The cost of building a goldmine has increased significantly over the past decade, from US$560/oz to more than $2,300/oz last year
The cost of building a goldmine has increased significantly over the past decade, from US$560/oz to more than $2,300/oz last year. These estimates come from a new report by SNL Metals & Mining, which show that capital costs are expected to peak this year at almost $2,400/oz. SNL has also observed the cost of operating a mine also increased over the last 10 years. Weighted-average annual cash costs increased about 190% from less than US$250/oz in 2004 to a peak of US$708/oz in 2012, before pulling black slightly to US$702/oz in 2013, said the report. This of course doesn't take into account the total production cost, which is estimated at an average of more than $1,000/oz for the industry. Rising costs mean a strong gold price is needed in order to ensure supply. (VIEW LINK)
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Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).
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