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Australian gold exploration 1976–2003
Resources Policy 30 (2005) 29–37 www.elsevier.com/locate/resourpol
Australian gold exploration 1976–2003 M.B. Huleatt*, A.L. Jaques Geoscience Australia, GPO Box 378, Canberra ACT 2601, Australia Received 10 July 2003; received in revised form 18 August 2004; accepted 25 August 2004
Abstract The Australian gold industry has grown enormously over the past 25 years. Australian mine production of gold in 2003 was 284 t, similar to that of the USA, and behind South Africa, the world’s largest gold-producing nation. Gold is Australia’s third largest commodity export, worth an estimated A$5.3 billion in 2003–2004. Underpinning the industry is a solid resource base that has grown by successful exploration over the past three decades. Australia ranks third in the world after South Africa and the USA in terms of its economic gold resources. The growth in Australia’s gold resources has been underpinned by high levels of exploration and innovations in gold processing technologies, specifically the development of carbon-based gold extraction methods that allowed commercial treatment of low grade ores. It has been supported by advances in gold exploration methods, especially exploration geochemistry. New resources were added at existing deposits and new deposits were found, including several of world class (O100 t contained gold), in each decade over the 25-year-period but resource growth since the 1990s has been dominated by brownfields additions rather than new discoveries. Average costs of discovery have now plateauxed at around A$20–25/oz, after falling sharply during the early to mid-1990s when a number of new discoveries were made, notably in the Yandal belt in Western Australia and the Lachlan Fold Belt in New South Wales. Current gold reserve/production and gold EDR/production ratios are 12 and 19 years, respectively, and indicate that the long-term future of the Australian gold industry depends on continued high levels of exploration and the discovery of new deposits to replace mines that are currently being depleted. q 2004 Elsevier Ltd. All rights reserved. Keywords: Australia; Gold; Gold resources; Exploration; Gold mining
Introduction The dramatic growth of Australian gold production from 20 t in 1978 to a peak of 314 t in 1997 is the third and by far the largest of three booms in Australian gold production. Close (2002) has given a comprehensive account of the modern gold boom and contrasted it with the Australian Gold Rushes of the 1850s–1860s and the gold boom of 1890–1910. The current gold boom was facilitated principally by the removal of price control on gold and the development of carbon-based gold extraction technology that allowed commercial treatment of low grade (w1 g/t) gold ore. Advances in low cost mining of gold deposits and in gold exploration methods, enhanced geological * Corresponding author. Tel.: C61 2 62 49 9745; fax: C61 2 62 49 9983. E-mail address: [email protected] (M.B. Huleatt). 0301-4207/$ - see front matter q 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.resourpol.2004.08.005
knowledge, and the application of structural analysis and regolith geochemistry also assisted. In this paper, we review rates and costs of discovery of gold resources over the past 25 years, identify patterns and emerging trends in the context of current exploration activity, and examine their implications for the future of the Australian gold industry. The resource information used is drawn largely from the annual assessment of Australia’s mineral resources made by Geoscience Australia and its predecessors since 1976. The mineral resource classification system for national resource assessment used by Geoscience Australia is based on the widely used McElvey resource classification system (BMR, 1984). This system is compatible with the Australian Code for Reporting Mineral Resources and Ore Reserves—JORC Code—used by mining companies to report reserve and resource data for individual deposits. Background information on resource
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classification systems and reserve depletion can be found in mineral economics texts and publications (e.g. Adelman et al., 1983). Exploration expenditure data is based on the Australian Bureau of Statistics (ABS) quarterly collections of data on exploration spending reported in their serial publication number 8412.0. All data are reported in Australian dollars (A$) unless stated otherwise. Conversion of current dollar exploration expenditure to constant dollars was based on a CPI series originally provided by the Australian Bureau of Agricultural and Resource Economics (ABARE).
Australian gold production Australian gold mine production rose sharply from 20 t in 1978 to a peak of 314 t in 1997 (Fig. 1). Production in 2003 was 284 t, up 4% on 2002 but down w10% on the 1997 peak (ABARE, 2003, 2004). Australia’s gold production in 2003 came from 74 gold operations of which 60 are primary gold producers (Surbiton Associates, 2004). Large-scale operations dominate with nearly 48% of production coming from the 10 largest mines and almost 31% from the five largest (Fig. 2). Australian gold production in 2003 was comparable with that of the USA but well short of that of South Africa, the world’s leading gold producer. The gold mining industry has historically been and remains more diversified than any other segment of the Australian mining sector. The period 1997–2002 saw a major consolidation of the Australian gold mining industry with the merger or takeover of several of Australia’s former leading gold companies. A number of gold mines, including several large producers, notably Kidston and Mt Leyshon in Queensland as well as a number of smaller operations, closed in this period. This period was characterised by low gold prices, poor returns from mining, low share prices for mining stocks, reduced exploration levels, and a global focus on growth through acquisition rather than exploration. Takeovers of a number of significant Australian gold producers (typically with a significant low cost inventory of resources) were facilitated by relatively low market
Fig. 1. Australian gold production 1978–2003 (ABARE, 2003, 2004).
Fig. 2. Source of Australian gold production 2003 (Surbiton Associates, 2004).
valuations and the low exchange rates for the Australian dollar (e.g. Close, 2002).
Gold exploration and discovery Growth in gold resource inventory The dramatic growth in Australia’s gold production has been underpinned by sustained successful exploration. Australian gold exploration expenditure has grown substantially since 1977 and generated strong growth in Australia’s gold resource inventory (Fig. 3) over the period. At the end of 2003, Australia’s gold resource base (all categories) stood at a record 9860 t and was the culmination of strong growth that commenced in 1982 (Fig. 3). This growth occurred through discovery of numerous deposits, including several of world class (O100 t contained gold), in the period 1972–1997 (Fig. 4, Table 1). In all, a total of 14 218 t of gold were added to the resource base in the period 1977–2003 at an average rate of 527 tpa (w17 Moz pa)—almost double
Fig. 3. Growth in Australia’s gold resources (all resource categories) since 1977.
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Fig. 4. Map showing the distribution of selected substantial and world-class gold deposits found in Australia since 1970.
the current mine production. Australia ranks third in the world after South Africa and the USA in terms of its gold economic demonstrated resources (Geoscience Australia, 2003). Over the period, annual gold exploration spending grew substantially with major peaks in 1987–1988 and 1996– 1997 (Fig. 5) when gold accounted for 72 and 64%, respectively, of all mineral exploration in Australia. Total expenditure on gold exploration in the period was A$11.5 billion (in 2002–2003 dollars). Both total and gold exploration spending fell sharply after the 1996–1997 peak to its lowest level since 1984 and reached a 10 year low in 2001–2002. This trend was reversed in 2002–2003 when total exploration expenditure rose by 14% and gold exploration by 6%. Figures for calendar year 2003 showed a further strengthening in exploration spending, with gold exploration expenditure up 5% on the 2002 figures to A$374 million. Australia’s gold resource base grew steadily from 1976 onwards, even during the downturn in exploration that followed the 1997 peak (Fig. 5). The gold resources added during the 1990s were nearly twice that of the 1980s.
