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Gold production down but margins stay firm

AUSTRALIAN gold miners produced 200,000 ounces less in 2000-01 than during the previous year and had to contend with higher costs of production, according to figures released by CIBC World Markets and the Australian Gold Council.

Production of 8.5 million ounces for the 2000-01 year was in line with forecasts by the Australian Bureau of Agricultural and Resource Economics.

The largest producer was the Normandy/Homestake Superpit with 12-month production of 721,365 ounces. The second largest producer for 2000-01 was WMC’s St Ives operation at 437,245 ounces.

The lowest cost producer was Troy Resources’ Sandstone mine at $147 cash cost per ounce, followed by Normandy’s Pajingo operation at $179 cash cost per ounce.

The average cash cost for the year was $330 – up from $322 in 1999-2000.

Australian Gold Council chief executive officer Greg Barns said the drop in production reflected the gradual winding down in production at Normandy’s Mt Leyshon operation, the Otter/Anglogold’s Central Desert Mine and Perilya’s Fortnum Mine.

“The $8 increase in cash costs for the year is indicative of a number of factors, including poor weather conditions in the first quarter of this year, which saw cash costs jump by over $10 per ounce, as well as the treatment of lower grade ore in some of the major mining operations during the year,” Mr Barns said.

“However, it should be noted that the Australian dollar gold price for the 2000-01 year has averaged over $500 per ounce and total cost of production for producers remains around $400, so profit margins for the 2000-01 year will still be strong despite the increase in cash costs.”

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