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Gold mining costs lowered in Q1 2016

2016-06-10


Despite the gradual recovery of global gold prices so far this year, during the first quarter of 2016 mostgoldproducers continued their efforts to reduce all-in sustaining costs (AISC). The major producers of gold gained an added advantage due to strengthening of the U.S. dollar against local currencies and lower global fuel prices.

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, according to data compiled by SNL Metals & Mining.NYSE-listed 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 per ounce. Barrick primarily benefited from operating and capital-cost control initiatives, and from lower fuel prices and foreign exchange gains.

Northern Star Resources Ltd. was next lowest with an AISC of US$711 per ounce. The March quarter AISC was a 5%decline from the previous quarter and a 30% drop from the year-ago quarter, mainly attributable to lower contracting, labor and supply rates that became effective Jan. 1, 2016.At the end of the first quarter, Newcrest revised its AISC guidance range for fiscal 2016 to US$1.88 billion to US$1.98 billion from US$1.90 billion to US$2.05 billion previously.

Barrick Gold operated at an impressive margin during the first quarter of 2016, recording a significant year-on-year decrease in AISC. Although Barrick's gold production in the March 2016 quarter dropped to 1.28 Moz from 1.39 Moz from the year-ago quarter, it managed to reduce its AISC to US$706 per ounce from US$927 per ounce, which is US$221 or 24% lower than its 2015 AISC.

Barrick expects its 2016 gold production to be in the range of 5.0 Moz to 5.5 Moz at an AISC range of US$760 to US$810 per ounce, down from an original guidance of US$775 to US$825 per ounce. Moreover, the company has set an ambitious target of reducing AISC below US$700 per ounce by 2019.