Definitions

NOTE:  in most cases, where numbers are taken from the gold company reports, GoldVal.com cannot guarantee that the most recently available information has been used in the compilation of the tables, charts and commentary contained in this web site. In all cases, the figures used will, by their very nature, be historic figures rather than current figures and, therefore, are not necessarily representative of present or future performance. All figures should be regarded as assumptions which are used for comparative purposes.

Computation Date – the date on which prices of gold company stocks and shares covered by this site and exchange rates are adjusted for the compilation of the tables and graphs given on this web site.

Share Price – the price of the ordinary shares in the company taken at the closing or during the day on the Computation Date, as obtained from stock exchange web sites. If not quoted in US$, the share prices will be converted from the quoted currency to US$ at an exchange rate based on that prevailing on the Computation Date. It should be noted that share prices and exchange rates are not necessarily recorded at the same time on the Computation Date.

Number of Shares – the number of shares in issue as reported by the company in their annual, quarterly or other reports. In some cases the number of shares in issue may be derived from information given by the stock exchange on which the company is listed or by a company such as Bloomberg.com. This number may not accurately reflect the actual number of shares in issue on the Computation Date.

Market Value – a general term meaning the value placed on a company by the market (which will be directly related to the price of the company’s shares). Market Value may be expressed in different ways, including Market Capitalisation and Enterprise Value.

Market Capitalisation (“MC”) – the number of issued shares multiplied by the share price- usually expressed as US$m.

Enterprise Value (“EV”) – This is derived by adjusting the Market Capitalisation for net cash or debt. This value is sometimes referred to as the Adjusted Market Capitalisation or the Firm Value. Net Cash of a company is deducted from Market Capitalisation to give Enterprise Value. Conversely, Net Debt of a company is added. In certain cases, Enterprise Value is believed to be a more useful comparative value measure as indicated in the examples given below:

The above hypothetical gold mining companies - A, B and C – all have the same level of production, reserves and resources, and also have the same Market Capitalisation. However, after adjusting for cash and/or debt, the Enterprise Values are quite different. In cases where a company has little net cash or debt relative to its Market Capitalisation, the use of EV in tables and charts for comparative purposes will show little difference to Market Capitalisation.

Net Cash / (Debt) – this figure is taken from the reports provided by the gold companies, either as stated by the company or computed from the company balance sheet. In the case of a computation (by GoldVal.com) this will usually be derived by taking the aggregate amount of current cash (or cash equivalent), and both short term and long term debt or financial liabilities. This measure may be quite clearly presented for some companies and less clear for others – depending on the reporting style, accounting practices or financial structure. A zero figure used by GoldVal.com may represent a lack of clear information rather than a computed estimate. The figure wil usually be obtained from the most recent financial reports of the company - which could be several months prior to the Computation Date. There is therefore no guarantee that the figure for Net Cash / (Debt) assumed by GoldVal.com on the Computation Date is truly representative of the actual situation.

Annual Gold Production – this figure is taken from the company reports. The figure may be the annual figure reported in the most recent annual accounts or it might be an annualised figure from a quarterly report or another reporting period. GoldVal.com will usually favour the use of the most recent reporting period of the company concerned – which may be a quarterly period. This figure may include Gold Equivalents.

Cash Operating Cost – the direct cost of gold produced or gold sold, usually expressed as $ per Ounce. This cost estimate will usually exclude non-direct costs (such as head office administration and overhead costs) as well as interest, depreciation and amortisation. The figure is often stated by the gold mining company and the same figure may be evident from the financial statements of the company. In some cases a cash cost figure may not be given, or the accounts may appear to indicate a figure different from that which is stated. Not all companies will necessarily compute the cash cost figure in the same manner. The Cash Operating Cost figure assumed in this web site may be based on annual accounts or other reporting periods. GoldVal.com will usually favour the most recent reporting period of the company concerned – which may be a quarterly period. This figure may be computed by the company concerned as being net of revenue received from non-gold by-products. Care needs to be taken to avoid double accounting in such cases. Given this situation, it is likely that comparative analysis relating to costs may be subject to inconsistencies and errors.

Cash Operating Profit – the profit derived from gold (or Equivalent) revenue received less the Cash Operating Cost. The figure may be stated by the gold mining company and the same figure may be evident from the accounts. In some cases, the Cash Operating Profit figure may not be given, or the accounts may appear to indicate a figure different from that which is stated. Not all companies will necessarily compute the Cash Operating Profit figure in the same manner. The Cash Operating Profit figure assumed may be based on annual accounts or other reporting periods. 

Estimated Operating Profit at $X per Ounce (“EOP-$XXX”) – this is a hypothetical figure used in several GoldVal.com comparative analyses, and represents the estimated cash operating profit that would be achieved at an assumed gold price and based on the assumed Cash Operating Cost for each company.

