FROM KITCO.COM; The Australian gold industry is on the mend after the double whammy of falling production and sliding local gold prices in the March quarter.
The slump in production to 10-year lows was caused by cyclones affecting mining operations during the period in the premier gold mining state, Western Australia.
The production fall came during a period when the US dollar gold price surged to more than $US425 an ounce but fell sharply in Australian dollars because of the higher exchange rate.
The production setback is expected to be short-lived, and because of the reversal in the US exchange rate the local gold price is again strong at more than $A550 an ounce.
On the production side, Australia is tipped to consolidate its recently attained status as the world's second-biggest gold producing nation behind South Africa.
A survey of March-quarter gold production by Melbourne-based Surbiton Associates, released yesterday, showed that March-quarter gold output was 64 tonnes (2.1 million ounces), worth $1.15 billion at current spot prices.
That was down by nine tonnes, or 12 per cent, from the preceding quarter's production and was four tonnes, or 7 per cent, lower than in the previous corresponding period.
Surbiton managing director Sandra Close said yesterday that March-quarter production was expected to be down due to the "extraordinarily wet weather".
Dr Close said that the downturn should only be temporary and overall the upward trend in gold production remained intact.
"At least another 30 tonnes or 1 million ounces of annual capacity is scheduled to come on stream by end 2004," Dr Close said.
"Despite this favourable outlook, most of the extra ounces are from redevelopment of known deposits. Exploration for new deposits must remain a top priority."
Cyclone Monty hit the WA goldfields in late February and Cyclone Fay followed in mid to late March. Production was affected at most operations and some reported extreme weather conditions.
Dr Close said Placer Dome's Wallaby open pit near Laverton suffered a "massive rainfall event" in late February, while at AngloGold Ashanti's nearby Sunrise Dam pit, access to the high-grade areas was limited for almost half of the quarter.
Dr Close said that the industry treated almost 2 million tonnes less of ore than in the previous quarter.
The top five producers for the March quarter 2004 were: Super Pit, Newmont/Barrick, 204,424 ounces; Tanami/Groundrush, Newmont, 165,400 ounces; St Ives, Gold Fields, 131,786 ounces; Ridgeway, Newcrest, 97,572 ounces and Sunrise Dam, AngloGold 86,582 ounces.
Dr Close said another factor contributing to the lower production effort in the March quarter was that it covered fewer days than the other quarters. About three-quarters of a tonne (about 25,000 ounces) of gold are produced in Australia each day.
Also contributing to the downturn in the March quarter were the closure of Sons of Gwalia's Gwalia treatment plant and Placer Dome's Kundana plant, plus mechanical problems at several other operations.
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