I am a physicist not an accountant but have been trying to get...

I am a physicist not an accountant but have been trying to get my head around amortization and capital spending and here is what I have figured... it is at a 'theory' stage definitely not 'law of nature' so DYOR of course. I do not think that the mine purchase costs will be depreciated in a way that affects the AISC. However the capital development they spend each year does increase the AISC as it increases the total that is amortised over the life of gold production.

Mines are assets that seem to have a carrying value based on what income may be reasonably expected to be made from them in the future less liabilities, although some components like buildings and plant are depreciated over x years, but maintenance and upgrade spending counters this. The purchase price serves as a 'carry' value which is evaluated each year in the accounts and may increase or decrease (impairment), based on changes to future income. It may go up if a rising gold price increases reserves by making more ore economical for example, so I don't think this or impairment is included in the AISC.

What is included in the AISC is depreciation of capitalised expenses such as exploration to define mineable reserves and prestripping are amortised over the life of the ore, so are included in the AISC. I would expect this means that all the higher capex for the current pits which is included as capital expense will be amortised for the rest of the year. So the more capex the higher the later depreciation component of AISC.

Capex for RMS this year is mostly first half, about $40M depreciated over 120koz production annual is about $300 increase in AISC, as an upper limit for example, according to how I work it. So I would expect this to cause the AISC to increase with significant capex, then decline quickly the quarters after. However I think a bigger reason AISC is forecast to drop second half is is that the underground development and the waste striping takes resources away from ore production, so when they stop in the second half they can reduce expenses and increase production...

Some miners breakdown their AISC for each quarter showing the amortisation expense but unfortunately RMS does not give this level of detail. You can get an approximation comparing the cash costs and the AISC each quarter. For example this quarter AISC went up and cash costs down, so a bigger non cash expense either corporate costs or depreciation and amortisation I would say.