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Gold Output in Australia Increases in Second Quarter on Grades

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Sept. 1 (Bloomberg) -- Gold output in Australia, the world’s second-biggest producer, advanced in the second quarter on an increase in the amount of metal mined and higher ore grades, according to mining consultant Surbiton Associates Pty.

Production was 67 metric tons in the three months through June, about 3.5 tons more than the previous quarter and 3 tons higher than the same period a year earlier, Melbourne-based Surbiton said in a statement. Output was 259 tons in the year ended June 30, “marginally less” than the year prior, it said.

Gold slumped in the second quarter as some investors lost faith in the metal as a store of value and an improving U.S. economy boosted speculation the Federal Reserve may scale back debt purchases that helped bullion cap a 12-year bull run in 2012. Prices rebounded from a 34-month low in June on increased demand for jewelry, bars and coins in Asia.

“The increase in grade was precisely what we expected would happen following the price fall in early April,” Sandra Close, a director at Surbiton, said in the statement. “One of the easiest ways to cut cash costs per ounce is to increase the grade of ore going into the treatment plant.”

China was the world’s biggest gold producer in 2012 followed by Australia, according to the U.S. Geological Survey.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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