Most gold companies have ample flexibility to weather a slump in gold prices. Debt has been reduced to levels that are manageable at lower gold prices and many companies have no net debt. The average all-in mining cost for the majors and mid-tiers is around $835 per ounce. Mining costs exclude exploration, capital projects, and other administrative costs.
All-in Mine Costs for Seniors & Mid-Tiers (Estimates for Industry)
Source: VanEck; Company Reports. Data as of May 2018.
At the $1,100 level we would expect companies to trim discretionary expenses and postpone new mine development. Approximately 10% of global production has all-in mining costs above $1,100 per ounce; therefore, there could be a few high-cost mines that consider curtailed production or closure.
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