Gold

Content maintained by Alan Whitaker

• Gold
• Resources
• Accessible EDR
• JORC Reserves
• Exploration
• Production
• World Ranking
• Industry Developments

The principle uses for gold (Au) are as an investment instrument for governments, central banks and private investors, and in the manufacture of jewellery. Because of its high conductivity and corrosion-resistance properties, gold is used in the electronics industry also, as well as in dentistry because the alloys used are strong and resistant to tarnishing.

Demand for gold has exceeded world mine production for many years and has necessarily drawn on recycling, sales by investors and, until recently, sales by central banks. Over most of the past two decades the central banks have sold down their stocks of gold. However, since early 2010, these banks have again become net purchasers of gold to augment their reserves. The continuing strong demand for gold from China and India, coupled with the ongoing economic uncertainty associated with the Eurozone and other debt crises, caused the price of gold to rise steadily from around US$1080 an ounce in January 2010 to about US$1700 an ounce in October 2011 (Fig. 1). Strong increases in the gold price (in US$) reflect the continuation of a trend since about 2002, which, with the exception of 2008, has been increasing at more than 10% a year and by more than 50% over the past two years. The rise in the gold price in AU$ has not been as dramatic over the same period largely because of the relative increase in the value of the Australian dollar (2002 AU$/US$= 0.55; 2010 =~0.95). Nonetheless, the increase in the gold price in AU$ has been tracking at more than 15% a year since 2005.

Australia's gold resources are mined in all States and the Northern Territory (NT). As at December 2010, total Joint Ore Reserves Committee (JORC) code resources of gold were about 13 800 tonnes (t), or 465t more than at the end of 2009. Allowing for depletion of resources due to production (260 tonnes), new resources added to the national inventory in 2010 totalled 725 tonnes or 23 million ounces (Mozs).

Australia's Economic Demonstrated Resources (EDR) of gold increased by 1010 tonnes (32Mozs) to 8410 tonnes in 2010. Around 70% of Australia's total EDR are contained in just 15 deposits (Fig. 2), with more than 50% of total EDR within the four largest, Olympic Dam in South Australia (SA), Cadia East in New South Wales (NSW) and Boddington and Telfer in Western Australia (WA). Although EDR increased in all States and the NT, more than half of the increase, about 590 tonnes, was in WA. Western Australia also continued to dominate total EDR of gold with approximately 3570 tonnes, or 42% of the national total. South Australia with 2310 tonnes largely from Olympic Dam and NSW with 1640 tonnes contributed the second and third largest quantities to the national EDR total respectively. Just under 50% of Australia's EDR of gold is derived from Ore Reserves as defined under the JORC code.

Sub-marginal Demonstrated Resources remained constant during 2010 at approximately 120 tonnes. In contrast, Para-marginal Demonstrated Resources decreased significantly to 930 tonnes, a decrease of 40% or 570 tonnes on the figures for 2009. Decreases occurred in all States and the NT and were directly attributable to the continuing increase in world gold prices during 2010. Western Australia saw the most significant decrease in Para-marginal Demonstrated Resources of 330 tonnes to a total of about 705 tonnes in 2010.

Nationally, Inferred Mineral Resources rose marginally to 4450 tonnes during 2010, an increase of about 19 tonnes or less than 1% on 2009 figures. While new inferred resources were defined during 2010, this was offset by the upgrade of existing inferred resources to categories with greater geological certainty through infill drilling. Changes to Inferred Mineral Resources at the State and Territory level were variable. However, WA with 1900 tonnes or 43% of the total and SA with 1070 tonnes or 24% of the total continued to maintain their dominance of the Inferred Resource category.

Australia's EDR for gold are essentially unencumbered with around 30 tonnes or less than 1% currently unavailable for exploitation. Deposits which contain gold resources that are unavailable for mining include Jabiluka, Koongarra, and Coronation Hill, which are all located in the NT.

JORC Reserves comprise total gold resources in Proven and Probable Ore Reserves as defined in the JORC code. In 2010, JORC Reserves amounted to 4070 tonnes, an increase of about 520 tonnes over the 2009 figure. These reserves accounted for 49% of total EDR. While the majority of operating mines have JORC Reserves which are the basis for current mining and production, it is apparent that some operations were mining from Mineral Resources of lower economic certainty, such as Bendigo Mining (now Unity Mining) at Kangaroo Flat in Victoria (Vic). Periodically some operations have also undertaken what is considered trial mining as irregularly distributed, coarse gold, has precluded the establishment of JORC compliant resource figures, as is currently the case for Castlemaine Goldfields Ltd at Ballarat (Vic).

