A Weaker Loonie Lowers the Cost of Mining Gold in Canada

Greenstone, Equinox Gold's open-pit mine in northern Ontario, sells its gold in US dollars and reports its costs to shareholders in US dollars. Much of what it takes to run the mine, from payroll to contractors, is paid in Canadian dollars.

That mismatch makes the exchange rate a cost line. On October 16, 2026, the Bank of Canada's daily rate was 1.4154 Canadian dollars per US dollar.

Two of the largest gold producers with mines in Canada planned for a stronger loonie. Agnico Eagle Mines built its 2026 cost guidance on 1.36, according to its second-quarter release, and Equinox Gold built its guidance on 1.34, according to its most recent MD&A.

When the loonie weakens, a Canadian dollar spent at the mine converts into fewer US dollars on the cost report. The trucks move the same tonnes. The reported cost per ounce falls anyway.

The gold producers dominated Maple's coverage this week, from Equinox Gold's largest quarter of the year on October 13 to Aya Gold & Silver's record quarter and the ounces B2Gold needs in the second half. Production comes first. The cost figures arrive with the full results, starting October 28, and part of what they show this time will be the currency.

Two separate forces set a cost per ounce

All-in sustaining cost, usually shortened to AISC, is the number the industry uses for what it takes to keep a mine producing an ounce: the cash spent mining and processing, the royalties, the capital needed to sustain the operation and a share of head-office cost. It is a non-IFRS measure, meaning the accounting standards do not define it, so each company explains its own calculation in its MD&A.

Two quite different things move it. One happens at the mine: the grade of the ore, the tonnes processed, the recovery in the mill, the price of labour and consumables. The other happens in the currency market, and it changes the US-dollar value of every Canadian-dollar invoice without touching the operation.

The companies separate the two themselves when the currency explains a change. In February, Agnico Eagle said the midpoint of its 2026 cost guidance sat about 12 per cent above 2025, and put about 60 per cent of that increase down to higher royalty costs and a strong Canadian dollar.

Its second-quarter release made the same point about results. Production costs per ounce in the first half of the year rose partly because the Canadian dollar had strengthened against the US dollar.

The loonie has since turned. The Bank of Canada's daily series shows its strongest 2026 reading at 1.3515 on January 29 and its weakest at 1.4271 on October 9. The quarterly averages in the table below are the desk's calculation from the Bank's daily figures.

What C$1,000 of mine cost is worth in US dollars

The mechanism fits in a single division. A bill of C$1,000 paid at a Canadian mine is reported as C$1,000 divided by the exchange rate.

Against Agnico's assumption, the October 16 rate takes 3.9 per cent off the US-dollar value of a Canadian-dollar cost. Against Equinox's, it takes off 5.3 per cent. Between the second-quarter average and the third-quarter average, the change was 1.1 per cent, which is the part already inside the results due this autumn.

Greenstone shows the scale at one mine. Equinox reported its second-quarter AISC there at US$2,207 an ounce sold, which is about C$3,055 at that quarter's average rate.

Reported at 1.4154, the same Canadian-dollar cost would come to about US$2,158, roughly US$49 lower.

That figure is a ceiling, and a generous one. It assumes every dollar Greenstone spends is a Canadian dollar, and Equinox does not publish the split. Fuel and a good deal of equipment are typically priced off US-dollar benchmarks wherever the mine sits.

Why the full effect never reaches the cost report

The exchange rate passes through to the reported number only in part.

Hedges come first. Agnico Eagle's July release said it had hedged about 60 per cent of its estimated remaining 2026 Canadian-dollar exposure, up from about 40 per cent in February. The contracts protect it against rates below 1.38 on average and let it benefit from a falling loonie up to an average of 1.42.

A hedge of that shape limited the damage while the loonie was strong, and it caps how much of any further decline the company keeps. The October 16 rate sits inside that band.

Royalties follow the gold price, not the currency. Agnico's guidance assumes US$4,500 an ounce for its Nunavut royalty payment, and its second-quarter cost increase came partly from royalties linked to the gold price.

Diesel is the third buffer. Agnico estimates that a 10 per cent change in diesel prices moves its total cash costs by about US$4 an ounce for the second half of 2026, and the Bank of Canada said on September 2 that elevated refined-energy margins were keeping fuel prices high.

Proportion matters too. Agnico reported a second-quarter AISC of US$1,459 an ounce against an average realized gold price of US$4,483. If every dollar of that cost were Canadian, a 3.9 per cent currency effect would come to about US$57 an ounce, a small fraction of the price it realized. The currency is a real line in the margin. The gold price is the margin.

Only the mines in Canada get the benefit

A Canadian listing does not mean Canadian costs. Maple's October 12 piece on Canadian miners' foreign assets set out how much of what Toronto-listed miners own sits abroad. A producer whose mines are in Mexico, Nicaragua or West Africa pays its bills in pesos, córdobas or CFA francs, and the loonie does nothing for those costs.

The two producers in the table sit at different points on that spectrum. Equinox's October 13 production release put 140,931 of its 237,019 third-quarter ounces at Greenstone, Musselwhite and Valentine, its three Canadian mines. Musselwhite counted for August and September only, because the Orla Mining combination that brought it in closed on July 31.

Agnico leans further toward Canada. Its seven Canadian mines produced about 85.4 per cent of its 855,816 second-quarter ounces, with the rest from Australia, Finland and Mexico.

There is a second effect for anyone who owns these shares in Toronto. A company that earns and reports in US dollars translates into more Canadian dollars when the loonie weakens, so the Canadian-dollar value of its profit rises alongside the US-dollar cost falling. The two effects run in the same direction for a Canadian holder, and neither has anything to do with how the mine performed.

October 28 starts the cost season

Agnico Eagle releases its third-quarter results after the close on October 28, with a conference call the next morning. Equinox Gold follows on November 9. Agnico has already named the Canadian dollar as a cost driver twice this year, in February and in July.

Some of this cannot be known from the outside. Neither company publishes the share of its costs paid in Canadian dollars, so the size of the currency effect at any single mine is an estimate with an upper bound.

The third-quarter average captured only part of the move to 1.4154. And the rate swung about 5.6 per cent between the loonie's strongest and weakest 2026 readings, so a cost improvement that rests on it can reverse without any change at the mine.

The ounce mined in Ontario this autumn is cheaper partly because the loonie is, and the companies' own cost bridges will say how much.