For Integra (IGR), that means an expected 120,000ozpa of gold production at the end of 2009 at their transported and refurbished New Celebration mill treating 1.4mtpa for at least 5 years near Salt Creek at Mt Monger (after spending ~A$50m capex plus possibly an ~40m to 50m pre-strip).

Further out in time, Anglogold expected its Tropicana JV (70%AGG/30%Independence [IGO]) to be in production in late 2011/early 2012 treating the upper end of a 3mtpa to 5mtpa range of 2.5g/t ore (~350 to 400,000ozpa?), assuming that the PFS is completed in early SQ08, the BFS in JH09 and permitting completed by DH09.

By which time (the end of 2010), St Barbara (SBM) expects to be producing 600,000ozpa (50% Southern Cross, 50% Gwalia), perhaps more if it starts or acquires a further 400,000ozpa from taking over other companies. SBM initially expected to achieve 450,000ozpa (50% Southern Cross, 50% Gwalia etc) at a cash cost probably closer to A$550/oz by DQ08.

Aside from SBM’s expansion during 2008, a number of new mines are scheduled to start such as Avoca’s (AVO’s) Higginsville initially at 170,000ozpa from June 2008, before it builds up to 190,000ozpa. AVO commented that they are seeing a lot of vg (visible gold) and historical reconciliations were typically +30%, so production could be much higher than expected.

AVO also stated that they have about 190,000t of material at ~3.5g/t to 4.0g/t stockpiled so far to commission the mill with, and they were not seeing any shortage of applicants for jobs at their mine, with ~150 applicants for the 15 mill jobs and 8 applicants for the mill super’s job.

Before June 2008, on a smaller scale, Silver Lake (SLR) should have their 300,000tpa Lakewood plant near Kalgoorlie treating ~75,000tpa of ~15 to16g/t ore in 08/09 for production of 35 to 40,000ozpa at cash costs up to A$490/oz. Starting gold production in April 2008, grades could easily be higher, since typical grades from their region at Mt Monger appear to have averaged closer to 30g/t.

Ramelius (RMS) also expected to start production at Wattle Dam (near Spargoville, west of Kambalda) by the end of April 2008, producing ~70,000ozpa at total costs of less than A$360/oz in 08/09 initially from an open-cut and then going underground to mine grades of >20g/t and treat them through the 200,000tpa refurbished Burbanks mill. RMS also expected to achieve a vg overcall since historical reconciliations have been 2 to 3 times expected ozs (in the open-cut) and underground stope grade comparisons appear to be uncut ~ more than 3 times cut grades.

Focus (FML) also stated that they expected to be in production in April 2008 having intersected ore at Perseverance near Coolgardie in late March, with a target of producing 40 to 45,000ozpa at cash cost of ~A$450/oz.

Hill End (HEG) also poured their first gold bar in early April 2008, and although production is low at 10t/shift increasing to 40t/shift, grades could range between 1oz/t and 10oz/t, current production apparently being in the 2oz/t to 4oz/t vicinity.

Apex (AXM) may be able to start production at the end of 2008, since mining and milling should start in SQ08. However, it depends on the 3-month bug build-up for the biox, so AXM are more comfortable with stating that production should recommence in January 2009 at 150,000ozpa increasing to a rate of 200,000ozpa by SQ09 at cash costs ~A$500/oz. Alkane (ALK) thought they could be in production in 2009 from Wyoming etc.

Some new mid-tier companies are also appearing through acquisitions such as North Queensland Metals’/Heemskirk’s (NQM/HSK) 60/40 JV acquisition of Pajingo with expected production of 70,000ozpa, and Beadell’s (BDR’s) A$200m offer for Newcrest’s 70% holding in Cracow (unless Lion Section (LST) exercises its pre-emptive right). Cracow produces ~ 100 to 110,000ozpa at cash costs ~A$420/oz.

However, some companies are also exiting, with Lihir’s (LGL) takeover of Equigold (EQI) for its Australian and Ivory Coast gold assets.

Looking offshore, Mundo’s (MUN’s) Engenho gold mine in Brazil expected to start production in April 2008 initially at 35,000ozpa with a target of increasing to 50 to 60,000ozpa. Later this year, possibly during September 2008, Mineral Deposits (MDL) expected to start production initially at 200,000ozpa from its Sabodala mine in Senegal.

There are probably a few other mines that are nearing production in the coming 12 months, but we (ERA) have encountered the ones in this column in the past two months through visits or presentations. However, what is clear is that Australia’s new mid-tier gold sector is gradually beginning to re-emerge especially during 2008.

Disclosure and Disclaimer: This article has been written by Keith Goode, the Managing Director of Eagle Research Advisory Pty Ltd, (an independent research company) who is an Authorised Representative with Taylor Collison Ltd, and with his associates, holds interests in some of the stocks mentioned in this article. The opinions expressed in this article should not be taken as investment advice, but are based on observations by the author. The author does not warrant the accuracy or completeness of any information and is not liable for any loss or damage suffered through any reliance on its contents.

Figure 1. Avoca’s New Higginsville Plant under Construction (April 2008)