GOLD has been a mainstay of the Western Australian economy for more than a century.
GOLD has been a mainstay of the Western Australian economy for more than a century. But while prices for the precious metal remain around record highs above $US900 per ounce, the sector has suffered as costs have risen and miners have been forced to exploit more difficult, lower-grade and deeper ore bodies.
Although WA still accounts for more than 60 per cent of total Australian gold output, the state's production has steadily declined since peaking at 238 tonnes in 1997; and it fell a further 14 per cent to 131 tonnes last year.
Consequently, the gold industry slipped to fifth on the state's biggest export earners, notwithstanding a 7 per cent increase in sales to $4.4 billion for the year reflecting higher prices.
The 2008-09 year also represented the end of five-year period of major ticket investment in the sector, following the completion of the $3.4 billion Boddington mine south of Perth.
The Newmont-owned operation produced its first gold earlier this month, and has overtaken both the Kalgoorlie Super Pit and Newcrest's Telfer mine in the Pilbara as Australia's biggest, with production forecast to average 1 million ounces a year for the first five years.
In addition, St Barbara Mines' $160 million Gwalia Deeps mine at Leonora, which started production in the December 2008 quarter, and Avoca's $125 million Higginsville mine south of Kambalda, were completed during the year.
With the $2 billion Telfer mine having been completed two years earlier, no other world-scale gold mine developments are currently under construction.
In fact, the only major new gold proposal likely to proceed in the next five years is the remote Tropicana project, 330 kilometres north-east of Kalgoorlie, owned by South Africa's AngloGold Ashanti and local miner Independence Group.
While the project boasts a total resource base of over 5 million ounces, the partners have only just commenced a bankable feasibility study for a $700 million mine development with the aim of producing more than 300,000 ounces a year from 2013.
Nonetheless, several smaller projects are under way, such as Catalpa Resources $92 million Edna May project at Westonia, north east of Perth. Construction began in July and production is expected to start in mid 2010 and average 100,000 ounces a year.
Meanwhile, Integra Resources hopes to start construction of its $64 million, 75,000oz/year Randalls mine near Kalgoorlie in November in order to start production in July next year.
At the same time, Navigator Resources is raising $40 million to acquire and restart the mothballed Bronzewing mine near Wiluna, and Regis Resources hopes to commence work on its $75 million Duketon mine near Kalgoorlie in the next few weeks.
And Apex Minerals remains hopeful that it can complete the ramp-up of its troublesome Wiluna gold mine by April next year. Apex has so far spent $62 million on refurbishing and re-commissioning the mine, but is now eyeing a further capital raising to achieve steady-state output of 150,000 ounces a year.