However, the rate of discovery (based on a 5-year rolling average) peaked in 1997 after rising steadily through the 1980s (Fig. 5). Since then the annual resource addition has fallen in line with exploration spending (Fig. 5) and the average annual addition of gold resources for the period 1988–2003 has been 419 t (13.5 Moz) pa compared with 703 t (22.6 Moz) in the period 1983–1988. Composition of resources The ratio of resources to production provides an estimate—albeit dynamic and imprecise—of the number of years of production the resource can support. Assuming that all gold production is drawn from the reserve categories, the reserve to production ratio is a measure of the status of the industry’s operating resource base. The 2003 Australian reserve to production ratio was 12, viz., at current mining rates, mining reserves are sufficient for 12 years production. Addition of other measured and indicated resources considered to be economically viable, to the reserves gives a category called the economic demonstrated resources (EDR). Fig. 6 shows that Australia’s EDR to
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Table 1 Australian world-class gold (O100 t gold) discoveries since 1970 Deposit
Gold resource
Discovery year
Telfer (WA) Olympic Dam (SA)
1007 t 1501 t, 37 Mt Cu, 1.2 Mt U3O8 127 t 167 t 138 t 149 t 385 t 1096 t
1972 1975 1978 1978 1979 1979 1980 1981
208 t 107 t 117 t 110 t
1981 1982 1982 1983
138 t 298 t 188 t 187 t 575 t, 2.3 Mt copper 165 t 183 t 230 t 172 t, 0.57 Mt copper 102 t 156 t
1987 1988 1990 1991 1992 1992 1992 1993 1996 1997 1998
Kidston (Qld) Stawell (Vic) Gympie (Qld) Granny Smith (WA) St Ives (WA) Boddington (including Wandoo) (WA) Sons of Gwalia (WA) Mount Leyshon (Qld) Paddington (WA) Pajingo (including Vera-Nancy) (Qld) Tarmoola (WA) Plutonic (WA) Kanowna Belle (WA) Callie (NT) Cadia System (NSW) Cowal (NSW) Jundee-Nimary (WA) Sunrise-Cleo (WA) Ridgeway (NSW) Carosue Dam Wallaby (WA)
Resource estimates are derived from data released in company reports to the Australian Stock Exchange.
production ratio has risen over much of the last decade and is currently significantly above the historic average of w14 years. There has been a sharp increase in recent years in the proportion of EDR that are in the mining reserve category (Fig. 7). This means that the pool of geologically wellknown resources from which reserves are generated is getting proportionally smaller. Inferred resources are the least well-known resources geologically and they provide the foundation from which measured and indicated resources and, ultimately, reserves are typically derived. Currently Australia’s ratio of inferred
Fig. 6. Australia’s EDR: production 1978–2003.
resources to production is relatively low (11 years), having decreased sharply in 2002 following a 10% fall in the level of inferred resources. The ratio of inferred resources to production is significantly lower than the reserve to production ratio: this implies that current levels of inferred resources are not sufficient to support an adequate reserve base in the longer term. The growth in the reserve to production and EDR to production ratios at the expense of the inferred resource to production ratio is consistent with a focus on low-cost brownfields resource addition at the expense of greenfield discovery in recent years (see below). Therefore, despite strong growth in Australian gold resources, the distribution of resources by category and the resource to production ratios means that the current high mining rates require continued exploration success-particularly discovery of new deposits-to sustain the industry in the longer term. Trends in resource growth Analysis of resource growth by decade from 19771 to 2003 reveals some further important trends. Strong growth in gold resources was recorded in the 1980s and 1990s and indications are that the current decade may also record strong growth (Fig. 1). There is a clear distinction in the nature of resource growth between the discoveries of 1990s and 2000s and those of the 1980s. In the 1980s, additions to the resource inventory were predominantly in deposits discovered in that decade, viz. new deposits, whereas resource additions in the 1990s and 2000s were primarily at deposits discovered in earlier decades (Huleatt and Jaques, 2002; Schodde, 2003a). The dominance of discoveries in the 1980s was a natural consequence of the introduction of the carbon-based technology allowing commercially viable treatment of low grade ores and the major increase in exploration spending in that period compared with previous years. This lead to 1
Fig. 5. Annual Australian gold exploration spending and resource growth for the period 1978–2003.
Available data for the 1970s is for the years 1977–1979 inclusive only but is presented for completeness. Data for the 2000s is for the years 2000–2003.
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Fig. 7. Gold reserves as a percentage of Australia’s gold EDR. Fig. 8. Average discovery cost per ounce of gold 1978–2003.
the discovery of a large number of relatively small, shallow, commonly oxide, deposits that were developed as open pits. However, in the 1990s over two-thirds of resources added to the inventory came from deposits discovered in earlier decades (mainly the 1980s). This was despite the discovery of a number of major deposits in the Yandal greenstone belt of the Yilgarn Craton (e.g. Kanowna Belle, Bronzewing, Jundee-Nimary, Centenary), the Tanami province (Callie) and the Lachlan Fold Belt (Cadia, Ridgeway, Cowal). More than 470 t (15 Moz) of gold were discovered in the Yandal belt (Phillips and Vearncombe, 2003) and 1080 t (w35 Moz) were discovered in Lachlan Fold Belt in the 1990s. There was also growth in resources at a number of deposits through extensions of shallow deposits to depth. In the period following the peak in exploration activity in 1996–1997 some 88% of gold resources were added at existing mines and known deposits. The largest single addition was at the Telfer deposit where some 590 t (19 Moz) were added in 2002, nearly trebling the then existing resources and making the Telfer deposit the third largest gold deposit in Australia based on current resources. This illustrates a marked shift from the grass roots exploration of the 1980s to brownfields activities in the later decades and an accentuation of that trend during the period of contracted exploration activity. Discovery costs Discovery costs (average cost per ounce of gold) for total resources, in constant 2002–2003 dollars, fluctuated from year to year (Fig. 8) and averaged A$25/oz. However, the trend shows that discovery costs increased during the 1980s, peaked in 1988, fell steadily to a low in 1996 and then rose and reached a plateau (Fig. 8). The fall in discovery costs in the early 1990s is attributed largely to the shift in focus from greenfields to lower cost brownfields exploration (see below) coupled with significant new deposits discovered in that period (Table 1). Many of these discoveries were made at relatively low cost and can be attributed to advances in the effective application of exploration geochemistry in the regolith dominated terranes of the Eastern Goldfields (e.g. Annand, 2003).
Whilst the aggregated exploration data published by ABS provide a useful basis for assessing average discovery costs, they mask variations in costs between provinces, within mineral districts, and between individual companies. More importantly, they mask differences between grassroots discoveries and brownfields additions that are typically substantially lower. For example, Schodde (2003b) estimated average Australian gold discovery costs for the period 1985–2002 at $60–70/oz for grassroots and $12–18 for mine site exploration. Australian gold exploration occurs dominantly in Western Australia where Flint and Searston (2003) reported that average discovery costs for measured and indicated resources and reserves for the period 1993– 2001 peaked at $30/oz in 1998 before falling to $12/oz by 2001. This reduction is consistent with a focus on low cost exploration at or near known deposits (brownfields) in that period as discussed earlier. Normandy (now Newmont Australia) reported average discovery costs of $18/oz for their operations in the Tanami Province (Lines and Kay, 2002). Within these average figures large variations in discovery costs can occur even in single mineral districts during the exploration program (e.g. Lord et al., 2001). Australian gold discovery costs, whether based on reserves or average addition to resources, compare favourably with those in other countries. For example, Lassonde (2001) reported average exploration costs per ounce of gold reserves added in the period 1995–2000 to be in the range US$12.5–$37 for five major producers (Barrick, Newmont, Placer, Homestake and Normandy). Champion de Crespigny (2002) reported that Australian costs of adding reserves were equal to those of Latin America (US$31/oz), higher than Africa (US$11) and Asia/Oceania ($24) but much lower than Canada (US$111) and the USA (US$527) for the same period. Schodde (2004), in a recent analysis of the discovery performance of the western world gold industry in the period 1985–2003, makes a number of important findings that are pertinent to our study and reinforce our conclusions. In particular, Schodde (2004) noted that Australia accounted for w16% of all gold discoveries greater than 100 koz (200 deposits) and 36 out of
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Outlook for the Australian gold industry
Fig. 9. Gold price in Australian and US dollars and Australian mineral exploration expenditure in A$2002–2003. Gold prices from the Perth Mint and exploration data from Australian Bureau of Statistics.
