Production costs flat among LatAm top gold miners

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Tuesday, September 5, 2017

Production costs among Latin America's main gold miners remained flat in Q2.

All-in sustaining costs (AISC) averaged US$875/oz, up just US$1 on the same quarter last year, according to non-weighted averages compiled by BNamericas. Sharp falls at some companies were offset by substantial rises at others. The figure was down from US$899/oz in Q1.

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Overall, AISCs are tracking below 2017 original average guidance of US$938/oz, although two of the lower cost miners, Fresnillo and Buenaventura, did not issue guidance. The companies are miners which produced more than 50,000oz in the region in Q2, with more than half their total output coming from LatAm operations.

Minera Frisco is excluded as it did not release AISC data.

FRESNILLO - US$755/oz

The Mexican miner was the only company with sub-US$800/oz AISCs in H1. Costs increased from US$721/oz in 1H16 (Fresnillo reports AISCs every half rather than quarter, and on a gold equivalent basis).

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Higher costs at the Herradura and Noche Buena mines were partly offset by a 20.3% decline at Ciénega to US$419/oz. Ciénega was Fresnillo's lowest cost gold mine in the period.

GOLDCORP - US$800/oz

The Canadian miner and region's top gold producer achieved a significant reduction in AISCs, from US$1,067/oz.

The decline was driven by improvements at its three main LatAm operations, Peñasquito in Mexico, Cerro Negro in Argentina and Pueblo Viejo in the Dominican Republic (a 40:60 JV with Barrick Gold), in addition to companywide efficiency drive.

Following two consecutive quarters of US$800/oz AISCs, Goldcorp lowered its 2017 guidance to US$825/oz from US$850/oz.

BUENAVENTURA - US$812/oz

The Peruvian miner remains among the region's lower cost producers despite AISCs rising from US$610/oz, mainly due to lower by-product credits and higher cost of sales.

YAMANA GOLD - US$899/oz

Yamana, with mines in Brazil, Chile, Argentina and Canada, saw AISCs fall US$60 from US$959/oz, with the Q2 figure tracking in line with 2017 guidance of US$890-910/oz.

TAHOE RESOURCES - US$925/oz

The Canadian miner, with gold mines in Peru and Canada, saw AISCs drop from US$973/oz. However, the figure is expected to rise sharply, with the company forecasting US$1,150-1,250/oz for 2017, as capex at the Shahuindo mine in Peru and its Canadian operations ramps up.

ALAMOS GOLD - US$942/oz

Alamos saw AISCs drop from US$1,037/oz, partly due to improvements at its Mulatos mine in Mexico, down to US$777/oz from US$883/oz.

At Mulatos, development of the La Yaqui phase 1 deposit is expected to lower costs next year.

TOREX GOLD - US$991/oz

Torex' El Limón-Guajes mine in Mexico, pictured, its sole producing asset, saw AISCs rise from US$754/oz, with the figure impacted by the timing of shipments and lower grades.

Improvements are expected in H2, with AISCs seen tracking to the higher end of guidance of US$775-825/oz. The ramp-up to full production is ongoing.