LAWRIE WILLIAMS: Australia continues to increase annual gold output in 2020

Melbourne-based gold mining consultants, Surbiton Associates has reported that Australia’s gold mine output totalled 327 tonnes in 2020, a new record for any calendar year, but only about 1.5 tonnes more than in calendar 2019. The consultancy reports that the full calendar year’s production was down slightly on that of the 12 months to 30 June 2020. (Most Australian corporate data is reported from end-June to end-June.)  As an Australian-based consultancy specialising almost entirely on the gold mining sector, Surbiton’s figures are always both reliable and accurate.

In her latest comments accompanying the report, Surbiton director Dr. Sandra Close notes that “Although Australian gold production is remaining near record levels, we are seeing a significant overall drop in the grade of ore being treated.  This is a rational response to the higher gold prices during the year.” 

This is a fact we have been emphasising here for many years.  Higher gold prices do not necessarily lead immediately to higher production.  While they may stimulate exploration and mine and plant expansions, such activities take time to lead to any production advance,  Meanwhile mining companies may well mine and process lower grades of ores to extend mine life at unchanged plant throughput while still being able to maintain profitability levels.   Dr Close goes on to note that some mines have greater flexibility in selecting the grade of ore mined, while some have stockpiled lower grade material which can be blended with their run-of-mine ore to be treated profitably.

Dr, Close also comments that Australia is the world’s second largest gold producer after China, with most of its gold exported, making the yellow metal a major contributor to the country’s balance of payments current account.  Whether the country is indeed the world’s second or third largest gold producer, though, perhaps remains open to question as global figures are collated.  Russia also lays claim to that position with the two countries producing very similar amounts of gold annually. 

Specialist precious metals consultancy, Metals Focus, last year came down on Russia’s side with data suggesting Russia produced marginally more gold than Australia, but it probably depends on how the data is calculated, and what is included as to which should take this title.  In any case which is actually the larger producer is pretty irrelevant, with both producing around 50% more gold than the world’s fourth largest gold miner – the U.S.  With China’s gold production seemingly falling about 5% a year, it may not be too long before Australia or Russia takes the World gold producer top spot providing both continue to at least maintain, or further increase, current production levels.

The Surbiton release notes also that looking to 2021, there are several new or recommissioned operations expected to join the list of producers.  Red River’s Hillgrove, gold-antimony operation in New South Wales and small producer Kaiser Reef in Victoria should commence in the March quarter 2021, while Ora Banda Mining at Davyhurst and Canada’s Novo Resources, both in Western Australia, both poured their first gold last month. Around mid-year Capricorn Metal’s Karlawinda operation should begin ramping up to an output of more than 100,000 ounces a year.

“The ‘deal of the year’ for 2020 was the change of ownership of the Super Pit in Kalgoorlie,” Dr Close said. “The two equal joint venturers, Barrick Gold and Newmont sold their interests to Saracen Mineral Holdings and Northern Star Resources respectively, valuing the Super Pit at around US$1.55 billion (A$2.3 billion).”

Since the Super Pit Joint Venture commenced in 1989, the open pit has grown to around 3.5 km long, 1.5 km wide and about 600 metres deep. It has produced around 21 million ounces of gold from the area often called “The Golden Mile”, which includes the workings of the many underground mines which date from the late 1890s and early 1900s.

 “The sale of Super Pit resolved some operational uncertainties and transferred the mine and treatment plant from overseas to local control,” Dr Close said. “Recent subsequent changes mean that the Super Pit, and indeed the original Golden Mile itself, is now effectively held by a single owner for the first time since the field was discovered in 1893.”  In January 2021 shareholders formally agreed to a ‘merger’ which saw Northern Star essentially take over Saracen, combining the assets of both companies, in a deal reported to be worth A$16 billion.

Surbiton classified Australia’s largest producing gold mines for the 2020 calendar year as:

 Operation                   Ounces                        Owner

Cadia East                   822,478           Newcrest Mining

Boddington                  670,000           Newmont Corp

Fosterville                   640,000           Kirkland Lake Gold

Tanami                       495,000           Newmont Mining

Super Pit                    453,194           Northern Star Resources 50%, Saracen

                                                            Mineral Holdings 50%

 

01 Mar 2021

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London - recently described as the World’s No. 2 University (after MIT).

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