190 (19%) of major (O1 Moz) gold deposits discovered in that period. The average cost of discovery in Australia (A$25/oz) is less than the US$25/oz (2002) for the western world reported by Schodde (2004). Influences on exploration trends The trends in gold exploration over the past 25 years can be readily interpreted as responses to different economic drivers. The substantial growth of resources in newly discovered deposits in the 1980s reflects a rapid growth in exploration spending which was based on a sustained period of prices far higher than those of earlier decades and advances in carbon-based extraction technology allowing the commercial treatment of low-grade ores. In the 1990s, exploration was driven by different parameters, notably consolidation and cost-cutting in the face of rising globalisation and generally lower gold prices, particularly from 1997 to 2002. This resulted in most resource delineation occurring in or adjacent to deposits discovered in the 1980s or earlier. In the 2000s, factors applying in the 1990s operated until 2002 when, in response to improved gold prices, gold exploration showed the first signs of recovery. Gold exploration, both in Australia and globally (Chender, 2004), strengthened throughout 2003 and into 2004 in response to higher gold prices. A prime determinant of gold mining profitability and, less directly, the level of exploration is the price of gold. Fig. 9 shows that Australian dollar gold prices in 2002–2003 were the highest since the late 1980s. This reflects the marked depreciation of the Australian dollar against the US dollar in 2000–2001 and the rise in US dollar gold price in the 2002–2003 period. Australian gold exploration expenditure, however, has tended to more closely follow (but with a 1–2 year lag) the US dollar gold price rather than movements in the Australian dollar price of gold.
The immediate outlook for the Australian gold industry is very positive with annual gold production forecast to increase by 4.4% pa in the medium term rising to 345 t in 2008–2009 (Maurer et al., 2004), cementing Australia’s position as the world’s second largest producer after South Africa. Production is likely to be increasingly dominated by the major mines—Telfer, Super Pit, St Ives, Granny Smith, Callie, Sunrise Dam, Cadia, Cowal and, potentially, Boddington. At full production the Telfer deposit will contribute 24 t (0.77 Moz) gold pa and will be one of the dominant Australian producers. However, the dominance of brownfields resource addition, a decline in the discovery rates, and a plateau in the discovery costs raises the question as to whether these are the early signs of exploration maturity. Exploration maturity and potential Clear signs of exploration maturity are a decrease in the size of deposits found and rising discovery costs (e.g. Hronsky, 2003). The decline in size of deposits found with time reflects the fact that in any province the largest deposits tend be found first—primarily because of their larger footprint and expression. The same is typically true of petroleum exploration, where the largest oil fields in a petroleum basin tend to be found early. This, together with the commonly observed parabolic fractal relationship between size and rank of oil fields when plotted on a log–log basis, is commonly used to predict the ultimate size of oil and gas fields in a basin (e.g. Bradshaw et al., 1998). Discovery dates and resources are given for a number of Australia’s more significant mines in Table 1. Several observations can be made. World-class deposits were found in each decade. Commonly the true size of the deposit was only apparent after a number of years of mining and further resource delineation. This can involve major increases in resources as shown at Telfer and Boddington, for example. Several of these deposits have only been found in the course of the modern cycle of gold exploration although many lie within historic goldfields. For example, both the Archaean Yandal greenstone belt of the Yilgarn Craton of Western Australia and the Proterozoic Tanami province straddling the Northern Territory—Western Australia border had a history of only small-scale gold production prior to 1985. Exploration of the Yandal belt in the 1990s resulted the discovery of more than 470 t (15 Moz) of gold, a total endowment for the belt estimated at more than 620 t (20 Moz), including the substantial Jundee-Nimary and Bronzewing deposits (Phillips and Vearncombe, 2003). Similarly, more than 373 t (12 Moz) has been discovered in the Tanami province in the past 16 years (Lines and Kay, 2002). The same is true of the central Lachlan Fold Belt in New South Wales, the site of Australia’s first discovery of
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Fig. 10. History of discovery of gold deposits and log–log plots of size versus rank for gold deposits from the Tanami Province (a, c) and Yandal belt (b, d). Data for the Tanami is from Ahmad et al. (1999) and Geoscience Australia. The Yandal belt data is from the Western Australian Department of Industry and Resources and Geoscience Australia.
gold in 1851: major new discoveries were made in the 1990s (see below). Time series data for discoveries in the Yandal belt and the Tanami province show that the largest deposits currently known in these provinces (Jundee-Nimary and Callie, respectively) were found relatively early in the current cycle of exploration but not necessarily first (Fig. 10a and b). Plots of gold resource versus rank (Fig. 10c and d) approximate a parabolic curve but with significant gaps that suggest both provinces have remaining potential for deposits containing greater than 50 t Au. Moreover, there is no certainty that the largest deposits in these provinces have been found. Lines and Kay (2002) believe that as little as 20% of the prospective covered areas of the Tanami region may have been subjected to modern exploration. In the Yandal belt deposits of significant size, such as Thunderbox (Bennett and Buck, 2000) continue to be found beneath thin (!30 m) transported regolith cover. The paucity of deep drill holes (O300 m) means that the Yandal belt has not been explored at depth (Champion de Crespigny, 2002). In many areas, the level of exploration is limited to shallow RAB drilling. Even in the more extensively explored gold mining districts such as Kalgoorlie new discoveries continue to be made indicating that these areas cannot
be considered fully explored, especially at depth and in areas beneath transported regolith and sedimentary cover. Deep crustal seismic surveys have highlighted the potential significance of major trans-crustal structures in controlling the distribution of gold deposits in the Eastern Goldfields (e.g. Swager et al., 1997; Goleby et al., 2003). A recent survey in the Laverton area has identified a major structure within the poorly exposed and underexplored Yamarna greenstone belt (Goleby et al., 2003) to the east of the Yandal greenstone belt highlighting the importance of new geoscientific knowledge to perceptions of prospectivity and modern gold exploration. New provinces, new potential In addition to discoveries in existing gold mining districts new and potentially new gold provinces continue to be opened up. Significant new porphyry, epithermal gold and associated skarn mineralisation has been discovered in the Lachlan Fold Belt in central western New South Wales associated with shoshonitic volcanic and high-level intrusive rocks of the Late Ordovician to early Silurian Macquarie arc. More than 1080 t (w35 Moz) Au have been discovered in the past 15 years including the Cowal deposit (165 t, 5.3 Moz Au)
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discovered in 1988 and due to begin production in 2004 (Tucker, 2003), the large Cadia porphyry and skarn system which has a resource of more than 575 t (w19 Moz) of gold discovered in1992 (Holliday et al., 2002) and the adjacent high-grade Ridgeway deposit (172 t, 5.5 Moz) discovered in 1996 (Wilson et al., 2003). Mining commenced at Cadia in 1998 and at Ridgeway in 2002. New discoveries continue to be made, notably the Wyoming deposit (15.5 t, 0.5 Moz to date) discovered in 2002 (Chalmers et al., 2003), with promising intersections reported from other prospects in the region. The Gawler Craton is an emerging gold province with Challenger, its first gold mine, having commenced operations in 2002 (Poustie et al., 2002). Challenger is a metamorphosed Archaean gold deposit hosted in highgrade felsic gneiss (Tomkins and Mavrogenes, 2002). Prominent Hill is an iron-oxide copper gold deposit (Olympic Dam style) deposit lying 150 km northwest of Olympic Dam and discovered in 2001 (Carter et al., 2003; Daly, 2003). Encouraging gold intersections have been reported from a number of new prospects in the central Gawler, notably Barns (Drown, 2003) and Tunkillia, which is believed to represent a new gold province (Ferris and Schwarz, 2003). Recent drilling beneath the Murray Basin north of the Stawell mine has indicated the existence of mineralisation along strike under 120 m of cover (Miller and Wilson, 2002). Exploration is making use of the latest research involving advanced modelling of fluid flow modelling and 3D geological models (Rawling et al., 2004). The Ashburton province has emerged as a new Proterozoic epithermal gold province following recent discoveries such as the Mt Olympus, Paulsens, and Waugh deposits and continuing encouraging new gold intersections (Sipa Resources International NL, 2003). The North Kimberley region, an area which has no historic gold production, has been suggested as a potentially new gold province following the discovery of grains of free gold and an extensive epithermal alteration zone (Flint and Searston, 2003). In conclusion, although exploration maturity is the ultimate fate of all mining districts, maturity is not simply a matter of endowment. Perceptions of maturity can be strongly influenced by factors such as changes in mining or extraction technology, new geoscientific knowledge (e.g. new ideas on controls on ore distribution etc.), and new exploration tools. The full potential of Australia’s gold provinces remains to be determined as many areas are still relatively poorly explored, especially at depths below the currently explored zone (which may be as shallow as 40 m), and beneath shallow transported regolith and sedimentary cover. The above examples highlight the potential for further gold discoveries, both in historic gold mining districts and new provinces.
