JOHANNESBURG (miningweekly.com) – Australian gold production is expected to rise as new and redeveloped operations came into production, with for 2009 likely exceeding that of 2008.

Industry consultants Surbiton Associates said that the biggest boost to production would come when the redeveloped of Newmont Mining’s Boddington gold/copper operation was commissioned next year, as it was likely to produce around 31 t/y of gold.

Newmont Mining’s latest report indicates that the Boddington redevelopment project will cost between $2,6-billion and $2,9-billion, with yearly output of around one-million ounces for the first five years of operation.

Surbiton director Dr Sandra Close said in a statement that diversified miner Oz Minerals’ long-awaited Prominent Hill copper/gold mine had also come on-stream during the quarter, while Apex Minerals’ Wiluna and ATW Goldcorp’s Burnakura operations recently rejoined the list of producers and Avoca Resources’ Higginsville operation, which was now treating higher grade ore, continued to ramp up output.

As far as the March quarter figures were concerned, Close said it was very much ‘steady-as-she-goes’. Although a few small operations including Brock’s Creek and Gympie recently ceased production, this had little effect on the March quarter figures.

Close said that the higher gold output anticipated in 2009 should allow Australia to regain a higher ranking among the world’s top producing countries.

In 2008, China was the leading gold producer with 282 t, the US was second with 229 t, followed by South Africa with 220 t and Australia with 219 t.

For some years China’s gold output has been increasing while that of the other major gold producing countries has declined. South Africa was the world's biggest gold producer for more than one hundred years, until it was overtaken in 2007 by the Asian giant.

Australia’s gold production has been on a downward trend since 1997.

“Last year, Australia produced almost a 100 t less gold than we did in 1997 and 100 t of gold is worth around A$4-billion at current prices,” Close said.

While it is the US dollar gold price that is usually quoted, she said that it was important also to take account of the Australian dollar price.

The Australian dollar gold price has been on an upward trend for the last nine years, with a record quarterly average of A$1 371/oz in the March 2009 quarter. An all-time daily high of A$1 547/oz was reached on February 20, but since then the Australian dollar had strengthened substantially against the US dollar, trimming the Australian dollar gold price back to around A$1 220/oz.

“Even at around A$1 200/oz, the low cash cost Australian operations such as Ridgeway, Cadia and Challenger are doing very, very well,” Close said.

She added that the current economic climate and the attractive gold price might actually encourage more companies to explore for gold in Australia, which has seen a significant reduction in gold exploration over the past decade.

“The recent fall in iron ore and base metals prices might induce small exploration companies to look more closely at gold again,” Close said. “Australia still has excellent exploration potential.”

In Western Australia, a state where gold output fell by about 50% in the past ten years, the government is introducing a A$80-million, five-year exploration incentive scheme, aimed at reducing the risk for resources companies.

Close said that gold was an “ideal” target for smaller companies in the current environment.

“It is a high-value, low-volume commodity that does not have the massive development costs or the enormous infrastructure requirements that the bulk commodities require.”

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