All-in sustaining cost (AISC) is a key performance metric used by gold mining companies to provide a more complete picture of the costs involved in producing an ounce of gold. It was developed by the World Gold Council in 2013 to improve transparency and comparability across the industry.
What AISC includes
AISC goes beyond traditional cash costs by including all expenses necessary to sustain current production levels. The main components are:
- Mining and processing costs: Direct expenses for extracting ore, crushing, grinding, and recovering gold.
- General and administrative costs: Overhead related to mine-site operations and corporate support.
- Royalties and production taxes: Payments to governments or landowners based on output or revenue.
- Mine-site exploration and study costs: Spending to extend the life of the mine or replace reserves near existing operations.
- Sustaining capital expenditure: Spending on equipment, infrastructure, and development needed to maintain current production levels. This excludes expansion capital for new projects.
- Reclamation and closure costs: Ongoing provisions for environmental rehabilitation and eventual mine closure.
How AISC is calculated
AISC is expressed as a dollar amount per ounce of gold sold. To calculate it, a miner sums all the costs listed above and divides by the total ounces of gold sold during the period. The result shows the average cost to produce each ounce, assuming the mine continues operating at its current scale.
Because AISC includes sustaining capital and other indirect costs, it is typically higher than cash cost or total cash cost. Investors and analysts use AISC to compare the efficiency of different mines and companies, and to assess whether a mine can remain profitable under various gold price conditions.
It is important to note that AISC does not include income taxes, interest expenses, or costs related to major expansions or acquisitions. These are excluded because they are not directly tied to sustaining current production.
Why AISC matters
AISC is a widely followed indicator of a gold miner's operational health. A lower AISC generally suggests a more efficient operation with higher margins. Conversely, a high AISC may indicate that a mine faces challenges such as lower ore grades, deeper deposits, rising input costs, or aging infrastructure.
When the gold price is above a miner's AISC, the operation generates positive free cash flow from existing production. When the price falls below AISC, the miner may struggle to cover all sustaining costs, potentially leading to production cuts, asset impairments, or mine closures.
Because AISC includes sustaining capital, it also reflects the ongoing investment needed to keep a mine running. A company that consistently reports AISC above the prevailing gold price may be depleting its reserves without adequately investing in replacement, which can affect long-term viability.
However, AISC should not be used in isolation. It is best considered alongside other metrics such as production volume, ore grade, reserve life, and total cash cost. Variations in accounting practices can also affect comparability between companies, so the specific components reported should be reviewed carefully.
Limitations of AISC
While AISC provides a useful standard, it has limitations. It does not capture the cost of acquiring new reserves through exploration far from existing mines, nor does it reflect the cost of financing or corporate overhead not allocated to specific mines. Additionally, one-time items such as asset write-downs or restructuring charges are excluded.
Because AISC is backward-looking and based on historical costs, it may not fully predict future costs, especially if a mine's ore grade declines or input prices change. Investors and analysts should consider trends in AISC over multiple periods rather than focusing on a single quarter.