Not only the common investors but also the big gold mining companies around the world are benefiting from the historic rise in gold prices. The earnings and profits of these mining companies have reached record levels in the first quarter of 2026. According to the latest report of the World Gold Council (WGC), despite the ongoing inflation and serious geopolitical tensions around the world, the profit margins and free cash flow of companies remain very strong.
Gold extraction becomes very expensive, AISC increased by 16%
Amid record-breaking earnings and revenues, production costs for gold mining companies are also continuously increasing. According to WGC, the all-in sustaining cost (AISC) of gold in the first quarter of 2026 reached $1,785 an ounce, up 16% year-on-year and 5% from the previous quarter.
This is the 28th consecutive quarter when the cost of extracting gold from the ground has registered a year-on-year increase. This simply means that even though the price of gold is increasing rapidly in the international market, the cost of extracting gold from the mines for mining companies is also not decreasing.
Record prices increased the share received by governments
One of the biggest reasons for this huge increase in gold mining costs includes the sharp increase in government royalty payments. In the month of January, the price of gold briefly reached its all-time record level of $ 5,595 per ounce.
As the price of gold increased, there was a tremendous jump in the sales and earnings of mining companies, but along with this the share of royalty given to various governments also increased significantly. According to the WGC report, the royalty expenditure of companies in the first quarter of 2026 was 24% more than the previous quarter and 85% more than the same period last year. If compared with the first quarter of 2021, then the royalty was only 6% of the total mining cost, which has now increased to 12% in the first quarter of 2026.
Changed royalty rules and tax burden in West Africa
Changed tax rules and increasing 'resource nationalism' in major countries of West Africa have also increased the overall costs of gold mining companies. Resource nationalism means that countries rich in natural resources are taking drastic steps to increase the government's share in the wealth derived from their land.
For example, Ghana implemented a new royalty system in March this year, under which a heavy royalty of up to 12% may have to be paid if the price of gold crosses $ 4,500 per ounce. Whereas in Burkina Faso, according to the rules implemented in 2025, 10% royalty is levied if the price of gold is between $4,000 and $4,500 per ounce. Mali had imposed a higher royalty rate of 9.5% at $4,100 an ounce in 2024.
Direct impact on IAMGOLD and Resolute Mining also
The direct impact of this royalty increased by the governments is clearly visible on the financial costs of mining companies. Royalty expenses at IAMGOLD's Essakane mine in Burkina Faso have increased by 220% compared to last year, now accounting for about 35% of the company's total cash costs, according to WGC data. Similarly, Resolute Mining has also publicly admitted that the high royalties are one of the main reasons for rising operating costs at its Syama mine.
Production cost increased, yet record profit margin was recorded
The most interesting thing is that despite the increase in production expenses and royalties, the overall profit margin of gold mining companies has reached record levels. The main reason for this is the unprecedented rise in the average rates of gold in the international market.
According to the report, the average price of gold registered a jump of 17% compared to the previous quarter and 70% on an annual basis. Due to this, the average AISC margin of companies increased by 25% from the previous quarter and 134% from the same quarter last year to a record level of $ 3,076 per ounce.
Newmont gave a big gift to shareholders
Mining companies are openly sharing the full benefit of this record earning with their shareholders and investors. Investors are being given huge returns through huge dividends and share buyback programs.
According to the WGC report, giant Newmont returned $2.7 billion to its shareholders after achieving a record free cash flow of $3.1 billion. Apart from this, the company has given green signal to another big share buyback program worth $6 billion. AngloGold Ashanti, on the other hand, recorded a record free cash flow of $1.2 billion and according to the report, the company is now completely debt free and in a strong net cash position.
Pressure may increase due to geopolitical tension and fuel crisis
The tensions arising out of the Iran conflict and the Strait of Hormuz have also adversely affected the global supply chain, increasing the prices of energy, freight and other essential services. According to the report, the price of wholesale diesel in the US saw an increase of 54% and in Perth by 96%.
However, its immediate impact on major gold mining companies was limited, as many large companies had largely controlled the risk of this sudden increase in costs through hedging, inventory and long-term purchase agreements.
Challenges for mining companies may increase in the second quarter
The World Gold Council estimates that the overall costs of mining companies may increase further in the coming days. The full impact of the Middle East conflict and related global supply chain problems will become more clearly visible in the financial data for the second quarter of 2026.
According to the report, the impact of several cost increases at the end of the first quarter will be visible in fuel, logistics, transportation and other administrative expenses in the second quarter. This is likely to put further pressure on the record profit margins of companies. At present, skyrocketing gold prices are giving bumper profits to mining companies, but rising royalties and logistics challenges may affect the pace of these profits in the coming quarters.