Dramatic skills and equipment shortages related to the surging COVID-19 pandemic, coupled with unparalleled climatic conditions, have managed to hamper Australia’s push to return to the top of the gold producing tree.
However, a suite of new developments and discoveries will ensure that the island nation will be seriously competing for the top title for a number of years to come.
Recent numbers produced by the Office of Australia’s Chief Economist found that the country’s gold mine production rose by 3.8% year-on-year in the March quarter 2022 to 77.0t, despite the ongoing impacts of state border closures and COVID-19 related labour shortages.
Several miners cited wet weather impacts in Western Australia (WA) and New South Wales (NSW) as having an impact on production over the quarter, while others pointed to supply chain delays – road haulage, for example – and pressures from input prices. With that as a backdrop, Australian gold output is estimated to have fallen by 2.1% to 313t in 2021–22.
Notably, production at Newcrest’s (ASX: NCM) Cadia mine in NSW decreased by 17% year-on-year in the March quarter 2022. However, production was 30% higher compared with December quarter 2021, as the SAG mill returned to full capacity after its replacement and upgrade.
Production at Agnico Eagle’s (NYSE: AEM) Fosterville gold operation in Victoria rose by 17% year-on-year. While the company reported that while mine production was affected by lower workforce availability (related to COVID-19), lower than forecast ore tonnage was offset by a higher than anticipated grade.
Production at Northern Star’s Super Pit gold operations in WA in the March quarter was 8.3% higher year-on-year, due to increased ore tonnage from underground and open-pit mining. Ore processed was lower than in December quarter 2021 due to a planned shutdown. However, this was offset by increased head grade and recovery efficiency.
Production from Northern Star’s (ASX: NST) Kalgoorlie operations in WA was 35% lower year-on-year, due to a significant mill downtime event impacting available milling time in South Kalgoorlie.
Australian gold export earnings fell by 21% year-on-year to $5.4B in the March quarter 2022, driven by lower gold prices (22% lower year-on-year).
However, Australia exported A$2.5B to China (excluding Hong Kong) in March quarter 2022, significantly higher than the A$218M in gold exports in the March quarter 2021 – which was impacted by bans imposed by Beijing when COVID-19 hit.
According to Barclay Pearce Capital, more than 100 new gold projects are currently under development in Australia, which are expected to contribute more than 1,166Koz to production by 2025. Last year saw several significant projects begin operation, among them the Karlawinda Gold mine near Pilbara and Wiluna Stage one expansion, both targeting over 115Koz production by the end of 2021, and breakthroughs by Resources & Energy Group (ASX: REZ) at the Granny Venn deposit in WA and Mount Mackenzie in Queensland.
New mines to lift production numbers
The Office of Australia’s Chief Economist forecast the nation’s gold production will rise at an average annual rate of 7.7% during 2022–23 and 2023–24.
Production is forecast to reach 338t in 2022–23, propelled by production from new mines and existing mine expansions.
Red 5’s (ASX: RED) 6.2tpa King of the Hills gold project in WA should start production in the September quarter 2022.
First gold is expected from Calidus Resources’ (ASX: CAI) 4.3tpa Warrawoona gold project in WA in May 2022.
Elsewhere, Heritage Minerals plans to open the 1.6tpa Mount Morgan tailings project in Queensland in 2023. Production is then forecast to reach 361t in 2023–24, as Newmont’s Tanami Expansion 2 is completed in early 2024, Bellevue Gold’s (ASX: BGL) 5.7tpa Bellevue gold mine in WA is tipped to come online in June quarter 2023, and Vista Gold’s (NYSEAM: VGZ) 11tpa Mt Todd project in the Northern Territory comes online in March quarter 2024.
Risks
Australia’s Department of Industry, Science and Resources, said the primary risk to the Australian gold production forecast is the extent to which supply chain issues and labour or skills shortages continue in the short term for Australian gold producers. It noted that Silver Lake Resources (ASX: SLR) withdrew its 2021–22 production guidance after the March quarter 2022, due to COVID-19 related labour shortages and supply chain interruptions.
Exploration spending continues to rise
The Office of Australia’s Chief Economist found that gold exploration expenditure continued to rise In the March quarter 2022. Australia’s gold exploration expenditure was A$363.5M. WA continued to be the focus of gold exploration activity in the country, accounting for about 70% of total the nation’s gold exploration expenditure.
Gold’s share of exploration expenditure across all minerals fell to 42.8% in March quarter 2022, down from 49.0% in March quarter 2021. This was largely due to higher expenditure in base metals and iron ore exploration, as gold exploration growth was flat year-on-year.
Researchers uncover ‘sweet spot’ for gold discovery
In recent news, a Geoscience Australia-led team of researchers has made it easier for explorers to strike gold, by uncovering previously unknown patterns in global geology that can be used to explore for gold deposits.
Researchers from Geoscience Australia’s “Exploring for the Future” programme, the University of Adelaide, and the United States Geological Survey compared magnetotelluric data from across Australia, North and South America and China, for the first time.
“Like a live wire detector, magnetotelluric instruments identify natural electric conductors in the Earth from tens to hundreds of kilometres beneath the Earth’s surface that are sometimes linked to copper, gold, and associated critical mineral deposits,” the programme’s senior science advisor, Dr Karol Czarnota, explained.
“Through this analysis, we’ve found that we can pinpoint areas for exploration by using statistics to look through the whole tectonic plate and identify which conductors have the greatest potential to be associated with mineral deposits. This is the first time we have identified statistically robust, global insights of this kind, which image the source regions of minerals deep in the crust and pinpoint favourable areas for exploration.
“In short, our findings indicate there is a ‘sweet spot’ for gold discovery. This information will make it much easier for gold explorers to zoom in on new prospective ground. It could even be used to open new mineral provinces across Australia, sparking a modern-day gold rush.
“This information could also help find other vital resources such as copper, tellurium, antimony, and other critical minerals used in alloys and electrification.
“We’ve learnt that gold in orogenic gold deposits is most likely sourced from the mid to lower part of the Earth’s crust as opposed to the even deeper layer in the Earth, the mantle. This answers the question of where the gold in deposits that helped build towns like Ballarat and Bendigo came from,” Dr Czarnota said.
