23/01/2008 - 22:00

New mines hold the key to ongoing production targets

23/01/2008 - 22:00

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With gold production in Western Australia near five-year lows, the outlook for future production is reliant on new mines coming on stream successfully and mine expansions coming to fruition.

New mines hold the key to ongoing production targets

With gold production in Western Australia near five-year lows, the outlook for future production is reliant on new mines coming on stream successfully and mine expansions coming to fruition.

WA produced just more than two-thirds of total Australian output at 165 tonnes in 2006, but was down on the 173t recorded the year earlier, according to Geoscience Australia.

Gold production has remained fairly stagnant for most of this decade, and is currently off the highs of 187t-189t achieved in 2002-03.

Total Australian gold production was also down in 2006 was 245t, 18t lower than 2005.

While a number of small WA mines were commissioned in 2007, three major gold projects planned over the next one to three years are expected to significantly boost production.

The nearest to completion is the Boddington gold project, jointly owned by AngloGold Ashanti and Newmont Mining.

Project manager, Newmont’s Tom McCulley, said the $2 billion project was currently 60 to 80 per cent complete, with initial production on track to commence by late 2008/early 2009.

With an estimated mine life of more than 15 years, the mine is expected to produce on average about 1 million ounces a year over the first five years and about 850,000 ounces per year from then on.

Mr McCulley said AngloGold was currently working on a re-estimate of the overall capital cost of the project, which is expected to be released in late February.

About 1,000 people are currently employed in the construction phase, which will increase to a peak of 2,000.

“In the first year, most [employees] will be drive-in drive-out,” Mr McCulley said.

“We have some locals, some living in the camp, some from south of Perth and some from the Mandurah region. It’s a good mix.”

Currently before the environmental appeals convenor, the Super Pit extension project will extend its mine life by five years, allowing the 89 million tonne per annum mine to continue output until 2017.

The proposal consists of undertaking a cutback along a section of the western edge of the existing Fimiston Open Pit, which would allow for the widening and deepening of the pit to 600 metres.

The cutback will increase the area of the open pit by 46 hectares.

AngloGold Ashanti is also the dominant joint venture partner in the Tropicana project, east of Laverton.

Tropicana has more than 320 kilometres of strike and about 4.05 million ounces of gold, worth an estimated $3 billion.

The deposit was touted as the state’s biggest gold discovery since Lion Ore’s Thunderbox discovery in 1998.

A pre-feasibility study is on track for completion in the first half of 2008, with the submission of environmental referral and approval documents scheduled for early 2008.

Globally, Australia ranks at the world’s third largest gold producer, with an output of 245t in 2006, closely followed by China with about 240t gold output.

South Africa remained the leading producer with 275t produced, followed by the US in second place with an output of about 253t.

But recent figures released by London-based precious metal consultancy GFMS have revealed that China has overtaken South Africa to become the world’s biggest gold producer.

Decades of falling yields caused and dwindling deposits have removed South Africa from the top ranking it has held for 102 years.

World mine production in 2006 fell by 3 per cent to 2,415t.

World gold reserves are estimated at 42,000t, with South Africa having the world’s largest reserve of gold at 6,000 t, or 14.3 per cent of the world’s holdings.

Australia has the second largest reserve with about 12 per cent of the world’s holdings.

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