Gold Mine By-Product Credits: When Other Metals Lower Gold Costs
A gold deposit may also contain economically recoverable silver, copper, lead, zinc, or other metals. When those secondary metals are sold, a miner may deduct their revenue from reported gold production costs as a by-product or co-product credit. The result can be a much lower cash cost or all-in sustaining cost (AISC) per ounce—even though the physical cost of mining and processing the ore has not disappeared.
How a by-product credit works
A mine designated primarily as a gold operation may treat revenue from secondary metals as a reduction of the costs attributed to gold. A co-product method may instead allocate costs among metals according to a stated methodology. The World Gold Council’s guidance on non-GAAP metrics says by-product and co-product credits are included as reductions in AISC and all-in costs, while also emphasizing disclosure and reconciliation because company methods and regulatory requirements can differ.
This distinction matters. Two mines with similar mining and processing expenses can report very different gold costs if one receives substantial revenue from copper or silver. A low “net of by-product credits” figure therefore describes an economic relationship, not necessarily a simpler or cheaper operation.
Gross metal value is not the credit
Investors should distinguish contained metal from recovered, payable, and sold metal. Metallurgical recovery determines how much metal reaches concentrate or doré. Smelter terms then determine the payable percentage, while transportation, treatment and refining charges, royalties, price-participation terms, and impurity penalties can reduce net revenue. Timing also matters because provisional concentrate sales may later be adjusted when final assays and market prices are known.
A 2025 SEC-filed Aranzazu Mine technical report, an external example unrelated to GBDS, disclosed separate payable percentages for gold, silver, and copper, together with transportation, treatment, refining, settlement, royalty, and impurity-penalty assumptions. Those details show why investors should not multiply headline grades by spot prices and call the result a usable credit.
Price assumptions can reshape reported margins
By-product credits introduce exposure to more than the gold price. A decline in copper or silver prices can raise net gold costs even if gold output and site spending are unchanged. Conversely, stronger secondary-metal prices can make gold costs appear lower. Recovery performance, concentrate quality, contract terms, exchange rates, and sales volumes can have similar effects.
The 2025 Mount Milligan technical report, another external example, estimated life-of-mine gold AISC on a by-product basis after accounting for copper and silver revenue. Its economic analysis separately disclosed gold, copper, and silver revenue, operating costs, treatment and refining costs, and metal-price assumptions—exactly the supporting information needed to understand the net cost figure.
A simplified hypothetical example
Hypothetical example: assume a mine sells 100,000 ounces of gold, incurs $140 million of operating costs and $20 million of sustaining costs, and earns $50 million of net by-product revenue. A simplified net cost would be $110 million, or $1,100 per gold ounce: ($140 million + $20 million − $50 million) ÷ 100,000 ounces. Before the credit, the same simplified figure would be $1,600 per ounce.
If the net by-product credit fell 30% to $35 million while everything else stayed constant, the simplified cost would rise to $1,250 per ounce. This illustration is not a forecast and omits many items found in formal AISC reconciliations, but it demonstrates the sensitivity clearly.
Questions investors should ask
Useful due-diligence questions include: Which metals are classified as by-products or co-products? Is the cost figure before or after credits? What prices, recoveries, payable percentages, and exchange rates are assumed? Are treatment charges, transport, royalties, penalties, and streaming obligations included? How sensitive are costs and project value to lower secondary-metal prices? Can the reported measure be reconciled to the financial statements?
The takeaway
By-product credits can be economically valuable, but they can also obscure the mine’s gross cost structure and create comparison problems. Investors should examine the metals behind the credit, the deductions between concentrate and cash, and the sensitivity of net gold costs to secondary-metal markets.
This article is for educational purposes only and is not investment, legal, accounting, or technical advice. Mining projects involve geological, metallurgical, financing, operating, commodity-price, environmental, and execution risks. Review primary disclosures and consult qualified advisers before making investment decisions.