GOLD NEWS

China may pass SA as world's leading gold producer this year, Australia No. 3

Australia’s leading gold production monitor, Surbiton Associates, believes China may take South Africa’s historic position as the leading global gold producer by the end of this year. Australia will hold third ranking because of sliding production in the US.

Author: Ross Louthean
Posted: Monday , 03 Dec 2007

PERTH  - 

For the first nine months of 2007, China's gold production totalled 191.5 tonnes, which was just behind South Africa's declining total of 192.7t, and could overhaul the latter in the final quarter of the year.

Dr Sandra Close of Melbourne-based Surbiton Associates, said that Australia eclipsed United States production with 184.5t for the nine months compared with the US estimate of 179t.

For the September quarter Australia produced 61.7t (2 million ounces) of gold which was about 1t (330,000 oz) less than the June quarter, but was relatively similar to the September 2006 quarter output.

Dr Close said Australia's quarterly gold output has remained relatively stable for the last two years.

"The Australian gold price reached an all time closing high of $A939 per ounce on November 26 ($US826.32/oz today) and was even higher during the day," said Dr Close. "This occurred due to a combination of a higher $US gold price and a lower Australian dollar exchange rate."

Dr Close said the higher local gold prices were obviously encouraging. However, she pointed out that, even if they are sustained, they may have little effect on production levels as producers could well prefer to extend the life of mines by mining slightly lower grade ore.

"In the longer term, there is no substitute for exploration," Dr Close said.

"Each year around 250t (about 8 M oz), worth over $A7 billion, are mined in Australia and an equivalent amount of gold must be discovered annually just to maintain reserves."

Several new operations came on stream while others closed or are suspending production.

"In the September quarter Telfer claimed the spot as top producer, with Super Pit and Sunrise Dam (also in Western Australia) close behind," Dr Close said. "Together, these three operations accounted for almost one quarter of all the gold produced."

Operations that recently joined the list of producers include Meekatharra (Mercator Gold plc), Davyhurst (Monarch Gold Mining Co Ltd) and Bronzewing (View Resources Ltd), while Wattle Dam (Ramelius Resources Ltd) and Laverton (Crescent Gold Ltd) were ramping up production.

Thunderbox (now owned by MMC Norilsk Nickel) closed in November due to lack of reserves. "As well, Wiluna (now owned by Apex Minerals NL) has been placed on care and maintenance and the Hill 50 mine at Mount Magnet (being sold to Monarch Gold) is expected to suspend operations early in 2008," she said.

Thunderbox, Wiluna and Hill 50 have all been steady producers for a number of years, with a total quarterly output of around 3t.

"Fortunately, Australian gold output should benefit from a number of new and recycled projects coming into production in 2008 and 2009," Dr Close said. "These include Boddington (Newmont/AngloGold), Gwalia (St Barbara), Higginsville (Avoca) and Prominent Hill (Oxiana) plus the continued build up from those operations that have recently commenced production."

The top five Australian operations for the September quarter 2007 were:

Operation	Ounces	Owner
Telfer	159,634	Newcrest
Super Pit - JV	154,000	Newmont 50%, Barrick Gold 50%
Sunrise Dam	153,230	AngloGold Ashanti
St Ives/Lefroy	102,400	Gold Fields
Tanami, Northern Territory	102,000	Newmont