UK-based precious metal consultancy group, Metals Focus, reports that global gold mining total cash costs (TCC) have fallen to their lowest level since 2011 but despite this the basic producer margin (gold price less total cash cost) is at the lowest level since the Metals Focus series began in 2010.
In the Q3 2015, TCC averaged US$652/oz, a decline of 1% on the prior quarter and 9% y-o-y, leading to a cash margin of US$473/oz, compared with a peak of US$1,038/oz in Q3 2011.
The consultancy notes that the weakening of many producers currencies (relative to the US dollar), alongside lower oil prices, is helping reduce mine site input costs, such as power, fuel and labour. “Regions performing particularly well in terms of total cash cost reductions are, unsurprisingly, strongly related to the weakness in local currencies”, Metals Focus observes and reports that costs in Oceania fell strongly, down 18% y-o-y, to US$637/oz as the Australian dollar depreciated by 27%.
In terms of all-in sustaining costs (AISC), the global average fell by 13% y-o-y, to US$836/oz, as key additional line items, such as head office costs, exploration and sustaining capital expenditure, were cut strongly.
The consultancy belives that despite the lower AISC, “15% of the global cost curve was loss making versus the Q3 average gold price of US$1,125/oz, which increases to 20% versus the current spot price (US$1,075/oz).
Gold mining costs lowest since 2011 but margins shrink – Metals Focus