Australian gold production declines as miners adapt to record prices

Australia, the largest gold producer after China, produced slightly less of the yellow metal in the 12 months to June 30 as miners adjusted strategies for record high prices even as second-quarter output increased 7%, according to Melbourne-based consultants Surbiton Associates.

The country produced 297 tonnes of gold during the 2023-24 year, 10 tonnes less than 2022-23, and valued at A$30 billion ($27.4 billion), Surbiton said. Production totalled 75 tonnes in the three months to June 30, a rise of five tonnes on the previous quarter after heavy March rains impacted most operations, it said.

“At times of high prices, some operators deliberately reduce mill head grades by blending low grade stockpiled material with run of mine ore,” Sandra Close, a director of Surbiton, said in a Sept. 1 release. “In this way more gold can be mined from their deposits, thus extending the lives of their operations. Some profit is foregone up-front but the life-of-mine is longer.”

Another strategy is to process higher-grade ore and realize greater early profits, even though some gold will be left unmined, Close said. “A dollar today is worth more than a dollar tomorrow,” she noted.

Leading mines

Newmont (NYSE: NEM; TSX: NGT), the world’s largest gold miner, led the country’s production during the year with 626,000 oz. from Boddington near Perth in Western Australia, 458,700 oz. from the former Newcrest mine Cadia, located 260 km west of Sydney, and 448,000 oz. from Tanami in the Northern Territory.

Northern Star Resources (ASX: NST) mined 449,000 oz. from Kalgoorlie Consolidated Gold Mines, known as the Super Pit, about 600 km east of Perth. And the 70-30 joint venture of AngloGold Ashanti (NYSE: AU)and Regis Resources (ASX: RRL) produced 428,000 oz. from Tropicana, about 1,000 km east of Perth.

Gold hit a record high of $2,532 per oz. on Aug. 20 while the Australian spot market spiked at $3,809 per oz. on Aug. 2 when the Australian dollar exchange rate was lower, the consultant said. Gold has been above US$2,000 an oz. for most of this year and higher than US$2,200 an oz. since late March.

Financial results

Surbiton also noted how Northern Star increased its full-year after-tax net profit by 9% to A$638.5 million with a dividend of A25¢ per share, up 61%. Also, gold and copper producer Evolution Mining (ASX: EVN; US-OTC: CAHPH) boosted its full-year after-tax net profit by 158% to A$422 million and more than doubled its dividend to A5¢ per share.

Close, who wrote a PhD thesis and two books on the Australian gold mining industry, criticized Environment Minister Tanya Plibersek’s decision last month to block a tailings dam at Regis’ McPhillamys gold project, which the company said would end the proposed mine and cost it US$130 million.

“Minister Plibersek’s ruling is a prime example of a politician shooting Australia in the foot, apparently for political reasons,” Close said. “Gold alone is one of our largest single export earners. Just remember exploration dollars for all minerals can be redirected overseas if last minute decisions are imposed that seriously impact the viability of new mining developments in Australia.”