All-in Sustaining Costs (AISC)
Also: AISC, All-in costs, Total production costs
All-in Sustaining Costs (AISC) are a standardised metric of the gold mining industry that captures all costs required to sustainably maintain a mine's current production capacity.
All-in Sustaining Costs (AISC) were introduced in 2013 by the World Gold Council to standardise the previously inconsistent cost reporting of the gold mining industry. Unlike the older concept of "Cash Costs", which only captured direct operating costs, AISC aim to provide a realistic picture of the actual economic burden per troy ounce produced.
What Is Included in AISC?
AISC add further cost blocks to the Cash Costs base – blocks that are indispensable for the sustainable operation of a mine:
- Cash Costs – direct mining, processing and refining costs
- Sustaining Capital Expenditure (Capex) – investments to maintain existing production capacity (e.g. replacement equipment, infrastructure)
- Exploration and development costs at existing mines
- General and administrative expenses (G&A) at corporate level
- Royalties and levies, insofar as not already included in Cash Costs
Growth investments in new mining areas or new mines are expressly not part of AISC – for this purpose the broader metric "All-in Costs (AIC)" exists.
Formula (simplified)
AISC (USD/oz) = Cash Costs + Sustaining Capex + Exploration (sustaining)
+ G&A + Royalties (if not already included)
÷ Troy ounces produced
Why Are AISC Relevant for Investors?
The current gold price compared with a mine's AISC reveals its operating margin: when the spot price is well above AISC, the mine is profitable and can repay debt or distribute dividends. If the gold price falls below AISC, production cuts or mine consolidations threaten – which influences global supply and demand in the precious metals market over the medium term and acts as indirect price support.
The historical gold price record shows that periods of heavily compressed margins – such as 2013–2015, when the gold price fell from around 1,700 USD to below 1,100 USD, reaching or exceeding the AISC of many high-cost producers – regularly led to production cutbacks followed by price recoveries.
Limitations of the Metric
AISC are not a GAAP figure and are calculated slightly differently by each company. Investors should check the composition in annual reports. AISC also do not account for growth capex, acquisition costs or financing costs – for a complete corporate analysis these must be considered in addition. (Not investment advice.)
In Brief
AISC is the most important profitability metric for gold mines: it shows at what spot price a mine can operate economically on a sustainable basis – and therefore how far the market price is from the structural cost floor.