New Delhi [India], August 29 (ANI): Record gold prices outpaced rising mining costs in the first quarter of 2026, generating unprecedented margins and cash flows for producers despite persistent inflationary pressures and regional geopolitical disruptions, according to a report by the World Gold Council (WGC).
Global average gold producer All-In Sustaining Costs (AISC) rose 5% quarter-over-quarter and 16% year-over-year to $1,785 per ounce during the first quarter of 2026. The period marked the 28th consecutive year-over-year increase in AISC for the gold mining sector.
The report highlighted that escalating royalty payments were the primary cost driver during the quarter. Spot gold prices reached historic highs, briefly touching $5,595 per ounce in January. This revenue expansion led royalty payments to surge 24% quarter-over-quarter and 85% year-over-year, doubling their share from approximately 6% of AISC in Q1 2021 to 12% of the average operation’s cost base in Q1 2026.
According to the WGC, fiscal regime changes and growing resource nationalism in West Africa also increased cost burdens across several jurisdictions. Ghana introduced a sliding-scale royalty system in March, reaching up to 12% for prices above $4,500 per ounce. Burkina Faso introduced a sliding system in 2025, reaching 10% between $4,000 and $4,500 per ounce, while Mali implemented higher rates of 9.5% at $4,100 per ounce in 2024.
Consequently, royalty expenses surged 220% year-over-year at IAMGOLD’s Essakane mine in Burkina Faso, accounting for 35% of cash costs, while Resolute Mining identified royalties as a key factor pushing costs at Syama above guidance.
Despite these cost increases, average gold prices rose 17% quarter-over-quarter and 70% year-over-year. This price movement drove average AISC margins up 25% quarter-over-quarter and 134% year-over-year to a record $3,076 per ounce.
The report noted that miners maintained strict capital discipline throughout the period, directing substantial cash flows toward dividends and share buybacks.
“Newmont returned $2.7 billion to shareholders after generating its highest-ever quarterly free cash flow (FCF) of $3.1 billion and has approved an additional $6.0 billion share buyback program,” the report stated.
“AngloGold Ashanti also generated record FCF of $1.2 billion and moved from a net debt position into net cash,” the report added.
Supply chain disruptions from the Iran conflict, including the closure of the Strait of Hormuz, increased global energy, freight and consumables expenses. While wholesale diesel prices rose 54% in the U.S. and 96% in Perth, large and intermediate producers remained largely insulated through hedging, inventories and long-term procurement contracts.
The WGC noted that “costs are expected to rise further, as the Iran conflict and associated supply chain disruptions persist. Given that much of the escalation occurred late in Q1 2026, the full impact on fuel, freight and consumable costs is likely to become more apparent during Q2 2026, placing additional pressure on margins.”
(ANI)
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