Mexico's lowest cost gold mines see further improvements

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Friday, September 15, 2017

Production costs among Mexico's lowest cost gold mines shifted lower in Q2.

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Cash costs among nine of the country's low cost operations averaged US$350/oz, down from US$545/oz in the same quarter last year, according to figures compiled by BNamericas. The non-weighted averages are from operations with sub-US$600/oz cash costs in Q2.

The decline reflects a huge reduction in costs at Goldcorp's Peñasquito mine, pictured, with costs rising at just three of the nine operations.

Cash costs in Mexico's gold sector have fallen in recent years, averaging US$650/oz among 16 mines in Q1, down from US$682/oz in the same period last year, and US$597/oz for 2016, down from US$631/oz the previous year.

MEXICO'S LOW COST MINES

1. Ciénega - cash costs negative US$243/oz

Fresnillo's Ciénega was the only mine with negative cash costs, after by-product deductions, falling to negative US$243/oz gold from negative US$122/oz in the same quarter last year.

The fall was due to higher by-product credits and a weaker Mexican peso against the US dollar, partly offset by lower volume of ore processed, higher electricity and diesel prices and an increase in labor costs in peso terms.

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2. Peñasquito, US$26/oz

Goldcorp's Zacatecas state mine saw a huge fall in cash costs, from US$1,757/oz, with the asset falling from the country's highest cost to among its lowest cost operations.

Higher grades and throughput lifted gold and by-product silver, lead and zinc output, while prices also rose and sustaining capex declined.

Gold production increased to 123,000oz from 36,000oz.

3. El Águila - US$272/oz

Cash costs also fell at Gold Resource's Oaxaca state operation from US$317/oz, benefiting from strong base metals sales.

The company calculates cash costs per precious metal gold equivalent ounce, after by-product base metals credits.

4. Pinos Altos, US$373/oz

Agnico Eagle Mines saw cash costs at its main Mexican operation increase from US$348/oz on lower gold production and reduced by-product revenue.

5. Herradura, US$484/oz

Cash costs at Fresnillo's biggest gold mine were down just US$1 compared to 2Q16.

= 6. Creston Mascota, US$550/oz

The mine, a satellite of Agnico's Pinos Altos, saw cash costs rise from US$469/oz, due to slightly lower gold production and higher haulage costs, due to increased trucking distances.

= 6. Mercedes, US$550/oz

Coming in joint sixth with Creston Mascota, Premier Gold Mines' Mercedes operation saw cash costs fall from US$580/oz, as cost reduction efforts bore fruit.

8. La India, US$552/oz

Agnico's most recent mine saw cash costs rise from US$381/oz, due to lower volume of ore processed, higher contractor costs linked to accelerated mine development, higher maintenance and trucking costs and the timing of unsold inventory.

9. La Colorada, US$590/oz

Argonaut Gold's La Colorada was the final mine with sub-US$600/oz cash costs, down from US$693/oz in 2Q16, due to lower mine operating costs.

The San Agustín project, which will deliver additional ore to La Colorada, is expected to help reduce costs once commercial production begins, anticipated by end-2017.