Make Kitco Your Homepage

Gold mining costs remain stable but could rise soon

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - The average cost of mining gold in 2021 stood at $1,129/oz in Q4’21, almost unchanged from the previous quarter. The static nature of the cost is somewhat of a surprise as inflation had kicked into a degree at that stage in time.

Inputs such as fuel, energy, and labor played a significant role in pushing global all-in Sustaining Costs (AISC) from $972/oz in Q2 2020 to $1,131/oz in Q3 2021 (+14%).

In regards to the grades mined, higher grade ore at several major gold mines, particularly at Barrick and Newmont’s JV mines in Nevada Carlin, Cortez, and Turquoise Ridge. The rise in average grades increases the amount of gold produced per tonne of rock mined and processed, thus effectively lowering costs on a unit basis, according to data acquired by Metals Focus.

Adam Webb, Director of Mine Supply at Metals Focus noted "Average margins were squeezed by these rising costs, but remain high on a historical basis. Despite a 6% y-o-y reduction, at US731/oz they remained comfortably above the peak of US$552/oz reached in 2012, during the last bull run in gold."

He also added, "Should the gold price remain strong in 2022 then gold miners should continue to generate high margins, notwithstanding further pressure from continued cost inflation."

Lowest cost gold mining companies in 2021 - report

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.