DESPITE the gradual recovery of gold prices, during the first quarter of 2016 most gold producers continued efforts to reduce all-in sustaining costs (AISC). Major producers also gained an added advantage due to strengthening of the US dollar against local currencies and lower global fuel prices.
Data compiled by SNL Metals & Mining shows that the top 17 publicly listed gold companies that reported AISC produced gold at a weighted-average cost of US$833 per ounce in the first quarter.
Barrick Gold Corp had the quarter’s lowest AISC at US$706 per ounce of gold produced, US$130 per ounce less than the group median of US$836. Barrick primarily benefited from operating and capital-cost control initiatives, and from lower fuel prices and foreign exchange gains.
Northern Star Resources was next lowest with an AISC of US$711 per ounce. The March quarter AISC was 5% less than the previous quarter and 30% less from the year-ago quarter, mainly attributable to lower contracting, labour and supply rates that became effective on January 1, 2016.
Newcrest Mining achieved the third-lowest AISC at US$723 per ounce sold on a consolidated weighted basis. The quarter’s low cost was attributed to high production at the Cadia Hill mine and a significant decrease in AISC at the Hidden Valley mine. At the end of the first quarter, Newcrest revised its AISC guidance range for fiscal 2016 to US$1.88 billion-US$1.98 billion from US$1.9 billion-US$2.05 billion.
At the other end of the scale, IAMGOLD reported the highest AISC compared with its peers, at US$1084 per ounce sold. Although the company’s March quarter AISC was 3% lower than the year-ago quarter, it was high compared with its peers due to an increase in sustaining capital and lower sales.
Other companies with high AISC were Centerra Gold and Gold Fields with AISC of US$1015 per ounce and US$961 per ounce respectively.
Comparing gold producers based on first-quarter profit margin, Barrick again led the pack with a margin of 40.2%, well above the group’s weighted average of 29.8%. Northern Star and Compania de Minas Buenaventura SAA also stood out with a margin of 39.9% and 39.1% respectively.
Again at the bottom, IAMGOLD had by far the lowest profit margin at 8.8%, or US$104 per ounce. Centerra and Acacia Mining recorded the second and third lowest profit margins compared with the group at 14.4% and 16.6%, respectively.