co-o operations update - very good long term, page-16

exfiles,

It really is not that easy to cut costs. In the real world (away from fudged CPI numbers) there is real inflation. Just look at the cost of oil for example. And that impacts power, tyres, explosives, and many other aspects of mining.

Companies are always trying to keep costs in check because it has a major impact on the bottom line. But their operational costs boil down to the actual costs of mining, hauling and processing each tonne of ore, plus all mining, hauling and storing of waste.

So there is a calculable Cost per tonne for every mine. What then matters is the grade, the recovery% and the selling price.

Once the Costs/tonne = Grade x Recovery% x Price/gramme, you have the economic cut-off.

Any further drop in PoG represents a straight loss at the operational level.

My understanding is that c. half the mines worldwide are now below the marginal cost of production at US$1250 spot.

Some can perhaps 'high-grade' for a while - if they are able. For those that cannot they must reduce overheads by cutting staff, shuttering their least economic mines, etc.

The 'shock and awe' hit on gold via the paper markets of the COMEX and the LBMA may well work out nicely for a few bullion banks over time, but the immediate impact is hardship and losses for many people in the industry.
CPDLC