Melbourne-based mining consultants Surbiton Associates Pty Ltd said Australian gold production fell in the March quarter 2017, with the industry affected by wet weather in many parts of the country.  Australia is the world’s second largest producer of new mined gold, after China and onl just ahead of Russia.

Output for the quarter was some 71.5 tonnes of gold, a fall of around six tonnes, or eight percent, compared with the excellent result of some 77.5 tonnes achieved in the December quarter 2016. Nevertheless, gold production for the quarter was similar to output in the March quarter 2016.

“The fall in output for the recent March quarter was not surprising, as wet weather early in the year often disrupts production,” said Dr Sandra Close, a Surbiton Associates’ director. “This year heavy rain in Western Australia, which accounts for about three-quarters of Australia’s gold output, plus the effects of Cyclone Debbie in Queensland in late-March, played havoc with gold production at many operations across the country.”

Dr Close said that while the lower production marks a poor start to the calendar year, typically output is higher in the other three quarters. Additionally, the March quarter is the shortest quarter of the year and this makes a difference, as every day of the year about three quarters of a tonne of gold is produced, worth over A$40 million at current prices.

“Heavy rain affects mining and ore haulage at gold mines in a number of ways, including flooding, access for supplies and materials handling problems,” Dr Close said. “As well, in open cuts and in underground operations where the ore is often hauled from underground to the lower levels of previously mined open pits, problems can arise due to ore and waste having to be trucked up steep, greasy haul roads.”

If the mining operations cannot produce enough ore to keep the processing plant at full capacity, then stockpiled material is sometimes used to supplement the ore feed. This material is usually of lower grade and results in less gold being produced and higher costs of gold production.

“However, in the March quarter 2017 the lower gold production was mainly due to a reduction in the tonnage of ore treated by the primary gold producers, along with fewer days in the quarter,” Dr Close said. “There was only limited use of lower grade stockpiles, as there was not a significant change in the average weighted recovered grade on an industry-wide basis.”

Newcrest’s Telfer mine in the Great Sandy Desert in northern Western Australia experienced significant disruption, with record rainfall in January. This led to a fall in output of around 35,000 ounces of gold for the March quarter 2017 compared with the previous December quarter 2016.

Many other operations also reported lower output for the quarter. These included Newmont’s Tanami operation down 25,000 ounces; AngloGold and Independence’s Tropicana operation, 22,000 ounces lower; and the Super Pit at Kalgoorlie, owned equally by Newmont and Barrick, down 16,000 ounces.

“The Australian gold industry continues to benefit from a relatively stable, relatively attractive, Australian dollar gold price, maintained in part by a favourable US dollar exchange rate, with an Australian dollar worth around US 75 cents,” Dr Close said. “This has encouraged further activity in the sector, including the start-up of several mothballed treatment plants.”

Production continues to ramp up at Blackham Resources’ Wiluna, WA project. Westgold Resources’ Fortnum, WA operation is currently being commissioned and Eastern Goldfields’ Davyhurst, WA treatment plant is nearing production. Maximus Resources, which bought Ramelius Resources’ mothballed Wattle Dam plant near Coolgardie, expects to toll treat ore from other companies soon. Also, Toronto-listed Monument Mining Ltd hopes to bring its Burnakura, WA treatment plant into production later in 2017.

“Some years ago when the Australian dollar was strong and worth more than one US dollar, over half of the mineral exploration expenditure by Australian companies was being spent overseas,” Dr Close said. “It is encouraging that more recently this seems to have turned around, as we note that now there is a greater emphasis on exploration within Australia.”

Dr Close said that Australian control of the local gold mining industry still remains at just over 50 percent, although there has been increased ownership of some Australian operations by Chinese and Canadian companies.

Australia’s largest gold producers for the March quarter, 2017 were:

Operation	Ounces	Owner
Boddington	202,000	Newmont Mining Corp
Super Pit – JV	176,000	Newmont Mining Corp 50%, Barrick Gold Corp 50%
Cadia East*	168,579	Newcrest Mining Ltd
Tropicana – JV	99,884	AngloGold 70%, Independence Group 30%
St Ives	81,600	Gold Fields Ltd

*includes minor output from Ridgeway