G Mining hikes cost forecast on labour, royalties

Operating expenses at South America-focused gold producer G Mining Ventures (TSX: GMIN; US-OTC: GMINF) will be about 12% higher this year due in part to labour-cost inflation and increased royalty payments. Shares fell.

Total cash costs this year will range from $836 (C$1,179) to $965 per oz. sold, compared with a previous target of $736-$865, G Mining said late Wednesday. All-in sustaining costs (AISC) are now pegged at $1,330-$1,544 per oz., up from $1,230-$1,444 previously. G Mining released the forecasts along with its second-quarter financial results.

The higher costs come despite a better-than-expected quarter for the Brossard, Que.-based company, which reaffirmed its 2026 production target of 160,000 to 190,000 oz. gold. About 61% of annual production is expected in the second half as mining advances into higher-grade mineralization at the Tocantinzinho mine in Brazil, which entered commercial production in September 2024.

The “earnings beat [was] overshadowed by [the] +$100 per oz. cost guidance revision,” National Bank Financial mining analyst Rabi Nizami said Thursday in a note.

Shares of G Mining dropped 4.2% to C$47.72 Thursday morning in Toronto, valuing the company at about C$14 billion ($10 billion). The stock has traded between C$17.12 and C$58.74 in the past year.

Growth engine

G Mining last month closed the C$3-billion acquisition of Guyana-focused developer G2 Goldfields. The deal brought two adjacent gold projects in the South American country – G Mining’s Oko West and G2’s Oko-Ghanie — under one roof. 

Oko West, which is scheduled to start pouring gold in late 2027, is poised to represent G Mining’s second major growth engine alongside Tocantinzinho. Together with Oko-Ghanie, it could deliver more than 500,000 oz. of gold annually over the life of mine, G Mining said in April.

Construction of Oko West was about 28% complete by the end of June, with more than $423 million spent against an approved initial capital budget of about $973 million, G Mining said Thursday. Detailed engineering was about 90% complete and procurement 99% complete at quarter-end.

Adjusted net income for the second quarter more than doubled to about $79.5 million, or 33¢ a share, from $36.5 million, or 16¢, a year earlier, G Mining also said Thursday. On that basis, financial analysts who follow the company had expected profit of 31¢ a share.

Higher prices

A stronger Brazilian real against the U.S. dollar, increased maintenance spending and higher assumed gold prices, which are set to lift royalty payments, also played a part in the higher cost forecast for the full year, G Mining said.

G Mining’s Brazilian real-to-U.S.-dollar assumption has been revised to 5.15 from 5.55 previously. The company has also raised its assumed gold price to $4,300 per oz. from $4,000, increasing royalty costs.

Second-quarter total cash costs were $1,046 per oz. sold, 1% higher than in the first quarter, while AISC rose 6% to $1,690 per oz.

The cost revision doesn’t change G Mining’s 2026 capital spending target, which ranges from $583 million to $649 million. Exploration spending should range between $42 million and $50 million.

Improved output

Tocantinzinho produced 36,845 oz. gold in the second quarter, 16% more than in the first quarter. Gold sales rose 11% to 37,439 oz., while the average realized gold price reached $4,197 per oz.

First-half production of 68,691 oz. was in line with G Mining’s plan to process lower-grade ore while accelerating waste stripping and advancing the pit toward higher-grade material. Production is expected to increase in the second half, with higher grades also expected to lower unit costs.

Development of the Gurupi project in Brazil is continuing. An updated resource and preliminary economic assessment, which will incorporate the results of a five-rig drill program, is planned for release by year-end. G Mining also expects to file an environmental and societal impact assessment in the fourth quarter.

Despite the higher cost outlook, G Mining ended June with $225.7 million in cash and $33 million in long-term debt. That left a net cash position of $192.7 million.