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Top gold miners book higher all-in sustaining costs in Q2'20


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Top gold miners book higher all-in sustaining costs in Q2'20

The top gold miners saw all-in sustaining costs climb in the second quarter amid mine shutdowns related to COVID-19, according to an S&P Global Market Intelligence analysis of 15 large gold producers.

Costs rose for nine of the analyzed gold miners in the second quarter, and the weighted-average mean increased 2.5% to US$987 per ounce of gold across the group. The group comprised producers with more than 500,000 ounces of attributable gold production in 2019.

Centerra Gold Inc. saw the biggest increase in all-in sustaining costs, up 12.9% to US$804/oz, according to the analysis. Evolution Mining Ltd. and Yamana Gold Inc. followed, up 9.7% and 9.0%, respectively, to US$716/oz and US$1,125/oz.

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In the second quarter, Canadian miner Centerra Gold reported that its Oksut gold mine in Turkey reached commercial production, while its Kumtor gold mine in Kyrgyzstan drove most of its US$268.1 million in cash flow from operations. The company also increased its dividend 25% to 5 Canadian cents per share, citing higher gold prices and growing profits.

Evolution Mining, an Australian company, reported that COVID-19 did not have a material impact on its mining operations, though its gold output decreased from 753,001 ounces in fiscal 2019 to 746,463 ounces in fiscal 2020. It also guided for shrinking fiscal 2021 production with a forecast range of 670,000 to 730,000 ounces.

Meanwhile, Yamana Gold held to annual production guidance of 890,000 ounces of gold equivalent and raised its dividend 12% to 7 U.S. cents per share.

Among the analyzed gold miners, Iamgold Corp. booked the highest all-in sustaining costs at US$1,189/oz, followed by Agnico Eagle Mines Ltd. at US$1,142/oz and Yamana at US$1,125/oz.

In early August, Iamgold cut its guidance for attributable 2020 gold production to between 645,000 and 700,000 ounces after a production halt related to COVID-19 at its Rosebel gold mine in Suriname.

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The miners with the lowest costs in the analysis were B2Gold Corp., Evolution Mining and Kirkland Lake Gold Ltd. with all-in sustaining costs of US$712/oz, US$716/oz and US$751/oz, respectively.

Six of the analyzed gold miners reported falling all-in sustaining costs for the second quarter. Australia-based miner Northern Star Resources Ltd.'s costs dropped 7.3% to US$970/oz, while Iamgold's costs fell 3.3% and Kirkland Lake's costs decreased 3.2%.

After the second quarter, B2Gold maintained its 2020 production guidance of between 1.0 million and 1.06 million ounces at an unchanged all-in sustaining cost outlook of US$780/oz to US$820/oz. Similar to other large gold miners, B2Gold raised its quarterly dividend to 4 U.S. cents per share from 2 cents per share.

According to the analysis, B2Gold, Evolution Mining and Kirkland Lake Gold had the biggest profit margins in the quarter at 58.6%, 56.5% and 56.2%, respectively. The weighted-average mean realized gold price among the 15 gold miners in the second quarter was US$1,567/oz.