Gold miners face price drop
Update: WA gold miners are set to suffer more pain after the price of the precious metal slid to its lowest level in four years today.
Gold was trading at $US1172 per ounce at 3pm today, down from Thursday's price of $US1207.80.
Hawkish comments from the Federal Reserve and strong US economic data indicating the central bank could raise interest rates sooner than expected affected the slide, with the drop set to put further pressure on already stretched gold miners.
Releasing its quarterly report today, Perth's Regis Resources reported gold production of 88,818 ounces at a basic cash cost, pre-royalties, of $745 per ounce.
The company did not disclose "all-in" costs.
However its Garden Well operation, 100km north of Laverton, is one of a number of operations around WA beginning to feel the pinch. Its basic cash costs "including royalties" at the mine were $1120 per ounce.
Regis reported a negative cash flow of $2.51 million for the quarter.
Fat Prophets resources analyst David Lennox said Australia's largest gold producer Newcrest Mining would come under renewed pressure if the price remained at current levels.
"A fall in the gold price, unfortunately, is the most extreme damage you can do to your operating profits," Mr Lennox said.
He said the pain was only partially offset by a weaker currency and cost reductions.
"If it stays at this level, it will require gold companies to adjust the valuations of their mines."
Companies which report profits to December, 2014 would need to examine whether they need to adjust their valuations, he said.
Mr Lennox added that Newcrest may have to report further impairments if the gold price slips further.
Australian gold miners have been trying to pay down debt over the past 12 months to counter further price falls.
The price of gold has fallen more than $US100 over the past four months from $US1327.00 on June 30.
