Paul,
One could also interpret from reading the statement that cash accounting was employed, not accrual accounting, in an effort to show reduced operating cost per ounce of gold. This would revert at year end when audited income statement is produced.
I once caught Barrick doing this when they stated, in a report to shareholders, that the Goldstrike cash cost was (about) $287/oz. This did not included deferred cost of stripping which amounted to (about) $100/oz. Barrick's statements was later modified to show the full accrual costs, including capitalized stripping cost.
Read statements very carefully. Contrast any capitalized items against statement of operations to see if actual cash costs are being deferred. You also may see, from time to time, that current mining has been reduced, while gold still flows from the ore already placed on pads. This practice can temporarily inflate interim cash earnings by reducing current cash outlays. (By the way this is cash accounting, not accrual accounting, and it gets reversed when audited accrual basis year-end statement is prepared.) Reducing mining may later penalize cash income, but not accrual earnings, as cash costs rise to place new ore on pads but gold production declines temporarily due to less ore being placed under leach in prior period.
RH |
