Gold in South Australia

- December 16th, 2020

South Australia accounts for more than a quarter of the country’s gold resources, but only 4 percent of gold production.

Australia is one of the world’s top gold miners, most recently producing 325.1 tonnes in 2019 and securing either second or third place for global production, depending on who you ask. From 2012 to today, the country has seen consistent increases in production year-on-year.

The most famous jurisdiction for mining output is Western Australia, which accounts for more than 60 percent of national output. The state of South Australia accounts for over a quarter of the country’s gold resources, but only 4 percent of production, according to South Australian government data.

The state is sitting on a lot of potential, with a major geological region — the Gawler Craton — identified by the government and mineral explorers as being of extreme interest for miners the world over. Indeed, it’s home to one of the premier mines of sector giant BHP (ASX:BHP,LSE:BHP,NYSE:BHP).

 

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Taking up 440,000 square kilometres, the Gawler Craton covers roughly half of the state, with South Australia’s three producing gold projects all located in the region, including the Olympic Dam mine.

The outlook for the area to increase its share of raw gold production in the coming years is positive thanks to the exploration and development projects around existing mines and within the Gawler Craton. They are putting the as-yet-untapped quarter of Australian gold resources well within reach.

The state shares the geographical benefits of Western Australia in that it’s sparsely populated and covered with desert, making exploration somewhat easy to carry out.

Investing in South Australian projects is another relatively easy prospect — within Australia, which is itself an attractive and safe jurisdiction, the state comes second behind Western Australia in investment attractiveness, according to the Fraser Institute.

The three producing and active mines within the state are run as polymetallic projects, with all of them operating as copper-gold mines.

Top South Australian gold stocks by market cap

1. BHP

Market cap: AU$180 billion

The owner and operator of the world-famous Olympic Dam polymetallic mine is none other than global mining giant BHP. The company has operated the copper-uranium-silver-gold mine since 2005, though it’s been in operation since 1988.

While Olympic Dam is known primarily for its copper and uranium output, the mine represents almost half the gold output in South Australia, accounting for 146,000 ounces of gold, according to BHP’s most recent annual report.

2. OZ Minerals (ASX:OZL)

Market cap: AU$4.92 billion

OZ Minerals is another of the big players in South Australia, with two operating copper-gold mines and exploration tenements across the state. The company produced 122,763 ounces of gold from its Prominent Hill mine in 2019, and has a second mine, Carapateena, that is in the process of ramping up production following a successful construction phase in 2019.

Prominent Hill is itself ramping up further. It produced 51,629 ounces of gold in 2020’s third quarter, and the company has increased its gold production guidance through the year.

 

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South Australia is the star jurisdiction for OZ Minerals, being home to two of its operational mines. It also has interests in Brazil, Peru and Sweden, though Australia remains the focus of its operations.

3. Terramin Australia (ASX:TZN)

Market cap: AU$114.29 million

Terramin Australia is a development company with assets in South Australia and Algeria. Within South Australia, it has interests inside the Gawler Craton and near the capital city of Adelaide, where it has 12 exploration tenements in the Adelaide Hills focused on gold.

The company’s flagship asset is the Bird-in-Hand project, which is a historical gold mine that Terramin estimates still holds 265,000 ounces of gold, despite being closed in the late 1800s.

Bird-in-Hand is one of multiple mines located within the Adelaide Hills that was a target for exploration in pre-Federation days in Australia.

The company is working on reopening the mine, which was originally shut due to technological shortfalls. According to the company, restart operations should cost around $25 million, and it is working through a staged approval process in order to get a mining lease.

4. Havilah Resources (ASX:HAV)

Market cap: AU$56.89 million

Havilah Resources is currently billed as an exploration company, with a raft of exploration and development projects dotted through Eastern South Australia against the border with New South Wales, where the nearest city and famed mining town of Broken Hill is located.

The company currently estimates its assets hold 3.2 million ounces of gold split between the Kalkaroo and Mutaroo projects — both located within South Australia outside of the Gawler Craton.

Kalkaroo, which is the company’s flagship project, sits on 3.1 million ounces of gold, according to its measured, indicated and inferred JORC mineral resources.

5. Rex Minerals (ASX:RXM)

Market cap: AU$50.79 million

Rex Minerals is an exploration and development company with assets in South Australia and Nevada, with its Australian interest being its Hillside copper-gold project on the Yorke Peninsula.

The Hillside project is a proposed mine, and was only discovered recently in 2008. In the most recent feasibility study for the project, the company envisages production of 24,000 ounces of gold annually for its first 12 years of production.

INNdepth

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Securities Disclosure: I, Scott Tibballs, currently hold no direct investment interest in any company mentioned in this article.

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