Gold Mine Output in 2008 Lowest in 12 Years

Source:

"Significant production improvements were comparatively limited with Russia and Peru leading the field, increasing by 11% and 6%. . ."

Global gold mine supply contracted by almost 3% in 2008 resulting in production levels falling to a 12-year low. Indonesia output decreased by 35%, South Africa, 14% and Australia 13%, according to Gold Survey 2009 released by GFMS Ltd.

In Indonesia, production fall was largely associated with mine sequencing leading to the extraction of low gold grade ores at the Grasberg. In South Africa, safety-related stoppages, and lost time relating to a force majeure announced by Eskom, the state electricity provider in January 2008, were both accountable for a large measure of the shortfall.

Significant production improvements were comparatively limited with Russia and Peru leading the field, increasing by 11% and 6%, with both countries' output benefiting from the roll-out of a major mining project, specifically the Kupol mine and the Yanacocha plant upgrade, respectively.

On an annualized basis, producers' total cash costs continued to expand last year, with an average increase of almost 20% against 2007. However, GFMS noted that cost benefits were already being realized in the December quarter, with the price declines noted for many consumables, coupled with depreciating currencies in several major mining countries, leading to an average decline of 9% quarter-on-quarter in U.S. dollar terms.

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