Towards an understanding of production costs at Australia's underground gold mines

Samuel Hamish Ulrich, Allan Trench, Steffen Hagemann

Research output: Chapter in Book/Conference paperConference paperpeer-review


A synthesis of reported All-In Sustaining Costs (AISC) for 57 Australian gold mines in the period 2014–2016 reveals for the first time the clear influence of grade upon cost performance, most evident in gold-only underground mines. Past syntheses of costs on a single quarter basis have viewed grade as potentially subordinate to other factors such as production scale, mine geometry, mineralisation style and a combination of other mining-related costs. Better understanding of the grade to cost relationship on both an individual mine and whole-of-portfolio portfolio basis is needed. Insight into the roles and trade-offs between other cost-determining factors will aid the future sustainability of the gold mining sector in Australia and assist in targeting prospects for future resource growth and development. While the overall trend is toward higher-grade mines displaying lower costs and vice versa, the grade to cost functions appear radically different between mines based on time-series data. The median cost of Australian gold production in the final quarter of 2016 was A$1081/oz. The threshold for lowest cost quartile production was A$965/oz. Underground production now dominates Australian gold output – with 71 per cent of ounces originating from operations that are either entirely underground or hybrid pit/underground mines. Scale economies are evident, with smaller mines predominately among the higher cost producers. For mines of equal grade, open pit mines are lower cost than underground operations. Reserves are modest, with an average mine life for underground operations of 4.7 years based on current production rates. Reserve additions at mines are likely constrained not only by the finite nature of mineralisation at each mine but also by the geometrical difficulty of accessing suitable drilling locations to test for reserve extensions.
Original languageEnglish
Title of host publication13th AusIMM Underground Operators' Conference 2017
EditorsPeter Hills
Place of PublicationCarlton South, Vic.
PublisherAustralian Institute of Mining & Metallurgy (AusIMM)
ISBN (Print)9781925100709
Publication statusPublished - 2017
Event13th AusIMM Underground Operators' Conference 2017 - Gold Coast, Australia
Duration: 16 Oct 201718 Oct 2017


Conference13th AusIMM Underground Operators' Conference 2017
CityGold Coast


Dive into the research topics of 'Towards an understanding of production costs at Australia's underground gold mines'. Together they form a unique fingerprint.

Cite this