Cash Costs A Better Indicator Of Pressure On Gold Mining: Citi

Gold mining operations have been under severe pressure for years, and major companies have burnt through $11 billion in the last decade, but that hasn’t stopped mines from increasing production, raising the gold supply by 10% between 2009 and 2012. Normally you would expect cost pressures to force some mines to halt production, but Citi analyst Jon Bergtheil thinks that cash costs may be a better indicator of short-term pressure than all-in costs.

Gold miners failed to cut costs

“Gold miners have failed to cut costs quickly enough to keep up with the fall in the gold price. Indeed, Citi equity analysts calculate that average all-in costs production costs decreased by 6.1% y/y in...