Gold

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

Strong gold prices continued throughout 2008 and supported stronger exploration expenditure. Production fell sharply due to a number of factors but is expected to recover some of the loss in 2009. Exploration continued to generate a very large number of intersections of economic significance, justifying further work. In addition, exploration generated an increase of 867 tonne (t) of gold in Australia's total resource inventory.

Gold has a range of uses but the two principal applications are as an investment instrument and for the manufacture of jewellery. Secondary uses in terms of the amount of gold consumed are in electronic and dental applications.

Australia's gold resources occur and are mined in all States and the Northern Territory (NT). At the end of 2008 total Australian gold resources were 867 t higher than at the end of 2007. After allowing for the replacement of those resources lost to production (215 t), newly delineated resources added to the national inventory totalled 1082 t (34.8 million ounces (Mozs)) in 2008.

Australia's Economic Demonstrated Resources (EDR) rose by 416 t (13.4Mozs) in 2008 to 6255 t and accounted for 81% of total demonstrated resources, a similar proportion to 2006 and 2007. In 2008, EDR increased in the NT and all States except Queensland (Qld) and Tasmania (Tas) where small reductions occurred. Although Western Australia (WA) with 2934 t continued to dominate EDR, its share fell again in 2008 to 47% of the national total compared to 49% in 2007 and 54% in 2006. This reduction in share occurred despite WA's EDR increasing by 84 t and was due to strong growth in other States, particularly in New South Wales (NSW), South Australia (SA) and the NT.

Subeconomic demonstrated resources rose by 191 t in 2008, with an increase of 206 t in the paramarginal demonstrated resources category being slightly offset by a reduction of 15 t in the submarginal demonstrated resources. Resources in the paramarginal category rose to 1478 t with 67% of total paramarginal resources occurring in WA. This share was lower than in 2007 (72%). The submarginal demonstrated resources fell by 15 t to 123 t, just over half of which was in WA.

Following a fall in 2007, the level of inferred resources rose by 260 t in 2008 to 4596 t. Western Australia (41%) and SA (26%) dominate inferred resources.

EDR for gold are essentially unencumbered (less than 2% is in any form of restricted area). At Australia's 2008 rate of production, EDR is sufficient for about 29 years. However, the 2008 production was substantially lower than the output levels of recent years for a number of reasons which suggests that a resource life estimate based on these factors may be somewhat misleading. Resources classified only as reserves under the Joint Ore Reserve Committee (JORC) Code will support only 16 years at the 2008 production rate. These estimates are average figures and there are some operations which may continue after these periods and there are others that will close before the end of those periods. The relatively short life suggested by these estimates highlights the importance of maintaining substantial short and medium term exploration programs.

EDR is the sum of the JORC Code reserves categories plus those resources from the measured and indicated resource categories assessed by Geoscience Australia as likely to be economic. In 2008, just under 54% of EDR fell into the JORC Code reserves categories.

On the basis of calendar year exploration spending reported by the Australian Bureau of Statistics (ABS), gold was supplanted by iron ore as the dominant single commodity target in 2008 and its share of total spending fell from 24% in 2007 to 22% in 2008. This fall occurred despite a 13% increase in exploration expenditure to $570 million. Western Australia continued to dominate gold exploration by attracting $329.1 million ($32.8 million more than in 2007). However, its share of total gold exploration fell again to 58%. All other regions, except the Australian Capital Territory, had gold exploration during the year and encouraging results were reported from each jurisdiction.

It should be noted that the ABS data reported on above will not include exploration for copper-gold mineralisation where the explorer nominates copper as the principal commodity. Such expenditure will be reported as exploration for copper.

On a financial year basis, the ABS reported gold exploration spending for 2007-08 was $592.7 million, an increase of $136.9 million over 2006-07.

Data published by the Canadian company Metals Economics Group (MEG) on company exploration budgets for non-ferrous minerals indicates that intended budgets for gold exploration in Australia for 2008 totalled US$700.4 million (A$756 million based on the exchange rate used by MEG). This budget was about 19% higher than actual spending reported by the ABS. The differences between reported budgets and actual spending on gold exploration may have been caused in part by increased spending on iron ore and base metals exploration resulting in gold budgets being reduced as funds were directed to these commodities. In addition, the impact of the global financial crisis toward the end of the year my have reduced some actual expenditure on gold exploration.

