Surbiton said September quarter's production was the lowest quarterly output since the rain affected March quarter in 2018. Australian gold output reached an all-time record of 321t in 2018/19, worth around $A22 billion at current prices, with Australia being the world's second largest gold producing country after China.
"Two major factors contributed to the lower production in the September quarter. One was due production factors such as planned maintenance or unexpected technical problems lowering output at some gold plants, while the other was due to the effect of higher Australian gold prices," Surbiton director Dr Sandra Close said.
Newcrest Mining's output was down around three tonnes in this last quarter. Production at Cadia East in NSW fell about 2t, or 63,000 ounces mainly due to the lower availability of the Cadia treatment plant, with a reduced tonnage of ore treated and at a lower grade. Production at the Telfer operation in Western Australia declined by 37,000oz due to unplanned mechanical equipment downtime and changes in mining plans.
Output at Northern Star Resources' Kalgoorlie operations declined by 22,000oz, while Newmont Goldcorp's Boddington mine produced 18,000 fewer ounces in the September quarter compared to the June quarter.
However, by comparison some operations increased output strongly compared with their performance in the June quarter.
"The new Gruyere gold mine, owned equally by South Africa's Gold Fields and ASX-listed Gold Road Resources, increased production by 28,000oz as it ramps up towards full production," Close said. "Another good performer was Canada's RNC Minerals which increased production by almost 16,000oz, not including another 1800oz of gold in specimen stone, from Beta Hunt and from its newly acquired Higginsville operation."
Close said gold production could recover in the December quarter 2019 as some of the operational problems are overcome and as some new operations join the list of gold producers.
"The higher gold prices we are seeing in Australian dollar terms can result in a reduction in the overall amount of gold produced. One of the effects of higher prices is that it allows some operations to reduce the grade of ore being treated by blending in material from lower grade stockpiles and/or mining some lower grade ore, thus lengthening the life of the operation."
Since treatment plants can only treat a certain amount of ore each period, lower head grades result in less gold being produced. However, such lower output is offset by the higher gold price, so sales revenue and profitability are little affected.
"In the September quarter 2019, the Australian dollar spot gold price averaged around $A2150/oz, compared with $A1870/oz in the June quarter and around $A1830/oz in the March quarter," Close said.
"The local gold industry, with its costs predominantly in Australian dollars, is benefiting from the changes in the exchange rate as the Australian dollar continues to weaken against the US dollar."
"The ownership of the Super Pit in Kalgoorlie is now resolved, following Saracen Mineral Holding's recent confirmation that it has successfully acquired Barrick Gold Corporation's 50% joint venture interest for $US750 million ($A1.1 billion) in cash," Close said. "This has at last removed the uncertainty that has prevailed since Barrick first signalled its wish to sell."
Dr Close said Barrick Gold acquired its interest in the Super Pit and other operations in Western Australia when it merged with the historic US-based Homestake Mining in December 2001. Then, in 2013, Barrick sold the Granny Smith, Lawlers, Darlot and Plutonic gold operations, so the 50% interest in Super Pit then remained its only Australian asset.
"Saracen's acquisition of Barrick's interest in Super Pit means that Australian control of the local gold industry will rise to near 60%," Close said. "Local control of the gold sector fell to around 30% in 2002, following takeovers by several overseas gold mining companies but local control has slowly increased to double that low point."
Australia's largest gold producers for the September quarter 2019 were:
Cadia: 171,730oz (Newcrest Mining)
Boddington: 167,000oz (Newmont-Goldcorp)
Fosterville: 158,327oz (Kirkland Lake Gold)
Tropicana: 123,320oz (AngloGold Ashanti 70%, Independence Group 30%)
Super Pit: 116,000oz (Newmont Goldcorp Corp 50% Barrick Gold Corp 50%)