Interesting article in today's Australian on how the way AISC is used by gold miners can be misleading to investors. WGX gets a mention:
The all-in sustaining costs published by ASX-listed gold companies are largely bollocks, and any retail investor that relies on them is fooling themselves. Here’s one example from the current car-crash in the Australian gold sector.
Dacian Gold reported all-in sustaining costs (AISC) for the March quarter was $2008 an ounce, suggesting the company was getting a margin of some $600 an ounce. Then, on June 17, Dacian told shareholders it was planning to wind back production at its Mt Morgan gold hub – a clear indication that the gold price the company needs to stay afloat is well above current levels.
Here’s another: West Australian producer Westgold Resources gave its March AISC as $1759 an ounce, when its average received gold price was $2385. To the eye of any ordinary investor, that’s an average margin of $626 an ounce, on production of 65,426 ounces – $41m cash for the quarter on top of costs.
Westgold finished March with $189m in the bank, compared to $110m at the end of December. If the $97m raised from investors is removed, Westgold’s position actually went backwards by $18m. To be clear, there is no accusation of fraud or dodgy business at either company.
Comments anyone?
WGX Price at posting:
$1.19 Sentiment: Hold Disclosure: Held
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