Article about Australian Producers
Australia Sees Boost In Gold Production As Prices Averaged A$1,532/Oz In Q2 - Surbiton
By Kitco News
Tuesday September 01, 2015 10:02
(Kitco News) - Australian Mining sector, benefiting from a weaker Australian dollar, saw higher gold production of 72 tonnes in the second quarter, according to the latest survey of the Australian gold mining industry by Surbiton Associates Pty Ltd.
The report, released Sunday evening, noted that second quarter production was 5% higher than the first quarter of the year, which saw the sector produce 69 tonnes of gold.
“The increase in the June quarter was mostly the result of more ore being treated by some of the primary gold producers,” said Dr. Sandra Close, a Surbiton director.
Close noted there were some inconsistencies in the sector with bigger projects producing more while smaller one saw a drop in production. In particular, Close highlighted the Kalgoorlie Super Pit, a joint venture between Barrick (NYSE: ABX, TSX: ABX) and Newmont Mining (NYSE: NEM), saw production increase by 44,000 ounces. She also noted that Newmont’s Boddington and Tanami operations increased by 17,000 ounces in the three-month period.
Close also said a major benefit for the Australian mining sector has been the relatively weaker currency against the U.S. Currently, the Aussie dollar is trading around 71 cents against the greenback. In gold terms, the yellow metal is trading around A$1,595 an ounce.
“Despite lower gold prices in U.S. dollar terms, the depreciation of the Australian dollar is proving a blessing for Australian gold producers,”Close said. “Although the gold price averaged US$1,192 per ounce in the June quarter, the Australian dollar gold price averaged A$1,532 per ounce. It’s reminiscent of what happened in 2008.
“I often wonder why local investors place so much importance on the U.S. dollar gold price. It is the Australian dollar gold price that matters to local producers as their costs are mostly in Australian dollars. Focus on the margin!” she exclaimed. “I find it quite bizarre to see the share prices of Australian-domiciled gold producers fall in response to a decline in the U.S. dollar gold price when, due to a change in the exchange rate, the Australian dollar gold price has actually risen.”