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Australia gold production dips, but Close says nothing to worry about

11th March 2024

By: Creamer Media Reporter

     

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Australian gold production reduced by 3%, or 9 t, to 304 t last year, Melbourne-based gold mining consultant Surbiton Associates reported on Sunday, but director Dr Sandra Close said that the drop was nothing to be worried about.

“Usually, when gold prices rise, many mine operators reduce the head grades of the ore being treated. This results in fewer ounces being produced and at a higher production cost in the short term, but is simply good practice to maximise gold output over the life of the mine,” she said.

Close said that head grades can be lowered by blending in lower grade stockpiled material or by treating lower grade ore from the mining operations, while maintaining profitability. For example, Northern Star Resources’ Super Pit has more than 100-million tonnes of low-grade material available for blending as required.

However, output rose by 3 t in the December 2023 quarter to 77 t, or 2% higher than the previous quarter.

In the December quarter, Australian dollar gold prices averaged A$3 040/oz, A$94/oz more than in the September quarter of 2023. By comparison, the rise in the US dollar price was only half this amount. The rest was due to a decline in the Australian dollar exchange rate.

“Ignore the US dollar:Australian dollar exchange rate at your peril,” Close said. “Locally, it is the margin between the Australian dollar gold price and the Australian dollar cost of gold production that determines profitability and the producers’ ability to pay dividends.”

Recently, gold prices have risen to record highs in the expectation of a reduction in US interest rates later this year. A record Australian dollar spot price of A$3 311/oz was reached early on March 9, while simultaneously a record US dollar spot price of $2 195/oz was recorded in New York trading on March 8.

Meanwhile, Close said that takeover and merger activity had been increasing recently in the Australian gold mining industry. “This may well have been triggered by higher gold prices and a renewed interest in gold in these uncertain times.”

Red 5 has announced a merger with Silver Lake Resources, which, if completed, will result in a 445 000 oz, or some 14 t, per year gold producer, all in Western Australia.

Evolution Mining said it would buy China Molybdenum’s 80% share of the Northparkes copper/gold operation in New South Wales. As Northparkes is primarily a copper producer this will only add about 38 000 oz/y to Evolution’s gold output.

Ramelius Resources on Friday confirmed that it was in “exclusive discussions” with Canada-based Karora Resources. However, discussions were “incomplete” and there was “no certainty that the discussions will lead to a transaction and if so at what price.” Karora produces about 160 000 oz, or five tonnes, of gold per year from its Higginsville and Beta Hunt operations in Western Australia.

“South Africa’s Gold Fields had a particularly strong December quarter with overall production rising around 64 000 oz, or 2 t,” Close said. “Unfortunately, this improvement was countered by the performance of Newmont where production, including the former Newcrest operations, declined by 78 000 oz or 2.4 t.”

Other operations producing more gold in the December 2023 quarter included Northern Star Resources’ Super Pit up 32 600 oz; Newmont’s Tanami, up 12 300 oz; and the new Bellevue mine near Leinster, Western Australia, up 12 000 oz. Tropicana, in Western Australia, owned 70% by AngloGold Ashanti and 30% by Regis Resources also had a good quarter.

Edited by Creamer Media Reporter

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