The low prices of some minerals in recent years can have drastic effects on the level of prospecting and exploration. This is not the case in the Australian gold mining industry today. The decline of South African gold production over the last twenty years and the increasing demand for gold in Asia, particularly China and India has helped to contribute to the high level of exploration activity in Australia. When other economic and political considerations are taken into account, mining ore with a lower cut-off grade becomes profitable. Hedging or forward selling.
Larger companies sell their gold to banks that deal in bullion.
The producer and buyer agree to sell at a contract price in advance of production. Hedging guarantees the miner an income for several years ahead. This benefits the small operator as hedging has stabilised the daily price of gold. Selling gold Most small mine operators sell their gold directly to gold refineries. The price received depends on the current spot price of gold less deductions for refining and handling.