For the first quarter of this year the gold production in Australia has dropped to its lowest level for almost twenty years. Gold production dropped by 16% on the previous quarter and by 12% lower year-on-year, at 53 tons.

Surbiton Associates director Sandra Close had this to say:

“The primary cause of the sharp drop in output was the lower average grade of ore treated I suspect some operators are taking every advantage of the high gold price to reduce their head grade.”

Operational problems, inclement weather and the odd closure were given as the contributing factors to the poor output figures. This comes as a bit of a surprise to us as we thought that gold production was being ramped up in Australia. We are well aware of the problems in South Africa with the power generation issues, etc, but Australia! It bodes well for gold bugs as the amount of product going onto the market is less than anticipated and subsequently gold prices should rise.

Sandra Close goes on to say that:

“The cost of labour, energy and consumables may be rising but the industry is doing a remarkable job keeping overall costs under control, despite the increase in cash costs per ounce of gold produced”

The high price of gold allows the producers to make the best of the lower grade ore that is available.

Have a good one.

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