Miners going for gold with high prices and production record in 2020

Australia’s gold mines set a new record for annual production as the gold price peaked in 2020.

Newcrest Mining’s Cadia operation was the biggest producer of the year, with output of 822,478 ounces.

Australia’s gold mines set a new record for annual production as the gold price peaked in 2020.

Local miners pushed their processing plants to take advantage of the high prices and produced $27bn worth of the precious metal in the process.

Gold consultancy Surbiton Associates released its annual review of the Australian gold sector on Sunday, saying Australia’s gold mines produced 327 tonnes of the precious metal in 2020, a calendar year record, and about 1.5 tonnes more than in 2019.

But the overall grade of production fell during the year, according to Surbiton director Sandra Close, as miners pushed their processing plants to capacity as the gold price soared.

Gold hit an all-time high in US dollar terms in August, peaking at $US2067 ($2868) a fine ounce, before softening as global volatility eased and the Aussie dollar strengthened against the greenback.

Dr Close said Australia’s record production was no surprise as miners big and small rushed to take advantage of the gold price.

“Although Australian gold production is remaining near record levels, we are seeing a significant overall drop in the grade of ore being treated,” she said.

“When gold prices are high, the grade of ore can be reduced but the mine can still remain profitable. Often this results in reduced output and the cost of production per ounce goes up — but at the moment operators are producing much the same amount of gold from lower grade material by increasing the throughput of their treatment plants.”

Newcrest Mining’s Cadia operation was the biggest producer of the year, with output of 822,478 ounces, followed by Newmont’s Boddington mine in WA, at 670,000 ounces.

Kirkland Lake Gold’s Fosterville operations produced 640,000 ounces, followed by Newmont’s Tanami mine in the Northern Territory at 495,000 ounces and then WA’s iconic Super Pit in Kalgoorlie — newly consolidated under a single owner — with 453,194 ounces.

 

The merger of Northern Star Resources and Saracen Mineral Holdings has catapulted the company into second ranking on the list of the biggest gold miners on the Australian Securities Exchange, and given Northern Star unparalleled control of Kalgoorlie’s Golden Mile.

The Super Pit joint venture was launched in 1989 and the open pit — now 3.5km long, 1.5km wide and about 600m deep, has produced about 21 million ounces of gold, Dr Close said.

The deal to merge Northern Star and Saracen, who each acquired half of the mine from Barrick and Newmont, meant the Super Pit, and the original Golden Mile itself, is now held by a single owner for the first time since the field was discovered in 1893, she said.

Although the gold price has softened to around $US1730 ($2246) an ounce, Dr Close said the strong price through the year had encouraged a suite of new gold producers into the market.

Red River’s Hillgrove NSW gold-antimony operation and small producer Kaiser Reef in Victoria should begin production in the March quarter, Dr Close said, while Ora Banda Mining at Davyhurst and Canada’s Novo Resources, both in WA, poured their first gold in February.

Capricorn Metal’s Karlawinda operation should begin ramping up production in the middle of the year, targeting output of more than 100,000 ounces a year.