Towards an understanding of production costs at Australia’s underground gold mines

CSA Global Principal Geologist, Sam Ulrich presented: “Towards an understanding of production costs at Australia’s underground gold mines” at this year’s 13th AusIMM Underground Operators’ Conference 2017, 16-18 October 2017 on the Gold Coast, Australia.

The theme ‘Capturing the Opportunities: Communication, Collaboration, Innovation’ provided an opportunity for practitioners to share their learnings of the last few years.

Towards an understanding of production costs at Australia’s underground gold mines

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A synthesis of reported All-In Sustaining Costs (AISC) for 57 Australian gold mines in the period 2014–2016 reveals for the first time the clear influence of grade upon cost performance, most evident in gold-only underground mines. Past syntheses of costs on a single quarter basis have viewed grade as potentially subordinate to other factors such as production scale, mine geometry, mineralisation style and a combination of other mining-related costs.

Better understanding of the grade to cost relationship on both an individual mine and whole-of-portfolio basis is needed. Insight into the roles and trade-offs between other cost-determining factors will aid the future sustainability of the gold mining sector in Australia and assist in targeting prospects for future resource growth and development. While the overall trend is toward higher-grade mines displaying lower costs and vice versa, the grade to cost functions appear radically different between mines based on time-series data.

The median cost of Australian gold production in the final quarter of 2016 was A$1081/oz. The threshold for lowest cost quartile production was A$965/oz. Underground production now dominates Australian gold output – with 71 per cent of ounces originating from operations that are either entirely underground or hybrid pit/underground mines. Scale economies are evident, with smaller mines predominately among the higher cost producers. For mines of equal grade, open pit mines are lower cost than underground operations. Reserves are modest, with an average mine life for underground operations of 4.7 years based on current production rates.

Sam Ulrich – Principal Geologist
BSc(Hons) Geology, GDipAppFinInv, MAusIMM, MAIG, FFin

Sam is a principal geologist with more than 20 years’ experience in the areas of exploration and resource development of gold, uranium and copper projects.  He has several years’ experience as a consultant and possesses a strong knowledge in the areas of project evaluations, the undertaking of VALMIN compliant valuations and Independent Geological Reports for IPO’s. Sam has worked extensively in Archaean orogenic gold deposits, epithermal gold and silver deposits in Indonesia and North Queensland. He has travelled globally to undertake assignments in countries, such as China, Laos, Indonesia, Argentina and the Kyrgyz Republic. With an interest in mineral economics, Sam is currently undertaking his PhD at the Centre for Exploration Targeting (CET) at The University of Western Australia linking geology to gold mine economics in Australia and New Zealand, with a focus on orogenic gold deposits.






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