SYDNEY Feb 5 Australia's giant Super Pit gold mine was given an eight-year extension by its operator on Wednesday, delaying its closure until 2029 and allaying concerns weakening bullion prices would lead to an early shutdown.
Actual mining of gold-bearing ore will cease in around five years at what was until recently Australia's biggest gold mine, though processing of ores already dug up and stockpiled has been extended from 2021 to 2029, according to the operator.
Kalgoorlie Consolidated Gold Mines (KCGM), which operates the Super Pit for 50-50 partners Barrick Gold and Newmont Mining, last year laid off staff as it ran cost reviews in response to falling gold prices.
Australia's gold mining industry - the world's second-biggest behind China - has borne the brunt of widespread job losses in mining across the nation as companies attempt to rein in costs.
By moving to process ores containing lower grades of gold, deemed mine reserves, the Super Pit will be able to keep up production for a longer period, according to KCGM.
It follows a decision by Barrick, the world's biggest gold producer, in January to re-calculate its worldwide reserves at a gold price of $1,100, down from $1,500 a year ago.
At 140 million ounces, Barrick's reserves are the biggest in the industry and equal to about 20 years of production. Reserves are those parts of a mine economically feasible to extract.
Rising bullion prices in 12 of the past 13 years made lower-grade ore profitable to extract, allowing miners to expand their reserves. But a 28 percent decline in the price of gold in 2013 to just above $1,200 at year-end means that mining some of those reserves would no longer pay off. Gold was quoted at $1,253 an ounce on Wednesday.
"While current plans have us stopping open pit mining in 2019, processing the low grade stockpiles has now become part of our long-term plan," KCGM general manager Russell Cole said in a statement.
Barrick and other big miners have been looking to shut down or sell assets and optimise their holdings.
Barrick and Goldcorp this week sold their jointly -owned Marigold mine in Nevada to Silver Standard Resources for $275 million.
Barrick also announced on Jan. 23 it was selling its Kanowna gold mine in Australia, following an agreement in mid-2012 to sell three other mines in Australia.
The Super Pit, which produces around 800,000 ounces of gold each year, recorded its lowest quarterly yield in nearly five years in the last quarter of 2013, according to industry consultant Surbiton Associates.
As a result, it was overtaken by Newmont's Boddington mine 700 km (400 miles) away as Australia's biggest gold mine.