The second interim update for GFMS Ltd.'s annual Gold Survey carries its usual comprehensive market assessment including an in-depth analysis of the mining sector. The analysis records a provisional fall in production for the year of 88 tonnes, with a large majority of the reduction taking place in the first half of the year. Producers' total cash costs rose by 22% year-on-year to an average of $472/ounce for the nine months of 2008, while total production costs were also up by 22% at $591/ounce. The figures for the third quarter of 2008 alone record an increase of 25% year-on-year in cash costs and a 24% in production costs.
These figures, which are based on primary gold mine production and are in accord with the Gold Institute reporting standard, show a cash margin in the third quarter of the year of $365/ounce, up form a margin of $276 in the third quarter of the previous year - but almost equal to the margin enjoyed in the final quarter of 2007 as gold prices increased by almost $100 between the third and fourth quarters of that year.
Australia sustained the highest costs in the third quarter after a massive year-on-year increase of 50%. This was partly due to extraneous factors with an explosion and loss of power at the Varanus Island gas plant, which forced a number of mines to take alternative, higher-cost, sources of power.
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