PERTH (miningweekly.com) – Australian gold production in the first quarter of 2023 fell to 72 t, a decline of 6 t, or 8%, compared with the December quarter 2022, according to Melbourne-based gold mining consultants Surbiton Associates.

Heavy cyclonic rain in the states of Western Australia, Queensland and New South Wales and also in the Northern Territory restricted gold mining and processing activities at many operations in the early months of 2023.

“Rain affects production almost every March quarter which, with only 90 days, is the shortest in the year,” said Surbiton Associates director Dr Sandra 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.”

“However, the gold has not been lost. It is just that its production has been delayed.”

Close said that a further factor which may have contributed to the lower gold output in the March quarter 2023 was the rising gold price throughout the period. The all-time record Australian dollar price of A$2 868/oz was reached in mid-March, with the gold price subsequently rising further.

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

“As prices rise, mine operators may blend lower grade stockpiled material into the ore feed. 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 higher cost per ounce, within that time frame.”

US dollar gold prices averaged $1 888/oz in the March quarter 2023, compared with $1 757/oz in the previous three-month period. Australian dollar gold prices rose from an average A$2 632/oz to an average A$2 762/oz over the same period.

Operations reporting significant lower gold output in the March quarter, compared with the previous quarter, included Newmont’s Boddington mine which was down 66 000 oz, Newcrest’s Cadia operation, which was down 35 800 oz, and AngloGold/Regis Resources’ Tropicana operation, which was down 27 500 oz.

These three alone accounted for a reduction of 4 t 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, which was up 8 400 oz, Silver Lake at Mt Monger, up 6 100 oz, and Karora Resources at Beta Hunt, up 5 700 oz.

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

Recently, the directors of Newcrest Mining Ltd recommended Newcrest shareholders accept the takeover bid from Newmont Mining Corp. Under the bid, Newcrest shareholders will receive 0.4 Newmont shares for each Newcrest share held. In addition, Newcrest shareholders will receive a franked special pre-completion dividend of up to $1.10 per share.

“If the takeover proceeds, hopefully the Newcrest shareholders will be treated better than the Normandy Mining shareholders were when it was taken over by Newmont in 2002,” Close said.

“At the time, the former Normandy shareholders initially received Newmont Chess Depository Interests, which were listed in Australia, but these were later withdrawn and replaced by US-listed Newmont shares only.

“I understand that even now, Newmont dividends are still paid to some Australia-based shareholders in US dollar cheques, sent by ‘snail mail’, which are difficult and expensive to cash. Additionally, US withholding tax needs to be dealt with and communications are also sent by ‘snail mail’ resulting in substantial delay.”

“So, if the takeover is completed, Newmont needs to ensure that its Australia-based shareholders are treated better than previously,” Close said.

“As Surbiton Associates has already noted, Newcrest is Australia’s largest locally-listed gold producer and currently controls around 12% of Australia’s primary gold sector.”

Surbiton Associates has published two books on the Australian gold industry, describing in detail the 40 years of the boom.