A couple of artciles with some pre write ups before the link. Courtesy of Ed Steer
Top 10 gold miners: cash cost reporting comes home to roost
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.
There is a case for reporting cash costs though, but only in context. They do signify how an individual mine can fare in a given gold price environment. What they do not take into account is the myriad of other costs, royalties, taxes and overheads a mining company can face in trying to sustain production across a group of operations – and this is why many miners are beginning to report what are now described as all-in sustaining costs – which in many cases are actually around double the cash cost figures or even more. This has been put forward as a sensible way of reporting by the World Gold Council. And by and large the major miners at least are falling into line on this.
http://www.mineweb.com/mineweb/content/en/mineweb-whats-new?oid=199552&sn=Detail
Barrick Takes Write-down, Cuts Dividend as Gold Declines
Barrick Gold Corp., the world’s largest producer of the precious metal, took $8.7 billion of write-downs and cut its dividend after gold prices fell.
Barrick posted a second-quarter net loss of $8.56 billion, or $8.55 a share, compared with net income of $787 million, or 79 cents, a year earlier, the Toronto-based company said today in a statement. The miner said it reduced its quarterly payout to 5 cents a share from 20 cents to improve liquidity.
“This is the prudent course of action,” Chief Executive Officer Jamie Sokalsky said in the statement. “We recognize the importance of dividends to our shareholders, and it is our goal to return more capital to investors in the future.”
Gold-mining companies have announced at least $21 billion of write-downs in the past two months after the metal’s steepest quarterly drop in London trading in more than nine decades. Barrick wrote down the value of its delayed Pascua-Lama mine in the Andes by $5.1 billion and took impairments on other assets including goodwill and a copper mine in Saudi Arabia.
Sokalsky, like every other gold and silver mining executive, knows precisely why they're in such dire straits...and that's because the precious metal prices are rigged...something that gold fund manager John Hathaway finally got around to admitting in his commentary at King World News posted further up in the Critical Reads section. But Sokalsky, like all the heads of the biggest gold and silver producers, is bought and paid for...and would prefer run their industry, their companies...and their respective shareholders into the dirt, rather than confront the issue.
http://www.bloomberg.com/news/2013-08-01/barrick-takes-writedown-cuts-dividend-as-gols-declines.html