Australia is on the edge of a "production cliff" and could slip from second to fourth on a list of the world's biggest gold producing nations by 2024, mining analysts have warned.

Key points: A research analyst says Australia's biggest gold mines are getting older and not enough new discoveries are being made to replace them

A research analyst says Australia's biggest gold mines are getting older and not enough new discoveries are being made to replace them He predicts global gold production will be in decline from 2022

He predicts global gold production will be in decline from 2022 The CEO of the Perth Mint says a significant fall in Australian gold production is highly unlikely



Behind only China, Australia's gold mines will produce an estimated 10.7 million ounces this year — the equivalent of about $19.2 billion worth of the precious metal.



But analysts predict Canada and Russia will overtake Australia, with production to fall more than 40 per cent to 6.3 million ounces over the next five years.



With the Australian dollar gold price trading near historic highs of about $1,820 an ounce, that could potentially represent about $8 billion in lost production.

General manager John Farr at the Gordon Sirdar underground gold mine in Western Australia. ( ABC News: Jarrod Lucas )

Ageing mines 'running out of gold'



Canadian research analyst Chris Galbraith, of S&P Global Market Intelligence, said Australia's biggest gold mines were getting older and not enough new discoveries were being made to replace them.



"Those have been great mines, they've had excellent lives, but nevertheless all good things must eventually come to a close and they are running out of gold," Mr Galbraith said.



Global gold output has increased 40 per cent since 2008, with production hitting 107.3 million ounces last year.



A new record high of 109.6 million ounces is expected to be reached this year, with China contributing just under 12 million ounces.

Mr Galbraith predicted global gold production would be in decline from 2022.



He said there was the potential to replace ageing mines through exploration.



"There's a lot of exploration going into Australia and it is bearing fruit," he said.



"Unfortunately, it's simply smaller fruit, so those large deposits that have been identified in the past, they're simply not materialising."

Perth Mint CEO Richard Hayes (right) with Kalgoorlie-Boulder Mayor John Bowler at last year's opening of the Heart of Gold tourist walk. ( ABC News: Jarrod Lucas )

Research dismissed by Perth Mint

Most of Australia's miners send their gold to Perth Mint for refining — about 350 tonnes of gold every year.



Perth Mint CEO Richard Hayes said a significant fall in Australian gold production was highly unlikely.



"Every year I go to conferences where I see people putting up graphs which show a production cliff, where all of a sudden in the next year or two or three, there's a massive drop off," Mr Hayes said.



"In the quarter of a century since I've been here I certainly haven't seen any evidence of any of those predictions ever coming true.



"Australia is the second largest producer of gold and has the world's largest known gold reserves, so I would be very, very surprised if there's this production cliff we're all going to fall off in five years' time."



This bar contains close to 500 ounces, which is worth close to $900,000 at today's gold price. ( ABC News: Jarrod Lucas )

Australia's big cheese among gold miners

The warning comes as Australia's biggest new gold mine prepares to pour its first gold bar in June.

The $621 million Gruyere project in WA's Great Victoria Desert is being developed as a 50:50 joint venture by South African mining giant Gold Fields and the Australian company which discovered the deposit, Gold Road Resources.



Gold Road Resources geology general manager John Donaldson inspects drilling samples at the Gruyere gold mine. ( ABC News: Jarrod Lucas )

The construction workforce at Gruyere peaked around 700 just before Christmas and the mine will create about 350 full-time jobs once it is fully operational.



Gold Fields also owns the Agnew-Lawlers, St Ives and Granny Smith mines in WA — all of which have been operating since the 1980s.



Last year, Gold Fields spent $85 million on exploration, including $25 million at Granny Smith, which has produced more than eight million ounces over its life and is ramping up production once again.



The Wallaby mine at Granny Smith has reached a depth of 1.2 kilometres below the surface and a second underground portal — fittingly named Joey — has been blasted open to access new areas of the mine for exploration drilling.



Truck driver Ken Hine at the Granny Smith gold mine. ( Supplied: Gold Fields )

Exploration dollars key to finding new discoveries

Gold Fields' executive vice president Australasia Stuart Mathews said ongoing exploration was the key to maintaining production levels.



"These predictions are not unusual, but over the last 18 years we have consistently demonstrated we can extend the life of our mines beyond estimates and have every expectation that we will continue to do so," Mr Mathews said.



"Increasing mine life is possible because of the quality of our current assets and the sustained investment we are making in exploration.



"Over five years our total exploration spend in the region has been $437 million, extending the life of our existing mines, and proving a clear pipeline of targets for further activity, giving us strong confidence in the life of all of our operations in Western Australia."



Exploration drilling at the Gruyere gold mine in WA's outback. ( ABC News: Jarrod Lucas )

Australian Bureau of Statistics figures show more than $1.3 billion was spent looking for mineral deposits in WA last year — the biggest spend in five years and up 18 per cent on the previous year.



Nearly half of that was spent on gold, with a record $641 million spent searching for the precious metal last year.



That is $100 million more than what was being spent at the peak of the mining boom in 2012.

Association of Mining and Exploration Companies CEO Warren Pearce said Federal and State Governments needed to invest more in exploration.



"Australia needs greater greenfields mineral exploration to discover future mines, and there is a real need to increase mineral exploration as the discovery rate has been in slow decline for the last decade," Mr Pearce said.



"Each new discovery that leads to a mine creates jobs, royalties and government revenues as well as a wide range of economic and community benefits."

The massive truck fleet at the Super Pit gold mine, with each truck capable of carrying up to 240 tonnes. ( ABC News: Jarrod Lucas )

Going strong but how long can mine reserves last?

The list of ageing gold mines in Australia is long and includes Kalgoorlie-Boulder's famous Super Pit, which turns 30 this year.



Gold mines are not akin to a fine wine that only gets better with age; rather, they get deeper, costs increase, and it gets more difficult to keep mines profitable.

The famous Kalgoorlie Super Pit gold mine, WA. ( ABC News: Jarrod Lucas )

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In the case of the Super Pit, the cream has certainly been taken from the top, despite the promise of many more years of production.

The massive open pit has produced more than 20 million ounces of gold since the late Alan Bond bought up all the mining leases on the historic Golden Mile in the 1980s.

Production in 2018 was 628,000 ounces, down from 754,000 in 2016 and down from 730,000 in 2002.

Production at the Super Pit has typically been around the 700-plus ounce mark for the past two decades, but the mine was impacted by two serious rock falls last year.



Once described as the richest square mile on Earth, the Golden Mile has been continually mined since its discovery in the 1890s rush with more than 60 million ounces produced.

Next door to the Super Pit is the Mt Charlotte underground mine, which has been operating continuously since 1963.

Mt Charlotte has been threatened with closure on many occasions over the past half century, but without more extensive drilling, is set to close around 2024.

Of Australia's five biggest-producing gold mines last year, Tropicana, 340 kilometres east-north-east of Kalgoorlie-Boulder, is the only operation that began this decade.