Conclusions Australia’s gold industry has grown enormously over the past 30 years to become the Australia’s third largest commodity export by value and the world’s equal second largest producer. Australia has a particularly good record of gold discovery at costs that are globally competitive. Australia’s gold EDR is at a record level as is the EDR to production ratio which currently stands at 20. The reserves to production ratio is also relatively healthy at the equivalent of 12 years current production. However, longer-term strategic issues are a decline in the discovery rate since 1997 and the fact that growth in gold resources over the past decade has been predominantly at existing deposits mostly discovered in the 1980s. We interpret these as consequences of a focus on mine site and near-mine site exploration in the face of lower gold prices during much of the 1990s and reduced levels of exploration since 1997 rather than a maturing of exploration. The challenge is to continue the record of success by discovery of new deposits as well as adding resources at known deposits to the resource inventory. Significant parts of Australia remain prospective for gold mineralisation, but much of the prospective area is under relatively shallow regolith and sedimentary cover. The conjunction of Australia’s significant gold endowment, the record of past success at globally competitive costs, and the remaining potential for new gold discoveries both in existing and new gold provinces should ensure the continued prominence of Australia’s gold industry, given appropriate levels of grassroots exploration spending to ensure new discoveries continue to be made.
Acknowledgements We thank Surbiton Associates for permission to quote from their compilation of gold production data and Don Flint and Roger Cooper (Department of Industry and Resources Western Australia) and Peter Downes (New South Wales Department of Mineral resources) for resource information on the Yandal belt and Lachlan Fold Belt, respectively. Constructive reviews by the Journal significantly improved the manuscript. The figures were drawn by Chris Fitzgerald. Publication is with the permission of the Chief Executive Officer, Geoscience Australia.
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M.B. Huleatt, A.L. Jaques / Resources Policy 30 (2005) 29–37 Ahmad, M., Wygralak, A.S., Ferenczi, P.A., 1999. Gold deposits of the Northern Territory. Northern Territory Geological Survey Report 11, 1–95. Annand, R.R., 2003. Importance of regolith for gold exploration in the Yandal gold province, Yilgarn Craton, Western Australia. In: Ely, K.S., Phillips, G.N. (Eds.), Yandal Gold Province: Geoscience and Exploration Success. CSIRO Exploration and Mining, Melbourne, pp. 27–52. Bennett, M.A., Buck, P.S., 2000. Discovery and geology of the Thunderbox gold deposit, Yandal Belt. Yandal Greenstone Belt. AIG Bulletin 32, 373–379. BMR, 1984. BMR defines its mineral resources classification scheme. Australian Mineral Industry Quarterly 36 (3), 73–82. Bradshaw, M.T., Bradshaw, J., Weeden, R.J., Carter, P., de Vries, D.F.H., 1998. Assessment—translating the future into numbers. The APPEA Journal 38, 528–550. Carter, D., Belperio, A., Freeman, H., 2003. The discovery of the Prominent Hill copper–gold deposit, South Australia. Proceeding NewGen Gold 2003 Conference—Case Histories of Discovery. Gold Mining Journal 2003; 102–116. Chalmers, I., Ransted, T., Kairaitis, R., 2003. The Tomingley gold project and the discovery of the Wyoming gold deposits, New South Wales. Proceeding NewGen Gold 2003 Conference—Case Histories of Discovery. Gold Mining Journal 2003; 171–184. Champion de Crespigny, R., 2002. Australia: the view from down-under. Paper presented at the Prospectors and Developers Association of Canada Annual Convention, Trade Show and Investor’s Exchange, http://www.pdac/pub/papers/2002/index.html Chender, M., 2004. How much exploration do we need? Paper presented at the Prospectors and Developers Association of Canada Annual Convention, Trade Show and Investor’s Exchange, Toronto. Close, S.E., 2002. The Great Gold Renaissance: The Untold Story of the Modern Australian Gold Boom 1982–2002. Surbiton Associates, Melbourne, 282 pp. Daly, S., 2003. Prominent Hill; now a significant gold resource. MESA Journal 28, 10. Drown, C., 2003. The Barns gold project; discovery in an emerging district. MESA Journal 28, 4–9. Ferris, G., Schwarz, M., 2003. Proterozoic gold province of the central gawler Craton. MESA Journal 30, 4–12. Flint, D.J., Searston, S.M., 2003. Overview of the Mineral Sector in Western Australia in 2001–02. Department of Industry and Resources, Perth. Geoscience Australia, 2003. Australia’s Identified Mineral Resources 2003 Geoscience Australia, Canberra, http://www.ga.gov.au/image_cache/ GA3310.pdf. Goleby, B.R., Blewett, R.S., Groenewald, P.B., Cassidy, K.F., Champion, D.C., Jones, L.E.A., Korsch, R.J., Shevchenko, S., Apak, S.N., 2003. The 2001 Northeastern Yilgarn seismic reflection survey, Geoscience Australia Record, 2003/028 2003, 144 pp. Holliday, J.R., Wilson, A.J., Blevin, P.L., Tedder, I.J., Dunham, P.D., Pfitzner, M., 2002. Porphyry gold–copper mineralisation in the Cadia district, Eastern Lachlan Fold Belt, New South Wales, and its relationship to shoshonitic magmatism. Mineralium-Deposita 37 (1), 100–116. Hronsky, J., 2003. The targeting process in mineral exploration: generic principles. Paper presented at the AIG Exploration Conference, Perth, http://www.wmc.com.au/pubpres/index.htm?tpZexploration Huleatt, M.B., Jaques, A.L., 2002. Australian gold discovery costs—getting better? Geological Society of Australia Abstracts 67, 1–5.
