The average head grade at primary gold operations reached a 10-year high of 1.46 grams per tonne gold in 2017 and has fallen every year since.

By 2021, the average grade had dropped by 8% from the peak to 1.35gpt.

Metals Focus said the rising gold price was partly attributable as miners lowered cut-off grades.

The average open pit grade in 2021 was 1.29gpt gold, down 16% since 2012, while the average underground grade was 4.15gpt, down 20% since 2012.

In 2021, mines with head grades above 3gpt gold had an average all-in sustaining cost margin of US$758 an ounce, 5% higher than those with head grades below 1gpt.

In 2022, inflation has pushed the cost of production higher for gold miners with industry average AISCs reaching record highs.

"This, alongside a falling gold price in the second half of the year, has led to a significant contraction in industry margins," Metals Focus said.

"This margin squeeze will lead to higher cost operations coming under pressure and likely lead to some closures."

Two of Western Australia's higher cost operations, Wiluna Mining's namesake operation and Gascoyne Resources' Dalgaranga mine, were among those to succumb.

"As these mines are disproportionately lower-grade mines, we expect this will have the effect of slowing or even halting the rate of decline in industry average grades.

"Meanwhile, thinning industry margins will result in higher grade operations outperforming their lower grade peers more so than they have in recent years."