Mines' Cash Costs Hit Record High

As reported on in Mineweb, global cash costs are rising; as of the first quarter of this year, they were at a new record high.

According to the report, "the average cash cost of gold mine production was $544/oz in Q1 10, the highest average cash cost yet in our data series, and $29/oz higher than the previous high last quarter."

The report shows that over the past 12 months average cash costs have risen 20%, or $91/oz, from $453/oz in Q1 09. And, while this is comfortably below an average gold price for the period of $1,109 an ounce, the range between the low and high cost producers has grown. And, for the first time since Q2 2009, the spread between the two has narrowed....

Part of the reason for the jump in costs is the report explains is the type of data collected. The report is based on 226 gold mines (for the period Q1 10), which collectively produced 10.8 Moz of gold.

This, the report says, is higher than the measured costed production in Q1 09 of 10.3 Moz, but lower than that seen in Q4 09 of 11.6 Moz.

Cash costs are, of course, only one component of overall costs. They rising suggests that the ore being brought into production is more expensive than the ore already mined, although a rise in ancillary costs could have contributed to the jump.