Research — July 28, 2026
Gold Mine Feasibility Studies: Analyzing the Discipline of Through-the-Cycle Pricing
By Jason Holden
What is the current relationship between gold price assumptions in feasibility studies and spot prices?
Development-stage gold companies are currently embedding a massive discount in their feasibility studies, with price assumptions lagging significantly behind the high prevailing spot prices. This discipline of "through-the-cycle" pricing means that if current gold prices hold, the actual net present values and internal rates of return for these projects will vastly outperform the base-case scenarios presented in the studies, representing a substantial cushion of unaccounted value.
Why is this pricing gap significant for the gold industry now?
The gap between study assumptions and spot prices is particularly significant now because the recent surge in gold prices has created the largest single-year divergence in the dataset. Studies published in 2026 used price assumptions 39% below the year-to-date average spot price. This indicates the industry's historical discipline of using conservative, long-term price forecasts is creating a substantial difference between reported project economics and the value implied by current market conditions.
What are the key insights from the analysis of gold feasibility studies?
- Significant Unaccounted Value: Development-stage gold companies have a massive discount embedded in current studies, with 2026 price assumptions running 39% below the year-to-date average spot price.
- Historical Conservatism: During the 2004–2012 bull market, feasibility study assumptions consistently ran 10%-27% below the spot price, demonstrating the industry's long-standing "through-the-cycle" pricing discipline.
- Price Convergence in Troughs: After the gold price peaked in 2011 and declined, study assumptions and spot prices converged, with assumptions even exceeding spot prices modestly in 2015 and 2016, indicating a reluctance to embed cycle lows into long-term project economics.
- Recent Widening Gap: The gold price surge from 2020 onward has led to a renewed and significant divergence, with the gap between study assumptions and spot prices widening to its largest point in the analyzed period.
- Influence of Study Type: The analysis is influenced by a high volume of preliminary economic assessments (PEAs), which tend to use more optimistic assumptions than the more conservative full feasibility studies that underpin financing decisions.
What does this analysis of gold feasibility studies examine?
This is the second article in a three-part series examining base-case commodity price assumptions used in mining feasibility studies versus prevailing spot prices. The analysis draws on 1,773 base-case gold price assumptions from studies published between 1998 and 2026, benchmarked against the London Bullion Market Association (LBMA) annual average gold prices. It examines the consistency and limits of the gold industry's through-the-cycle pricing discipline. Part one of the series covered copper, while part three will cover lithium.
- Development-stage gold companies have a massive discount embedded in current studies, representing a substantial cushion of unaccounted value.
- If current gold prices hold, the actual project net present values and internal rates of return will vastly outperform the base cases presented in current feasibility literature.
- Early-stage preliminary economic assessments, which are more optimistic, dominate study volumes. Therefore, the aggregate average study price ($2,946 per ounce in 2026) is higher than it would be if adjusted solely for full feasibility studies.
How does the mix of study types influence the analysis?
The gold dataset is the largest of the three commodities analyzed, reflecting gold mining's position as the most active commodity segment of the global mining industry, both in the number of active projects and in the size of exploration budgets. In this analysis, 675 (38%) of the studies are preliminary economic assessments (PEAs), 308 (17%) are prefeasibility studies, 515 (29%) are full feasibility studies and 275 (16%) are mine plans. Compared to copper, the relatively high proportion of full feasibility studies reflects gold's greater capital market maturity and the volume of gold projects that have advanced to the bankable study stage. This factor affects interpretation because the study type mix affects price assumption behavior. PEAs, often produced by junior companies seeking to demonstrate project attractiveness, can embed more optimistic assumptions. Meanwhile, full feasibility studies, which underpin financing decisions, tend to be more conservative.
2004–12 bull market: Refusing to chase the rally
Gold feasibility study assumptions during the 2004–2012 bull market display the clearest and most consistent pattern in the dataset: They ran 10%-27% below the spot price for nine consecutive years. In 2007, when the LBMA spot price averaged $697/oz, study assumptions averaged $529/oz — a 24% discount. By 2011, at the height of the bull market with the spot price at $1,572/oz, assumptions had risen to $1,154/oz, but the discount had deepened to 27%. This is the gold industry's through-the-cycle pricing discipline in action. Rather than anchoring to the prevailing spot price, companies applied long-run price assumptions that reflected where they expected gold to trade over the life of a multidecade mine. The approach is rational — a mine sanctioned on $1,572/oz gold that subsequently faced a correction to $1,160/oz would have been under pressure — but it also meant that study economics published during the bull market consistently understated project value at prevailing prices.
