Canadian gold production jumped 22% in the third quarter as new mines increased output, outpacing global growth even as rising costs made ounces more expensive to produce.
Recently commissioned operations including Equinox Gold’s (TSX, NYSE-A: EQX) Valentine mine in Newfoundland and Labrador and B2Gold’s (TSX: BTO; NYSE-A: BTG) Goose mine in Nunavut helped drive the increase, alongside stronger production from existing mines, the World Gold Council said Tuesday. Worldwide mine output rose 3% to a third-quarter record of 1,071 tonnes.
“Mine production could reach another record high, but the overall supply response should remain modest, with recycling still subdued,” the Council said in its latest quarterly assessment.
Canada’s growth shows how new operations are adding meaningful volumes while some established mining countries struggle with lower grades and changing mine plans. Yet increased mine production has not translated into more total supply: weaker recycling and a further reduction in producers’ outstanding hedges pushed the global total 1% lower to 1,369 tonnes.
Canadian growth
Valentine entered commercial production in November last year, giving this year’s third quarter a much larger contribution than the commissioning period a year earlier. The Newfoundland operation is expected to produce 140,000 to 150,000 oz. this year, according to Equinox’s operating outlook.
Canada was among several countries recording substantial gains. Indonesian output increased 21%, helped by higher grades and production at Batu Hijau, the start of Pani Gold and recovering output at Grasberg. Chilean production rose 19%, supported by Salares Norte and the newly commissioned Fenix operation, the council said.
Those increases contrasted with a 12% decline in Australia and a 7% fall in the United States. Lower-grade mining and production sequencing weighed on both countries, including at Cadia in Australia and Nevada Gold Mines and Round Mountain in the U.S.
Global mine production was 2% higher over the first nine months, putting the industry on course for a full-year record unless widespread disappointments emerge in the fourth quarter, the Council said.
Costs climb
The additional output comes at a higher cost. Average industry all-in sustaining costs reached a record C$2,698 ($1,930) per oz. in the second quarter, up 22% from a year earlier, according to Metals Focus data cited by the Council. The figures, which lag production data by a quarter, showed the fastest annual cost increase since early 2013.
Higher energy and consumable prices, along with increased sustaining capital spending, contributed to the rise.
BMO Capital Markets’ latest GoldPages estimates point in the same direction. Production-weighted sustaining costs for producers covered by the bank are forecast to average $1,795 per oz. this year, 16% more than in 2025. Including development capital, average all-in costs are forecast to rise 22% to $2,298 per ounce.
The BMO figures cover a different group of companies and a full year, so they are not directly comparable with the council’s quarterly industry estimate. The bank forecasts some relief next year, with sustaining costs easing to $1,764 per ounce.
Gold prices remain well above those cost measures. Bullion averaged $4,262 per oz. in the third quarter, 23% more than a year earlier, according to the council. However, sustaining costs exclude development spending and do not measure a company’s full cash requirements.
Recycling retreats
Recycled supply fell 8% to about 314 tonnes in the third quarter, its lowest level since late 2023. The decline outweighed the increase in mined gold, alongside an estimated 17-tonne reduction in outstanding producer hedges.
Recycling remained subdued despite historically high prices. In India, some owners preferred to pledge gold as collateral, while jewellery exchanges allowed buyers to fund new purchases with old pieces. Expectations of higher prices also discouraged selling, the Council said.
Chinese recycling fell 20% from a year earlier. Trading in old jewellery to offset a new tax on jewellery sales also encouraged exchanges rather than outright sales.
Producers’ aggregate hedge book declined for an eleventh consecutive quarter. Deliveries into maturing contracts and restructuring of existing positions contributed to the reduction, while miners showed limited appetite to lock in future prices.
Central banks buy
On the demand side, central banks provided the strongest offset to weaker consumer buying. Their estimated purchases rose 42% to 321 tonnes, lifting nine-month buying to 675 tonnes, 6% above the same period last year.
China and Poland together added about 104 tonnes to disclosed holdings. China’s purchases extended the accelerating accumulation evident in its September figures.
However, reported purchases accounted for only about 120 tonnes of the quarterly total. The remaining 63% reflected estimated unreported activity, limiting the visibility into which countries were buying.
Gold-backed exchange-traded funds added 211 tonnes after second-quarter outflows, although that was 6% less than a year earlier. The inflows extended the investment divergence seen in September, when fund buying persisted despite falling bullion prices.
Bar-and-coin demand fell 19% to 268 tonnes, while jewellery consumption dropped 17% to 313 tonnes, the weakest third quarter in the Council’s series. Total demand, including over-the-counter activity, fell 1%.
The Council halved its forecast for this year’s increase in investment demand to 200 tonnes from 400 tonnes as bar-and-coin buying slowed. It raised its expectation for central bank purchases, which it now expects to at least match 2025.
That buying could help support prices, but the council cautioned against treating it as a guarantee.
“Purchases nevertheless appear sensitive to price,” the Council said. “This pattern could provide some price support and stability, although the relationship is not sufficiently stable to imply a firm floor for the gold price.”
Source: https://www.mining.com/canada-gold-output-jumps-22-as-global-supply-slips/
