• Inflation, labour shortages, Covid and ageing assets are seeing costs climb across the ASX gold sector
  • We pared through ASX quarterlies this month to find some of the industry’s top performers on costs in the September quarter

If you spend any time following mining stocks you’ve probably heard of the term all in sustaining costs.

The measure was devised by the World Gold Council after the GFC in response to concerns investors weren’t getting the full story from gold miners, many of whom were using their own in-house accounting methods and coming up with multi-million dollar losses despite appearing to operate with thick, juicy margins.

The most egregious example was probably Barrick, the world’s second biggest gold miner, which in 2012 reported a US$538 million operating loss despite its margin suggesting it should have been making US$1206 in cash on every ounce.

AISC came in to the equation a year later, just in time for a downturn that ensured efforts to drive down the number were closely watched by investors.

Like the old C1 and C2 reporting methods (the former of which is still commonly used in iron ore) AISC reporting is not without its pitfalls and sophistry.

Many costs a company incurs around a mine can be moved from sustaining expenditure (work to keep a mine operating normally like a plant shutdown) to capital expenditure (work to extend or expand a mine like waste stripping).

But today it is one of the key metrics used by investors to assess how well a company is performing.

Indeed, while Australian dollar gold prices are not too far off all time highs seen in 2020 thanks to a weakening Aussie dollar, the sharp rise in costs means margin pressure is much higher, with the gold industry globally witnessing an 18% year on year AISC rise to an all time high of $US1,289/oz.

In comparison gold was fetching around US$1650/oz yesterday, or around $2560 Australian.


Standing out

In times like these, those companies who can keep their costs down and margins high are going to stand out even more.

In a moment we’ll get to our list of 25 prominent ASX gold producers and how they performed in the September quarter.

There are a couple things to remember.

Profitability is far more closely linked to all in costs than all in sustaining costs. But only a handful of companies, such as big three Northern Star (ASX:NST), Evolution Mining (ASX:EVN) and Newcrest Mining (ASX:NCM), as well as Aeris Resources (ASX:AIS) reported that measure this reporting season.

On that metric, and remembering all in cost doesn’t take in broader financial and administrative costs across the business, margins were pretty slim.

This was at least in part due to front-loaded capital and exploration expenditure, which is often completed early in the financial year. Gold companies have a tendency to run hard for the finish line when it comes time to make guidance and announce some dividends to hook in the shareholders.

A number of companies are also assisted by by-product credits, particularly copper. Newcrest’s Cadia mine and Evolution’s Ernest Henry operate at times with extreme negative costs because the copper sales are reported against the cost of operating the mine rather than revenue.

Other companies may have gold assets, but primarily be copper or base metals producers, like Aeris Resources. For these companies we have either reported just their gold ops (AIS) or included only their reported gold production, which may or may not include copper by-product credits in their AISC (NCM, EVN, AMI, NML).

Some companies also report their costs in US dollars (RSG, NCM, WAF, EMR). These have been adjusted to simplify our list and provide an AISC average.

Without further ado …


ASX gold miners September costs

Scroll or swipe to reveal table. Click headings to sort.

Alkane ALK Tomingley 19,489 $1,191
St Barbara SBM Multiple 63,700 $2,490
Northern Star NST Multiple 369,000 $1,788
Evolution Mining ^ EVN Multiple 161,098 $1,513
Perseus Mining * PRU Multiple 137,460 $1,286
Beacon BCN Jaurdi 7,088 $1,867
Gascoyne GCY Dalgaranga 13,905 $3,135
Ramelius RMS Multiple 61,244 $1,930
Gold Road GOR Gruyere (50%) 83,635 $1,426
Regis RRL Multiple 114,831 $1,782
Newcrest *^ NCM Multiple 527,115 $1,606
Westgold WGX Mutiple 66,048 $2,106
Dacian DCN Mt Morgans 21,525 $1,594
Aurelia ^ AMI Peak/Hera 22,530 $2,643
Resolute * RSG Multiple 90,387 $2,213
Calidus Resources CAI Warrawoona 12,836 N/A
Capricorn Metals CMM Karlawinda 31,005 $1,166
West African Resources * WAF Sanbrado 49,396 $1,751
Silver Lake Resources SLR Multiple 59,935 $2,052
Aeris ^ AIS Cracow 10,100 $2,558
Navarre ^ NML Mt Carlton 5,113 $3,539
Kaiser Reef ∆ KAU A1 3,512 $1,333
Emerald * EMR Okvau 23,217 $1,205
Red 5 RED King of the Hills 26,710 N/A
Ora Banda OBM Davyhurst 13,661 $2,914
Ten Sixty Four * X64 Co-O 20,047 $2,329
AVERAGE $1,965
*Originally reported in USD
^ Copper producer
∆ Cash costs only
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Your top five cost leaders for the September quarter

Before we start let’s clarify something. Lower numbers are better. OK? Good stuff.


1) Capricorn Metals (ASX:CMM)

Capricorn Metals was once a takeover target for Regis Resources (ASX:RRL), a respected mid-tier WA gold miner known for generating low cost ounces from ultra low grade open pits.

Now Capricorn, whose management team is headed by former Regis boss Mark Clark, is worth more than its one-time suitor, having acquired the qualities its new executive chairman instilled in his former home.

One very serious negative of this reporting season was the death of a MACA contractor in an accident at its Karlawinda gold mine, which occurred after the quarter ended on October 13.

