PERTH (miningweekly.com) – Despite the declining US dollar gold price, Australia’s gold production remained relatively unchanged in the September quarter, mining advisory Surbiton Associates reported this week.

During the three-month period, gold production declined only by 20 000 oz, to around 71 t, compared with the three months to June. However, production was still about half-a-tonne higher than the previous corresponding period.

“It is not surprising that gold production remains steady, despite the lack of market support. There are several contributing factors, including operational parameters such as grade and throughput, the effect of exchange rate movements and the impact of hedging activities,” said Surbiton director Dr Sandra Close.

“Gold is not a bulk commodity like iron-ore or coal. Many gold miners have greater operational flexibility, such as the ability to increase grade of ore treated, for example, which enables them to reduce costs and remain in business.”

Close said that although the US dollar gold price continued to trend downward, the Australian dollar gold price has been more stable, as it has benefited from the lower Australian dollar exchange rate, particularly in the last few months.

The average gold price for the September quarter was A$1 385/oz, a little higher than the current price in the local currency. By comparison, US dollar gold prices have fallen about $100/oz.

“Results this September quarter clearly show the benefit of hedging. Several producers delivering some of their production into forward positions or using put options achieved well over A$100/oz more than the average spot price,” Close said.

“Used wisely, hedging mechanisms provide certainty and reduce risk,” Close said.

Meanwhile, gold production from a number of Australian gold mines were reduced during the quarter, including from major Newmont Mining’s Tanami operation, down 23 000 oz and the Jundee, operation which was down 19 700 oz.

At Jundee, the June quarter was the last under Newmont Mining’s ownership and production was maximised before the operation was sold to Northern Star Resources on July 1.

Gold miner St Barbara’s Gwalia mine also produced 14 000 oz less gold during the quarter, as a two-week shutdown to replace ball mill foundations adversely affected production.

However, Close noted that some operations increased output during the quarter ended September.

Production at Evolution Mining’s Mt Carlton mine was up 16 700 oz owing to switching from silver-rich ore to predominantly gold-rich ore, while output at AngloGold Ashanti’s Sunrise Dam operation rose 16 000 oz on the back of higher throughput.

At Regis Resources’ Rosemont mine production was up 15 500 oz owing to a greater tonnage of ore treated, with higher grades and higher recoveries, as the mine overcame the effects of flooding earlier in the year.

“The gold sector is maintaining production but low gold exploration expenditure is still a real concern. However, with reduced share prices and a shortage of new capital we are seeing some rationalisation of exploration tenements and projects among the junior companies. Hopefully this will provide some much-needed stimulation,” Close said.