A quick audit of Australian gold exploration last month suggested that the business had been exceptionally successful for three decades (Phillips, 2013). These conclusions are at odds with a common perception, especially in West Perth, that gold explorers in Australia have been performing poorly.
This contribution addresses three questions that the audit (Phillips, 2013) has raised: what is the source of these data, why does the conclusion differ so greatly from the repeated negative reports for Australian gold exploration, and how important are the findings?
Data for the audit come from Federal Government sources and are readily available online at no cost. The Australian Bureau of Statistics collects annual exploration expenditure figures for various commodities including gold. Annual gold production figures for Australia are readily available and typically accepted without controversy. The third set of figures comes from Geoscience Australia (GA) in their annual Australia’s Identified Mineral Resources series. GA publishes Economic Demonstrated Resource (EDR) figures that include a section on gold compiled in recent years by Alan Whitaker. According to GA, EDR combines the JORC categories of Ore Reserves and most of the Measured and Indicated Resources. None of the numbers are perfect, nor are they independent of gold price, but they are very good.
Australian gold exploration since 1979 has achieved what no other country has achieved (barring South Africa 70 years ago); it discovered 16 500 tonnes Au in 34 years, and did this at less than $40 per ounce (2013 AUD). The pace of addition has actually increased over the last nine years and the discovery cost per ounce has decreased.
Vastly different conclusions about Australia’s gold exploration performance can be attributed to how success is counted. In some studies, success is counted as the size and number of new greenfield discoveries [approach 1]; but in last month’s audit, the parameter of interest is ounces of gold added as reflected by production and EDR [approach 2]. The shortcoming of approach  is easily shown with the well-known example of Kalgoorlie. This goldfield was closed in 1979 except for Mt Charlotte, yet has been a leading Australian gold producer for many years since the 1980s and still has millions of ounces in reserve. The extra 30-40 moz ‘found’ at Kalgoorlie by innovative thinking, mine redesign and brownfield exploration will never show up as a discovery, yet is crucial when judging success of the local gold industry. Similar stories apply to the large additions at Telfer, Boddington, Cadia and Norseman well after their discovery dates. At smaller goldfields, resources are typically added in 0.5 – 1 Moz increments during campaigns that may be years after the official discovery.
The difference between the two mantras: “Gold exploration has been poor in Australia” compared to “Australia is continuing an unprecedented period of gold discovery at highly competitive prices” does matter to many people. If investors believe that gold exploration has failed in Australia then they will look to somewhere like West Africa, and companies will struggle to fund their Australian projects. Geologists in Kalgoorlie will find holding a job difficult if the money is moving away, businesses suffer in Perth and Kalgoorlie if there is no local gold exploration; graduates find it difficult getting their first job, and even the Perth taxi driver or Kalgoorlie publican find times more difficult if gold exploration dries up. And for the States and Governments, less exploration today means less mining and less taxes tomorrow.
With nearly 10 000 tonnes Au EDR, Australia’s urgency is not for another greenfield discovery per se to sustain its industry. What it does need from exploration are better quality gold ounces. These could be higher grade, easier to extract or better located, or all three; a high-grade, large tonnage, and continuous orebody is always nice.
Phillips, G. N. 2004. Australian gold exploration – a quick audit (or how do we measure success?). AusIMM Bulletin, August 2013, 22-23, 25.
1 million ounces is equal to 30 tonnes (31.01 t).
G Neil Phillips,
Phillipsgold Pty Ltd, Univ. Melbourne & Stellenbosch, Box 3 Central Park 3145 Australia
Julian R Vearncombe,
SJS Resource Management Pty Ltd, Box 1093, Canning Bridge 6153 Australia
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