AISC vs cash cost: what's the difference, and why is AISC often misleading?
Cash cost captures only direct mining costs, while all-in sustaining cost (AISC) adds sustaining capital, site G&A, and reclamation — and AISC becomes misleading when it’s reported in "equivalent ounces" (AgEq/AuEq) and the scenario metal price runs well ahead of the price used to compute the equivalence.
Cash cost understates the true cost of staying in production; AISC is the more honest margin denominator — but only when its denomination is stable.
The trap: when AISC is quoted per equivalent ounce, the equivalent-ounce count shrinks as the primary metal’s price rises, so a fixed-dollar cost base divides into fewer ounces — inflating per-ounce AISC while per-ounce revenue rises, compounding to overstate free cash flow by 100%+ in tested cases.
The fix: when the scenario price exceeds ~1.5× the reporting-period price, switch from the per-equivalent-ounce formula to physical-metal revenue minus an absolute-dollar cost base (each metal at its own scenario price, costs inflated forward).
Worked example
- CYL.AX — a producer-developer hybrid (Australia, Tier 1, 9-Factor 75.2) — the polymetallic, mid-transition profile where equivalent-ounce reporting bites hardest. Illustratively: 6,000 oz Au is ~438K AgEq oz at $30/oz Ag but only ~240K at $150/oz — same metal, 45% fewer "ounces."