Gold Mining Companies Post Record Margins Despite Rising Costs
The World Gold Council (WGC) released its report on gold mining costs for Q1'26, showing that surging gold prices led to record margins despite rising costs. Global average gold producer All-In Sustaining Costs (AISC) rose by 16% year-on-year to $1,785 per ounce, marking the 28th consecutive year-on-year increase in AISC.
The primary cost driver for the quarter was escalating royalty payments, which surged by 24% quarter-on-quarter and 85% year-on-year. This led to royalty payments doubling their share from approximately 6% of AISC in Q1'21 to 12% of the average operation's cost base in Q1'26.
Fiscal regime changes and growing resource nationalism in West Africa also contributed to cost burdens. Ghana introduced a sliding scale royalty system in March, while Burkina Faso and Mali implemented higher rates in previous years. As a result, royalty expenses surged by 220% year-on-year at IAMGOLD's Essakane mine in Burkina Faso.
Despite these cost increases, average gold prices rose by 17% quarter-on-quarter and 70% year-on-year. This drove average AISC margins up by 25% quarter-on-quarter and 134% year-on-year to a record $3,076 per ounce.