Mexico gold miners trim costs

Monday, May 29, 2017

Production costs in Mexico's gold mining sector edged lower in the first quarter of this year.

Cash costs across 16 of the country's main gold mines averaged about US$650/oz, down from US$682/oz in the same quarter last year, according to non-weighted figures collated by BNamericas.

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Higher by-product prices and a weaker peso were among the factors pushing down costs.

Silver, lead and zinc prices increased considerably over the year. The US dollar traded mainly at 19-22 pesos, compared to 17-19 pesos in 1Q16.

Cash costs among the operations ranged from below US$100/oz to over US$1,100/oz.

Note: Fresnillo was excluded as it publishes cash cost details for its mines every half-year. Minera Frisco did not release cash cost details in its results statement.



LOWEST COST - sub-US$500/oz cash costs

Goldcorp's Peñasquito was by far Mexico's lowest cost mine in the quarter, at US85/oz. The Zacatecas state operation also saw the biggest fall in cash costs, from some US$513/oz in 1Q16.

The improvement was due to higher by-product output and prices, a weaker peso and lower sustaining capex. The mine also produces silver, lead and zinc.

Higher by-product prices were also behind a sharp drop in cash costs at Gold Resource's El Águila mine, the second lowest cost producer.

Cash costs fell to US$263/oz from US$667/oz on higher silver, copper, lead and zinc prices, and increased silver, copper and lead volumes sold.

Agnico Eagle Mines' Pinos Altos and La India operations were the other mines with sub-US$500/oz cash costs, at US$358/oz and US$438/oz, respectively, up from US$343/oz and US$360/oz in the same period of last year.

MIDDLE GROUND - US$500-800/oz cash costs

Agnico's Creston Mascota mine, a satellite operation at Pinos Altos, was also among Mexico's lower cost operations, with cash costs of US$525/oz, up from US$460/oz.

This was followed by McEwen Mining's El Gallo, at US$564/oz, up from US$432/oz, due to lower grades.

Argonaut Gold's La Colorada mine saw cash costs fall to US$570/oz from US$654/oz, helped by higher gold and silver output.

Cash costs at the Mercedes mine, acquired by Premier Gold Mines from Yamana Gold last year, remained almost unchanged at US$632/oz, with Torex Gold's El Limón-Guajes at US$671/oz (the mine started commercial production in 2Q16).

Primero Mining reported cash costs of US$698/oz gold at its San Dimas operation, down from US$968/oz. Site costs of US$5.2mn run up during a strike in Q1 were not included in the figure.

Alio Gold (formerly Timmins Gold) saw cash costs fall to US$735/oz from US$761/oz at its San Francisco mine.

HIGHER COST - cash costs over US$800/oz

Alamos Gold's Mulatos operation, pictured, saw cash costs increase to US$827/oz from US$811/oz, with Argonaut Gold's El Castillo coming in at US$885/oz, up from US$850/oz.

Goldcorp reported US$900/oz cash costs for the Los Filos mine, up from US$763/oz, partly reflecting lower production. Los Filos was acquired by Leagold Mining in April.

Mexico's ageing gold assets were its highest cost producers.

New Gold's Cerro San Pedro mine saw cash costs rise to US$1,099/oz from US$934/oz. Active mining finished in 2Q16, with production continuing through residual leaching.

Alamos' El Chanate mine was the operation with the highest cash cost in Q1, at US$1,144/oz, up from US$1,086/oz. Cash costs are forecast to reach US$1,200/oz for 2017 as the mine nears the end of its active life.