ASX listed gold miners have been making big margins in the first three months of 2015, but some companies have stood out above the rest, especially when it comes to low All-In Sustaining Costs (AISC).
Low cost producers should be at the top of the list when considering investing in commodities like gold and the top three low cost producers for the recent March quarter were St Barbara Ltd (ASX: SBM), Resolute Mining Limited (ASX: RSG) and Newcrest Mining Limited (ASX: NCM).
| Gold Miner | AISC per oz March 2015 Qtr | AISC per oz Dec 2014 Qtr | % Change |
| St Barbara Ltd (ASX: SBM) | $798 | $1,042 | -23% |
| Resolute Mining Limited (ASX: RSG) | $918 | $1,134 | -19% |
| Newcrest Mining Limited (ASX: NCM) | $946 | $963 | -2% |
| Evolution FPO (ASX: EVN) | $1,024 | $990 | 3% |
| Northern Star Resources Ltd (ASX: NST) | $1,172 | $1,073 | 9% |
Source: Compiled from company quarterly releases.
Interestingly, neither St Barbara Ltd nor Resolute Mining Limited are among the largest ASX-listed producers by volume, so what was their secret to coming up trumps over titan Newcrest Mining Limited (ASX: NCM)?
St Barbara Ltd –
St Barbara's huge 23% reduction in All-In Sustaining Costs was driven by strong mine productivity and higher than anticipated grades of ore. The result was record gold production from the company's Gwalia mine in W.A. of 77,000 ounces, up 12% over the December quarter. There was also a notable decline in St Barbara's development and capital expenditure in the quarter.
This is something that won't last, as development expenditure is expected to rise in the June quarter, while production is expected to fall which could push AISCs costs back up.
However St Barbara's outlook for the full year 2015 (FY15) still looks positive with production guidance increased by up to 12%, or 30,000 oz. and cash flows anticipated to improve.
Resolute Mining Limited –
Resolute produces 72% of its gold from its Syama gold mine in Mali, West Africa, where cash costs are significantly lower than the company's Australian operations.
Resolute's March quarter cash costs were lower on the back of higher production, cost savings initiatives and lower fuel prices; a heading the company expects to maintain into the June quarter.
Newcrest Mining Limited –
Newcrest reduced costs by 2% over the December quarter helped by an increase in gold production, the falling Aussie dollar and access to higher grade ore at the company's Bonikro mine in West Africa.
The company's Lihir mine in Papa New Guinea which made up almost 30% of quarterly production, still struggled with high AISCs of $1,391, but pleasingly total FY15 AISCs are expected to be at the low end of company guidance.
