Capital costs are expected to increase to almost US$2,400/oz, before pulling back to about US$1,900/oz in 2015.
Posted: Wednesday , 18 Jun 2014
RENO (Mineweb) -
The cost of building a mine has increased significantly over the last decade, from US$560 per ounce of gold production capacity in 2014 to more than $2,300/oz last year, says a new report by SNL Metals & Mining.
Based on data from mines currently under construction, capital costs are expected to peak this year at almost $2,400/oz, according to an article by SNL metals analyst Kevin Murphy.
“The three-year-running-average capital cost of capacity follows behind the trend set by the gold price,” said the SNL report, Strategies for Gold Reserves Replacement. “When gold prices increased sharply in 2006, producers responded by approving construction of more capital-intensive projects, which began at earlier gold prices.”
“This lag between the change in gold prices and the increased capital cost intensity is simply the time required for construction of more capital-intensive projects, which began at earlier gold prices,” said SNL Metals & Mining. “While producers and prospective producers greatly curtailed capital spending in 2013 and to date in 2014, capital cost intensity is expected to increase to almost US$2,400/oz in 2014, before pulling back to about US$1,900/oz in 2015.”