The MEG data show that 36% of gold exploration budgets were expected to be directed at grassroots exploration compared to 47% in 2007 although it is a similar level to the 33% in 2006. The shares of both minesite and late stage gold exploration budgets reported by MEG rose in 2008 to 25% for minesite exploration (23% in 2007) and 39% for late stage exploration (30% in 2007). These budgets highlight the continued concentration on brownfields exploration for gold.

New gold resources were reported for many deposits across the country. These included:

• At Newcrest Mining Ltd's Cadia Province, NSW, the Cadia East mineral resource increased by 6.6Mozs Au and 1.88 million tonnes (Mt) Cu while its ore reserve rose by 5.0 Mozs Au and 1 Mt Cu. An initial mineral resource for Big Cadia, located northeast of the Ridgeway mine, was estimated at 0.44 Mozs Au and 0.17 Mt Cu.
• Castlemaine Goldfields Ltd announced an initial Inferred Resource of 2.1 Mt @ 8.3 g/t Au for to 574 000 ounces (oz) Au for the Chewton deposit located adjacent to Wattle Gully mine, Victoria (Vic). There is an additional Inferred Resource of 610 000 t @ 5.7 grams per tonne (g/t) Au for 112 000 oz Au in remnant areas of the adjacent Wattle Gully gold mine.

New gold mineralisation was found across the continent and at depth below known deposits in a variety of mineralisation styles. The Archean greenstones of WA's Yilgarn Craton remain a very favourable target, but substantial opportunities also exist in other provinces. A major review of the highlights of gold exploration in Australia in 2008 is available in the document Australian Mineral Exploration: A Review of Exploration for the Year 2008 - Extended Edition available from the Geoscience Australia web site. Indicative of drill intersections reported from across the country in 2008 which highlight the potential, with further exploration, to yield resources to underpin the Australian gold sector into the medium to longer term were:

• At the McPhillamys Prospect, 35 km southeast of Orange, NSW, Alkane Resources Ltd and Newmont Australia Ltd reported a major gold intersection of 366 metres (m @ 1.85 g/t Au from 134 m depth.
• Also in NSW, Cortona Resources Ltd announced results from drilling at the Dargues Reef prospect at Majors Creek where intersections included 13 m @ 8.33 g/t Au; 3.2 m @ 15.4 g/t Au and 35 m @ 18.17 g/t Au.
• Dominion Mining Ltd reported good results from it Challenger Deeps Surface Drilling Program at its Challenger mine in SA, which aimed to test the depth continuity of mineralisation. Significant intersections reported included 12.5 m @ 13.84 g/t Au from 997.5 m depth; 4.17m @ 14.33 g/t Au from 887 m, and 4.00 m @ 22.28 g/t from 1005 m.
• Westgold Resources Ltd advised that drilling at Rover 1 near Tennant Creek, NT, returned significant high-grade mineralisation. Intersections included 65.75 m @ 11.0 g/t Au; 66 m @ 4.26 g/t Au, 0.56% Cu, 0.08% Co, 0.20% Bi and 2.1 g/t Ag which included 9m @ 14.4 g/t Au; and 49 m @ 5.8 g /t Au, 1.05% Cu, 0.10% Co, 0.42% Bi and 0.9 g/t Ag.
• From drilling to test the extensions to the Red Dome gold-copper-molybdenum deposit, Qld, Kagara Ltd reported an intersection of 63.45 m @ 3.14 g/t Au from 1002 m. This intersection is the highest grade achieved during Kagara's drilling program over the past two years and opens up the potential for the Red Dome system at depth.
• Frontier Resources Ltd has several drill intersections of gold skarn at the Stormont deposit in the central north of Tasmania, the best being 6.6 m @ 16.32 g/t Au, 0.29% Bi and 4.8 g/t Ag.
• At the Tropicana joint venture, 230 km east-south-east of Laverton, WA, AngloGold Ashanti Ltd and Independence Group NL reported further encouraging regional exploration results. Independence announced that aircore drilling defined a 45 km anomalous gold corridor trending northeast and southwest from the 4.05 Mozs Au Tropicana-Havana deposit and lying between the Black Dragon and Kamikaze prospects. Rock chip sampling adjacent to a hole at Black Dragon, 30 km northeast from Tropicana-Havana, returned assays including 22.2 g/t Au, 16.7 g/t Au and 15.9 g/t Au. Follow-up sampling over the main high-grade zone returned 27 samples with grades in excess of 1 g/t Au including 12 samples grading over 5 g/t Au which included samples assaying at 573 g/t Au, 324 g/t Au, and 157 g/t Au.
• Avoca Resources Ltd announced the discovery of gold mineralisation at its Musket Prospect, 40 km southeast of the Trident mine at Higginsville, WA. An intersection from a diamond drill hole returned 18 m @ 10.9 g/t Au from a depth of 68 m. This drilling was to test shallow mineralisation defined by earlier RC drilling that included intersections of 3 m @ 9.9 g/t Au from 13 m, 10 m @ 2.9 g/t Au from 67 m, and 16 m @ 2.1 g/t Au from 73 m.
• Integra Mining Ltd reported high-grade gold intersections from an initial drilling program at the Lucky Bay prospect which is part of its Aldiss-Randalls project near Kalgoorlie, WA. An intersection of 5 m @ 25.93 g/t Au was recorded. Other intersections include 14 m @ 5.39 g/t Au and 16 m @ 4.64 g/t Au which included 2 m @ 10.57 g/t Au.