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Lassonde, P., 2001. Mergers and acquisitions versus exploration and organic growth. Presented at the LBMA Precious Metals Conference, Istanbul. Lines, K., Kay, B., 2002. The Tanami: Australia’s best gold frontier. Australian Journal of Mining September/October, 62–64. Lord, D., Etheridge, M., Wilson, M., Hall, G., Uttley, P., 2001. Measuring exploration success: an alternative to the discovery-cost-per-ounce method of quantifying exploration effectiveness. Society of Economic Geologists Newsletter 45, 1–16. Maurer, A., Wells, T., Tedesco, L., Ball, A., Haine, I., 2004. Metals outlook to 2009. Australian Commodities, Forecasts and Issues, March quarter 2004 11 (1), 115–142. Miller, J.McL., Wilson, C.J.L., 2002. The Magdala lode system, Stawell, southeastern Australia: Structural style and relationship to gold mineralization across the western Lachlan fold belt. Economic Geology 97 (2), 325–349. Phillips, N.G., Vearncombe, J.R., 2003. Exploration of the Yandal gold province, Yilgarn Craton, Western Australia. In: Ely, K.S., Phillips, G.N. (Eds.), Yandal Gold Province: Geoscience and Exploration Success. CSIRO Exploration and Mining, Melbourne, pp. 1–26. Poustie, T., Bamford, P., Daly, S., 2002. Challenger—South Australia’s first Archaean gold mine. MESA Journal 27, 4–8. Rawling, T., Schaubs, P., Dugdale, J., Wilson, C., 2004. Development of new mineral targeting strategies using 3D modelling and numerical fluid-flow simulation techniques in Western Victoria. Geological Society of Australia Abstracts 73, 113. Schodde, R., 2003a. Long term trends in exploration and the likely impact of the investment climate. Paper presented at the AIG Exploration Conference, Perth, http://www.wmc.com.au/pubpres/index.htm?tpZ exploration Schodde, R., 2003b. Long term trends in exploration and the likely future of the Australian exploration industry. Paper presented at the Australasian Institute of Mining and Metallurgy technical meeting, Melbourne, http://www.wmc.com.au/pubpres/index.htm?tpZexploration Schodde, R.C., 2004. Discovery performance of the western world gold industry over the period 1985–2003. Australasian Institute of Mining and Metallurgy, PACRIM 2004. Proceedings, Adelaide, South Australia, pp 367–380. Sipa Resources International NL, 2003. Annual Report to Shareholders, 2003, http://www.sipa.com.au/PDFs/Sipa03.pdf. Surbiton Associates, 2004. Australian Gold Quarterly Review, December quarter 2003. Swager, C.P., Goleby, B.R., Drummond, B.J., Rattenbury, M.S., Williams, P.R., 1997. Crustal structure of granite-greenstone terranes in the Eastern Goldfields, Yilgarn Craton, as revealed by seismic reflection profiling. In: Myers, J.S. (Ed.), Archaean granite-greenstone geology of the Eastern Goldfields, Yilgarn Craton, Western Australia Precambrian Research 83, pp. 43–56. Tomkins, A.G., Mavrogenes, J., 2002. Mobilisation of gold as a polymetallic melt during pelite anatexis at the Challenger deposit, South Australia: a metamorphosed Archaean gold deposit. Economic Geology 7 (6), 1249–1271. Tucker, D., 2003. Cowal gold-discovery, disappointment, recovery. Proceedings NewGen Gold 2003 Conference—Case Histories of Discovery. Gold Mining Journal 2003; 185–199. Wilson, A.J., Cooke, D.R., Harper, B.L., 2003. The Ridgeway gold-copper deposit; a high-grade alkalic porphyry deposit in the Lachlan fold belt, New South Wales, Australia. Economic Geology 98 (8), 1637–1666.
Australian gold exploration 1976–2003 M.B. Huleatt*, A.L. Jaques Geoscience Australia, GPO Box 378, Canberra ACT 2601, Australia Received 10 July 2003; received in revised form 18 August 2004; accepted 25 August 2004
Abstract The Australian gold industry has grown enormously over the past 25 years. Australian mine production of gold in 2003 was 284 t, similar to that of the USA, and behind South Africa, the world’s largest gold-producing nation. Gold is Australia’s third largest commodity export, worth an estimated A$5.3 billion in 2003–2004. Underpinning the industry is a solid resource base that has grown by successful exploration over the past three decades. Australia ranks third in the world after South Africa and the USA in terms of its economic gold resources. The growth in Australia’s gold resources has been underpinned by high levels of exploration and innovations in gold processing technologies, specifically the development of carbon-based gold extraction methods that allowed commercial treatment of low grade ores. It has been supported by advances in gold exploration methods, especially exploration geochemistry. New resources were added at existing deposits and new deposits were found, including several of world class (O100 t contained gold), in each decade over the 25-year-period but resource growth since the 1990s has been dominated by brownfields additions rather than new discoveries. Average costs of discovery have now plateauxed at around A$20–25/oz, after falling sharply during the early to mid-1990s when a number of new discoveries were made, notably in the Yandal belt in Western Australia and the Lachlan Fold Belt in New South Wales. Current gold reserve/production and gold EDR/production ratios are 12 and 19 years, respectively, and indicate that the long-term future of the Australian gold industry depends on continued high levels of exploration and the discovery of new deposits to replace mines that are currently being depleted. q 2004 Elsevier Ltd. All rights reserved. Keywords: Australia; Gold; Gold resources; Exploration; Gold mining
Introduction The dramatic growth of Australian gold production from 20 t in 1978 to a peak of 314 t in 1997 is the third and by far the largest of three booms in Australian gold production. Close (2002) has given a comprehensive account of the modern gold boom and contrasted it with the Australian Gold Rushes of the 1850s–1860s and the gold boom of 1890–1910. The current gold boom was facilitated principally by the removal of price control on gold and the development of carbon-based gold extraction technology that allowed commercial treatment of low grade (w1 g/t) gold ore. Advances in low cost mining of gold deposits and in gold exploration methods, enhanced geological * Corresponding author. Tel.: C61 2 62 49 9745; fax: C61 2 62 49 9983. E-mail address: [email protected] (M.B. Huleatt). 0301-4207/$ - see front matter q 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.resourpol.2004.08.005
knowledge, and the application of structural analysis and regolith geochemistry also assisted. In this paper, we review rates and costs of discovery of gold resources over the past 25 years, identify patterns and emerging trends in the context of current exploration activity, and examine their implications for the future of the Australian gold industry. The resource information used is drawn largely from the annual assessment of Australia’s mineral resources made by Geoscience Australia and its predecessors since 1976. The mineral resource classification system for national resource assessment used by Geoscience Australia is based on the widely used McElvey resource classification system (BMR, 1984). This system is compatible with the Australian Code for Reporting Mineral Resources and Ore Reserves—JORC Code—used by mining companies to report reserve and resource data for individual deposits. Background information on resource
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classification systems and reserve depletion can be found in mineral economics texts and publications (e.g. Adelman et al., 1983). Exploration expenditure data is based on the Australian Bureau of Statistics (ABS) quarterly collections of data on exploration spending reported in their serial publication number 8412.0. All data are reported in Australian dollars (A$) unless stated otherwise. Conversion of current dollar exploration expenditure to constant dollars was based on a CPI series originally provided by the Australian Bureau of Agricultural and Resource Economics (ABARE).
