mxr part of renewed activity in gold sector

Article overnight about old gold mines being targeted as a result of high gold price, in the Mining Weekly.

"Renewed activity in Australia's gold sector

By: Creamer Media Reporter
30th August 2010

PERTH (miningweekly.com) Australian miners are taking another look at old gold deposits as bullion prices remain strong, says industry consultant Surbiton Associates.

We are experiencing an extended period of high Australian gold prices which has led to old deposits being re-evaluated and re-developed, said Surbiton director Dr Sandra Close.

The reopening of old mines, as well as stronger production from long-established producers and higher output from operations that were still in the ramp-up phase, pushed Australias gold production to its highest level in six and a half years in the June quarter.

According to a Surbiton report, released on Sunday, gold output rose by 11% to 67 t, or 2,2-million ounces, compared with the March quarter. Year-on-year, the June quarters production was 20% higher.

Gold production for 2009/10 rose by 11% to 245 t, compared with 222 t in 2008/9.

The June quarter was somewhat of a perfect storm for Australian gold production, Close commented.

It was the highest quarterly output since December 2003, and helped to turn around annual production as well.

Close broke down the reasons for the higher gold output into three categories.

Firstly, several long-established producers significantly increased output and had an excellent quarter, she said, noting that Newcrest Minings results were particularly noteworthy.

Production at the Newcrest Cadia Hill and Telfer mines, in New South Wales and Western Australia respectively, was up 42 000 oz and 28 000 oz respectively, while Barrick Golds Cowal mine in New South Wales boosted production by 15 000 oz.

Secondly, there was higher output from Western Australia operations, including Boddington, Frogs Leg and Carosue dam, which were commissioned in earlier quarters and were still in the ramp-up phase, Close said.

The Newmont Boddington operation produced 26 000 oz more than in the March quarter, La Mancha Resources Frogs Leg output increased by 11 500 oz and the Saracen Minerals Carosue Dam operation was up a further 10 000 oz.

Thirdly, Close said that several new or recycled operations joined the producer ranks in the June quarter.

Edna May and Bronzewing in Western Australia and White Dam in South Australia were notable additions.

Navigator Resources Bronzewing mine produced around 11 000 oz, Catalpa Resources Edna May mine produced around 10 000 oz and output from the new White Dam heap-leach operation of Exco and Polymetals was around 10 000 oz.

It is impossible to predict the future but the production outlook is positive in the near term, Close said.

Some producers are still in the ramp-up phase and there are several other operations that are due to pour their first gold in the September quarter.

The 11% increase in the 2009/10 output represents a turnaround from the low of 222 t, which was reached in 2008/9, as production trended downwards from the all-time peak of 318 t in 1997/8.

At the current Australian gold price near A$1 400/oz, the 2009/10 production is worth a total of some A$11-billion.

Close noted that the higher gold price was one reason for the many new and recycled operations coming on stream at the moment. Another factor was probably the greater availability of finance after the disruption caused by the global financial crisis.

Between 2000 and 2005, Australian gold prices averaged around A$550/oz but the average for the last two years is around A$1 200/oz. Its no wonder that we are seeing renewed activity in the gold sector.

Close said the Australian gold mining industry has done a good job of keeping costs under control......."

Many operations are targeting 1.5g/t gold whereas MXR's Adelaide hills multiple historic gold deposits/mines are targeting one of Australia's highest grades of 15g/t gold from the historic gold mines.