Gold loses some luster after Trump’s decisive win
Gold’s slide is a marked turnaround for a commodity that had surged by more than 30% in the year leading up to the US vote.
The price of gold broke a three-year losing streak in 2016, but the focus of the world’s top gold mining companies in terms of output continued to be on cost-cutting and divestment (with varying degrees of success) which led to a decline in production for most of the sector’s majors.
Preliminary gold production by the top 10 publicly-traded, non state-owned gold mining companies compiled by MINING.com sister company IntelligenceMine totalled 29.46 Moz in 2016. That represents a 4% decrease compared to 2015, but still makes up a significant proportion of overall global production of some 100 million ounces a year. Fewer discoveries, lower grades and difficult economics and regulatory environment in many countries are expected to result in fall in global production in 2017 for the first time in more than a decade.
Most of the companies in the top rankings achieved savings per ounce of gold mine, but all-in costs (AISC – a measure that captures direct operating costs, corporate and exploration expenditure and capital investment required to sustain the business) have stayed stubbornly high for many of the top producers as the positive effects of lower energy costs and currency weakness against the dollar diminishes.
The top 10 list stayed the same compared to 2015, but there are a few companies knocking on the door notably Canada’s Yamana Gold which produced just short of 1.3 Moz of gold in 2016 and is closely followed by Africa-focused Randgold Resources.
Cortez – Barrick Gold
With 5.52 Moz of gold produced in 2016, Canada’s Barrick Gold Corp. (TSE:ABX) holds first place in global ranking, well ahead of its competitors.
Compared to 2015’s 6.12 Moz, Barrick’s gold output dropped by 9%, mainly because of the Toronto-based company’s asset sales including the Bald and Round Mountain mines in January 2016 to number 5 on the list Kinross Gold. Barrick also reduced its equity interests in the Porgera mine in Papua New Guinea in the third quarter 2015.
Barrick’s focus on cost-cutting and restructuring of its portfolio paid off in a big way – the company managed to reduce its all-in sustaining costs (AISC) by 12%, from $831 in 2015 to $730 in 2016.
Newmont’s Carlin mine in Nevada. Image: Newmont Mining
US-based Newmont Mining Corporation (NYSE:NEM) stays at number two, but closed the gap substantially producing 4.9 Moz of the precious metal in 2016, 6% more than in 2015 (4.6 Moz). T
his growth was supported by new production from Merian and Long Canyon; a full year of production at Cripple Creek & Victor and Carlin’s Turf Vent Shaft; and productivity improvements at Kalgoorlie. These ounces offset the impacs of declining production at Yanacocha and geotechnical issues at Carlin.
The Denver-based company reduced its all-in sustaining costs (AISC) by 2%, from $933 in 2015 to $912 in 2016.
AngloGold Ashanti’s Moab Khotsong mine 180km from Johannesburg, South Africa. Image: AngloGold Ashanti
AngloGold Ashanti Limited (NYSE:AU), reported 8% decrease in annual production, from 3.95 Moz of gold in 2015 to 3.63 Moz in 2016.
Production was impacted by safety-related stoppages at its South African mines; lower grades from Kibali in H1 2016; a planned decrease in head grades at Geita and Tropicana; and Obuasi having been on care and maintenance for 2016.
Johannesburg-based AngloGold’s AISC jumped 8%, from $910 in 2015 to $986 in 2016.
Cerro Negro mine southern Argentina. Image: Goldcorp
Goldcorp Inc. (TSE:G) produced 2.87 Moz of gold in 2016, down 17% compared to 2015 (3.46 Moz). The sharp drop was due to work stoppages at some of its biggest mines Cerro Negro (Argentina) and lower ore grade as well as lower throughput due to harder ore types processed at Penasquito (Mexico) mines.
Vancouver-based Goldcorp reduced AISC by 4%, from $894 in 2015 to $856 in 2016. The decrease in AISC was primarily due to lower production costs and the favourable impact of the strengthening US dollar against the Argentine and Mexican pesos.
Water sampling at Tasiast mine. (Image courtesy of Kinross Gold)
Another Canadian company Kinross Gold Corporation (TSE:K), achieved fifth place in terms of output, producing 2.79 Moz of gold equivalent in 2016, 8% higher than in 2015 (2.59 Moz).
Increase in production was mainly a result of the acquisition of Bald Mountain and the 50% of Round Mountain mines from Barrick. Kinross’s AISC in 2016 was $984 or 1% higher than in 2015 ($975).
In 2017 Kinross expects to produce 2.5–2.7 million Au eq. oz. at a production cost of sales per Au eq. oz. of $660 – $720 and an all-in sustaining cost per of $925–$1,025.
Cadia is crushing it when it comes to keeping costs low
Sixth in the ratings, Australia’s Newcrest Mining Limited (ASX:NCM), produced 2.46 Moz of gold in 2016 calendar year, which is approximately 1% lower than 2015 output (2.49 Moz).
The Melbourne-based company managed to keep AISC on the same level as in 2015 and boast the lowest cost mine anywhere in the world. Its Cadia Valley operations in Western Australia pump out gold at a cost of less than $300 per ounce and have been doing so for years.
Crushed ore stock pile at Damang Gold mine in Ghana. (Image courtesy of Gold Fields)
South African Gold Fields Limited (NYSE:GFI) produced 2.15 Moz of gold equivalent in 2016, which is slightly lower than 2015 production volume (2.16 Moz).
Like fellow South African miner Sibanye, Gold Fields managed to reduce its AISC to triple digits, from $1,007 in 2015 to $980 in 2016.
Verninskoye. Image: Polyus Gold
Russia’s Polyus Gold (MCX: PLZL) produced 1.97 Moz of gold in 2016, a 12% increase from its 2015 tally of 1.76 Moz. Polyus Gold’s AISC/oz demonstrated a 4% y-o-y decline to $572/oz in 2016.
Strong operational performance, efficiency improvement initiatives and Russian rouble devaluation continued to support the Moscow company’s cost profile as it ramps up to a goal of 2m ounces per year.
Agnico Eagle’s Meadowbank open-pit gold mine in the Nunavut Territory of Canada. Image: Jason Pineau
Canadian Agnico Eagle Mines Ltd (TSE:AEM) gold output decreased insignificantly, from 1.67 Moz in 2015, to 1.66 Moz in 2016. Agnico Eagle’s reported by-product AISC was $824 in 2016 or 2% higher than AISC in 2015 ($810).
Agnico Eagle is on an aggressive growth path with gold production expected to increase from current levels to 2.0 million ounces in 2020 after the Toronto-based company’s board recently approved expansion of its Meadowbank mine in Nunavut, Canada and a new project called Meliadine in the same territory.
Sibanye’s Kloof gold mine, 60 to 70 km west of Johannesburg, South Africa (Image courtesy of Sibanye Gold)
South Africa’s Sibanye Gold Limited (JSE: SGL & NYSE: SBGL), which split from Gold Fields in February 2013, held onto its no. 10 position despite a modest loss of ounces.
The Johannesburg-based company which is also a major platinum, palladium miner producing 1.51 Moz of gold, or 1% less than in 2015 (1.54 Moz).
Sibanye slashed AISC by 7%, from $1,030 in 2015 to $954 in 2016.
*All-in sustaining cost is a measure that captures direct operating costs, corporate and exploration expenditure and capital investment required to sustain the business.
**Estimated
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