The fall in the gold price has really emphasised how cash cost reporting can so easily be misunderstood and why it is being gradually overtaken as a metric by all-in sustaining costs.
by Lawrence Williams, MineWeb.com
The full absurdity of cash cost reporting for gold miners is really coming to the fore with the latest batch of quarterly and half yearly reports from the world’s leading gold mining companies. On a cash costs basis virtually all the world’s significant gold miners would appear to be profitable – most highly so, yet as we foreshadowed ahead of them on Mineweb the latest quarterly and half yearly profit figures coming out of the gold mining sector are, virtually without exception, dire.
One might have been forgiven from asking in the past why reported earnings have invariably worked out as being way below the optimistic estimates suggested by cash cost reporting, and this quarter the figures are really making the point that at current gold prices even the best of the world’s gold miners are either making losses, or are only at best marginally profitable. That’s a sobering fact for gold stock investors who may well have misunderstood the actual profit implications of the cash cost figures promulgated by most mining companies in their quarterly and annual reports in the past.
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