If at all, it is reversed: gold production costs follow the prices. When the price of the yellow metal increases, mining companies will invest in more sophisticated methods to extract gold and will start to operate deeper mines or lower quality ores, boosting the production costs.
There, all-in gold production costs can be more than twice as much as in Peru, which is the least expensive place to mine gold. According to the GFMS Gold Mine Economics Service, average all-in costs for South Africa were over $1,400 between 2005 and 2013.
A new metric has since been developed by the World Gold Council to report the “all-in sustaining costs” of mining gold. These numbers report that the cost of extracting an ounce of gold is actually over $1,000 per ounce, well above the aforementioned numbers.
A small gold mine flowsheet is shown below together with cost data which clearly shows the results that can be ‘obtained when handling a low grade ore by a simple process. There are many commendable features in such a set up and no complicated machines or practices are embodied in this plan. In fact, its simplicity is appealing and the results obtained prove the practicability of this .
In early February 2014, the World Gold Council noted that the average industry cost of production is $1,200/ounce, with 30% of the industry becoming unprofitable if the gold price drops below that.
In fact, there is a thorough and exhaustive, not to mention costly, mining and refining process. Various miners have their estimates as to how much it costs to extract gold, and silver, per ounce. At present, this estimate runs in the hundreds of dollars per ounce of gold, which indeed sounds expensive.