Gold production costs on the rise in LatAm

Wednesday, June 7, 2017

Production costs among Latin America's gold miners swung higher in Q1 following sharp declines last year.

Average non-weighted all-in sustaining costs (AISCs) of six of the region's biggest producers were up to US$899/oz from US$832/oz in the same quarter of last year.

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However, AISCs remain around US$100 lower than in 1Q15.

The companies are gold-focused miners that produced over 50,000oz at mines in the region and with more than half of their total output coming from Latin American mines.

Mexico's Fresnillo and Minera Frisco were not included as they did not report AISCs for the quarter.


Latin America's top gold producer  also had the lowest costs on the list, with AISCs declining US$36 to US$800/oz.


The fall was due to cost reduction efforts, including lower corporate administration costs and sustaining capex, along with higher by-product silver, lead and zinc prices at Peñasquito in Mexico, where AISCs plummeted to US$391/oz from US$1,004/oz.

Costs increased at Goldcorp's other main Latin American mines (Cerro Negro in Argentina and Pueblo Viejo in the Dominican Republic, a 40:60 JV with Barrick Gold).


Canada's Tahoe was the second lowest cost producer at US$860/oz, up from US$825/oz in 1Q16.

The increase reflects the addition of the company's higher-cost Canadian mines in 2Q16, partly offset by lower costs at La Arena in Peru.

AISCs at the Shahuindo gold mine, which began commercial production in 2Q16, were US$870/oz.

Tahoe expects AISCs to average US$1,150-1,250/oz in 2017, due to higher capex at Shahuindo and its Canadian operations.


AISCs at Peru's Buenaventura were just US$2 higher than Tahoe's, rising from US$728/oz due to higher cost of sales, partly offset by higher by-product credits and lower administrative costs.

The figure remains significantly lower than the US$1,126/oz seen in 1Q15.


Torex was a new entry on the list following the start of commercial production at its El Limón-Guajes mine in Mexico in 2Q16.

AISCs are forecast to trend lower, averaging US$775-825/oz in 2017, on a par with Goldcorp's Q1 figure.


AISCs increased sharply from US$787/oz (figures include attributable production from Brio Gold in Brazil and are on a co-product basis).

Costs were up at all of Yamana's operations, which are located in Brazil, Chile, Argentina and Canada.

Among the reasons for the AISC increases were FX fluctuations, lower grades and higher exploration spending. AISCs for the 2017 are forecast to reach US$890-910/oz.

ALAMOS GOLD: US$1,014/oz

Alamos' AISCs increased from US$986/oz, but the company expects improved results in the remainder of the year, to meet full-year guidance of US$940/oz.

AISCs are down from US$1,093/oz in 1Q15. The company has the Mulatos and El Chanate mines in Mexico and Young-Davidson in Canada.