Australia’s gold production is increasing

According to the Melbourne-based gold miner, Surbiton Associates, gold production in Australia increased by 7t in the last quarter of the  year.

Production for the quarter of June 2022 was 83t, a 9% increase on the 76t in  March 2022. This brings Australia’s total gold output to 317t for the year ending June 30, 2022, amounting to worth $26 billion. According to Surbiton reports, the company collected five million tons more oil in the last quarter compared to what was collected in the previous three months.

Gold producers have used this opportunity to end the year, making their mills smaller and producing higher grade gold. This quarter, two major products went live. These can add 10t more of gold production per year when fully operational. King of the Hills mine in Western Australia, produced 9,500 ounces of gold in June whilst Calidus Resources’ Warrawoona project produced 10,000 ounces since May.

King of the Hills performed impressively in July. Processing capacity of 4.7 million tons of metal per year. This makes it is the largest new project commissioned in the last couple of years.  The rise in the June output happened despite continued talk of skilled labor shortages and absenteeism due to the Covid-19 pandemic. It is well known that input costs are going higher resulting in higher costs across the gold industry. Beacon Minerals which operates  a  project just  south-west of Kalgoorlie known as the Jaurdi-Lost- Dog, have noted in their reports an increase in production costs including a sharp rise in the fuel price. Oil prices have increased by over 59%; the price of cyanide increased by 95% whilst grinding bodies and explosives rose by 43% and by 56% respectively. These rising costs make the production of gold more expensive.

Also, gold producers benefited from a weak Australian dollar in June. For gold investors in Australia, it is important to remember that everyone does not price asset shares in Australian dollar but in U.S dollars. So, you should convert whatever the spot price is in US dollars to Australian dollar when you buy gold bullion in Australia. However, the according to data, the price of gold in June dropped by $125 per ounce however because the Australian dollar was performing much better the price of gold in Australia rose to AUD42/oz making way for a $0.06 in currency exchange rates.  

Rising gold prices may be good for anyone looking to sell gold, but miners are interested in production costs. And so far, with rising inflation and economic and geopolitical conflicts not paying, extracting gold from land and its processing may be more expensive in the long run. Because Australia exports most of its gold to other countries, gold mining contributes a great deal to the country’s foreign exchange reserves. With fuel and energy prices on the rise, the rise in profits of Australian miners revealed this week was a flashpoint amid the gloom dominating the economic news. But the coming months look more challenging, especially for companies that are not exposed to clean energy,  especially with Russia and Ukraine still fighting.

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Articles from the Melbourne Gold Company