Gold mining companies are doing a better job of controlling costs in this cycle than we have ever seen. The chart below of all-in sustaining costs shows how costs have risen and fallen with the gold price historically. Notice how costs have remained around $1,000 as the gold price rose to over $2,000 in 2020. Scotia estimates a small decline in costs through 2023.
Gold Industry Costs 1970 – 2023e
While a major contributor to containing costs has been the adoption of new technologies, they have also been contained because companies are more focused on operational efficiency and less obsessed with growth.
Building mines is fraught with risks, so companies no longer attempt to build multiple mines at once. In this cycle we are seeing companies sequence developments in order to achieve a manageable pace and avoid costly mistakes. More capital is also being used to fund lower risk brownfield projects that typically carry higher returns than new developments.
MVIS Global Junior Gold Miners Index
30/04/2020-30/04/2021
Source: MV Index Solutions. Data as of 30 April 2021.
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