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Great article in today’s Australian on Aussie gold miners.

DRM’s MD highlights the decreasing costs in the sector.

Extract as follows:

Doray Minerals managing director Allan Kelly is blunt about the impact that the iron ore boom had on the gold sector.

“It’s hard to have too much sympathy for the iron ore guys,” he says.

“They stuffed the market for a couple of years; they were poaching people left, right and centre from everyone else. Now it’s our turn.”

Doray is well into the construction of its new Deflector mine, which will be the company’s second operation.

The tough times in the rest of the mining sector have been reflected in the number of job applications the company is receiving.

“We were recruiting for a fitter and we stopped when we had received 270 applications,” he said. “It’s just a great time to be starting a new project and staffing up because there’s so many people out there.”

Exploration costs have also fallen sharply, meaning more bang for buck when hunting for new deposits. The rate for air-core drilling, Mr Kelly says, has fallen to about $13 a metre after peaking during the boom at about $40 a metre. Back in 1994, when he was starting out as a geologist, the going rate was around $12 a metre.

“You’re getting really good people at reasonable prices, you’re getting cheap drilling, your diesel is cheap, and you’re getting a good price for your gold. It’s a great time,” he said.

Unlike the boom in iron ore, which inspired a wave of expansion and development around the world that swamped international markets, the surge in gold is a more localised phenomenon.

Goldmine margins in the US and many African nations have not enjoyed the foreign exchange kicker being felt by Australian operators, lessening the risk of an overly exuberant supply response.

It also seems unlikely that any expansion of Australia’s gold sector could possibly take up all the slack created by the downturns in iron ore, coal and oil and gas, meaning the chances of a return of boomtime cost inflation is remote.