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GFMS Says Gold Mining Cash Costs Increased 17% to Most Ever

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Jan. 16 (Bloomberg) -- Gold producers’ average total cash costs climbed 17 percent to a record $736 an ounce in the first nine months of last year, Thomson Reuters GFMS said.

The average cash margin increased by $12 an ounce to $915 an ounce as prices advanced, the London-based researcher said today in a report. The average all-in cost of production gained 7 percent last year to about $1,150 an ounce, it said. Output rose 0.2 percent to a record 2,841.9 metric tons last year and first-half supply will climb 1.5 percent from a year earlier.

South African gold production slumped 11 percent to 179.8 tons last year due to labor unrest, according to GFMS, a unit of Thomson Reuters Corp. While Peru’s output declined 2 percent to 184 tons, it moved above South Africa to become the fifth-biggest miner, the report showed. The U.S. and Russia were the third- and fourth-biggest producers last year, after China and Australia.

Mining companies reduced gold hedges by 20 tons last year and will probably cut another 6 tons from forward sales in the first half of this year, compared with 11 tons a year earlier, the researcher said. Miners can sell future output at fixed prices to secure loans and may cut hedges by buying back contracts, adding to demand.

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To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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