Australian gold production Australian gold mine production rose sharply from 20 t in 1978 to a peak of 314 t in 1997 (Fig. 1). Production in 2003 was 284 t, up 4% on 2002 but down w10% on the 1997 peak (ABARE, 2003, 2004). Australia’s gold production in 2003 came from 74 gold operations of which 60 are primary gold producers (Surbiton Associates, 2004). Large-scale operations dominate with nearly 48% of production coming from the 10 largest mines and almost 31% from the five largest (Fig. 2). Australian gold production in 2003 was comparable with that of the USA but well short of that of South Africa, the world’s leading gold producer. The gold mining industry has historically been and remains more diversified than any other segment of the Australian mining sector. The period 1997–2002 saw a major consolidation of the Australian gold mining industry with the merger or takeover of several of Australia’s former leading gold companies. A number of gold mines, including several large producers, notably Kidston and Mt Leyshon in Queensland as well as a number of smaller operations, closed in this period. This period was characterised by low gold prices, poor returns from mining, low share prices for mining stocks, reduced exploration levels, and a global focus on growth through acquisition rather than exploration. Takeovers of a number of significant Australian gold producers (typically with a significant low cost inventory of resources) were facilitated by relatively low market
Fig. 1. Australian gold production 1978–2003 (ABARE, 2003, 2004).
Fig. 2. Source of Australian gold production 2003 (Surbiton Associates, 2004).
valuations and the low exchange rates for the Australian dollar (e.g. Close, 2002).
Gold exploration and discovery Growth in gold resource inventory The dramatic growth in Australia’s gold production has been underpinned by sustained successful exploration. Australian gold exploration expenditure has grown substantially since 1977 and generated strong growth in Australia’s gold resource inventory (Fig. 3) over the period. At the end of 2003, Australia’s gold resource base (all categories) stood at a record 9860 t and was the culmination of strong growth that commenced in 1982 (Fig. 3). This growth occurred through discovery of numerous deposits, including several of world class (O100 t contained gold), in the period 1972–1997 (Fig. 4, Table 1). In all, a total of 14 218 t of gold were added to the resource base in the period 1977–2003 at an average rate of 527 tpa (w17 Moz pa)—almost double
Fig. 3. Growth in Australia’s gold resources (all resource categories) since 1977.
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Fig. 4. Map showing the distribution of selected substantial and world-class gold deposits found in Australia since 1970.
the current mine production. Australia ranks third in the world after South Africa and the USA in terms of its gold economic demonstrated resources (Geoscience Australia, 2003). Over the period, annual gold exploration spending grew substantially with major peaks in 1987–1988 and 1996– 1997 (Fig. 5) when gold accounted for 72 and 64%, respectively, of all mineral exploration in Australia. Total expenditure on gold exploration in the period was A$11.5 billion (in 2002–2003 dollars). Both total and gold exploration spending fell sharply after the 1996–1997 peak to its lowest level since 1984 and reached a 10 year low in 2001–2002. This trend was reversed in 2002–2003 when total exploration expenditure rose by 14% and gold exploration by 6%. Figures for calendar year 2003 showed a further strengthening in exploration spending, with gold exploration expenditure up 5% on the 2002 figures to A$374 million. Australia’s gold resource base grew steadily from 1976 onwards, even during the downturn in exploration that followed the 1997 peak (Fig. 5). The gold resources added during the 1990s were nearly twice that of the 1980s.
However, the rate of discovery (based on a 5-year rolling average) peaked in 1997 after rising steadily through the 1980s (Fig. 5). Since then the annual resource addition has fallen in line with exploration spending (Fig. 5) and the average annual addition of gold resources for the period 1988–2003 has been 419 t (13.5 Moz) pa compared with 703 t (22.6 Moz) in the period 1983–1988. Composition of resources The ratio of resources to production provides an estimate—albeit dynamic and imprecise—of the number of years of production the resource can support. Assuming that all gold production is drawn from the reserve categories, the reserve to production ratio is a measure of the status of the industry’s operating resource base. The 2003 Australian reserve to production ratio was 12, viz., at current mining rates, mining reserves are sufficient for 12 years production. Addition of other measured and indicated resources considered to be economically viable, to the reserves gives a category called the economic demonstrated resources (EDR). Fig. 6 shows that Australia’s EDR to
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Table 1 Australian world-class gold (O100 t gold) discoveries since 1970 Deposit
Gold resource
Discovery year
Telfer (WA) Olympic Dam (SA)
1007 t 1501 t, 37 Mt Cu, 1.2 Mt U3O8 127 t 167 t 138 t 149 t 385 t 1096 t
1972 1975 1978 1978 1979 1979 1980 1981
208 t 107 t 117 t 110 t
1981 1982 1982 1983
138 t 298 t 188 t 187 t 575 t, 2.3 Mt copper 165 t 183 t 230 t 172 t, 0.57 Mt copper 102 t 156 t
1987 1988 1990 1991 1992 1992 1992 1993 1996 1997 1998
Kidston (Qld) Stawell (Vic) Gympie (Qld) Granny Smith (WA) St Ives (WA) Boddington (including Wandoo) (WA) Sons of Gwalia (WA) Mount Leyshon (Qld) Paddington (WA) Pajingo (including Vera-Nancy) (Qld) Tarmoola (WA) Plutonic (WA) Kanowna Belle (WA) Callie (NT) Cadia System (NSW) Cowal (NSW) Jundee-Nimary (WA) Sunrise-Cleo (WA) Ridgeway (NSW) Carosue Dam Wallaby (WA)
Resource estimates are derived from data released in company reports to the Australian Stock Exchange.
production ratio has risen over much of the last decade and is currently significantly above the historic average of w14 years. There has been a sharp increase in recent years in the proportion of EDR that are in the mining reserve category (Fig. 7). This means that the pool of geologically wellknown resources from which reserves are generated is getting proportionally smaller. Inferred resources are the least well-known resources geologically and they provide the foundation from which measured and indicated resources and, ultimately, reserves are typically derived. Currently Australia’s ratio of inferred
Fig. 6. Australia’s EDR: production 1978–2003.
resources to production is relatively low (11 years), having decreased sharply in 2002 following a 10% fall in the level of inferred resources. The ratio of inferred resources to production is significantly lower than the reserve to production ratio: this implies that current levels of inferred resources are not sufficient to support an adequate reserve base in the longer term. The growth in the reserve to production and EDR to production ratios at the expense of the inferred resource to production ratio is consistent with a focus on low-cost brownfields resource addition at the expense of greenfield discovery in recent years (see below). Therefore, despite strong growth in Australian gold resources, the distribution of resources by category and the resource to production ratios means that the current high mining rates require continued exploration success-particularly discovery of new deposits-to sustain the industry in the longer term. Trends in resource growth Analysis of resource growth by decade from 19771 to 2003 reveals some further important trends. Strong growth in gold resources was recorded in the 1980s and 1990s and indications are that the current decade may also record strong growth (Fig. 1). There is a clear distinction in the nature of resource growth between the discoveries of 1990s and 2000s and those of the 1980s. In the 1980s, additions to the resource inventory were predominantly in deposits discovered in that decade, viz. new deposits, whereas resource additions in the 1990s and 2000s were primarily at deposits discovered in earlier decades (Huleatt and Jaques, 2002; Schodde, 2003a). The dominance of discoveries in the 1980s was a natural consequence of the introduction of the carbon-based technology allowing commercially viable treatment of low grade ores and the major increase in exploration spending in that period compared with previous years. This lead to 1
Fig. 5. Annual Australian gold exploration spending and resource growth for the period 1978–2003.
