Every producer reporting this season has been able to point at a record margin. Fewer have been willing to discuss what happens to that margin at a materially lower price, because the honest answer involves tonnage that only works at today's quote.
Three inputs doing the damage
Labour, power and consumables have all reset higher and none of them are reverting. Strip ratios have crept up as pits deepen. Sustaining capital has been deferred at more operations than the disclosures make obvious.
A record margin earned on a falling grade is a loan against the orebody.
The disclosure test
The producers worth trusting publish reconciliation between reserve grade and delivered grade, and they do it consistently rather than in the quarters that flatter them.