Australian gold production reported by the Australian Bureau of Agricultural and Resource Economics (ABARE) for 2008 was 215 t, a reduction of 12% from the 2007 level. Australia's largest producer in 2009 was the Super Pit at Kalgoorlie 0.6 Mozs (19 t) was produced. It was followed by the Telfer operation, also in Western Australia where production was almost 0.58Mozs (18 t). In 2008, Western Australia dominated Australian production with 134 t, just under two-thirds of total Australian output but a reduction of 14% on the output achieved in 2007 (Table 1).

	2004 (t)	2005 (t)	2006 (t)	2007 (t)	2008 (t)
New South Wales	29.14	28.05	27.04	34.89	31
Victoria	3.46	5.24	6.27	6.42	5
Queensland	23.16	23.99	21.47	20.81	18
South Australia	5.12	6.24	6.75	6.92	7
Western Australia	164.32	173.14	165.10	155.29	134
Tasmania	10.60	8.34	5.10	4.19	5
Northern Territory	22.27	16.55	14.03	16.54	15
Australia	258.07	261.53	245.76	245.04	215

Source: ABARE Australian Commodity Statistics 2008 and ABARE Australian Mineral Statistics, December Quarter 2008
Table 1. Australian gold production 2004 to 2008.

The United States Geological Survey (USGS) estimates of world gold reserves of 47 000 t an increase of 5000 t over 2007. According to the USGS, South Africa still has the world's largest reserve of gold, which remained unchanged at 6000 t (12.8%) although its proportion fell slightly. Also, according to the USGS, Australia has the equal second largest reserve with Russia, with each having approximately 11% of the world's holdings.

Data published by the USGS shows world mine production of gold in 2008 to be 2330 t a reduction of 50 t on the estimated 2006 production level. China remained the leading producer with 295 t, followed by South Africa with 250 t and the USA with 230 t.

A limited review of developments is available in the document Australian Mineral Exploration: A Review of Exploration

for the Year 2008 - Extended Edition available from the Geoscience Australia web site. For a more comprehensive discussion of project development the ABARE report Minerals and Energy - major development projects - October 2008 listing is available for download from the ABARE website.

Some of the major developments are:

• Boddington (Newmont 100%) in WA where milling is expected to start later in 2009 and production over the first five years is expected to average around 1 Mozs/yr. Average annual production over the current 15 year life of mine will be around 850 000 oz of gold and 30 000 t of copper. Development at Boddington is over 70% completed.
• St Barbara Ltd commenced gold production at its Leonora operation, WA, where the first pour marked the end of the three year redevelopment of the Gwalia underground mine.
• Dioro Exploration NL and its partner La Mancha Resources Inc. poured the first gold from ore mined underground at its Frog's Leg project near Kalgoorlie, WA.
• Avoca Resources Ltd commenced gold production at the Trident mine at its Higginsville Gold Project, WA.
• Straits Resources Ltd opened its Hillgrove mine, NSW and plans to produce 20 000 oz Au, 10 000 t Sb and 30 t W annually.