The global average all-in sustaining costs (AISC) for gold miners in Q4’23 witnessed a 2% quarter-on-quarter rise to US$1,342/oz, fueled by persistent cost inflation and a tight labor market impacting on-site operating expenses. However, there’s a positive note as the rate of increase is decelerating, and the higher gold price has alleviated pressure on producer margins. With a quarterly average spot price of US$1,977/oz, the global average margin in Q4’23 stood at a relatively healthy US$635/oz, gradually approaching levels seen in H1’22, although still distant from the record margins of 2020.
Despite local inflation receding in several producer countries over the year and prices of oil, natural gas, and cyanide trending downwards, operational costs remained high due to factors such as escalating employee-related expenses, continuing elevated prices for certain consumables, and local currencies strengthening against the US dollar. Moreover, companies operating in higher-risk areas faced increased security costs, leading to ongoing cost fluctuations and regional disparities.
North America witnessed a 2% q/q increase in average AISC to US$1,522/oz in Q4’23, the highest among all regions, continuing the upward cost trend since 2017. The average AISC margin for the region reached US$454/oz, marking a 4% q/q rise but still notably lower than margins in 2021. Barrick reported a higher q/q AISC at Nevada Gold Mines, while Newmont recorded increased AISC at Peñasquito due to operational challenges.
In Oceania, AISC rose by 1% q/q to US$1,132/oz, resulting in an average AISC margin of US$692/oz, up 7% q/q. Newmont reported higher q/q AISC at Boddington and Tanami, while Evolution Mining recorded lower AISC at its Cowal operation.
South America saw a 3% q/q decrease in average AISC to US$1,372/oz in Q4’23, leading to an average AISC margin of US$604/oz for the quarter, driven by higher grades processed and an average total cash cost (TCC) of US$998/oz. Newmont’s Yanacocha mine in Peru benefited from higher by-product credits, while AngloGold Ashanti reported higher AISC at Cerro Vanguardia in Argentina due to inflation and currency depreciation.
Costs, and consequently margins, are anticipated to remain under pressure in the near term, with factors such as the Brent Crude oil price increase and ongoing industry-wide skills shortages contributing to the challenge.
