Miners cut production amid gold price rise

Australian gold production fell sharply in the first three months of the year.

Newcrest’s $2.2bn Cadia East mine was the gold-producing star for the March quarter.

Australian gold production fell sharply in the first three months of the year, dropping 12 per cent from a record December quarter.

Gold consultancy Surbiton Associates said total Australian quarterly production fell to 77 tonnes in the March quarter, down from an 87-tonne record in the previous period as Australian miners took advantage of the rising gold price to process lower-grade ore.

In Australian dollars the gold price averaged $2410 an ounce in the period, 30 per cent better than in the March quarter of 2019.

Surbiton director Sandra Close said the mining restrictions caused by the coronavirus appeared to have had little impact on gold production across the country, with the sharp fall more likely to have come from a decision by miners to take advantage of record gold prices in the period.

She said miners often turned to lower grade ore during prolonged spikes in the gold price to extend the life of mines while still delivering expected margins for shareholders.

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“The March quarter saw a sector-wide reduction in grade treated and tonnes treated, compared with the previous quarter, and there was one less day in the ­period,” Dr Close said.

“We saw the same effect of prolonged higher prices reducing production when the Australian dollar gold price rose substantially over several years, to reach more than $1500 an ounce in 2011 and 2012.”

While more than 70 per cent of Australia’s total output came from West Australian mines, two east coast operations topped the production figures for the period.

Newcrest’s flagship Cadia mine in NSW produced 195,181 ounces, down 44,500 ounces from the December quarter. Output from Kirkland Lake Gold’s Fosterville mine in Bendigo also fell, by 33,000 ounces, but it still had the second-highest production for the period at 158,864 ounces, Surbiton said.

The top five producers were rounded out by Newmont’s Boddington mine south of Perth with 142,000 ounces; the Kalgoorlie Super Pit, back in Australian ownership for the first time in decades, with 117,127 ounces; and Newmont’s Tanami operations in the NT, at 116,000 ounces.