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Aussie gold industry valued at $30 billion annually as prices hit record highs and production dips

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(Kitco News) - Australian gold companies produced 73 tonnes of the precious metal in the first quarter of 2023, a decline of 8% from the fourth quarter of last year, according to the latest report from Melbourne-based gold mining consultants Surbiton Associates.

However, Dr. Sandra Close, a director for the research firm, noted that production in the first quarter is traditionally softer compared to the rest of the year as heavy cyclonic rain impacted operations in three states.

"Rain affects production almost every March quarter which, with only 90 days, is the shortest in the year," said Close. "Often, greasy haul roads disrupt trucking, wet ore is more difficult to handle in the plant and critical supplies such as explosives, cyanide and other reagents cannot be delivered."

Despite a soft start to the year, Close noted that the Australian gold sector remains on solid footing as prices hit a record high of A$2,868 per ounce mid-March.

"At prevailing price and exchange rates, the Australian gold industry is now worth around A$30 billion on an annual basis," she said.

While Australian gold producers see healthy profit margins, Close noted that low ore grades could impact production.

"As prices rise, mine operators may blend lower grade stockpiled material into the ore feed," Close said. "This enables better use of the resource overall, while still maintaining profit margins, although the lower average grade results in fewer ounces of gold produced and at a higher cost per ounce, within that time frame."

The research firm said that operations reporting significantly lower gold output in the March quarter, compared with the previous quarter, included Newmont's Boddington mine (down 66,000 ounces), Newcrest's Cadia (down 35,800 ounces) and AngloGold/Regis Resources' Tropicana operation (down 27,500 ounces.) These three alone accounted for a reduction of four tonnes in the total quarterly output.

By comparison, the three operations reporting the highest increases in gold output were Gold Fields/Gold Road Resources at Gruyere (up 8,400 ounces), Silver Lake at Mt Monger (up 6,100 ounces) and Karora Resources at Beta Hunt (up 5,700 ounces.)

Close said that operations with lower output outnumbered those reporting higher output by a ratio of three to two.

Surbiton Associates noted that Australia's mining sector has seen a significant transformation in the last 40 years.

Close has documented the sector's growth in two books, The Great Gold Renaissance, covers the first 20 years of the gold boom from 1981 to 1889. Her second book, Australia's Greatest Gold Boom, published last year, covers the sector from 2001 to current market conditions.

In 1981 Australia produced less than 20 tonnes of gold and now the industry generates $30 billion in economic activity.

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