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The Australian gold mining sector has set a new production record with 327 tonnes in 2020 despite the challenges of the year, according to gold consultants Surbiton Associates.

While the record was less than the 12 months’ output to June 2020, implying a slower September quarter, the December quarter of 2020 saw gold production rise by two tonnes to 83.

Surbiton Associates director Sandra Close explained the nature of the record year.

“Although Australian gold production is remaining near record levels, we are seeing a significant overall drop in the grade of ore being treated,” she said.

“This is a rational response to the higher gold prices during the year.”

Close said the effects of uncertainty surrounding the COVID-19 pandemic caused the gold price to reach record levels in 2020.

On August 6 2020, gold was valued at $2,868 per ounce, but sits at $2,249.04 at the time of writing.

“The 327 tonnes of gold (approximately 10.5 million ounces) produced in 2020 was worth $27 billion, based on the average daily Australian dollar gold price,” Close said.

“When gold prices are high, the grade of ore can be reduced but the mine can still remain profitable. Often this results in reduced output and the cost of production per ounce goes up – but at the moment operators are producing much the same amount of gold from lower grade material by increasing the throughput of their treatment plants.”

The Super Pit sale from Barrick Gold and Newmont to Saracen Mineral Holdings and Northern Star Resources was also one the biggest stories in Australia’s gold mining sector in 2020.

The “deal of the year”, as Close labelled it, valued the Super Pit mine in Kalgoorlie, Western Australia at around $2.3 billion as its Golden Mile mine has already produced 21 million ounces.

Close said it was a historically significant deal.

“The sale of Super Pit resolved some operational uncertainties and transferred the mine and treatment plant from overseas to local control,” she said.

“However, recent subsequent changes mean that the Super Pit, and indeed the original Golden Mile itself, is now held by a single owner for the first time since the field was discovered in 1893.”

Northern Star Resources and Saracen Mineral Holdings more recently completed a merger where the former acquired the latter after heavy backing from both companies’ shareholders.

The Super Pit was the fifth largest producer of Australian gold in 2020, with 453,194 ounces, while Newcrest Mining’s Cadia East Operation boasted 822,478 ounces to be the country’s largest gold operation for 2020.

Close said gold remained a trustworthy investment partner going forward.

“I cannot predict the future but it is likely gold will still be seen as a safe store of value, as it is tangible and you can hold in your hand,” she said.