Total Cost or Production Cost – gold mining companies often report additional cost figures which may include non-direct costs, royalties, depreciation and amortisation. These figures are sometimes referred to in terms of the “Gold Institute Standard”. Although some companies still refer to this standard, it is understood that the Gold Institute was dissolved and the cost standard (which also included Cash Costs) has been formally abandoned as a result of new reporting standards. 

Reserves and Resources – these are taken from company reports, which are usually only updated fully on an annual basis and are usually contained in the annual financial statements. There are several different reporting codes or standards used by the various gold companies. These include: JORC (Australia); NI 43-101 (Canada); SAMREC (South Africa); CMMI (UK) and SME (USA).  The code adopted – sometimes with definitions of the terminology used – is usually, but not always, given in the company reports. There are many similarities in the various codes but not all reporting done by the various companies is necessarily directly comparable and care needs to be taken in this regard. In addition, even with companies that adopt the same code for the reporting of Reserves and Resources, it is still possible that different interpretations for the same code may be applied.

In this web site Resources are always reported as being INCLUSIVE of Reserves - even if the company reports in an exclusive manner.

The JORC Code (Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) has long been established to set out minimum standards of reporting of Reserves and Resources and other codes may have been based on the JORC Code. The JORC definitions will be briefly outlined here (taken directly from JORC Code – 2004 Edition):

-          A “Mineral Resource” is a concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

-          An “Inferred Mineral Resource” is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or uncertain quality and reliability.

-          An “Indicated Mineral Resource” is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

-          A “Measured Mineral Resource” is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.

-          An “Ore Reserve” is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes all diluting materials and allowances for losses, which may occur when material is mined. Appropriate assessments and studies have been carried out, and include consideration and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and government factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.

-          A “Probable Ore Reserve” is the economically mineable part of an Indicated, and in some cases, a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistaically assumed mining, metallurgical, economic, marketing, legal, environmental, social and government factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.

-          A “Proved Ore Reserve” is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and government factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.

NOTE for USA Gold Companies - The US SEC Industry Guide 7 does not permit the disclosure of identified material (defined as Mineral Resources in the SME Guide and other international codes) having potential economic benefit outside of Proven and Probable Reserves, unless (1) this material is required to be disclosed by foreign or state law or (2) estimates have been provided to others in the context of an acquisition, merger or consolidation. This creates some difficulty of comparison and also requires many gold companies listed outside the USA to provide specific notices for US reporting purposes.

Gold Reserve Life (“ReL”) – this is the hypothetical life of the gold mining company, expressed in years, computed by dividing the Gold Reserves by the currently estimated Annual Gold Production.

Gold Reserve Value (“ReV - $XXX”) – the hypothetical value, usually expressed in US$m, computed by multiplying the Gold Reserves by the Estimated Operating Profit/Oz (which assumes a certain gold price ($XXX)).

Discounted Gold Reserve Value (“DReV - $XXX – X%”) – the hypothetical value, usually expressed in US$m, computed by multiplying the Gold Reserves by the Estimated Operating Profit/Oz (which assumes a certain gold price ($XXX)) and by further discounting that value at a certain annual discount rate (X%) over the Gold Reserve Life.

Gold Resource Life (“RoL”) – this is the hypothetical life of the gold mining company, expressed in years, computed by dividing the Resources by the currently estimated Annual Gold Production.

Gold Resource Value (“RoV - $XXX”) – the hypothetical value, usually expressed in US$m, computed by multiplying the Gold Resources by the Estimated Operating Profit/Oz (which assumes a certain gold price ($XXX)).

Discounted Gold Resource Value (“DRoV - $XXX – X%”) – the hypothetical value, usually expressed in US$m, computed by multiplying the Gold Resources by the Estimated Operating Profit/Oz (which assumes a certain gold price ($XXX)) and by further discounting that value at a certain annual discount rate (X%) over the Gold Resource Life.

Gold Equivalent – some gold companies may produce other metals or minerals, such as Silver , Copper and Uranium Oxide. Such companies may report the production, cash operating Costs, Reserves and Resources in terms of Gold Equivalents. Gold Equivalents are generally based on the value of the non-gold commodity relative to the gold price. For example, at a Gold Price of $935 per Ounce and a Silver Price of $13 per Ounce, approximately 72 ounces of Silver will be equivalent to 1 ounce of Gold.  Similarly for copper – at a copper price of $2.41 per Pound, approximately 388 Pounds of Copper will be equivalent to 1 ounce of gold. In cases where the Gold Equivalents are not reported by the company concerned these may be estimated by GoldVal.com. In general, the Gold Equivalents given in this web site will be limited to Silver expressed as a Gold Equivalent - even if there are other metals produced or in reserves and resources which have signifecant value.