THE FALLING gold price, which dropped as low as $803/oz this morning, has sent the share prices of SA’s three major gold producers tumbling to new 12-month lows.

In addition to the current bearish trend on the metal it seems investors are also becoming concerned over the bottom-line profitability of the mines.

That was highlighted by Gold Fields CEO Nick Holland in his recent June quarter presentation when he drew industry comparisons based on “all-in” working costs.

Few gold mining companies state their costs this way preferring to highlight cash operating costs which exclude capital expenditure and most exploration costs.

Holland gave a “notional cash expenditure” (NCE) cost – effectively an “all-in” production cost - for his group of $869/oz for the June quarter which provided a slim 3% margin on the gold price received for the quarter of $895/oz

That means Gold Fields’ margin would be a negative 8% at a gold price of $803/oz assuming June’s working costs but Holland put up a graph showing Gold Fields’ NCE costs are going to rise in the short-term.

He forecast they would peak at about $950/oz in the current June quarter before dropping back to between $725/oz and $750/oz during the March 2009 quarter.

Holland also published a graph showing the weighted average NCE cost for the industry to be $780/oz with AngloGold Ashanti and Barrick well below that average but Harmony well above it.

It seems San is sitting pretty with 350 dollar cost

The whole story is here: http://www.miningmx.com/gold_silver/...