PRECIOUS METALS | Oliver Bragdon: Gold Miners' Q2 Results Remain Strong Despite Higher Costs

Gold miners delivered strong second-quarter results despite a retreat in gold prices, rising costs and production disruptions. According to Sina Finance, World Gold Council-commissioned mining supply analyst Oliver Bragdon said the sector's performance remained robust by annual and historical measures, even as average all-in sustaining costs (AISC) rose 8% quarter over quarter and 22% year over year to a record $1,930 per ounce, marking the 29th consecutive year of annual increases. Sustaining capital expenditure became the main driver of higher AISC, climbing 34% sequentially and 25% year over year to a record $441 per ounce. Of the $139-per-ounce quarterly increase in AISC, about 80% came from higher sustaining capital expenditure, whose share of the cost structure rose from 18% in the first quarter of 2026 to 23%. The increase was concentrated at a small number of mines. In the Metals Focus mine-cost sample, output rose 1.6% quarter over quarter and average ore grades improved 1.4%; year over year, output fell 4.4% and grades declined 3.1%. On-site cash operating costs rose 6% sequentially and 18% year over year to $1,215 per ounce, while total cash costs increased 4% and 22%, respectively, to $1,406. Labor and fuel remained major cost pressures, and supply-chain bottlenecks affected the availability of key materials. Average royalty and production-tax costs fell 11% quarter over quarter to $185 per ounce but remained 53% higher year over year; their share of AISC declined from 11.6% in the first quarter to 9.6%. The average gold price fell 7.2% from the first quarter to $4,512 per ounce. Average AISC margins narrowed 16% to $2,582 per ounce, but were still 52% higher year over year and the second-highest in the sample. Bragden characterized the second quarter of 2026 as a return from exceptionally high margins to normal levels, not a collapse in cash flow. The average gold price in the third quarter of 2026 was $4,266 per ounce, down 5.5% sequentially; gold was around $4,040 per ounce at the time of writing. Bragden said margins could face further pressure for the rest of 2026 as costs rise and gold prices weaken. Looking to 2027, he said a recovery in gold prices could lift royalties, but the additional revenue would exceed the cost increase and support wider margins.