Australian Gold Output Declines After Heavy Rains Lash Mines

May 24, 2014 10:00 pm ET

May 25 (Bloomberg) -- Gold output in Australia, the world’s second-biggest producer, fell in the first quarter after a key mining region was inundated by heavy rainfall, industry consultant Surbiton Associates Pty said.

Production was 68 metric tons in the three months through March, about 7 percent less than in the fourth quarter of 2013, Melbourne-based Surbiton said in a statement. Output was 8 percent higher than in the same period a year earlier, it said.

A tropical low brought heavy rain to the Goldfields region of Western Australia in mid-February, inundating Regis Resources Ltd.’s Duketon site with about 165 millimeters of rain and submerging its Garden Well mine under about 4.7 million cubic meters of water. Full mining may resume in June, the Perth-based producer said last month in a statement.

“As well as mining and haulage problems, wet, sticky ore affects crushers and conveyor belts,” Sandra Close, a director at Surbiton, said in the statement. “Heavy rain can also restrict the supply of diesel and other consumables to remote mine sites.”

Bullion has advanced 7.7 percent this year through May 22 as concerns over the pace of economic recovery in the U.S. and tensions in Ukraine spurred haven demand. The metal has rallied after its largest annual decline in three decades last year, which led producers to cut output and divest higher-cost assets.