Available data for the 1970s is for the years 1977–1979 inclusive only but is presented for completeness. Data for the 2000s is for the years 2000–2003.
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Fig. 7. Gold reserves as a percentage of Australia’s gold EDR. Fig. 8. Average discovery cost per ounce of gold 1978–2003.
the discovery of a large number of relatively small, shallow, commonly oxide, deposits that were developed as open pits. However, in the 1990s over two-thirds of resources added to the inventory came from deposits discovered in earlier decades (mainly the 1980s). This was despite the discovery of a number of major deposits in the Yandal greenstone belt of the Yilgarn Craton (e.g. Kanowna Belle, Bronzewing, Jundee-Nimary, Centenary), the Tanami province (Callie) and the Lachlan Fold Belt (Cadia, Ridgeway, Cowal). More than 470 t (15 Moz) of gold were discovered in the Yandal belt (Phillips and Vearncombe, 2003) and 1080 t (w35 Moz) were discovered in Lachlan Fold Belt in the 1990s. There was also growth in resources at a number of deposits through extensions of shallow deposits to depth. In the period following the peak in exploration activity in 1996–1997 some 88% of gold resources were added at existing mines and known deposits. The largest single addition was at the Telfer deposit where some 590 t (19 Moz) were added in 2002, nearly trebling the then existing resources and making the Telfer deposit the third largest gold deposit in Australia based on current resources. This illustrates a marked shift from the grass roots exploration of the 1980s to brownfields activities in the later decades and an accentuation of that trend during the period of contracted exploration activity. Discovery costs Discovery costs (average cost per ounce of gold) for total resources, in constant 2002–2003 dollars, fluctuated from year to year (Fig. 8) and averaged A$25/oz. However, the trend shows that discovery costs increased during the 1980s, peaked in 1988, fell steadily to a low in 1996 and then rose and reached a plateau (Fig. 8). The fall in discovery costs in the early 1990s is attributed largely to the shift in focus from greenfields to lower cost brownfields exploration (see below) coupled with significant new deposits discovered in that period (Table 1). Many of these discoveries were made at relatively low cost and can be attributed to advances in the effective application of exploration geochemistry in the regolith dominated terranes of the Eastern Goldfields (e.g. Annand, 2003).
Whilst the aggregated exploration data published by ABS provide a useful basis for assessing average discovery costs, they mask variations in costs between provinces, within mineral districts, and between individual companies. More importantly, they mask differences between grassroots discoveries and brownfields additions that are typically substantially lower. For example, Schodde (2003b) estimated average Australian gold discovery costs for the period 1985–2002 at $60–70/oz for grassroots and $12–18 for mine site exploration. Australian gold exploration occurs dominantly in Western Australia where Flint and Searston (2003) reported that average discovery costs for measured and indicated resources and reserves for the period 1993– 2001 peaked at $30/oz in 1998 before falling to $12/oz by 2001. This reduction is consistent with a focus on low cost exploration at or near known deposits (brownfields) in that period as discussed earlier. Normandy (now Newmont Australia) reported average discovery costs of $18/oz for their operations in the Tanami Province (Lines and Kay, 2002). Within these average figures large variations in discovery costs can occur even in single mineral districts during the exploration program (e.g. Lord et al., 2001). Australian gold discovery costs, whether based on reserves or average addition to resources, compare favourably with those in other countries. For example, Lassonde (2001) reported average exploration costs per ounce of gold reserves added in the period 1995–2000 to be in the range US$12.5–$37 for five major producers (Barrick, Newmont, Placer, Homestake and Normandy). Champion de Crespigny (2002) reported that Australian costs of adding reserves were equal to those of Latin America (US$31/oz), higher than Africa (US$11) and Asia/Oceania ($24) but much lower than Canada (US$111) and the USA (US$527) for the same period. Schodde (2004), in a recent analysis of the discovery performance of the western world gold industry in the period 1985–2003, makes a number of important findings that are pertinent to our study and reinforce our conclusions. In particular, Schodde (2004) noted that Australia accounted for w16% of all gold discoveries greater than 100 koz (200 deposits) and 36 out of
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Outlook for the Australian gold industry
Fig. 9. Gold price in Australian and US dollars and Australian mineral exploration expenditure in A$2002–2003. Gold prices from the Perth Mint and exploration data from Australian Bureau of Statistics.
190 (19%) of major (O1 Moz) gold deposits discovered in that period. The average cost of discovery in Australia (A$25/oz) is less than the US$25/oz (2002) for the western world reported by Schodde (2004). Influences on exploration trends The trends in gold exploration over the past 25 years can be readily interpreted as responses to different economic drivers. The substantial growth of resources in newly discovered deposits in the 1980s reflects a rapid growth in exploration spending which was based on a sustained period of prices far higher than those of earlier decades and advances in carbon-based extraction technology allowing the commercial treatment of low-grade ores. In the 1990s, exploration was driven by different parameters, notably consolidation and cost-cutting in the face of rising globalisation and generally lower gold prices, particularly from 1997 to 2002. This resulted in most resource delineation occurring in or adjacent to deposits discovered in the 1980s or earlier. In the 2000s, factors applying in the 1990s operated until 2002 when, in response to improved gold prices, gold exploration showed the first signs of recovery. Gold exploration, both in Australia and globally (Chender, 2004), strengthened throughout 2003 and into 2004 in response to higher gold prices. A prime determinant of gold mining profitability and, less directly, the level of exploration is the price of gold. Fig. 9 shows that Australian dollar gold prices in 2002–2003 were the highest since the late 1980s. This reflects the marked depreciation of the Australian dollar against the US dollar in 2000–2001 and the rise in US dollar gold price in the 2002–2003 period. Australian gold exploration expenditure, however, has tended to more closely follow (but with a 1–2 year lag) the US dollar gold price rather than movements in the Australian dollar price of gold.
The immediate outlook for the Australian gold industry is very positive with annual gold production forecast to increase by 4.4% pa in the medium term rising to 345 t in 2008–2009 (Maurer et al., 2004), cementing Australia’s position as the world’s second largest producer after South Africa. Production is likely to be increasingly dominated by the major mines—Telfer, Super Pit, St Ives, Granny Smith, Callie, Sunrise Dam, Cadia, Cowal and, potentially, Boddington. At full production the Telfer deposit will contribute 24 t (0.77 Moz) gold pa and will be one of the dominant Australian producers. However, the dominance of brownfields resource addition, a decline in the discovery rates, and a plateau in the discovery costs raises the question as to whether these are the early signs of exploration maturity. Exploration maturity and potential Clear signs of exploration maturity are a decrease in the size of deposits found and rising discovery costs (e.g. Hronsky, 2003). The decline in size of deposits found with time reflects the fact that in any province the largest deposits tend be found first—primarily because of their larger footprint and expression. The same is typically true of petroleum exploration, where the largest oil fields in a petroleum basin tend to be found early. This, together with the commonly observed parabolic fractal relationship between size and rank of oil fields when plotted on a log–log basis, is commonly used to predict the ultimate size of oil and gas fields in a basin (e.g. Bradshaw et al., 1998). Discovery dates and resources are given for a number of Australia’s more significant mines in Table 1. Several observations can be made. World-class deposits were found in each decade. Commonly the true size of the deposit was only apparent after a number of years of mining and further resource delineation. This can involve major increases in resources as shown at Telfer and Boddington, for example. Several of these deposits have only been found in the course of the modern cycle of gold exploration although many lie within historic goldfields. For example, both the Archaean Yandal greenstone belt of the Yilgarn Craton of Western Australia and the Proterozoic Tanami province straddling the Northern Territory—Western Australia border had a history of only small-scale gold production prior to 1985. Exploration of the Yandal belt in the 1990s resulted the discovery of more than 470 t (15 Moz) of gold, a total endowment for the belt estimated at more than 620 t (20 Moz), including the substantial Jundee-Nimary and Bronzewing deposits (Phillips and Vearncombe, 2003). Similarly, more than 373 t (12 Moz) has been discovered in the Tanami province in the past 16 years (Lines and Kay, 2002). The same is true of the central Lachlan Fold Belt in New South Wales, the site of Australia’s first discovery of
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Fig. 10. History of discovery of gold deposits and log–log plots of size versus rank for gold deposits from the Tanami Province (a, c) and Yandal belt (b, d). Data for the Tanami is from Ahmad et al. (1999) and Geoscience Australia. The Yandal belt data is from the Western Australian Department of Industry and Resources and Geoscience Australia.
