Since 1922 this year is the lowest gold production of South Africa

South African gold output reached its lowest level since 1922 last year, with total gold production of 275,119.4kg in 2006. The rate of production decline also accelerated in the fourth quarter to 9.3% from 2.9% in the third quarter of 2006.

The South African Chamber of Mines said total production for last year was 7.5% down on 2005 and in fact the lowest since a strike in 1922 reduced production to 218,031 kilograms.

In the fourth quarter, the country’s gold production fell by 3.1% to 68,117.9 kilograms on the third quarter of 2006.

The decline in production took place against the background of a year-on-year rise in the US dollar gold price of 35.8% to US$604 an ounce and a 44.6% jump in the Rand gold price to R131,322 a kilogram.

Production by Chamber of Mine members fell by 2.6% to 58,341.9 kilograms in the fourth quarter as an 0.1% increase in the tonnage of ore milled failed to offset a 2.7% decline in average grade achieved.

However, a 14.2% year-on-year decline in average grade mined by members was on the back of a stronger gold price, which allowed mining companies to mine lower grade ores, with the effect that higher gold prices tend to lead to lower short term output. A year-on-year increase of 16.3% in cash production costs in turn eroded some of grade flexibility allowed by higher prices.

Total production costs increased by 11.9% before capital expenditure on a year-on-year basis to R99 725 per kilogram as input costs rose. And total production costs including capital expenditure climbed by 20.8% to R125 030 a kilogram.

source:www.mineweb.net