Higher gold prices lead to reduction in production | Australian Markets

An Australian greenback gold price heading in direction of $5000 an ounce has really pushed a reduction in production of the valuable metallic throughout the nation, Melbourne-based industry analysts Surbiton Associates say.

Surbiton stated Australian gold mine production totalled 73 tonnes in the March quarter, six tonnes much less than in the December quarter however three tonnes more than the March quarter of 2024.

This happened because the London Bullion Market Association gold price ranged between $US2633/ozand $US3115/oz, which in Australian greenback phrases was $4232/oz to $4960/oz.

“Effectively, the recent decline in Australian gold production was largely the result of higher gold prices,” Surbiton Associates director Dr Sandra Close stated.

“At today’s gold price the March quarter’s output is worth over $12 billion, so understandably many producers are optimising their operations in response to such price increases.”

Dr Close stated the upper gold price had made decrease cut-off grades financial as a result of what was unprofitable to mine and deal with in the previous had now turn into profitable.

“If operations are able to lower their cut-off grades, then a greater amount of gold is recovered from each orebody,” she stated.

“Also, higher gold prices mean that it is economic to reclaim more low-grade material from stockpiles to feed into the treatment plants, so the weighted average head grade of ore being treated declines.

“Although lower head grades result in less gold being produced and means cash costs and AISC costs per ounce increase, the value of each ounce of gold is higher.

“Surbiton Associates’ latest analysis shows that low-grade, reclaimed stockpiled material is currently as high as around 15 per cent of the total ore being treated.

“Thanks to increasing gold prices, the proportion of low-grade material being blended into feed has risen steadily for the last five quarters, from a proportion of only around one per cent a year ago.”

Dr Close stated that it is likely to be thought that greater prices also needs to stimulate gold output by encouraging the start-up of new tasks and the re-commissioning of previous tasks on care and upkeep.

However, she stated many current plants had been now operating close to their restrict, so there was a scarcity of instant therapy capability for rising small miners wanting to promote parcels of ore or to have their ore toll-treated.

“On the face of it, lower gold production and rising costs per ounce might suggest that the gold industry in Australia is in trouble,” Dr Close stated.

“Far from it. Many gold producers are experiencing high margins and are doing very well.”

Those mines reporting considerably decrease gold production in the March quarter included Tropicana 330km north-east of Kalgoorlie-Boulder down 57,000oz, St Ives south of Kambalda down 40,500oz, and Tanami in the Northern Territory down 46,000oz.

Among the operations reporting elevated gold production had been the Cadia mine in New South Wales up 25,000oz, Bellevue north of Leinster up 22,000oz, and Fosterville in Victoria up 7000oz.

Boddington south-east of Perth produced essentially the most gold during the quarter, 126,000oz, whereas Tropicana churned out 105,267oz, Cadia 103,000oz, Kalgoorlie-Boulder’s Super Pit 99,998oz, and Telfer 90,172oz.