Operationally, Capricorn had been hitting its straps, with its production of 31,005oz at AISC of $1166/oz projecting at the top of end of FY23 production guidance (115,000-125,000oz) and bottom end of cost guidance ($1160-1260/oz).

It comes after Karlawinda helped CMM deliver a maiden profit after tax of $89.5m in FY22, its first year of operations, with cashflow from the mine of $38.5m in the September quarter, up from $38.1m in the June quarter.


Capricorn Metals (ASX:CMM) share price today:




2) Alkane Resources (ASX:ALK)

Alkane Resources is the smallest operator on this list, with FY23 guidance for its Tomingley mine, around 50km southwest of Dubbo in New South Wales, of 55,000-60,000oz at $1650-1900/oz.

It knocked the first quarter out of the park, producing 19,489oz (around a third of full year guidance) in just three months at cash costs of $1095/oz and AISC of $1191/oz, with 18,344oz of gold sales generating $46.7m in revenue at an average sale price of $2547/oz.

Alkane, one of the oldest mining companies on the ASX with a history stretching back over 50 years, has $124.6m in cash, bullion and listed investments and is looking to leverage its success at Tomingley to develop the large Boda and Kaiser porphyry gold and copper deposits.

ALK has lost around a fifth of its value this year in line with broader negative sentiment in the gold sector, but also exceeded guidance in FY2022, producing 66,883oz at $1460/oz.


Alkane Resources (ASX:ALK) share price today:




3) Emerald Resources (ASX:EMR)

Chaired by well-known WA resources investor Simon Lee, a backer of Mark Clark’s Equigold known for selling the Lihir gold mine in PNG to Newcrest, Emerald has been chasing bullion in an even more unusual jurisdiction.

It owns the Okvau gold mine in Cambodia, where it is a first mover, with the $120 million mine opened in 2021 considered the first commercial gold mining operation in the South East Asian country.

So far it has been a winner, delivering over 100,000oz in its first full year of operation in FY22, including commissioning.

After official commercial production of 88,171oz at US$754/oz in 2022, the September quarter was a reasonably strong start, with 23,217oz produced despite a SAG mill gearbox failure and what the miner called a “99th percentile” wet season.

That saw costs finish slightly above its US$740-810/oz forecast at US$824/oz.

The company, which also took majority control of WA gold explorer Bullseye Mining this year, has maintained FY23 forecasts of US$740-810/oz AISC and production of 25-30,000oz per quarter.

Emerald’s cash and bullion position of $60.9m at September 30 was roughly in line with its June 30 number of $58.8m, with US$52m of its debt remaining after US$13m in repayments in the September term.


Emerald Resources (ASX:EMR) share price today:



4) Perseus Mining (ASX:PRU)

Perseus Mining is the rising star of the Australian gold sector, and it’s done it all from the unfashionable climes of West Africa.

Described by our intrepid deputy ed Reuben Adams as “consistent” and “can-do-no-wrong”, PRU is on track to achieve its 240,000-265,000oz guidance for the December half year after lifting output 12% to a record 137,460oz in September.

Its AISC fell 12% too to US$879/oz, far below its US$1000-1100/oz market guidance, and below costs from the same period in 2021.

But mines age and not all companies in this sweet spot keep the hot hand forever. Fellow West African specialist Resolute Mining (ASX:RSG) once performed with a similar level of grace before it ran into operational troubles a few years ago, becoming something of a pariah in the large and mid cap gold space.

Perseus is spreading its wings though. Already on track to produce at a 500,000ozpa rate from its Yaoure and Sissingue mines in Cote d’Ivoire and Edikan in Ghana, the gold miner bought out Canada’s Orca Gold earlier this year to add the Block 14 project to its portfolio, a frontier asset on Sudan’s northern border with Egypt.


Perseus Mining (ASX:PRU) share price today:



5) Gold Road Resources (ASX:GOR)

Gold Road Resources is one of the ASX’s great success stories.

Having made the Gruyere discovery in 2013 the one time tiddler is now one of the ASX’s largest dividend paying gold companies by market cap.

That find in the remote Yamarna gold field, 200km east of Laverton, is now owned 50-50 between GOR and South African JV partner Gold Fields, one of the world’s biggest gold producers.

It remains on track to produce between 300,000 and 340,000oz at $1270-1470/oz in calendar 2022, after the JV delivered 83,635oz at $1426/oz in the September quarter.

That is a big jump from 85,676oz at $1250/oz in the June quarter, with increased spending on capitalised waste stripping, processing, sustaining capital and the slight drop in production blamed.

Gold Road and Gold Fields are much better off than they were late last year and early this year, with issues with its processing plant and lower head grades seeing lower gold production and higher costs of $1526/oz in the December and March quarters.

GOR is now a hunter in its own right, having built a ~20% stake in the owner of the next grade WA gold discovery, De Grey Mining (ASX:DEG), and its Hemi project.

Hemi and the broader Mallina gold project near Port Hedland will produce 540,000ozpa over its first decade at an average all in sustaining cost of $1220/oz according to a recent PFS.

But Gruyere’s DFS from 2016 is an example of how inflation can make fools of us all. Its 13-year life of mine AISC (albeit in a far lower gold price environment) was estimated originally at just $945/oz.


Gold Road Resources (ASX:GOR) share price today: