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Australia's 2016 gold output highest since 1999 -survey

By James Regan

SYDNEY, Feb 26 (Reuters) - Australian gold output hit a 17-year high of 298 tonnes in 2016 as higher bullion prices drove mining companies to dig deeper, a sector survey released on Sunday showed.

A robust world gold price and favourable foreign exchange rates for most of the year that boosted prices for local producers were the factors behind the increase, according to the survey by Australian mining consultancy Surbiton Associates.

"Overall, the Australian dollar gold price has continued to be attractive, thanks to the combination of the U.S. dollar gold price and favourable exchange rates," said Surbiton director Sandra Close.

"This has encouraged the redevelopment of previously mined areas and the refurbishment of mothballed plants, thereby pushing Australian gold output higher," Close said.

Australia produced a record 314 tonnes of gold in 1997, according to Close.

A weaker Australian currency against the U.S. dollar lifted the local gold price to a high of A$1,856.48 an ounce in June, Reuters data showed.

Prices have since recoiled to around A$1,623 an ounce - compared to about $1,250 in U.S. dollars - but still high enough to deliver strong profit margins for miners.

Australia's gold miners' index on Friday reached its highest level since Nov. 11.

But heavy rainfall in far Western Australia - the country's main gold mining region - has been affecting mine work and could curb first-quarter output, getting 2017 off to a slower start, according to Close.

(Reporting by James Regan, editing by G Crosse)