USGS releases first study to assess global earthquake risk to mineral supplies
Earthquakes have the potential to substantially affect mining operations, leading to supply chain disruptions that adversely affect the global economy.
The Australian (paywall) reports the actual cost of mining gold is over 50% higher than the cash costs gold producers disclose in financial statements.
Analyst Stephen Thomas of Bell Potter, an Australian brokerage, found that “the average total production cost was $1,170 an ounce, compared with an average reported cash cost of $773 an ounce.”
These figures are in line with new reporting standards announced by Goldcorp (NYSE:GG) earlier in January.
The company, the world’s second largest gold miner, will be using a an “all-in sustaining cash cost” measure to more fully define the total costs associated with producing gold.
Goldcorp said the “. . . measure seeks to reflect the full cost of gold production from current operations.”
Examples of all-in sustaining cash costs would include by-product cash costs, sustaining capital, exploration expense, and administrative expense. New project capital will not be included in the calculation.
For example Goldcorp’s 2013 cash costs are forecast at $525 to $575 per ounce, but the all-in sustaining cash costs are $1,000 to $1,100.
The World Gold Council has been lobbying for the change, which it believes will give a better window into a company’s profitability. It hopes the accounting changes becomes an industry standard.
