PERTH (miningweekly.com) – The declining value of the Australian dollar has been hailed as the saviour of the country’s gold sector, with mining consultancy Surbiton Associates saying that the gold sector remained in good shape, despite the negative market sentiment associated with the current US dollar gold price, which was now at a six-year low.

“On the basis of the margin between gold prices actually being achieved and the all-in sustaining costs (Aisc), we estimate that around 90% of operations in Australia are still in the black,” said Surbiton director Dr Sandra Close.

“During the September quarter, the Australian dollar declined from about $0.77 to around $0.70.”

The average gold price for the September quarter was A$1 550/oz, some A$20/oz higher than the average for the previous three-month period. At the current exchange rate of about $0.72, the local gold price is just below A$1 500/oz compared with a US price of around $1 075/oz.

Close said that there would invariably be some operations at the top-end of the cost curve which were struggling, but noted that those companies at the lower-end of the cost curve had recently achieved excellent margins.

“Newcrest Mining’s Cadia East mine is a standout example,” Close said.

“It’s a large-scale, low-cost, highly-efficient operation that produces gold with copper as a by-product. An Aisc of only A$142/oz after copper credits and a selling price of over A$1 550/oz of gold, made it a ‘high-margin’ operation in the September quarter.”

However, Close warned that costs at Cadia East might rise in the current quarter owing to problems with one of its two semi-autogenous grinding (SAG) mills. The SAG mill was taken out of service in mid-October for repairs to the drive motor but was returned to service about a week ago. 

“Other ‘high-margin’ gold producers in the September quarter included Evolution Mining’s newly-acquired Cowal gold mine in New South Wales, which achieved a margin of over A$1 000/oz, while Evolution Mining’s Mt Rawdon mine and St Barbara’s Gwalia operation had margins around the A$850/oz mark,” Dr Close said.

However, some of the gold producers were not so fortunate. She said Newmarket Gold’s operations at Cosmo, in the Northern Territory and Stawell in Victoria, did not cover their Aisc, while AngloGold Ashanti’s Sunrise Dam operation was just under break-even in the three-month period.

Close reported that Australian gold output remained relatively stable.

“September quarter 2015 production totalled 72 t, around 1% higher than the previous quarter and 2% higher than for the September quarter 2014. Both primary gold and by-product output were slightly higher.”

Production from the Super Pit at Kalgoorlie, jointly owned by Newmont Mining and Barrick Gold, increased by 32 000 oz compared with the June quarter 2015. Other operations with increased output included Gwalia, which was up 15 000 oz and Tanami, owned by Newmont Mining, which was up 10 000 oz.

Operations producing less gold in the September quarter included Ridgeway, also owned by Newcrest Mining, which was down by 19 000 oz, Evolution Mining’s Cowal mine, which was down by 11 600 oz, and its Mungari mine, which was also down by 10 000 oz.

“In cases where operations change hands, such as Cowal and Mungari, it is not unusual for gold production initially to decline under the new owners,” Close said.

“Vendors often maximise gold production in the months prior to sale.”

The big improver among the by-product producers was BHP Billiton’s Olympic Dam mine, which increased gold production by almost 20 000 oz.

“Several new and recycled operations are coming on stream. The largest is Metals X’s Meekatharra gold project, which poured its first gold on October 29.”

She said other smaller projects, utilising spare treatment capacity in the Kalgoorlie area, include Kidman Resources, which started production from Burbanks in late September, Southern Gold’s Cannon gold deposit, which began in mid-November, and Excelsior Gold which would start treatment of ore from Castlereagh in December.