According to a number of gold company CEO’s it costs about $1,200 to pull an ounce of gold out of the ground.
CAPE TOWN – For the gold industry to keep its nose above water and maintain the current production base, gold prices need to stay above $1,650 an ounce.
Speaking to Mineweb from the sidelines of the 2012 African Mining Indaba conference, AngloGold Ashanti CEO, Mark Cutifani, said, at a price of $1,650 per ounce, gold miners are “only just returning the weighted average cost of capital for the industry”.
This is the number that gold miners need to work from on a real basis he says, but added, “The average cost to produce an ounce of gold, all up, everything loaded in, is about $1,200 to $1,250.
Harmony Gold CEO, Graham Briggs, agrees with Cutifani saying, from Harmony’s perspective, the all-in cost to pull an ounce of gold out of the ground is around $1,250. This figure includes everything from the cost of the Harmony head office to maintenance and its exploration programme which is why it is higher than the $958/oz cash operating cost figure reported by the miner at its half year results on Monday.
Briggs added, “Of course there are other costs as well that would need to be added in over and above these so Mark [Cutifani] is probably fairly spot on with his calculations.”
Similar figures cropped up in a conversation with IAMGold CEO, Steve Letwin, who told Mineweb, that a floor has developed in and around the $1,400 – $1,450 level as a result of increased costs across the industry.
“I think you hit peak gold three or four years ago. You cannot find the large deposits any more. Most of it being lower grade and in more remote locations, so it’s going to be difficult for anybody to produce gold at less than $1,200/oz in terms of new discoveries,” he said.
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