Record ounces, rising costs: what Q3 tells us about gold miners’ margins

Discovery, the Toronto-listed owner of the Porcupine gold operations in Ontario, reported a record quarter on 10 November. It produced 70,564 ounces of gold in the third quarter, 12% more than a year earlier, and adjusted earnings of 10¢ a share beat the 7¢ consensus, The Northern Miner reports. Its costs rose faster than its output.

Discovery’s quarter

From Discovery’s release, except the consensus, which is from The Northern Miner. Revenue includes $72.3mn of concentrate from its Kidd operation. Mining.com’s version of the story refused automated access; The Northern Miner carries the same report.

The realised price rose 23% on the year. All-in sustaining cost rose about 32%. By our subtraction, the gap between the two widened from $1,755 to $1,990 an ounce: still a bigger margin, but only about $235 of a $794 rise in the gold price reached it. Discovery blamed higher-cost tonnes processed from stockpiles. Rabi Nizami of National Bank Financial said “annual production and cost guidance was maintained, although cash costs are now expected at the top end of the range.” Its operating cash cost guidance is $1,250–$1,400, and the quarter’s $1,470 was above it. The shares fell 4.4% to C$11.14 on Tuesday morning in Toronto, The Northern Miner reports.

Equinox: bigger, and tracking low

Equinox Gold reported a day earlier, its first quarter including mines from its combination with Orla, which closed on 31 July. It produced 237,019 ounces, including two months of Musselwhite and Camino Rojo. Its all-in sustaining cost was $2,091 an ounce, down 4% from the second quarter, against a realised price of $4,157. Equinox says it is on track for the low end of its 870,000–920,000-ounce production guidance and the high end of its $1,900–$2,000 AISC range.

Margin maths at $4,000 gold

Prices and costs from each company’s release; the gap is our subtraction.

All-in sustaining cost is what it takes to keep a mine running, not to build new ones, so the gap is not profit. It does show the cushion. At Tuesday’s spot price of about $4,030, each of these producers would still have roughly $1,700–$2,100 an ounce over sustaining cost by our arithmetic, but that cushion shrinks each quarter costs rise and the price does not. Part of the rise in costs comes from the gold price itself, through royalties and profit-linked pay, as Record gold, rising costs explains.

Growth pipelines

Discovery is aiming to more than double Porcupine’s annual output to over 500,000 ounces, The Northern Miner reports, without giving a date. Chief executive Tony Makuch said “we now believe Dome is an open-pit project,” and mining at Dome is expected to restart by early 2028, with first ore in mid-2028. An updated technical report for Porcupine is due early in 2027. Equinox’s chief executive, Jason Simpson, said the quarter was “only a partial reflection” of the combined company.

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Every figure here is as reported by the publications listed under Sources, at the time they reported it. Prices move; the live gold price has the current one. Nothing on this page is investment advice.