gold in 1851: major new discoveries were made in the 1990s (see below). Time series data for discoveries in the Yandal belt and the Tanami province show that the largest deposits currently known in these provinces (Jundee-Nimary and Callie, respectively) were found relatively early in the current cycle of exploration but not necessarily first (Fig. 10a and b). Plots of gold resource versus rank (Fig. 10c and d) approximate a parabolic curve but with significant gaps that suggest both provinces have remaining potential for deposits containing greater than 50 t Au. Moreover, there is no certainty that the largest deposits in these provinces have been found. Lines and Kay (2002) believe that as little as 20% of the prospective covered areas of the Tanami region may have been subjected to modern exploration. In the Yandal belt deposits of significant size, such as Thunderbox (Bennett and Buck, 2000) continue to be found beneath thin (!30 m) transported regolith cover. The paucity of deep drill holes (O300 m) means that the Yandal belt has not been explored at depth (Champion de Crespigny, 2002). In many areas, the level of exploration is limited to shallow RAB drilling. Even in the more extensively explored gold mining districts such as Kalgoorlie new discoveries continue to be made indicating that these areas cannot
be considered fully explored, especially at depth and in areas beneath transported regolith and sedimentary cover. Deep crustal seismic surveys have highlighted the potential significance of major trans-crustal structures in controlling the distribution of gold deposits in the Eastern Goldfields (e.g. Swager et al., 1997; Goleby et al., 2003). A recent survey in the Laverton area has identified a major structure within the poorly exposed and underexplored Yamarna greenstone belt (Goleby et al., 2003) to the east of the Yandal greenstone belt highlighting the importance of new geoscientific knowledge to perceptions of prospectivity and modern gold exploration. New provinces, new potential In addition to discoveries in existing gold mining districts new and potentially new gold provinces continue to be opened up. Significant new porphyry, epithermal gold and associated skarn mineralisation has been discovered in the Lachlan Fold Belt in central western New South Wales associated with shoshonitic volcanic and high-level intrusive rocks of the Late Ordovician to early Silurian Macquarie arc. More than 1080 t (w35 Moz) Au have been discovered in the past 15 years including the Cowal deposit (165 t, 5.3 Moz Au)
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discovered in 1988 and due to begin production in 2004 (Tucker, 2003), the large Cadia porphyry and skarn system which has a resource of more than 575 t (w19 Moz) of gold discovered in1992 (Holliday et al., 2002) and the adjacent high-grade Ridgeway deposit (172 t, 5.5 Moz) discovered in 1996 (Wilson et al., 2003). Mining commenced at Cadia in 1998 and at Ridgeway in 2002. New discoveries continue to be made, notably the Wyoming deposit (15.5 t, 0.5 Moz to date) discovered in 2002 (Chalmers et al., 2003), with promising intersections reported from other prospects in the region. The Gawler Craton is an emerging gold province with Challenger, its first gold mine, having commenced operations in 2002 (Poustie et al., 2002). Challenger is a metamorphosed Archaean gold deposit hosted in highgrade felsic gneiss (Tomkins and Mavrogenes, 2002). Prominent Hill is an iron-oxide copper gold deposit (Olympic Dam style) deposit lying 150 km northwest of Olympic Dam and discovered in 2001 (Carter et al., 2003; Daly, 2003). Encouraging gold intersections have been reported from a number of new prospects in the central Gawler, notably Barns (Drown, 2003) and Tunkillia, which is believed to represent a new gold province (Ferris and Schwarz, 2003). Recent drilling beneath the Murray Basin north of the Stawell mine has indicated the existence of mineralisation along strike under 120 m of cover (Miller and Wilson, 2002). Exploration is making use of the latest research involving advanced modelling of fluid flow modelling and 3D geological models (Rawling et al., 2004). The Ashburton province has emerged as a new Proterozoic epithermal gold province following recent discoveries such as the Mt Olympus, Paulsens, and Waugh deposits and continuing encouraging new gold intersections (Sipa Resources International NL, 2003). The North Kimberley region, an area which has no historic gold production, has been suggested as a potentially new gold province following the discovery of grains of free gold and an extensive epithermal alteration zone (Flint and Searston, 2003). In conclusion, although exploration maturity is the ultimate fate of all mining districts, maturity is not simply a matter of endowment. Perceptions of maturity can be strongly influenced by factors such as changes in mining or extraction technology, new geoscientific knowledge (e.g. new ideas on controls on ore distribution etc.), and new exploration tools. The full potential of Australia’s gold provinces remains to be determined as many areas are still relatively poorly explored, especially at depths below the currently explored zone (which may be as shallow as 40 m), and beneath shallow transported regolith and sedimentary cover. The above examples highlight the potential for further gold discoveries, both in historic gold mining districts and new provinces.
Conclusions Australia’s gold industry has grown enormously over the past 30 years to become the Australia’s third largest commodity export by value and the world’s equal second largest producer. Australia has a particularly good record of gold discovery at costs that are globally competitive. Australia’s gold EDR is at a record level as is the EDR to production ratio which currently stands at 20. The reserves to production ratio is also relatively healthy at the equivalent of 12 years current production. However, longer-term strategic issues are a decline in the discovery rate since 1997 and the fact that growth in gold resources over the past decade has been predominantly at existing deposits mostly discovered in the 1980s. We interpret these as consequences of a focus on mine site and near-mine site exploration in the face of lower gold prices during much of the 1990s and reduced levels of exploration since 1997 rather than a maturing of exploration. The challenge is to continue the record of success by discovery of new deposits as well as adding resources at known deposits to the resource inventory. Significant parts of Australia remain prospective for gold mineralisation, but much of the prospective area is under relatively shallow regolith and sedimentary cover. The conjunction of Australia’s significant gold endowment, the record of past success at globally competitive costs, and the remaining potential for new gold discoveries both in existing and new gold provinces should ensure the continued prominence of Australia’s gold industry, given appropriate levels of grassroots exploration spending to ensure new discoveries continue to be made.
Acknowledgements We thank Surbiton Associates for permission to quote from their compilation of gold production data and Don Flint and Roger Cooper (Department of Industry and Resources Western Australia) and Peter Downes (New South Wales Department of Mineral resources) for resource information on the Yandal belt and Lachlan Fold Belt, respectively. Constructive reviews by the Journal significantly improved the manuscript. The figures were drawn by Chris Fitzgerald. Publication is with the permission of the Chief Executive Officer, Geoscience Australia.
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