OUT AND ABOUT: Integra Mining managing director Chris Cairns pulled on the steel-capped safety boots to take a well-aimed kick at the head of The Federal Government.
Cairns slammed the government for jeopardising investment in Australia’s gold sector at a time the sector was described to have suffered, “a long time between major gold discovery drinks”.
Presenting at the Paydirt 2012 Australian Gold Conference in Perth, Cairns said that despite being the country’s third highest export earner by contributing $18.9 billion a year, gold remained unloved by the Federal Government.
“What we have is a Government which is encouraging industrial disputes, considering expanding the MRRT to other metals and ignores the fact that any idiot can find a coal or iron ore deposit but gold is invariably in highly complex systems which are difficult to find,” Mr Cairns said.
“On top of that, the Government is looking at cutting the diesel rebate for our mining trucks – which don’t leave the mine sites and don’t use the public roads for which the tax pays for – and is removing exploration expenditures as carried forward tax losses.
“That action will not encourage gold exploration investment, discovery and therefore contributing gold revenues.”
Mr Cairns agreed it had been a long time between drinks in Australia for major gold discovery – pointing out the last such discovery being the 5 million ounce Tropicana deposit in southern Western Australia, which was discovered six years ago.
“In the six years since Tropicana, Australia has produced 40-50 million ounces of gold but the best recent discovery of five to six million ounces was made seven years ago so our discoveries are not replacing the volumes mined.”
Cairns went on to say Australian gold production had peaked at 300 tonnes a year in 1999 whereas global gold production peaked in 2001.
“The perspective gets skewed because of the really dramatic increase in the gold price which has quintupled over the past 12 years,” he said.
“The gold exploration spend has increased but compared to 1990 dollars, has actually decreased by one third compared to the spend in 1997.
“What the equities market has to factor in is that of the Top 10 gold producers in Australia, most of them are very mature mines and will be coming offline over the new few years.”
Cairns predicted Australian gold production to ease to around 200 tonnes per annum in the next 5-10 years reasoning that while the gold price is up significantly, the global all-up cost of gold production is $1100 an ounce with forecasters predicting a hike by 2017 to around $1,700 an ounce.
“So the gold price has been rising but so too have costs so marginal gold mining operations will continue to remain marginal mines,” he said.
The Integra head pointed to gold’s grassroots exploration spend which had collapsed from 47 per cent of new deposit discoveries across major minerals in 2004 to 35 per cent in 2011.
“We are certainly not looking for new gold deposits in the same way we used to in Australia,” Cairns said.