Costs fall for Mexico's gold miners

Wednesday, March 15, 2017

Production costs in Mexico's gold mining sector fell in 2016, with the decline spurred partly by FX and lower fuel prices.

Cash costs averaged US$597/oz for the year, down 5.4% from US$631/oz in 2015, according to data collated by BNamericas from 16 of the country's gold mines.

Start your 15 day free trial now!


Already a subscriber? Please, login


Fresnillo's Ciénega mine was the lowest cost gold operation in 2016, with cash costs of negative US$217/oz, down from positive US$245/oz the previous year.

The company reported 8.41% cost deflation in 2016, driven by a weaker peso and lower diesel and electricity costs, but expects inflation to return this year.

Ciénega was followed by Agnico Eagle's Pinos Altos and La India operations at (positive) US$356/oz and US$395/oz, respectively.



Cash costs at Fresnillo's Herradura and Goldcorp's Peñasquito came in at US$471/oz and US$483/oz, respectively.


Four mines had cash costs in the US$500-550/oz bracket.

These were Agnico's Crestón Mascota (US$516/oz), McEwen Mining's El Gallo (US$524/oz), Torex Gold's El Limón-Guajes (ELG) (US$543/oz) and Gold Resources' El Águila (US$548/oz).


The rest of the mines covered had cash costs above US$700/oz, with some showing significant improvements.

These included Timmins Gold's San Francisco at US$734/oz, down from US$1,017/oz, and Goldcorp's Los Filos (pictured) at US$766/oz, down from US$1,313/oz. Goldcorp is selling the latter to Leagold Mining.

Fresnillo reduced cash costs at its Noche Buena mine to US$766/oz from US$937/oz.

Cash costs at Alamos Gold's Mulatos were US$838/oz, and US$856/oz at Primero Mining's San Dimas, up from US$409/oz due to a string of challenges.

The highest cost mines were New Gold's Cerro San Pedro, at US$933/oz, up from US$865/oz, and Alamos' El Chanate at US$1,052/oz, up from US$808/oz.


Cash cost guidance for 2017 was only available for eight of the mines, with an average of US$765/oz.

Agnico expects cash costs to increase at its Mexican mines, with particularly steep rises at Crestón Mascota to US$812/oz, and La India to US$583/oz.

McEwen also forecasts a significant increase at El Gallo to US$760/oz, while Timmins expects cash costs of US$925/oz at San Francisco (midpoint guidance).

Torex and Alamos have guided broadly flat cash costs at ELG and Mulatos, respectively, with El Chanate seeing an increase to US$1,200/oz.

While Goldcorp has not issued cash cost guidance, it expects all-in sustaining costs to fall to US$825/oz from US$937/oz at Peñasquito.

Gold miners have striven to cut costs in response to falling gold prices, which peaked in 2011.

While some companies have room to further reduce costs by renegotiating contracts with suppliers and contractors, higher oil prices will weigh on cost-cutting efforts, BMO Capital Markets' Andrew Kaip told BNamericas earlier in March.

Cash costs for 2016 were not available for Argonaut Gold, which has the El Colorado and El Castillo gold mines, or Premier Gold Mines' Mercedes mine.