Gold Grades and Gold Costs Exploding the High-Grade Myth Allan Trench 12 Matthew Kanakis 23 & John Sykes 12 1. Department of Mineral & Energy Economics, Curtin University 2. Centre for Exploration Targeting, Curtin University & University of Western Australia 3. Consultant, KPMG, Perth WA 6000
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Gold grades & gold costs - Trench et al - Feb 2015 - Centre for Exploration Targeting / University of Western Australia / Curtin University
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Gold Grades and Gold Costs
Exploding the High-Grade Myth
Allan Trench12 Matthew Kanakis23 & John Sykes12
1. Department of Mineral & Energy Economics, Curtin University
2. Centre for Exploration Targeting, Curtin University & University of Western Australia
3. Consultant, KPMG, Perth WA 6000
RIU Explorers Conference: Making Mines, Making Money
The Australian Gold Industry
• A ‘Rise & Stall’ scenario (or worse) for the Australian
gold industry is a material risk - despite discovery
exceptions of recent years (Andy Well, Tropicana)
• ‘Grade is King’ over-simplifies the sector’s mine
economics: If “Grade is King, Geology is the Ace”
• That is, publicly reported cost data from 50 mines
reveals that scale effects, orebody geometry &
mineralisation style are more important to deposit
economics than is grade between mines
25 Feb 2015
Gold Grades and Gold Costs: Exploding the High-Grade Myth
Slide 2 of 12
RIU Explorers Conference: Making Mines, Making Money
A case study of ‘geological-economics’ and
the challenges facing Australian gold
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1989 1994 1999 2004 2009
Mil
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Australian Production of Gold (1989-2013)
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US
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Increases in costs over time
GrowthCapex Cost
All-In-Costs
Gold Price
25 Feb 2015
Gold Grades and Gold Costs: Exploding the High-Grade Myth
Source: USGS and Taggart (2013)
Slide 3 of 12
RIU Explorers Conference: Making Mines, Making Money
Australian gold: About 50 mines with close to 50:50
underground to open pit split of production
25 Feb 2015
Gold Grades and Gold Costs: Exploding the High-Grade Myth
Fact Key Figure(s)/Mine example(s)
Total Australian and New Zealand Production Dec Half-
Year 2013 Recorded in the Study. 4,126,319 oz.
Percentage of Gold Production from Underground Mines 56%
Percentage of Gold Production from Open Pit Mines 44%