Gold fever of the 1800s alive in Australia today

The discovery of gold in Australia, which was greeted with great excitement and frenzied activity almost 140 years ago, changed the face and destiny of a very young nation. It was arguably the most important event in Australia’s 200- year history.

Over the last decade, Australia has again been gripped by gold fever, and a new rush to mine the precious metal is on. While the 1970s in Australia were the years of the gold speculator, the 1980s is the decade of the gold miner. An unprecedented number of new mines have opened in Australia since 1979 and production has risen sharply.

Gold was discovered in Australia in 1851, and by the middle of the next year, 50,000 argonauts were working on the diggings in the states of New South Wales and Victoria. Bark huts and shanty towns proliferated to house the thousands of emigrants who poured off ships from England and Ireland, frantic with hope of making their fortunes. Miners made their homes at campsites where they endured harsh summers and cruel winters, working day and night digging their tiny claims with picks and shovels. By 1860, their efforts paid off and Australia became the world’s largest gold producer. The energetic miners transformed the landscape of the goldfields into giant anthills, exhaustively turning the earth for gold. The signature of their hard work and endurance on the goldfields remains today.

The same fever and lust for gold which intoxicated the old timers has infected today’s generation of miners. It is a rush that has never really ended. Today, the picks and shovels have been replaced by large mining plants and technical innovations as mining companies pour millions of dollars into exploration.

The new quest for gold was initially driven by a surge in the gold price eight years ago. The leap to $400(US) an ounce in 1979 made the quest for gold an economic proposition. At the same time, innovations in mining made it economically viable to begin reworking the historic goldsites.

Since 1979, the price of gold has fluctuated between $875 and $294 an ounce. It is currently trading $450 an ounce, which is high enough to assure profits for Australian gold companies which have low production costs, and an Australian dollar worth only 72 cents (US). Even if gold fell to $250 an ounce, analysts believe the new mines would still be economically viable, as most Australian mining companies have been able to keep their costs below that figure. Australia’s largest mine to date, Placer Pacific’s Kidston mine, paid for itself a year after it opened in 1985. On the other hand, in South Africa, the world’s leading gold producer, the metal is found deep underground and extraction costs are much greater.

Enterprising individuals, driven by the same passion for gold as their mining ancestors, and further encouraged by a favorable gold price, have pegged their own claims and set up smaller-scale mining operations all over Australia.

Family groups armed with panning equipment and metal detectors have been bitten with the mining bug, and on weekends travel from the cities to the old goldfields to fossick for gold. They scour creekbeds where they hope the miners may have left behind traces of the yellow metal. Sometimes they find little more than an old beer can buried beneath the surface, or metal implements like forks or broken picks discarded by the oldtimers who picked through the same clump of ground 140 years before. On luckier occasions, they may find traces of color, and when they are very fortunate they find gold nuggets.

Australia is famous for the discovery of gold nuggets, with some weighing more than 2,000 oz. Several of these nuggets such as the “Welcome Stranger” (weighing 2,284 oz) or the “Hand of Faith” (weighing 730 oz), are depicted on the Australian Nugget legal tender gold bullion coins.

The search for gold is a venture which can bring exciting and sometimes unbelievable tales. There is the story of a family who stumbled on a huge gold nugget behind their church in the town’s main street, and of campers who accidentally discovered a nugget as big as a man’s fist when hammering their tent pegs into the ground.

At the other end of the mining spectrum are the huge mining companies which have reopened mines closed during the years when gold’s price was fixed. One of Australia’s largest companies, Western Mining Corp., last year produced over one million ounces of gold. Western Mining has recently taken over four Canadian gold companies — Western Goldfields (TSE), Northgate Mines, Seabright Resources (TSE) and Grandview Resources (VSE).

In Western Australia alone, some 20 large mines were opened last year as well as countless new, smaller mining operations. Australian beer baron, media owner and the man behind the America’s Cup challenge, Alan Bond, is playing a major role in the resurgence of gold mining. He has spent more than $1.2 billion(A) acquiring mines, and is aiming to make himself a million- ounce-a-year man.

A relative newcomer to gold, Bond is intent on building a mining empire to match his other activities in beer, newspapers and television. His plan is to open the “Big Pit” to engulf the northern section of the legendary Golden Mile, in Kalgoorlie, Western Australia. The Big Pit will be 1.8 miles long and 275 yards deep — so large that it may even be visible from the moon.

A decade ago, this area around Kalgoolie was the symbol of depression endured by the gold industry. All the mines on the Golden Mile were closed and only a small nucleus of miners remained. By early 1987, most of the Mile was effectively in the hands of the two key groups, one controlled by Bond. Bond currently has plans to list a company on the New York Stock Exchange this year, Bond International Gold, that will incorporate the recent acquisition of the large U.S. gold company, St. Joe Gold. Bond’s company will be known as BIG, and that seems to say it all.

The latest phase of Australian mining has spurred the introduction of mining innovations that result in radically improved recovery. With new techniques like carbon-in-pulp treatment, low- grade open pits previously regarded as uneconomical are now profitable.

In 1975, gold commanded barely 10% of mining exploration budgets in Australia. Today, it takes up at least 80% of exploration budgets. Gold exploration over-all has soared from $30 million(A) in 1980 to over $200 million in 1986. Nineteen new mines opened in Western Australia that year, and more than 20 opened in 1987.

The mining boom in Australia has an added incentive because gold mining profits are not taxed. A threat to impose a tax in December, 1986, by Australia’s finance minister, Paul Keating, was withdrawn after a tremendous uproar from the goldfields.

GoldCorp Australia, a trading division of the Western Australian Development Corporation (WADC) was established in 1983 to undertake an international gold program to complement the activities of the Perth Mint. The company aims to promote Australia as a major international gold producer and to develop new international gold bullion products and markets for Australia’s gold.

GoldCorp recently completed a comprehensive survey of Australian gold production. Based on Bureau of Mineral Resources figures, GoldCorp estimates that 121-125 tonnes of gold will be produced in Australia in 1988. In 1987, 107 tonnes were mined. Breaking through the 100-tonne mark represented a major milestone for the Australian gold mining industry, making it the largest quantity of gold produced by Australia for over 80 years. If the projected 1988 figure is reached, Australia will become the third largest gold producer in the world after South Africa and the Soviet Union.