Despite a slight decline in production, AISC in the gold mining industry reached its highest level ever in Q1 of 2022, according to the latest report from the World Gold Council. As the price of gold rises, the gold mining industry needs to keep the cost of production in check in order to maintain profitability. But this is not always easy. In fact, many companies face serious financial problems that can hamper their profitability.
Barrick Gold’s production fell 7% YoY
During the third quarter, Barrick Gold Corporation GOLD reported earnings of $241 million. The company beat Zacks Consensus Estimate of 11 cents per share. Barrick’s gold production dropped 9% from 1.09 million ounces to 998 ounces. The company’s all-in sustaining costs (ASIC) rose 22.7% from $2.60 per pound to $3.13 per pound.
Gold sales were 997,000 ounces, down 7% from a year earlier. The company’s average realized price of gold dropped 8% to $1,722 per ounce from $1,926 per ounce.
The company’s production guidance for the fourth quarter will depend on the performance of its tier-one gold mines. Barrick is forecasting attributable production to be in the range of 4.4 Moz to 4.7 Moz. In addition, the company’s guidance may be affected by Covid-19.
The company’s net earnings declined to $241 million from $285 million in the year-ago quarter according to this site https://bestiragoldcompanies.com/. Barrick repurchased $322 million of its shares under a share buyback program as of Sep 30, 2022. Its operating cash flow was $758 million in the quarter. Barrick plans to pay a quarterly dividend of nine cents per share.
Despite the recent downgrade, Kinross Gold Corporation (NYSE:KGC) has reaffirmed its guidance for 2022. The company expects to generate two million ounces of gold per year for the remainder of the decade, with a cost of sales of $830 per ounce of gold. The company is still targeting the potential launch of an advanced exploration program as early as 2024. The advanced exploration program would allow Kinross to explore the deeper areas of the LP Fault, establish underground workings and begin drilling.
Kinross’s production costs are higher than the industry average, which is a concern. The company’s average head grade decreased by 4% q-o-q. In addition, the company is experiencing inflationary pressures. The company is closely monitoring this pressure. In the first quarter of 2022, the company’s all-in sustaining cost (AISC) was the highest it has been since 2012. In Q1 2022, the average AISC for Kinross’s top 25 GDXJ peers was $1,218 per ounce.
LaRonde Complex’s assets are more marginal
Located in the heart of the Abitibi province, the LaRonde mine is a hulking goliath. Aside from the mine, the company also operates the smaller but no less productive El Coco mine. Although the mine hasn’t yielded any gold, it has produced silver, copper, zinc, uranium and other metals. Its small staff of a few dozen operates in a remote but not remote location. This has prompted the company to make it a point to maintain open communications with local residents and stakeholders alike. In fact, the company has made a point of visiting the area at least once every week for the last three years in a row. In addition to a regular weekly cadenced tours of the mine, the company has also arranged for a number of community engagement events, such as a series of town hall style meetings with residents. Besides the usual suspects, the company has also reached out to First Nations communities in the area.
During the first quarter of 2022, Essakane’s AISC reached the highest level ever reported by the company. The company expects this to continue through the year, with Essakane’s grade to continue to increase. The grade should be at its strongest in the fourth quarter of the year.
The company has announced that Essakane produced 174,000 ounces of gold during the first quarter of 2022, which represented an increase of 14% compared to the prior quarter. The company has also announced that cash flow for the quarter was $142.3 million, up from $74.8 million in the previous quarter. The company has also announced that proceeds from its 2022 Prepay Arrangements have increased.
Essakane’s AISC is still very high, but the company expects it to decline in the second half of the year. The company expects the AISC to be between $1,650 and $1,690 per ounce sold. The company has also stated that they will provide a detailed update on costs and schedule estimates prior to the end of the second quarter.