Gold Miners Post Record Margins as Prices Outpace 16% Cost Surge
Record gold prices in Q1'26 drove mining margins to all-time highs, even as costs rose 16% YoY, per the World Gold Council.
The global gold mining industry recorded its highest-ever profit margins in the first quarter of 2026, as a surge in bullion prices comfortably outpaced a sharp rise in production costs, according to new data from the World Gold Council (WGC).
Average All-In Sustaining Costs (AISC) climbed 5% quarter-on-quarter and 16% year-on-year to USD 1,785 per ounce. This marked the 28th consecutive year-on-year increase in the sector's cost base. However, with spot gold briefly touching a historic USD 5,595 per ounce in January, average realized prices jumped 17% quarter-on-quarter and 70% year-on-year. This pushed the average AISC margin to a record USD 3,076 per ounce, up 134% from the same period last year.
Royalty payments emerged as the primary cost driver, surging 24% quarter-on-quarter and 85% year-on-year. Their share of the average operation's cost base has doubled from roughly 6% in Q1'21 to 12% in Q1'26. Fiscal changes in West Africa were a key factor, with Ghana introducing a sliding royalty scale reaching 12% for prices above USD 4,500 per ounce. Burkina Faso and Mali have also implemented higher progressive rates. The impact was stark at specific operations, with royalty expenses at IAMGOLD's Essakane mine in Burkina Faso rising 220% year-on-year, now accounting for 35% of cash costs.
Despite these pressures, miners maintained strict capital discipline, channeling strong cash flows into shareholder returns. Newmont returned USD 2.7 billion to shareholders after generating a record quarterly free cash flow of USD 3.1 billion and approved an additional USD 6.0 billion buyback. AngloGold Ashanti also posted record free cash flow of USD 1.2 billion, moving from net debt to net cash.
The WGC noted that supply chain disruptions from the Iran conflict, including the closure of the Strait of Hormuz, have raised global energy and freight costs. While wholesale diesel prices rose sharply in the US and Perth, large producers were largely insulated through hedging and long-term contracts. The council cautioned that the full impact of these disruptions is likely to materialize in Q2'26, potentially adding further pressure on margins.