Capex, Opex & AISC
The Costs Behind Every Ounce and Pound
The three numbers that decide whether a mine actually makes money.
- Capex is capital spending, the money used to build or sustain long-lived assets.
- Opex covers running the operation day to day, including mining and processing.
- AISC is a widely used, non-GAAP measure, especially in gold mining, meant to capture the full sustaining cost of production.
- A metal price above AISC doesn't mean every dollar of that gap becomes free cash flow.
- Compare costs on the same basis, and read the company's own definition and reconciliation before trusting a headline number.
Building the Mine and Running It
A restaurant needs money to fit out its kitchen before it opens, then ongoing money for staff, ingredients and utilities. A mine works on the same distinction, just at a much larger scale.
- Capital expenditure, or capex. Spending on assets like the processing plant, mine development, equipment and infrastructure.
- Operating expenditure, or opex. The ongoing cost of the work itself, including drilling, processing, labour, fuel, power and site administration.
Cost Per Tonne and Cost Per Ounce
Cost per tonne measures spending against the material mined or processed. Cost per ounce or pound relates spending to metal output instead. These are different denominators, so one can't be substituted for the other.
Say processing costs run $20 per tonne. If a tonne yields 0.01 recovered ounces, that $20 works out to $2,000 per recovered ounce. If it yields 0.02 ounces instead, the same $20 falls to $1,000 per ounce.
What AISC Adds
All-in sustaining cost, or AISC, broadens the older "cash cost" measure to include specified sustaining costs on top. The World Gold Council's guidance explains how it treats sustaining capital and the other components that go into it.
AISC is not an accounting profit measure, and it isn't a full cash flow forecast either. Growth capital, financing costs and income taxes sit outside it and need separate attention.
Beginner Benchmark
Roughly where AISC tends to sit. AISC changes with reporting period, currency, production, sustaining expenditure and other costs. Use dated company disclosures and compare consistent definitions rather than relying on an undated industry average. AISC is not the total cash requirement of a mining company: growth spending, financing and other commitments also matter.A Margin Illustration
At a hypothetical gold price of $2,000 an ounce and AISC of $1,400, the margin is $600. At $1,700 gold with the same AISC, it falls to $300. A 15 percent price decline there roughly halves that simplified margin.
Read the Cost Fine Print
A low headline cost is only useful once you understand what it includes and whether the company can actually sustain it.Want more mining news explained this way?
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How Mining Companies Make Money
Turning ounces and pounds in the ground into real cash flow.
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