London consultancy, Metals Focus, reports that in Q4 15 gold mining total cash costs (TCC) averaged US$631/oz, a decline of 1% on the prior quarter and 7% y-o-y and the lowest level since mid-2011.
The weakening of many producers’ currencies (relative to the dollar) helped lower key mine site input costs, such as labour and power, while the 40% y-o-y fall in crude oil prices also contributed to the decline.
Although the news on costs is encouraging, the consultancy cautions that given the deterioration in the gold price (to an average of US$1,104/oz in Q4), the basic margin (gold price less TCC) fell to its smallest level in over five years, this despite the average royalty charge falling by 9% y-o-y, to an average US$36/oz as a result of the lower gold price.
In terms of all-in sustaining costs (AISC), the global average fell by 11% y-o-y (-2% q-o-q), to US$832/oz. In addition to TCC, the all-in sustaining metric includes additional line items, such as head office costs, exploration and sustaining capital expenditure.
Cash costs in Oceania fell the most, by over US$100/oz versus Q4.14, as the Australian dollar weakened by 18%.
Metals Focus notes that with the above costs and prices, only 4% of the cost curve was loss making on a total cash cost basis.
Gold cash costs lowest for five years – Metals Focus