Australia Gold Output Recovers in 2Q, Rising 4% on Quarter -Surbiton

   By Robb M. Stewart 
 

MELBOURNE--Australia's gold production recovered in the second quarter of the year and appears set to continue growing, benefiting from a strong bullion price, after output declined in the previous three quarters, mining consultants Surbiton Associates Pty. Ltd. said in a report released Sunday.

April-June production rose 4% to 65 metric tons from 62.5 tons in the first quarter. However, first-half output was down 4% at 261 tons, or roughly 8.4 million troy ounces, partly due to wet weather earlier.

"Producers took advantage of higher gold prices and made the most of their deposits by treating slightly lower grade ore," Sandra Close, a director at Melbourne-based Surbiton, said.

She added that production was set to rise, with several new and rejuvenated mining projects coming on stream later this year and in 2013.

International metals consultancy GFMS last week said Australia's gold output had fallen 5% in the first half of 2012 to 122.5 tons, in part due to a drop in volumes from Newcrest Mining Ltd.'s (NCM.AU) Cadia Valley operations. Production rates at Australia's two largest gold mines--Newmont Mining Corp. (NEM) and Barrick Gold Corp.'s (ABX) Kalgoorlie Super Pit, and Newmont's own Boddington mine--also declined.

Surbiton said in its report that Super Pit remained the country's top producer in the 12 months to June 30, with output of 746,000 ounces. This was followed by Newmont's Boddington mine, which produced 713,000 ounces, and Newcrest's Telfer, which produced 540,115 ounces.

Strong gold prices encouraged companies to mine lower-grade ore bodies and supported takeover activity in Australia. The country is the world's second-largest producer of gold after China.

"Overseas investors are showing considerable interest in Australian gold operations," Ms. Close said. "Lately, there have been various bids and takeovers by overseas companies of both local and foreign-owned gold producing companies."

Singapore-based LionGold Corp.'s (A78.SG) all-scrip bid for Castlemaine Goldfields Ltd. (CGT.AU) closed this week after the company secured a more-than-97% stake. Zijin Mining Group Co. (2899.HK) last month bought control of Norton Gold Fields Ltd. (NGF.AU) in a cash offer that valued the Australian company at roughly A$215 million.

In Australian dollar terms, the gold price rose 1.2% in the first half of 2012, compared with an 0.03% increase in U.S. dollar terms.

Rhiannon Hoyle in Sydney contributed to this article

Write to Robb M. Stewart at [e-mail]