfall which may have occurred earlier in the year,” Close said.

Surbiton warned, however, that bad weather could disrupt production in the short term.

"Given all the recent rain in Western Australia and other states, gold output in the March 2017 quarter  may well be down,” she said.

“Output early in the year is often affected by rain from summer cyclones that disrupt mining in openpits and creates problems during processing due to the sticky nature of the ore. Also, the March quarter is only 90 days, which reduces output by around 1.5 t compared with the 92-day December quarter.” 

Close noted that, in the near term, Australia’s yearly gold production could likely continue to increase, adding that the local gold price remains reasonably attractive despite some fluctuations.