Australia's gold output hit an 11-year high in 2014 but lower prices have caused job losses and may lead to mines shutting prematurely.
Production rose four per cent to 284 tonnes in 2014, it's highest level since 2003, Sandra Close, a director of mining consultants Surbiton and Associates said.
"Lower prices have forced Australian gold miners to increase the grade of ore that they are mining and treating, and they are also pushing their treatment plants harder in order to remain profitable," Dr Close said.
"However, there is a downside.
"Higher grades and greater throughput certainly lift production but lower grade material becomes uneconomic, so mine lives are shortened."
Since mid-2011, Australian dollar gold prices have fallen from around $1800 per ounce to $1550 per ounce, as the Australian dollar's value against the US dollar dropped 25 per cent, and the US dollar gold price dropped 37 per cent.
Dr Close said the prospect of a higher rate of state gold royalties in Western Australia would further harm employment prospects in an industry already suffering steep job losses.
"The lack of work and the waste of trained people are of great concern," Dr Close said.
A final WA state government report on royalties is expected to be released soon.
Newmont's Boddington and Kalgoorlie operations, both in WA, produced the most gold in 2014, followed by Newcrest's Telfer mine and Anglogold's Tropicana operations, also in WA.
Mining service company Ausdrill recently said it is pinning its hopes on a lower Australian dollar boosting the US dollar gold price and spurring investment in the local gold sector.
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