Australian gold miners are producing like it’s the 1980s — but how long will the good times roll?
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Australia’s gold miners have been producing at a pace not seen since the 1980s as they chase high bullion prices and a lower Australian dollar — but what about the longer-term?
Gold production hit 82 tonnes in the June quarter.
According to figures from mining consultants Surbiton Associates, (first cited by The West Australian), Australia’s gold production hit 321 tonnes for the year.
Newcrest Mining’s (ASX:NCM) Cadia pumped out 910,000oz (equivalent to 25.8 tonnes) to lead all-comers.
Given the ongoing geopolitical spot-fires which have been raging this year and the associated flight to gold, it’s no surprise to see Australia’s existing gold producers put their nose to the grindstone.
Also spurring gold producers to a greater level of production has been a steady decline of the Australian dollar against the greenback.
It’s pushed the Australian value of gold to record levels — $2,294.20/oz at the time of writing.
Given several commentators have tipped gold to keep heading north in the shorter term, we could see it nudge $2,370 in the coming months.
But with several gold players prioritising gold production over exploration, the alarm has previously been sounded on the ability for Australia’s gold players to maintain the rage longer-term.
Canadian research analyst Chris Galbraith, from S&P Global, made waves earlier this year when he suggested Australia’s aging gold mines couldn’t support longer-term gold production.
“Those have been great mines, they’ve had excellent lives, but nevertheless all good things must eventually come to a close and they are running out of gold,” Galbraith said.
“There’s a lot of exploration going into Australia and it is bearing fruit.
“Unfortunately, it’s simply smaller fruit, so those large deposits that have been identified in the past, they’re simply not materialising.”
His sentiment has been backed in more recent times by IBISWorld analyst Jason Aravanis, who said Australian gold production would hit a 350-tonne peak next year, and then pull back to 250 tonnes in 2024.
“The gold mining industry just hasn’t really put in the funds, the expenditure to discover new gold assets,” he said.
“What’s been happening is these miners have instead focused on brownfield exploration, where they’re looking near existing mines and they’re not looking in new areas to find these new mega discoveries.”
Australia’s juniors have certainly shown a penchant for brownfield acquisitions in recent times.
Perhaps keen to take advantage of the supportive pricing (and shareholder sentiment) environment, juniors from a raft of sectors have jumped into gold.
For example, Greenpower Energy (ASX:GPP) only recently got into the game — having started life as a coal seam gas player and then re-emerging as a battery metals hopeful.
It told its shareholders that it had picked up a swag of gold mines in Queensland from Q-Generate with a cumulative historic production of 153,315 ounces from just under 2.5 million tonnes of ore — for an average grade of 1.91 grams per tonne (g/t).
But a whole swag of juniors have joined Greenpower.
With so many juniors opting to go after brownfield targets rather than sit on greenfield opportunities, and current producers opting to turbo-charge their own production — the days of record production may start to come to a close over the next couple of years.