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Australia Q1 Gold Production Dips; Lower Grade, Throughput – Surbiton

(Kitco News) - Australian gold production was lower in the first quarter of 2015, dropping 5 tonnes, or 7%, to 69 tonnes, according to a survey of the Australian gold mining industry by 
Surbiton Associates Pty Ltd.

The Melbourne-based mining consultants noted in a report Sunday evening that the first quarter of production is usually the lowest of the year but, with that being said, gold grades and tonnage were lower quarter-over-quarter.

“Disruptions due to wet weather early in the year often mean gold producers have to treat additional tonnages of lower-grade stockpiled material to keep their plants near capacity,” said Dr Sandra Close, director of Surbiton. “This year, wet weather affected some of the more northerly operations in Western Australia but further south, it was not a major problem.”

She highlighted Newcrest Mining Ltd.’s (ASX:NCM) Telfermine, Northern Star Resources Ltd.’s (ASX:NST) Jundee mineand Regis Resources Ltd.’s (ASX:RRL) three operations in the Duketon region all reporting lower production due to wet weather.

Close also noted that operational factors, such as scheduled maintenance, adverse geological factors and unexpected ground stability played a factor.

Piling on to the reasons production was lower are the fewer number of days in the first quarter, she added, as “each day of the year about three quarters of a tonne of gold is produced. This daily output is worth some A$37 million at the current gold price.”

The higher Australian gold price also played into lower grades.

“The higher average Australian gold price in the March quarter may well partially explain why grades were lower for the quarter too,” Close said. “With a higher gold price it becomes economic to treat lower grade ore.”

“[t]he average U.S. dollar gold price was only slightly higher in the March quarter than in the previous three month period,” she added. “However, the seven cent decline in the Australian dollar lifted the average Australian dollar gold price by A$144 per ounce, from A$1,403 per ounce in the December quarter to A$1,547 per ounce in the March quarter.”

Close also made quick reference to Western Australia’s government’s revision of mineral royalty rates but cautions that this is positive only for the short term as “[u]nfortunately the gold royalty question has not been resolved, only deferred.”

By Alex Létourneau of Kitco News
Follow Alex Letourneau @alex_letourneau


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