2013–19: Recalibration and a quiet vote for recovery
After gold peaked in 2011 and entered a multiyear decline toward $1,160/oz by 2015, assumptions and spot price converged rapidly. By 2013, the gap had essentially closed, and from then to 2019, assumptions tracked within 5% of the spot price in either direction. A modest period of above-spot assumptions emerged in 2015 and 2016, when study averages of $1,253/oz and $1,294/oz were 8% and 4% above a declining spot price, respectively, indicating companies were pricing in a degree of recovery. This mirror image of the bull-market discount — a slight premium during troughs — is consistent across all three commodities in this series and reflects the reluctance to embed cycle lows into the economics of projects with productive lives extending well beyond the current price environment.
2020 onward: COVID-19 surge, convergence and the current divergence
The gold price surge of 2020 triggered a fresh round of conservatism. Assumptions lagged spot price by 17% in 2020, falling to 6% and 9% in 2021 and 2022, respectively. By 2023 and 2024, the gap had closed again almost entirely: Study assumptions sat within $1/oz of actual annual average spot prices in both years, an exceptional degree of alignment that had not been seen during any prior rising-price period. The most recent data is where the story becomes most significant. As gold surged to an annual average of $3,444/oz in 2025 and has averaged $4,817/oz in the year to date in 2026, study assumptions have not kept pace. Studies published in 2025 used average assumptions of $2,513/oz, 27% below spot price, and 2026 studies have used $2,946/oz, 39% below a market that has moved to an entirely new price level. This is the largest single-year divergence in the gold dataset and suggests that the through-the-cycle discipline that served the industry well during the 2004–12 cycle is once again creating a substantial gap between reported project economics and the value implied by current market prices.
What is the investment implication of the pricing gap in gold studies?
Across the dataset, full feasibility studies tend to use more conservative assumptions than PEAs in bull markets, consistent with the greater scrutiny applied to bankable documents. In the current environment, where PEAs are driving much of the study volume for early-stage gold projects, the mix effect modestly elevates the aggregate average assumption. The directional conclusion is unchanged, however: Industry assumptions remain well below prevailing spot prices. For investors evaluating gold project economics today, the conservatism embedded in feasibility studies represents a significant upside, provided current price levels are sustained.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
How does S&P Capital IQ Pro support analysis of mining project economics?
S&P Capital IQ Pro provides the comprehensive data and analytics essential for navigating the complexities of mining project evaluation discussed in this analysis. The research, which draws on 1,773 base-case gold price assumptions from studies published between 1998 and 2026, showcases the depth of historical data, sourced from Capital IQ Pro. Clients can leverage these extensive datasets to benchmark company-disclosed price assumptions against historical and prevailing spot prices, just as demonstrated in this article's examination of the gold market. Our tools allow users to differentiate between study types—from preliminary economic assessments (PEAs) to bankable feasibility studies—to understand how the study mix affects aggregate price assumptions and project valuations. This enables a more nuanced assessment of project economics and the potential upside hidden by conservative "through-the-cycle" pricing.
Questions About Gold Feasibility Study Price Assumptions
Explore how gold feasibility studies use price assumptions far below spot prices, creating a cushion of unaccounted value.
What is 'through-the-cycle' pricing discipline in gold mining?
"Through-the-cycle" pricing discipline is the practice where mining companies use long-run price assumptions in feasibility studies rather than anchoring to the prevailing spot price. As seen in the 2004-2012 bull market, this often results in study assumptions being set well below high spot prices, reflecting an expectation of where gold will trade over a mine's multidecade life.
How did gold price assumptions behave during the 2004-2012 bull market?
During the 2004-2012 gold bull market, feasibility study assumptions consistently ran below the spot price for nine consecutive years, with the discount ranging from 10% to 27%. For example, in 2011, when the spot price was $1,572/oz, the average study assumption was $1,154/oz, a 27% discount.
How do different types of feasibility studies affect price assumptions?
The type of study significantly affects price assumptions, as preliminary economic assessments (PEAs) tend to embed more optimistic assumptions to demonstrate project attractiveness. In contrast, full feasibility studies, which are used for financing decisions, are typically more conservative. The current high volume of PEAs modestly elevates the aggregate average price assumption.
What is the current gap between study price assumptions and the spot gold price?
The current gap is the largest single-year divergence in the dataset. Studies published in 2026 have used an average price assumption of $2,946/oz, which is 39% below the year-to-date average spot price of $4,817/oz. This has created a substantial gap between reported project economics and the value implied by current market prices.
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