Mexico's gold miners forecast stable costs

Mexico's gold miners are forecasting mixed cost performance in 2016.

Guidance from five significant yellow metal producers ranges from a sharp drop to modest increases in cash costs, compared to 2015.

Gold miners have been under pressure from falling prices in recent years, although the metal's recent rise above US$1,200/oz is providing respite.

AGNICO EAGLE

Agnico Eagle Mines, Mexico's fourth biggest gold miner, has forecast companywide cash costs of US$590-630/oz, up slightly from US$567/oz in 2015.

Guidance for its three Mexican operations is lower at US$474/oz, up from US$408/oz. Pinos Altos, Crestón Mascota and La India are among Mexico's lowest-cost gold mines.

Agnico also has operations in Canada and Finland.

ALAMOS

Alamos Gold, Mexico's fifth biggest gold producer, has forecast companywide cash costs of US$800/oz in 2016, compared to US$850/oz reported in Q3 (full-year 2015 figures have not yet been released).

The Mulatos mine is in line for a modest reduction to US$850/oz from US$865/oz guided for 2015, with all-in sustaining costs at US$925/oz.

The company expects cash costs at El Chanate of about US$1,100/oz, compared to US$675-775/oz in 2015, but the figures are not comparable as Alamos expects to expense waste stripping costs which were previously capitalized.

Alamos also has the Young-Davidson mine in Canada.

PRIMERO

Primero Mining is Mexico's sixth biggest gold producer, with the San Dimas gold-silver mine, along with Black Fox in Canada.

The company expects a slight reduction in cash costs to US$570-620/oz in 2016, down from US$637/oz last year. San Dimas' cash costs are forecast as stable at US$525-575/oz, compared to US$558/oz.

ARGONAUT

Argonaut Gold was Mexico's ninth biggest yellow metal producer in Q3. The company's two mines, El Castillo and La Colorada, are in Mexico.

Cash costs are seen as flat or marginally higher this year at US$750-800/oz. The company expects to report cash costs slightly above the US$700-750/oz previously guided for 2015.

TIMMINS

Timmins Gold, whose sole operating mine is San Francisco in Mexico, has forecast the biggest drop in cash costs of the five companies, to US$750-850/oz.

This compares to US$1,000-1,050/oz in 2015, when figures were impacted by higher than expected waste stripping.

OUTLOOK

The overall trend appears to be for broadly stable cash costs in 2016, based on guidance from these five top-10 Mexican gold miners.

With the exception of Timmins, whose cash costs were higher last year because of stripping, companies are forecasting slight falls or rises or no change.

Gold miners substantially cut production costs in recent years as prices fell, leaving little space for further reductions.

As a result of cost cutting, the sector generally is in good shape to generate profits following the rebound to US$1,200/oz prices, Scotiabank director of gold and precious metals told BNamericas this month.

Pictured: Alamos Gold's Mulatos mine.