Australian gold output steady in March quarter: Surbiton

Gold output fell by 2 per cent or 1.3 tonnes to 61 tonnes (1.96 million ounces), compared with the December quarter 2009 but was still up by 13 per cent compared with the March quarter 2009.
“At current prices, the gold produced in the March quarter was worth around A$2.8 billion,” said Dr Sandra Close, a director of Surbiton Associates.
“Australian mines produce about two-thirds of a tonne of gold a day and the March quarter is two days shorter than the December quarter, so this affects the figures,” Dr Close said. “However, there were some significant differences in output from mine to mine between the two periods.”
Newmont’s giant, low-grade Boddington operation south east of Perth continued to ramp up production, with gold output rising by one third to 158,000oz for the quarter.
“Boddington treated a total of 6 million tonnes of ore in the March quarter but for every ounce of gold produced it had to process some 38 tonnes of ore,” Dr Close said.
“By comparison, the Super Pit in Kalgoorlie treated half as many tonnes but its ore is richer, so it only had to process some 15 tonnes of ore to extract an ounce of gold.”
Output at Barrick’s Yilgarn South operations fell by 24,000oz, Newcrest’s Telfer mine produced 32,000oz less and production from BHP Billiton’s Olympic Dam mine fell by more than 90 per cent to 1,650oz due to ore haulage problems.
Joining the list of producers were Saracen’s refurbished Carosue Dam mine in Western Australia which produced some 15,000oz of gold during its two-month commissioning phase and Toronto-listed Crocodile Gold Corp which contributed 13,700oz from Union Reefs in the Northern Territory.
Dr Close was critical of the government’s proposed Resource Super Profits Tax (RSPT).
“The proposed tax is complex, convoluted and ill-defined,” Dr Close said. “Apparently the government now wants to become a partner with the minerals industry - if this is the case, I’d suggest they need some lessons on relationship-building as well as on mining, finance and investment!”
Dr Close said that the government and its economic advisers seem to have little understanding of the practicalities of exploration and mining and the industry’s inherent risk and volatility, let alone of the workings of the capital markets and the requirements of investors.
“It’s ‘investment 101’, it’s the fundamental principle of risk and reward,” Dr Close said.
“It’s quite unrealistic to consider that the risk free rate is an appropriate benchmark by any measure. Furthermore, this proposed RSPT is retrospective and seems to be designed not only to penalise success but actually to reward failure - whatever happened to incentive, for producers or investors?
“The resources industry is diverse, yet the focus is on a selected few large bulk commodity producers. It’s extraordinary that the government should seek to treat such a wide range of commodities and producers on the same basis, with little understanding of the consequences, be they intended or unintended.”
Dr Close said that producers currently enjoying the high iron ore and coal prices realistically should expect to pay proper recompense for the utilising the minerals whose ownership rests with the States on behalf of the people. However, she cautioned that the resources industry is cyclical, conditions can change abruptly and this must be recognised when determining such compensation. As an example, she pointed out that although few may remember, Paraburdoo was mothballed just prior to completion, due to a rapid downturn in the iron ore market.

The top five producing gold operations for the March quarter 2010 were: