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Global Gold Mining Expected To Remain Stable In 2019

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(Kitco News) - Global gold production is expected to be somewhat stable in 2019, with one analytical firm forecasting a fall of half a percentage point and another looking for a rise of less than that.

The GFMS team at Refinitiv projected 2019 gold production will ease to 3,265.5 tonnes from an estimated 3,281.7 for 2018.

“On balance, we think it will contract by one-half percent,” said analyst Johann Wiebe.

Meanwhile, the consultancy Metals Focus sees global gold mine production edging higher by 0.2% in 2019 to a new record of 107.6 million ounces.

GFMS looks for output to rise in Africa, Australia-Oceania and Europe. However, production is seen decreasing in Asia, South America and North America.

“There’s not going to be any major mine closures,” Wiebe said. “There’s going to be a couple of instances where we have lower grades having an effect on production.”

However, he added, there is potential for political uncertainty and unrest, as well as court challenges, to affect production in South America, in particular Argentina. For instance, in October, Chile’s environmental court ordered Barrick Gold Corp. to close the Chilean portion of the Pascua-Lama project. South America is the region for which GFMS looks for the biggest percentage change in output next year, calling for a decline of 2.6%, although some of this is because of lower ore grades in Chile and Bolivia due to mine depletion.

“There are some ongoing issues in South America, but it’s been that way for a while,” Wiebe said. “In that sense, there’s not going to be anything new. There might be some disruptions but nothing major in terms of significant mine production being put off line.”

The Amulsar project in Armenia is expected to add several additional tonnes to global output in 2019, Wiebe noted. However, output will ease in other parts of Asia due to lower grades, Wiebe explained.

Newmont Mining Co. has said it will get the first full year of production from the Subika Underground project at the Ahafo in Ghana.

Output is expected to ease in North America, with lower production in Mexico and the U.S. but with this partly offset by the opening of new gold mines in Canada, including the first production from Agnico Eagle Mines Ltds.’s Amaruq mine, Wiebe reported.

Metals Focus listed the following expected notable additions to mine supply:

* Mincor Resources achieved first gold production at Widgiemooltha in Australia in July, and the operation is expected to reach an average gold production of one tonne per year.

* Orminex Ltd. announced the first gold pour at Comet Vale, also in Australia, in August. The first stage of development consists of a 27-month mine plan exploiting a 200,000-ounce resource.

* The first gold pour at Pan African Resources’ Elikhulu tailings retreatment plant in South Africa was accomplished in August, with the operation scheduling steady-state production of 1.7 tonnes a year.

* Nordgold started operations at the Gross project in Russia in September, and once fully ramped up, the open pit/heap leach operation will have an average gold production of 6.2 tonnes a year.

* Harte Gold Corp. achieved first gold pour at Sugar Zone Mine in Canada in October, and the operation is targeting annual production of 3.3 tonnes per year from the three phased ramp-up.

* Nornickel continues commissioning of the Bystrinsky project, with gold in concentrate is forecast to average 7.6 tonnes per year.

GFMS looks for average all-in sustaining costs to be in a range of roughly $850 to $900 a gold ounce in 2019, compared to an expected $845 for 2018. “Oil will be a big factor in terms of cost-inflation impact,” Wiebe said.

Mixed Expectations For Silver Output

GFMS sees 2019 silver production declining 0.7% to 851 million ounces, compared to 857 million in 2018. Analysts look for declines in Asia, South America and Europe, but increases in Africa, North America and Australia-Oceania.

Meanwhile, Metals Focus said it expects a 2.2% rise in global mine supply to 871.6 million ounces in 2019.

The majority of world’s silver comes as a by-product of mining for other metals – either gold or base metals such as copper. One of the countries that will post the biggest jumps will be Canada as a result of byproduct silver, Wiebe reported.

Here are some of the expected highlights listed by Metals Focus:

* Yamana Gold Inc. achieved the first quarter of commercial production at the Cerro Moro gold-silver mine in Argentina in the third quarter and forecasted higher throughput and grade in fourth quarter to meet full-year guidance of 3.75 million silver ounces, with the mine is expected to produce 8.3 million per year in 2020.

* First Quantum Minerals Ltd. announced construction of the Cobre Panama project was 81% complete as of the end of the third quarter, with the operation expected to ramp up over 2019 and 2020 and produce 1.8 million silver ounces a year as a by-product of copper mining over a 34-year mine life.

* Northern Vertex Mining Corp. declared commercial production at the Moss Mine in Arizona in September 2018, with the company’s guiding production of 236,000 ounces in 2019.

* Bear Creek Mining Corp. completed phase-one detailed engineering work on Corani in Peru, and the project received necessary permits in June. The project will initially produce an average of 12 million ounces of silver in years one through six, along with lead and zinc.

One unknown for silver-mining supply is the future of Tahoe Resources Inc.’s Tahoe giant Escobal mine in Guatemala. Pan American Silver Corp. agreed to purchase Tahoe in November, and the companies set out a contingency payment after commercial shipments resume, assuming Escobal operations restart.

The country’s Supreme Court shut down the mine last year over a dispute on whether the Ministry of Energy and Mines properly consulted surrounding indigenous communities on the project. The Constitutional Court has provided a resolution for a process that can lead to a restart of the mine, although there is no timeline. The Escobal mine produced 21 million ounces of silver at all-in sustaining costs of $8.63 during its last four quarters of undisturbed production, Tahoe has reported.

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