Higher gold prices lead to reduction in production during March quarter, Surbiton Associates say

West Australian

08-06-2025

An Australian dollar gold price heading towards $5000 an ounce has actually driven a reduction in production of the precious metal across the country, Melbourne-based industry analysts Surbiton Associates say.
Surbiton said Australian gold mine production totalled 73 tonnes in the March quarter, six tonnes less than in the December quarter but three tonnes more than the March quarter of 2024.
This took place as the London Bullion Market Association gold price ranged between $US2633/oz and $US3115/oz, which in Australian dollar terms was $4232/oz to $4960/oz.
'Effectively, the recent decline in Australian gold production was largely the result of higher gold prices,' Surbiton Associates director Dr Sandra Close said.
'At today's gold price the March quarter's output is worth over $12 billion, so understandably many producers are optimising their operations in response to such price increases.'
Dr Close said the higher gold price had made lower cut-off grades economic because what was unprofitable to mine and treat in the past had now become profitable.
'If operations are able to lower their cut-off grades, then a greater amount of gold is recovered from each orebody,' she said.
'Also, higher gold prices mean that it is economic to reclaim more low-grade material from stockpiles to feed into the treatment plants, so the weighted average head grade of ore being treated declines.
'Although lower head grades result in less gold being produced and means cash costs and AISC costs per ounce increase, the value of each ounce of gold is higher.
'Surbiton Associates' latest analysis shows that low-grade, reclaimed stockpiled material is currently as high as around 15 per cent of the total ore being treated.
'Thanks to increasing gold prices, the proportion of low-grade material being blended into feed has risen steadily for the last five quarters, from a proportion of only around one per cent a year ago.'
Dr Close said that it might be thought that higher prices should also stimulate gold output by encouraging the start-up of new projects and the re-commissioning of old projects on care and maintenance.
However, she said many existing plants were now running close to their limit, so there was a shortage of immediate treatment capacity for emerging small miners wanting to sell parcels of ore or to have their ore toll-treated.
'On the face of it, lower gold production and rising costs per ounce might suggest that the gold industry in Australia is in trouble,' Dr Close said.
'Far from it. Many gold producers are experiencing high margins and are doing very well.'
Those mines reporting substantially lower gold production in the March quarter included Tropicana 330km north-east of Kalgoorlie-Boulder down 57,000oz, St Ives south of Kambalda down 40,500oz, and Tanami in the Northern Territory down 46,000oz.
Among the operations reporting increased gold production were the Cadia mine in New South Wales up 25,000oz, Bellevue north of Leinster up 22,000oz, and Fosterville in Victoria up 7000oz.
Boddington south-east of Perth produced the most gold during the quarter, 126,000oz, while Tropicana churned out 105,267oz, Cadia 103,000oz, Kalgoorlie-Boulder's Super Pit 99,998oz, and Telfer 90,172oz.