Producers strive to keep costs low

Averaging costs in 1986 at 147 primary gold mines, Mine Development Bimonthly calculates that 50% of the gold cost less that $200(US) per oz to produce, with 75% of the gold produced at or under $230.

The 147 mines produced a total of 27.8 million oz gold in 1986, with the market price of the precious metal averaging $368 that year. (The publication does not include depreciation, amortization, depletion or interest in its cost figures.)

The publication found 10% of the gold was produced at $125 or less. Lowest cost producer was Sumitomo’s Hishikari mine in Japan, where early in the year costs were said to be $20-to-$30. Hishikari’s output for the year was estimated at 170,000 oz. Second low- cost producer was Amax’s Sleeper open-pit, carbon-in-pulp operation in Nevada, where gold output totalled 128,000 oz last year at a cost of $59.

Also falling into the low-cost group were Total Erickson’s underground mine near Cassiar, B.C., where the cost was $96; Barrack/ Eastern Petroleum’s Horseshoe Lights open-pit mine in western Australia, at $105; Hemlo Gold’s Golden Giant mine in northern Ontario, at $109; and Gold Field’s Kloof mine in South Africa, at $112.

At the other end of the scale, 10% of the gold cost more than $300 to produce. Three mines had cash costs topping $350: Rand Mine’s East Rand Proprietary Mines in South Africa, at $410; St. Joe’s Yuba Placer mine in California, at $362; and Pamour’s Schumacher operation (now operated by Giant Yellowknife) in northern Ontario, at $356.

With somewhat lower costs but still at the high-cost end were Lac Minerals’ Bousquet mine in northwestern Quebec, at $329, and the Valdez Creek placer joint-venture operation in Alaska, at $324.

Average production cost for the 147 mines was $210. Australia leads way

The publication divided its cost data (most of which came from four western gold-producing nations) according to countries, and found Australia, with 33 of its mines represented, had the lowest average costs, at $197. Output from the 33 mines, most of which are open pit, totalled 2.1 million oz in 1986.

Second low-cost producing nation was the U.S., with the cost for 38 mines averaging $200. Most of the operations are open pit; the 38 mines produced 3.4 million oz last year.

In Canada, where most of the mines are underground, the average cost for 32 mines, whose output last year totalled 2.7 million oz, was $213.

The largest gold-producing nation in the world, South Africa, experienced a production cost of $231 (which, if anything, is expected to rise in future years). Total production last year from the 36 (mostly underground) mines represented was 18.1 million oz.