Aus­tralian Gold Output Hit By Rain

Solitaire - - SPECTRUM -

Mel­bourne-based gold mining con­sul­tants, Sur­biton As­so­ciates Pty Ltd, said Aus­tralian gold mine pro­duc­tion for the three months to March 31st, 2018 to­talled some 74 tonnes, six tonnes or 7% less than in the pre­vi­ous quar­ter.

De­spite the lower March quar­ter output, the re­sult com­pares favourably with the 71 tonnes of gold pro­duced in the cor­re­spond­ing quar­ter of 2017. “Over­all it was a rea­son­able per­for­mance given that pro­duc­tion in the De­cem­ber quar­ter was par­tic­u­larly high at 80 tonnes,” said Dr San­dra Close, a Sur­biton As­so­ciates’ di­rec­tor. “This was an out­stand­ing re­sult. How­ever, as an­tic­i­pated, the fig­ures for the lat­est quar­ter are down, as the usual wet weather early in the year in Western Aus­tralia (WA) and north Queens­land caused pro­duc­tion cuts at sev­eral mines.”

Dr Close said the March quar­ter, which is two days shorter than the De­cem­ber quar­ter, also ac­counted for al­most a tonne and a half of the re­duced output. “Just a hand­ful of the largest op­er­a­tions ac­counted for some four tonnes less gold pro­duc­tion in the March quar­ter,” Dr Close said. “When wet con­di­tions cause mining and haulage prob­lems, oper­a­tors have to draw from low grade stock­piles to main­tain mill through­put.”

She said that in the lat­est quar­ter, An­gloGold and In­de­pen­dence Group’s Trop­i­cana Joint Ven­ture pro­duced 34,000 ounces less; Newcrest’s Telfer op­er­a­tions output was down 33,000 ounces; New­mont and Bar­rick’s Su­per Pit was 28,000 ounces lower; and output from New­mont’s Bod­ding­ton and Tanami op­er­a­tions fell by a com­bined 30,000 ounces.

“In ad­di­tion, Newcrest’s Ca­dia East op­er­a­tion in New South Wales (NSW) was down some 37,000 ounces in the March quar­ter,” Dr Close said. “It has had a dif­fi­cult time in the last 12 months but now pro­duc­tion has re­sumed once more and gold and cop­per output is im­prov­ing.”

In mid-July 2017, Ca­dia East suf­fered an earth tremor which dis­rupted pro­duc­tion dur­ing the Septem­ber quar­ter. Although pro­duc­tion re­cov­ered in the De­cem­ber quar­ter, it was dis­rupted again when a tail­ings dam wall was breached in March 2018. Mining was sus­pended for two weeks and pro­cess­ing did not re­sume for a fur­ther week. “Only a small num­ber of op­er­a­tions re­ported higher output dur­ing the March quar­ter,” Dr Close said. “An­gloGold’s Sun­rise Dam op­er­a­tion in­creased output by about 20,000 ounces mainly due to higher re­cov­ered ore grade from un­der­ground, while both BHP’s Olympic Dam and Sil­ver Lake’s Mt Monger op­er­a­tions each pro­duced 13,000 ounces more.”

Dr Close said over­seas con­trol of Aus­tralia’s gold pro­duc­tion has pro­gres­sively fallen for some years and will likely con­tinue to de­cline as Aus­tralian com­pa­nies de­velop new mines and some over­seas com­pa­nies with­draw, of­ten sell­ing their Aus­tralian op­er­a­tions back to lo­cal pro­duc­ers. “Over­seas con­trol of Aus­tralia’s gold mines rose from around 20% to around 70% in the late 1990s and early 2000s,” Dr Close stated. “But it has sub­se­quently re­duced sub­stan­tially, so that over­seas con­trol cur­rently sits at around 46%.” She added that it was dis­ap­point­ing to hear that once again the sub­ject of an in­creased roy­alty on gold had been raised in WA, where about three quar­ters of Aus­tralia’s gold is pro­duced. Although the roy­alty was not in­creased in the WA State Bud­get on May 10th, trea­surer Ben Wy­att said he be­lieved that an in­crease in the roy­alty for gold was jus­ti­fied, not­ing that its roy­alty rate was lower than that charged for other min­er­als.

“Not all com­modi­ties are the same and the roy­alty rate ap­ply­ing to one min­eral may not be ap­pro­pri­ate for another,” Dr Close said. “For ex­am­ple, iron ore is a bulk com­mod­ity that lends it­self to large-scale mining and min­i­mal up­grad­ing. Gold is at the other end of the spec­trum, with very low grade ore mined on a much smaller scale, with that ore also re­quir­ing sig­nif­i­cant pro­cess­ing and refin­ing.”

She added that at any par­tic­u­lar time there were al­ways some op­er­a­tions do­ing well, some op­er­a­tions will be just prof­itable and some will be re­ally strug­gling. “Over­all the gold mining sec­tor works hard to con­trol costs but cur­rently some pro­duc­ers have All In Sus­tain­ing Costs (AISCs) well above the gold price,” she said. “To im­pose a higher roy­alty would seem a pe­cu­liar way for the present WA gov­ern­ment to keep peo­ple in work and to keep the gold in­dus­try pro­duc­tive and con­tribut­ing to our ex­port earn­ings.”

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