Reserves & Resources

Reported Reserve and Resource Figures

The following graph shows the reported Reserves and Resources of the Senior Gold Companies (listed in order of Market Capitalisation). It should be noted that Resources include Inferred Resources (which category is not officially recognised in USA - see Definitions):

Note that Newmont (as a US company) does not report any resource figures and so any statistics on resources for Newmont will be meaningless.

The following table shows the Reserve and Resource figures as reported by the various Senior companies. As described in the Definitions section, Resources are made up of Measured, Indicated and Inferred Resources. The Inferred category is the category having the lowest level of certainty and, in some cases, gold companies may report and highlight the Measured and Indicated categories quite separately from the Inferred category (which may also be given in less detail). The general inference from this is that the companies themselves are promoting more weight and emphasis to be placed on the Measured and Indicated categories of Resources.

The GoldVal.com Gold Company Review will provide more detailed analysis on the different categories of Resources.

Value per Ounce of Reserve

The following graph shows Enterprise Value per reported Reserve Ounce (including Proven and Probable Reserves) - given in order of Market capitalisation:

The average value (EV per Reserve Oz) within this Senior froup is $453/Oz. The company with the highest rating on this measure is Eldorado ($1031/Oz). Other companies with above average values are GoldCorp, Agnico Eagle, Buenaventura, Randgold Resources, Fresnillo and Red Back Mining. The 3 South African companies - AngloGold Ashanti, Gold Fields and Harmony - have lower than average values on this measure. Polyus - a Russian company - also shows a low value on this measure.

Value per Ounce of Resource

The following graph shows Enterprise Value per reported Resource Ounce (including Measured, Indicated and Inferred categories) - given in order of Market capitalisation:

The average value (EV per Resource Oz) within this Senior group is $238/Oz. The company with the highest rating on this measure is Eldorado ($489/Oz). Other companies with above average values include Agnico Eagle, Buenaventura, GoldCorp, Randgold Resources and Red Back Mining. The 3 South African companies - AngloGold Ashanti, Gold Fields and Harmony - have lower than average values on this measure.

Reserve Life

The following chart shows the Reserve Life for the Senior Gold Companies – which is the theoretical life of the Reserves (or the Company if no additional reserves are identified) on the assumption that annual production is maintained at the current level. In this case the graph is capped at 50 Years – although some producers have a Reserve Life of greater than that time based on current production levels. See Definitions for full explanation. 

Resource Life

This will be covered in the GoldVal.com Gold Company Review - see Services section.

Reserve Value (Undiscounted & Discounted)

The following graph shows the Reserve Value – which is a theoretical value which assumes that the Reserves of the Gold Company are exploited at the current Operating Costs and at an assumed on-going gold price – in this case $1132/Oz (the approximate price at the Computation Date). The Discounted Reserve Value incorporates the time value of money and discounts the Reserve Value over the Reserve Life period at an assumed discount rate – in this case 8% pa. See Definitions for explanation of terms.

It is evident that in many cases the Undiscounted Reserve Value is well in excess of the Enterprise Value (and generally the Market Capitalisation) of the gold company. This is understandable as the Total Production Costs and other additional costs are not accounted for in this simplistic estimate. The discounted Reserve Value appears in some cases to approximates the Enterprise Value – as can be seen in the following comparison:

In the above comparison a value of 1.0 means that the Discounted Reserve Value is equal to the Enterprise value. Under these assumptions (Gold Price = $1132 and Discount Rate = 8%pa) the average ratio for the Senior companies was 1.02. This suggests that this parameter could be a useful tool for valuation purposes – but there is still a wide variation and it can also expected that different results will be obtained from different sectors.

Mid-Cap and Junior Gold Companies

Presentation of similar information for the Mid-Cap and Junior companies is currently beyond the scope of this web site. However, all of this analysis on Reserves and Resources (including more detail on the different categories of Resources) will be provided in the GoldVal.com Gold Company Review. This work will include sensitivity analysis for different gold prices. (See Services section)