Total mineral exploration expenditure, as reported by the Australian Bureau of Statistics, increased by $468 million to $2491 million in 2010. Gold exploration attracted the largest share of Australia’s total expenditure at approximately 25%, overtaking that for iron ore. Expenditure on gold increased $161 million to $624 million, or 35% more than the 2009 figures.  

Exploration expenditure for gold increased in the NT and all States except SA. Almost 90% of the total expenditure increase occurred in WA which was up $135 million on the 2009 figures to $412 million. New South Wales attracted the second largest increase in expenditure of just over $15 million, while expenditure on gold exploration in SA was estimated¹ to have decreased by about $19 million in 2010. Total gold exploration expenditure during the first half of 2011 was up $28 million on the corresponding period in 2010 with increases in WA (up $40M), the NT (up $6M) and Tas (up $1M). The other States have recorded decreases of between $1 million and $13 million.

Expenditure on gold exploration between greenfields (new) and brownfields (existing deposits) projects is not shown in available statistics. However, the proportion of total mineral exploration expenditure between greenfields and brownfields remained essentially unchanged between 2009 and 2010 at 38% and 62% respectively.

The Perth Mint is the sole refiner of gold in Australia, acquiring raw material from domestic mine production, recycled materials and from overseas. Total refined gold for 2010 amounted to 350 tonnes, of which about 330 tonnes was exported, a decrease of 30 tonnes on 2009.

While domestic mine production increased to 260 tonnes in 2010, around 37 tonnes higher than 2009, it was still less than production highs of about 310 tonnes achieved in the late 1990s. Almost 70% of 2010 national mine production came from WA, followed by NSW with 12% (Table 1). Gold was a primary output of about 70 operations with many drawing resources from two or more deposits and/or from both open pit and underground sources. Several mines also produced gold as a by-product of processing other commodities such as in polymetallic base metal deposits at Rosebery, Olympic Dam and Prominent Hill.

Table 1: Gold production by State/Territory for the past five years. Western Australia continued to dominate Australian production figures in 2010.

Source: ABARES Australian Commodity Statistics 2008 and ABARES Australian Mineral Statistics, March Quarter 2010

Gold deposits can be grouped into a number of deposit types. The resources and mine production in 2010 for each of these types is shown in Table 2. Lode gold deposits of Archean age, with grades typically of 1.5 grams per tonne (g/t) to more than 8g/t Au, accounted for almost 61% of production. Other copper-gold (18.4%) and Lode gold of Phanerozoic age (7.3%) were the second and third most important sources respectively. More than 60% of Australian EDR of gold are in relatively low grade 0.36g/t to 0.86g/t Au iron oxide or other copper-gold deposits. These deposits contributed only a little over 20% to the 2010 gold production figures.

In summary, Archean lode gold deposits dominate current mine production, however, lower grade copper-gold deposits of various styles comprise the majority of Australia's current resources.

Thus in order to maintain the current level of production over the intermediate to longer term:

• significant new resources of higher grade deposit styles, most probably Archean lode gold, will need to be defined;
• Inferred resources of Archean gold deposits (and other types) must be better drilled to transfer these to reserves; or
• mining of lower grade deposits will need to occur at much higher rates than at present.

Table 2. Economic Demonstrated Resources (EDR), Inferred Resources, and mine production of gold (in tonnes) for 2010, categorised by deposit type. Also shown are category percentages (in parentheses) of the respective total resource types, or mine production. Lode gold deposits of Archaean age dominate current mine production, but lower grade copper-gold deposits of various styles comprise the majority of Australia's current resources. Surbiton Associates Pty Ltd is gratefully acknowledged for providing the compiled data behind the mine production figures. Other Cu-Au/Au-Cu deposits include Telfer in Western Australia and the porphyry related mineralisation at Northparkes and Cadia in New South Wales.

Based on estimates provided by the United States Geological Survey (USGS), World economic resources of gold increased almost 5000 tonnes in 2010 to 51 800 tonnes. Australia, with EDR of 8410 tonnes (16%), had the largest share of the total, followed by South Africa with 6000 tonnes (12%) and Russia with 5000 tonnes (10%). Also based on USGS figures, world mine production of gold increased about 50 tonnes to 2510 tonnes in 2010. Australian mine production of 260 tonnes, or about 10% of world total, was ranked second behind China with 340 tonnes, but ahead of the United States of America with 230 tonnes, and Russia and South Africa, which each produced about 190 tonnes in 2010. Over the past decade, world mine production has fluctuated between a peak of 2620 tonnes in 2003 and a trough of 2264 tonnes in 2008. Over the same period, consistent increases in output for China, from 185 tonnes in 2001 to 300 tonnes in 2010, have been offset by declining production in South Africa from 402 tonnes to 190 tonnes, Canada from 160 tonnes to 90 tonnes and the USA from 335 tonnes to 230 tonnes. Estimated production rates for other countries over the same period are more irregular. Australia's mine production of gold peaked most recently about 1998 at 310 tonnes but declined steadily to 215 tonnes in 2008 before recovering a little in 2009 to 223 tonnes and more substantially in 2010 to 260 tonnes, which was still 50 tonnes below that achieved in 1998.

