The gold production of Australia improved by 4 per cent in the second quarter of 2012 to 65 metric tonnes from 62.5 tonnes in the first quarter. However, total first half production went down 4 per cent to 261 tonnes partly due to wet weather.

The overall decline in gold production was because of decrease in volumes of production by Newcrest Mining, Newmonth Mining and Barrick Gold's Kalgoorie Super Pit, reported international metals consultancy GFMS.

Despite the lower production, Super Pit remained the top producer of the yellow metal in the past 12 months to June 30 with a total output of 746,000 ounces, followed by Newmont's Boddington mine with 713,000 ounces and Newcrest's Teifer with 540,115 ounces.

Sandra Close, director of industry analyst Surbiton Associates, said the slight drop in production was expected since gold price was $230 higher compared to the previous year and averaged $1,620 an ounce.

She forecast higher production in the coming quarters due to several new and rejuvenated projects coming to stream late 2012 and in 2013.

"But if the government wants the boom to continue and to have a positive effect on the economy, it needs to ensure exploration in Australia, particularly by locally listed companies, is encouraged," The Herald Sun quoted Ms Close.

She expressed alarm that more than half of exploration expenses by Australian-listed companies in gold and other minerals are spent overseas.

"While it is rational to use our expertise overseas as well as locally, you have to question what is driving such a strong move offshore," Ms Close said.

She explained the slowdown in mineral exploration in Australia to uncertainties and risks concerning taxation and concerns about land access.