The latest round of June quarterly updates has been a mixed bag for Australia’s biggest and best ASX-listed gold miners.
Of particular concern to investors is how companies stack up when it comes to costs, as measured by All-In Sustaining Costs (AISCs) per ounce. These costs can be compared to a company’s average received price of gold to estimate the margin a gold miner is making.
The standout performer for the June quarter was gold titan Newcrest Mining Limited (ASX: NCM). Newcrest was helped by its significant growth in production which drives economies of scale. The big miner’s low AISCs suggest it will produce a sizable operating margin compared to other miners.
Rocketing into second place is current investor darling Northern Star Resources Ltd (ASX: NST) which also reduced costs on higher production after the well timed purchase of new mines. Northern Star is now the second-largest ASX-listed gold miner (by production) and pulled in $161.6 million in revenue for the quarter.
|AISC March Quarter 2014 (A$)||AISC June Quarter 2014 (A$)||% Change||Average gold price received (A$)|
|Newcrest Mining Limited (NCM)||$988||$913||-7.6%||$1,382|
|Northern Star Resources Limited (NST)||$1,167||$1,032||-11.5%||$1,395|
|Evolution Mining Limited (EVN)||$1,079||$1,057||-2%||$1,422|
|Kingsgate Consolidated Limited (KCN)||$1,209¹||$1,101²||+9%||$1,388³|
|Doray Minerals Limited(DRM)||$1,078||$1,181||+9.5%||$1,504|
|Beadell Resources Limited(BDR)||$932⁴||$1,273⁵||+36.6%||$1,390⁶|
|Silver Lake Resources Limited (SLR)||$1,266⁷||$1,397⁷||+14%||$1,435|
Source: Company quarterly reports.
Notes: ¹US$1,126, ²US$1,026, ³US$1,293, ⁴US$868, ⁵US$1,190, ⁶US$1,295, ⁷SLR Mount Monger Operations only – accounts for 83.5% of production
Bottom of the list is former star performer Silver Lake Resources Limited. (ASX: SLR). The company has been plagued with high costs since the price of gold started falling and has put its Murchison Gold Operations in care and maintenance while it rides out the storm.
Silver Lake’s AISCs, which include a non-cash value for ore movements, were only $38 above the average price of gold received for the quarter.
Beadell Resources Limited (ASX: BDR) also struggled with costs over the quarter which spiked as a result of lower production. Beadell was one of the lowest cost producers in the previous March quarter, but above average rainfall hampered production which fell 14% pushing up the average costs per ounce.
Beadell expects to be back on track for the second half of the year and is forecasting full-year AISCs of between $864 – $918 (US$805 – US$855) per oz which could push it to the top of the table.
Although the quarterly updates represent just a snapshot, they are crucial for investors evaluating the risks or prospects for each company. It is disappointing then that Regis Resources Limited (ASX: RRL) cannot be included on the list because the company did not report costs on an AISC basis.
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Returns as of 6th October 2020
Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.