A mining company in Ghana has announced that gold production costs will rise this year in comparison with 2007.
Jeff Huspeni, vice-president of Africa Operations, told Reuters that the cost per ounce of gold excavation would rise from $396 last year to between $485 and $520 this year as a result of logistical factors.
He said that the rising price of oil and labor is having a negative effect on cost, while low levels of water in the Volta Dam has resulted in electricity being used from generators.
This can cost as much as four times more than power from the Volta River Authority power utility, the news provider reports.
Mr Huspeni said that situation is difficult for the gold mining sector.
"I look at the horizon and say that we still have the challenge of obtaining sustainable, reliable and competitively priced power for the longer term. We need the security of a stable power source," he said.
Today's news could prove supportive for gold prices, as the World Gold Council recently released figures which show that the global demand during the first quarter of 2008 was positive and especially strong in the developing world.
Looking to Buy Gold today? For direct access to live Gold Market prices - and to save up to 80% compared with coin dealers' fees - click through to BullionVault now