Continuing increases in the price of gold during 2010 provided additional impetus for the rebound in exploration, with expenditure for the year up about $160m on the figure for 2009. During the year, the assessment of deposits, many with historic production, led to several feasibility studies, the purchase and upgrading of processing plants and widespread drilling programs. Many operating mines commenced enlarging open pits (referred to as cutbacks in open pits) or accessing panels in underground operations to extract material which previously was deemed uneconomic. These activities led to a substantial increase in the EDR for gold and are expanding production capacity.

The following selected announcements provide an overview of significant industry activities for 2010.

Conquest Mining Limited announced the purchase of the remaining 40% of the Pajingo Gold Mine, southeast of Charters Towers, through the acquisition of HSK Gold Pty Ltd and the remaining 5% of North Queensland Metals. The company also announced board approval for development of the Mt Carlton Mine, northwest of Collinsville, and purchased an 800 000 tonnes per annum (tpa) semi autogenous grinding (SAG) mill for the project from Hillgrove Resources Limited.

Ivanhoe Australia Limited announced upgraded indicated and inferred resources for Mt Elliott south of Cloncurry of 570 million tonnes (Mt) at 0.44% Cu and 0.26g/t Au. The company also reported promising drill intersections at Starra 222, south of Mount Elliott, including 58 metres (m) at 1.04% Cu and 1.76g/t Au, and at Barnes Shaft, north of Mount Elliott, 29m at 3.21% Cu, 3.37g/t Au and 383 parts per million Cobalt.

Barrick (PD) Australia Ltd reported placing the Osborne Mine, south of Mount Elliott, on care and maintenance and subsequently sold the mine and related tenements to Ivanhoe Australia Limited.

Resolute Mining Ltd reported high grade gold intercepts from the Welcome Breccia at its Ravenswood Project, northeast of Charters Towers, including 113m at 7.7g/t Au from 316m and 55m at 10.54g/t Au from 420m.

Catalpa Resources Limited announced a 21% increase in mineral resources at Cracow, west of Maryborough, to 1.02Mozs.

Newcrest Mining Ltd announced planning approval for the Cadia East (Mine) Project, southwest of Orange.

Alkane Resources Ltd announced that the McPhillamys deposit, southeast of Orange, would proceed to a Bank Feasibility Study. They also reported Indicated plus Inferred Mineral Resources of 60Mt at 1.32g/t Au and 0.08% Cu at a 0.5g/t Au cut-off.

Cortona Resources Ltd reported further high grade intercepts at Dargues Reef, southeast of Canberra, including 5.7m at 97.1g/t Au, 2.8m at 39.1g/t Au and 5.5m at 14.4g/t Au, and conclusion of a positive feasibility study.

Castlemaine Goldfields Limited announced the purchase of the Ballarat Gold Project from Lihir Gold Ltd. The company subsequently reported drilling results from the project including 6.4m at 61.2g/t Au from the Britannia-Makado Fault Zone and 8m at 7.3g/t Au from the Basking Fault zone in the Britannia Compartment.

Minotaur Exploration Ltd announced an Inferred Mineral Resource at Golden Mountain, south of Benalla, of 950 000 tonnes at 2.31g/t Au for 70 500 ounces at 1g/t cut-off.

Morning Star Gold N.L. reported that production had commenced at the Morning Star Gold Mine at Woods Point.

Greater Bendigo Gold Mines Limited signed an options agreement to purchase the Bendigo Creek Tailings Project northeast of Bendigo and poured its first gold from the Maxwells Mine at Inglewood.

After acquiring the Henty Gold Mine, southeast of Rosebery, in July 2009, Bendigo Mining Limited (now Unity Mining) announced the discovery of two new mineralised zones, the Read Zone (best intersection of 5m at 105g/t Au); and the Newton Zone (best intersections of 23m at 11g/t Au and 10m at 12.2g/t Au).

BCD Resources NL announced a 14% increase in reserves at its Tasmania Mine at Beaconsfield to 949 000 tonnes at 9.7g/t Au for 294 000ozs.

Crocodile Gold Corporation announced increases in indicated mineral resources at Howley, northwest of Pine Creek, to 11.4Mt at 1.54g/t Au for 566 500 ozs, and commencement of commercial production from the Union Reefs Mill.

