Kalgoorlie Consolidated Gold Mines (KCGM) has extended the life of its Super Pit gold mine by an additional eight years, thus delaying its closure until 2029 and squashing concerns that weakening bullion prices would lead to an early shutdown.
KCGM said that the actual mining operations of gold-bearing ore will end in five years, but the processing of ores already dug up has been extended from 2021 to 2029.
Australia’s gold mining industry, which is the second biggest in the world behind China, has been cutting jobs in mining operations across the country as companies are trying to cut down growing costs.
According to the news article on Reuters, Kalgoorlie Consolidated Gold Mines, which operates the Super Pit for 50-50 partners Barrick Gold and Newmont Mining, last year laid off staff in an attempt to reduce costs due to falling gold prices.
The company said that by moving to process ores containing lower grades of gold, the Super Pit will be able to keep up production for a longer period.
With bullion prices continuously growing over the last decade, lower-grade ore became profitable to extract, enabling miners to expand their reserves. However, the 28% drop in the price of gold in 2013 to just over $1,200 at the end of the year meant that processing some of those reserves will no longer be profitable.
“While current plans have us stopping open pit mining in 2019, processing the low grade stockpiles has now become part of our long-term plan,” KCGM General Manager Russell Cole said in a statement.
Barrick, the world’s biggest gold producer, re-calculated its worldwide reserves at a gold price of $1,100 in January, down from $1,500 a year ago. It is said that the company, along with other big miners, have been looking to close or sell assets and optimize their holdings.
To that end, Barrick and Goldcorp sold their jointly-owned Marigold mine in Nevada to Silver Standard Resources for $275 million, with Barrick also seeking suitors for its Kanowna gold mine in Australia following an agreement in 2012 to sell three other mines in the country.
The Super Pit mine, which was the country’s biggest gold mine until recently, produces around 800,000 ounces of gold each year.
In the last quarter of 2013 the mine registered its lowest quarterly yield in the last five years and was overtaken by Newmont’s Boddington mine as Australia’s biggest gold mine.