Surging Gold Prices Fuel Record Margins for Mining Companies
Gold mining companies saw record margins in Q1'26 despite rising costs, thanks to surging gold prices. The World Gold Council reported that global average All-In Sustaining Costs (AISC) rose by 5% quarter-on-quarter and 16% year-on-year to $1,785 per ounce.
The primary cost driver was escalating royalty payments, which surged by 24% quarter-on-quarter and 85% year-on-year. This led to a doubling of 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 increased costs. Ghana introduced a sliding scale royalty system in March, reaching up to 12% for prices above $4,500 per ounce.
Despite these cost increases, average gold prices rose by 17% quarter-on-quarter and 70% year-on-year, driving AISC margins up by 25% quarter-on-quarter and 134% year-on-year to a record $3,076 per ounce.