Presenting to a 500 strong crowd at the West Australian Mining Club in May, Stuart Tonkin, Chief Executive Officer Northern Star Resources, began by ensuring their view of the gold industry’s future was seen through rose-coloured glasses.
As CEO of one of Australia’s largest gold producers and a Director on the Gold Industry Group Board, Stuart said future proofing the gold sector through investment in exploration was key to staying steady and maintaining current production levels.
As the world’s second largest producer behind China, providing 10% of total global production, the gold industry contributed $13.4 billion to the Australian economy in 2017 alone. Holding 18% of the global unmined inventory – which Stuart explained as having more gold under Australian soil yet to discover than there is physically sitting in the US vaults – the industry can also remain significant to the nation’s future wealth.
Backed by these and more statistics and comparisons, Stuart confirmed that the country’s recent production and export figures show the Australian gold industry has been performing well and the platform to develop is enormous. However he urged members to look forward to the future, rather than down at their balance sheets.
“Every dollar invested in exploration generates $11.40 in revenues that come back into the sector,” he said.
Looking back through historical data, Stuart said global gold exploration spend had tripled in the last ten years to $54 billion, compared to the previous decade, however the discovery success was less than a third at only 27%. Another concern, he pointed out, is the average delay of 13 years between discovery and development, and the fact that the average life of Australian gold mines is 5 years, with one third of those mines having only a 2.5 year reserve life.
Motivating members to action, Stuart cited a study of the 40-year outlook and said creating a sustainable future for the gold sector and the Australian economy is paramount.
“If we do nothing the industry will halve over that period through lack of discovery,” he said.
Whilst the challenge ahead sounded dire, Stuart pointed out there are options available. He said the gold sector needed to either double exploration expenditures or double discovery performance.
He detailed Northern Star’s own success at leveraging technology as part of the solution. Employing geophysical exploration techniques, including 2D and 3D seismic surveys, and airborne geophysics has enabled them to identify future extensions and targets.
Stuart also said that historical mining and drilling activity focused on the first 700m below the surface, and Australian producers are now facing the choice of either heading overseas or underground, with currently 27% of the country’s gold production sourced from the open pit method. See Stuart's full presentation here.
The WA Mining Club’s monthly luncheons offer the opportunity to network, share information and listen to guest speakers who share recent mining experiences and discuss topics of interest to the industry. The WA Mining Club’s next luncheon will be held on 28 June, and will feature a panel discussion as part of their annual Miners on the Move event.