Rising energy, steel and labour costs, and the added burden of investors snubbing the industry has led to a spate of casualties in the gold sector in recent years.
Rising energy, steel and labour costs, and the added burden of investors snubbing the industry has led to a spate of casualties in the gold sector in recent years. Even participants at the recent Diggers & Dealers Mining Forum in Kalgoorlie couldn't find much to get excited about.
"Then there's Boddington, the world's largest gold mine under construction," Chamber of Commerce and Industry WA chief economist, John Nicolaou, said of the flipside to gold's steep decline.
"That is certainly a big part of this state's investment story."
Newmont Mining Corporation, which owns 66.7 per cent of the Boddington mine, and AngloGold Ashanti Ltd (33.3 per cent) have built the $2.4 billion project on the footprint of the original Boddington gold mine.
The open-cut operation is expected to produce an average of 850,000 ounces of gold and 30,000 tonnes of copper a year for more than 20 years, making it the largest gold project in Australia.
The project, managed by Newmont-owned the Boddington Gold Mine Company, has total gold reserves of more than 15 million ounces.
At its peak, the operation will employ about 1,000 workers and during its operation is expected to generate $770 million a year for Western Australia's economy.
Andrew Muir, economic analyst with Perth-based Hartleys, said the Boddington mine was a boon for WA, particularly considering gold's fall from grace.
"I guess there is the perception that all the really big gold deposits are now to be found offshore," Mr Muir told WA Business News.
"WA has been so heavily explored, but Tropicana also caused people to have a rethink."
Currently under a pre-feasibility study, the Tropicana Joint Venture Project, located 400 kilometres north-east of Kalgoorlie, is a joint venture between AngloGold Ashanti (70 per cent) and Independence Group NL (30 per cent).
Regional exploration is continuing on the 12,000-square-kilometre tenement package, which holds 4 million ounces of gold.
AngloGold chief executive Mark Cutifani hinted that the development of the deposit could cost up to $600 million, assuming a diesel-powered electricity plant. Mr Cutifani said the gold giant, like others, was suffering from rising materials and labour costs - as evidenced by the company's recommissioning (with Newmont Mining) of the Boddington mine - suggesting that further imposts like the proposed carbon emissions trading scheme could mean the difference as to whether Tropicana got off the ground or not.
Although there has been a 20 per cent decline in Australia's gold output over the past decade, WA has few major projects to keep an eye on.
With St Barbara Ltd's $160 million Gwalia Deeps Gold Mine poised for production to begin this quarter, and the development at Avoca Resources Ltd's $110 million Higginsville Gold Project, the mainstay of WA's mining industry could be on the comeback.
Higginsville, Avoca's flagship project, recently had its JORC resources inventory increased by 246,000 ounces to 11.7Mt at 3.6 grams per tonne for 1.35 million ounces, representing a 23 per cent increase from the resource base reported in December 2006.
Gwalia Deep, which has total ore reserves of 1.7 million ounces, is set to begin mining this quarter at the site previously owned by failed resource company Sons of Gwalia.
St Barbara has a targeted gold production for the 2009 financial year to reach 125,000 ounces.
