Independent consulting group Surbiton Associates says Australian gold production fell by just over 10 t, or 12%, quarter-on-quarter in the three months ended March 31.
Production in the quarter under review declined to 77 t from 87 t in the December quarter.
The fourth quarter of last year happened to be the highest quarterly output on the books, says Surbiton.
The consultancy notes that the reduced output is no cause for alarm, since Australian dollar gold prices were a significant contributing factor last year.
Surbiton director Dr Sandra Close explains that many operators continue to take advantage of the extraordinary rise in Australian dollar gold prices through 2019 and early 2020.
However, the quarter under review saw a sector-wide reduction in both grade treated and tonnes treated, compared with the preceding quarter.
Close points out that in times of prolonged high gold prices, many operations reduce the head grade of the ore being treated where possible.
“This still yields good profits because of the higher prices, but the amount of gold produced actually falls. It also extends the life of the mines and leaves less gold in the group, which is positive, but also results in higher operating costs per ounce.
“The Australian dollar gold price averaged A$1 831/oz in the three months ended March 31, 2019 and A$2 410/oz in the quarter under review, which is a 30% year-on-year increase,” she highlights.
The US dollar price has also risen over the same period, but only by about 21% by comparison, as the Australian dollar price has had the added benefit of a lower exchange rate.
Close avers that the opposite effect occurs when gold prices fall for an extended time and mine operators reduce the amount of low grade material being treated. This then increases ore head grades, more ounces of gold are produced and the costs per ounce decline.
Meanwhile, Surbiton reports that Covid-19 has had minimal impact on gold production in Australia, since the majority of mines operate in remote locations – about 70% of Australia’s gold production comes from the Western Australia region.
“The gold mining industry and the mining industry in general have handled the problems associated with the coronavirus threat very well. Some operators have re-organised rosters and some fly-in, fly-out employees are working for extended tours of duty, in order to reduce the movement of personnel.
“In some cases, workers from other states have moved to Western Australia to overcome the problem of state border closures,” the consultancy states.
Close says that operations recording lower production outnumbered those increasing output by almost four to one, in the quarter under review.
The top five gold producers for the March quarter remained Newcrest Mining, Kirkland Lake Gold, Newmont, Northern Star Resources and Saracen Minerals.