Gold Down Under: Gold Mining in Australia

Gold prospecting and mining helped to build Australia into the nation it is today, and, nearly two centuries later, gold mining in Australia continues to be a vital industry for the country.

Ever since the first discoveries of gold in the 19th century, gold mining has been a key contributor to the Australian economy, and the land down under has been integral to the global gold industry. As one of the world’s top gold-producing countries and one of the top-ranked mining jurisdictions, Australia has been attracting some of the industry’s premier mining companies for decades with no sign of slowing down. The geographically fortunate country boasts the largest gold reserves on Earth, easily extractable material due to natural weathering and a supportive yet responsible regulatory climate, all resulting in strong potential and high margins for the country’s mining industry.

Some of the oldest mineral formations on Earth are located on the continent of Australia, making for a vast richness of mineral deposits including iron, uranium, cobalt, nickel, copper, zinc, platinum, diamonds and, of course, gold. Australia currently hosts 66 active gold mines including 14 of the largest on Earth. Of those gold deposits, the vast majority are located in Western Australia.

Australia’s golden history

The very first confirmed gold find in Australia occurred in 1823 with the discovery of riverbed gold particles in the Bathurst region of New South Wales. The next 27 years would see the odd small discovery, mostly in New South Wales and Victoria. In 1851, a prospector named Edward Hargraves, who had just come to Australia with new prospecting methods from the California gold rush, made the discovery that kicked off the first Australian gold rush. Hargraves’ discovery was near Orange, New South Wales, but the discovery, along with the introduction of the panning and cradling methods, brought prospectors from all over the world to any part of the country that had seen so much as a hint of gold discovery in the years prior.

The resulting influx of immigration transformed Australia into the country we know today. Major discoveries in Western Australia sparked another major gold rush in the late 1890s, bringing a wave of prospectors to the region and resulting in the beginning of some of the country’s major mines, one of which, the Super Pit in Kalgoorlie, is still operating today.

Australia as a premier mining jurisdiction

This mining heritage and the understanding that mining helped build the Australian economy into what it is today informs government support for the industry. The Australian federal government and the state governments understand that their economic prosperity relies on the success of mining and exploration. Australian states have industry-friendly but responsible regulatory systems and supportive infrastructure to help ensure a smooth regulatory process with a predictable outcome. As the second-largest producer of gold in the world behind only China, Australia extracted 301 tonnes in 2017, up 3 tonnes from the year before, for its highest production since 1999.

A significant part of the appeal of Australia as a premier mining jurisdiction comes from low production costs and high margins. Not only does Australia have some of the world’s largest gold deposits, but the age of these deposits combined with extensive weathering means that many of these are near surface. This allows for easy, low-cost extraction. However, it isn’t only geological factors lowering gold exploration and production costs. The Australian dollar is weak compared to the US dollar, allowing miners operating in Australia to increase margins by selling gold in US dollars.

Gold mining in Australia: Companies and projects

The largest gold-mining company in Australia by market cap is Newcrest Mining (ASX:NCM). Newcrest has been operating in Australia since 1975 with the discovery of the Telfer open-pit mine in Western Australia, which continues to produce today. Newcrest’s Cadia Valley operations produced 599,717 ounces of gold during the financial year ended June 20, 2018.

Northern Star Resources (ASX:NST,OTC Pink:NESRF) became Australia’s second-largest gold miner in 2005 when it first began operations at the low-cost Paulsens gold mine in Western Australia. Since then, the company has expanded its assets in Western Australia with the acquisition of the Kanowna Belle mine and a 51 percent stake in the East Kundana mine.

Evolution Mining (ASX:EVN,OTC Pink:CAHPF) owns five Australian gold operations in three states, while AngloGold Ashanti (ASX:AGG,NYSE:AU) owns two facilities in Western Australia, the Sunrise Dam and the Tropicana mine. The northeastern goldfields of Western Australia produced 559,000 ounces of gold in 2017.

Throughout 2018, Canadian junior gold miner NxGold (TSXV:NXN) conducted exploration on its promising Mount Roe gold project in Western Australia’s Pilbara region, an area known as one of the world’s largest iron-ore-mining regions. According to the company’s January 2019 exploration update, recent sampling has returned a high of 4.8 g/t gold. The area in which the Mount Roe gold project is located has the potential to host a range of gold systems. The flattened, rounded gold nuggets recovered at Mount Roe suggest that the property contains similar gold geography to that of adjacent Novo Resources (TSXV:NVO,OTCQX:NSRPF), Artemis Resources (ASX:ARV,OTCQB:ARTTF) and De Grey Mining (ASX:DEG,OTC Pink:DGMLF) properties.

Macarthur Minerals (TSXV:MMS,OTCQB:MMSDF) is another junior miner in Australia and owns 18 exploration licenses in Western Australia accounting for 325 square kilometers in the Pilbara region. These properties were originally acquired with lithium in mind, but as gold exploration in the region has heated up, Macarthur has recognized the properties’ potential for gold production. Junior miner Pacton Gold (TSXV:PAC;OTC Pink:PACXF) controls one of the largest land packages in the Pilbara region.

Takeaway

From the first discoveries of the 1850s gold rush to the modern boom that we’re seeing in Western Australia, gold mining continues to provide enormous opportunity for low costs and high rewards for miners of all sizes and for the economic benefit of the nation.

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