PERTH (miningweekly.com) – Gold production during the quarter ended March dropped by some 5 t, or 7%, compared with previous quarter, reaching 69 t, mining consultancy Surbiton Associates revealed this week.

“March quarter production in Australia is usually the lowest for the year. Overall, both the grade and tonnage of ore treated were lower this quarter than for the December quarter 2014 and there are several reasons for that,” said Surbiton director Dr Sandra Close.

She noted that disruptions in production, owing to wet weather conditions, and a range of operational problems and the fact that the March quarter is the shortest in the year all contributed to the lower gold output.

“Disruptions due to wet weather early in the year often mean gold producers have to treat additional tonnages of lower-grade stockpiled material to keep their plants near capacity. This year wet weather affected some of the more northerly operations in Western Australia, but further south, it was not a major problem.”

Newcrest Mining’s Telfer operation, Northern Star’s Jundee mine and Regis Resources’ three operations in the Duketon region all reported lower output, with adverse effects due to high rainfall, Close pointed out

“Operational factors at several mines also contributed to the lower gold production. These included scheduled downtime, adverse geological factors and unexpected ground instability,” she said.

Maintenance requirements and operational changes at Kalgoorlie’s Super Pit resulted in a significant fall in output. Ore treated fell by three-quarters-of-a-million tonnes and gold output declined by 44 000 oz to 118 000 oz, based on Barrick Gold’s figures.

Close noted that there was also a 16-day maintenance shutdown at the Fimiston plant, for a mill reline and girth gear replacement. Currently the Gidgi roaster, which treats gold-bearing concentrates from the Super Pit, is being phased out in favour of ultra-fine grinding.

Meanwhile, the Super Pit joint venture owners Barrick Gold and Newmont Mining, recently announced that Newmont would take over sole responsibility for management of Kalgoorlie Consolidated Gold Mines (KCGM) which is the jointly owned management company for the Super Pit joint venture.

Output was reduced at Alkane Resources’ Tomingley operation, in New South Wales, as mining continued deeper in the Caloma openpit and the ore transitioned from the weathered zone to fresh rock. At Norton Gold Fields' Paddington operation and also at Regis Resources’ Rosemont mine, pit wall failures were reported, but appear to be relatively minor.

Close added that the fewer number of days in the January to March quarter always had a negative impact on gold output as each day of the year about three-quarters of a tonne of gold is produced. This daily output is worth some A$37-million at the current gold price.

“The higher average Australian gold price in the March quarter may well partially explain why grades were lower for the quarter too. With a higher gold price it becomes economic to treat lower grade ore.”

Close said that the average US dollar gold price was only slightly higher in the March quarter than in the previous three-month period. However, the 7c decline in the Australian dollar lifted the average Australian dollar gold price by A$144/oz, from A$1 403/oz in the December quarter to A$1 547/oz in the March quarter.

She welcomed the decision of the Western Australian government to defer its revision of mineral royalty rates, as this provides some reassurance for the gold mining industry for the immediate future, although the uncertainty still remains in the longer term.

“Unfortunately the gold royalty question has not been resolved, only deferred,” Close said.

Australia is the world’s second largest producer of gold after China, which produced 450 t last year. In 2014, Australian mines produced 284 t of gold, ahead of Russia, with 245 t, the US, with 211 t, and Canada, at 160 t. South Africa, which dominated world gold production for over 80 years now ranks equal sixth with Peru at 150 t.