Gold Mines And Costs

A Mineweb article by Barry Sergeant goes through the universe of major gold producers and points out that they haven't been doing all that well compared to gold when prices fell. This disappointment is in contrast to tepid rises in the long term when gold was up. In the middle of the article, he attributes the underperformance to rising costs:

Benefits from the longer term increase in the dollar gold price have been whittled away by rising capital expenditure costs, at existing operations (stay-in-business capital expenditure), and at new mines, where build decisions have sometimes been based on mineral economic feasibility studies that no longer look so robust. Costs have a nasty habit of rising, and then not receding to previous levels, and then rising again.

I made a similar point earlier in "Where's The Leverage?", but my hunch on the source of the cost pressure was wrong. As Segeant said, ballooning capital costs are to blame.