Vista Gold Corporation released the results of a positive preliminary feasibility study of the Batman Deposit at its Mount Todd Gold Project, southeast of Pine Creek, with proven and probable ore reserves of 60.05Mt at 1.05g/t Au for 2.03Moz at a 0.55g/t cut-off. The company also announced measured and indicated mineral resources at the near-by Quigleys Deposit of 6.07Mt at 0.92g/t Au for 179 000ozs.

Tanami Gold NL announced that it had acquired the Groundrush Gold Project, northeast of Tanami, from Newmont Asia Pacific and subsequently reported drill intersections from the Southern Deposit of up to 19m at 7.8g/t Au.

ABM Resources NL reported that it had acquired several gold projects from Newmont Asia Pacific, including Twin Bonanza and Old Pirate, southwest of Tanami. The company also announced drill intersections at Hyperion, northeast of Tanami, of 60m at 2.57g/t Au and 28m at 5.07g/t Au.

Rex Minerals Ltd announced an Inferred Resource for the Hillside Deposit south of Ardrossan on the York Peninsula of 100Mt at 0.7% Cu and 0.2g/t Au.

Southern Gold Ltd announced its first JORC compliant Inferred Resource for the Golf Bore Deposit, northwest of Tarcoola and northeast of the Challenger Gold Mine, of 3.2Mt at 1g/t Au.

Hillgrove Resources Ltd announced its intention to redevelop the Kanmantoo Mine southeast of Adelaide and increased reserves to 14.8Mt at 0.85% Cu, 0.17g/t Au and 3.1g/t Ag.

Exco Resources Ltd and Poly Metals Group Pty Ltd completed construction at the White Dam deposit northeast of Olary and produced its first gold from the project.

Havilah Resources NL announced the results of a positive feasibility study for the Portia Gold Project north of Olary and its intention to proceed with development.

Regis Resources Ltd announced a maiden ore reserve for the Garden Well Deposit, north of Laverton, of 27.5Mt at 1.52g/t Au within mineral resources of 42.4Mt at 1.36g/t Au. The company also announced an initial ore reserve for its Erlistoun Gold Project, north of Laverton, of 2Mt at 2.41g/t Au for 157 500 ozs, and commencement of commercial operations of the 2Mtpa Duketon gold plant.

Eleckra Mines Limited (now Gold Road Resources Ltd) announced drill intersections of 5m at 146g/t Au and 6m at 35g/t Au from its Central Bore Project, 150 kilometres (kms) northeast of Laverton.

AngloGold Ashanti Ltd and Independence Group NL approved to the development of the Tropicana Gold Project, 300kms northeast of Kalgoorlie, based on a bank feasibility study and proven and probable ore reserves of 48Mt at 2.2g/t Au for 3.4Mozs.

Avoca Resources Ltd (now Alacer Gold Corp) announced its takeover of Dioro and a positive mining scoping study for the HBJ Superpit south of Kalgoorlie based on a mineral resource estimate of 51Mt at 1.8g/t Au for 3Mozs. The company also reported increased mineral resources at Higginsville (Trident, Fairplay, Chalice) south of Kambalda of 14.3Mt at 3.4g/t Au for 1.57Mozs.

Focus Minerals Ltd announced the commissioning of its Three Mile Hill mill at Coolgardie, a Maiden Reserve for the Mount Deposit of 68 000 tonnes at 8.6g/t Au and upgraded mineral resources at the Tindals Mining Centre of 2.04Mt at 4.9g/t Au for 324 000ozs.

Troy Resources NL reported that its Sandstone operations had moved to care and maintenance.

Beadell Resources Ltd announced a drill intersection at the Hercules Shear Zone in the 'Tropicana Belt' 300kms northeast of Kalgoorlie of 30m at 8.3g/t Au, including 10m at 23.1g/t Au.

Catalpa Resources Limited reported its first gold pour from the Edna May Project, west of Southern Cross, and subsequently that Ore Reserves had increased to more than 1Mozs.

Millennium Minerals Ltd announced a total Ore Reserve estimate for its Nullagine Gold Project of 8.2Mt at 1.7g/t Au for 567 000ozs and updated total resources to 17.54Mt at 1.11g/t Au for 1.25Mozs

Northern Star Resources Ltd announced purchase of the Paulsens Gold Mine in the Pilbara region, resumption of production and drill intersections, including 2m at 71g/t Au and 3.3m at 13g/t Au.

1. The figures for exploration expenditure on gold may only be considered an approximation as ABS assigns company provided expenditure on poly-metallic deposits (e.g. copper-gold) to the first named commodity.