Gold may be the shining light in the gloom of resources slump
The Age
Monday June 1, 2009
IT HAS become the best of times for the Australian gold sector. After being on the skids for 12 years, production is set rebound in response to the surge in gold prices to a record quarterly average of $A1371 an ounce in the March quarter.Melbourne industry consultant Surbiton Associates is predicting that conditions are right for an increase in gold exploration, the life blood of the $A8 billion industry.Surbiton director Sandra Close said the slump in iron ore and base metals prices might induce small exploration companies to look more closely at gold again."Gold is an ideal target for smaller companies in the current environment," Dr Close said. "It is a high-value, low-volume commodity that doesn't have the massive development costs or the enormous infrastructure requirements that the bulk commodities require."But production continues to drag at lower levels. A survey of March-quarter production by Surbiton, released yesterday, showed output was steady at 54.5 tonnes (1.75 million ounces), worth $A2.13 billion at spot prices. This was unchanged from the preceding quarter (December 2008) but an encouraging 3 per cent gain on the previous corresponding period.Production for 2009 will get a boost from OZ Minerals' new Prominent Hill copper/gold mine in South Australia. In addition, Apex Minerals has restarted the Wiluna gold operation, as did ATW Goldcorp at Burnakura.The real move along will come when Newmont's $US2.9billion redeveloped Boddington gold-copper operation in Western Australia's Darling Range is commissioned mid-year. It is set to produce 31 tonnes (one million ounces) annually, making it Australia's biggest gold mine.Dr Close said the higher output should allow Australia to regain a higher ranking among the world's top producing countries. Last year, China was the leading producer with 282 tonnes, followed by the US, South Africa and Australia (219 tonnes).The only dark cloud for the local industry is the recent strength of the US exchange rate. Gold has risen strongly in the past two months to $US980 an ounce. But because of the rise in the US exchange rate, the local price at $A1222 an ounce is well off the record quarterly average set in the March quarter. The local price has nevertheless been in an upwards trend for the last nine years.
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