Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
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NEWS-LEADING DEVELOPMENTS 6% and 23%, respectively, from second quarter 2012; • All-in sustaining gold production costs of $1,136/oz, excluding stockpile writedowns, or $1,548/oz, reflecting stockpile write-downs; • Average realized gold and copper prices of $1,386/oz and $2.66/lb, respectively; and • Maintaining full-year 2013 attributable production outlook of 4.8 million to 5.1 million oz of gold and 150 million to 170 million lb of copper. As a result of its impairment charge, Goldcorp reported a net loss in the second quarter of $1.93 billion compared to net earnings of $268 million in the second quarter of 2012. Goldcorp President and CEO Chuck Jeannes said, "Gold production across the portfolio was as planned during the second quarter, but revenues and operating cash flows were significantly impacted by lower realized gold prices, timing of gold production, and a temporary increase in inventory at Red Lake. Almost half of our total quarterly gold and silver sales occurred in the month of June, which coincided with a period of particularly weak prices for the metals." Goldcorp's second-quarter financial highlights included: • Revenues of $889 million; • Gold sales of 624,300 oz on gold production of 646,000 oz; • All-in sustaining costs of $1,279/oz; • Cash costs of $646/oz on a by-product basis and $713/oz on a co-product basis; and • Reconfirmed 2013 production guidance of 2.55 million to 2.8 million oz at total cash costs of between $1,000 and $1,100/oz on an all-in sustaining cost basis, $525 to $575/oz on a by-product basis, and $700 to $750/oz on a coproduct basis. Ontario Securities Commission Review Finds Deficiencies in NI 43-101 Reporting The Ontario Securities Commission (OSC) has issued a report based on a staff review of 50 selected NI 43-101 and Form 43101F1 technical reports filed on SEDAR by Ontario mining securities issuers between June 30, 2011, and June 29, 2012. The selected reports are a sub-set of a total of 460 reports filed during that time period. Canada's NI 43-101 reporting requirements came into effect in February 2001 and were last updated in June 2011. Form 43-101F1 came into effect in April 2011. 6 E&MJ; • AUGUST 2013 In summary, the OSC review found that 40 (80%) of the technical reports reviewed had some form of non-compliance with the requirements of Form 43-101F1. Approximately 40% of these reports had at least one major non-compliance concern. Another 40% had minor non-compliance issues. Only 20% were found to be fully compliant. The fact that 40% of the reports had at least one major non-compliance concern is "unacceptable," the OCS report stated. "Although significant efforts have been made to comply with the disclosure requirements in NI 43-101, issuers and qualified persons need to further improve their disclosure. We will continue to review Technical Reports by Ontario mining issuers as part of our overall disclosure review program." The OSC review found reporting deficiencies to some extent in all sections of one or another of the technical reports. However, significant deficiencies were most often found in the sections on mineral resource estimates; environmental studies, permitting, and social or community impact; capital and operating costs; economic analysis; and interpretation and conclusions. Other sections of the report that had frequent disclosure deficiencies included the summaries, the project histories, and the certificates of the qualified persons. Based on the results of the review, the OSC report offers guidance in the reporting of several areas of specific concern. Regarding mineral resource estimates, the report reminds qualified persons that "mineral resources, by definition, must have reasonable prospects for economic extraction based on justifiable technical and economic factors. These factors are typically reflected in the cut-off grade and metal price assumptions and other constraints such as the geological model, conceptual pit shell, or mine model." The review also found that 32% of the technical reports on advanced properties did not adequately disclose information related to environmental permits or the social or community impacts of developing the mineral project. Also, some technical reports did not disclose how surface rights issues would be addressed or whether there was an exploration agreement in place or under negotiation with local First Nation communities. Regarding costs, the OSC report reminded qualified persons that cost estimates should not be a single bottom-line number but should include the main components of estimated capital and operating costs and the basis for these estimates. Regarding economic analysis, the report commented that "It is potentially misleading for a technical report on an advanced property to disclose only pre-tax cash flows and economic outcomes or to disclose only positive metal price changes or only up-side sensitivity analysis." Also, "Qualified persons should consider including in the technical report a table showing the significant project-specific risks, potential outcomes, and mitigating factors, along with supplementary discussions. Possible opportunities may also be included, if reasonable." The 17-page OSC report is available as a free download at: http://www.osc.gov. on.ca/documents/en/Securities-Category1/ sn_20130627_43-705_rpt-tech-rpt-mining-issuers.pdf. WGC Publishes Cost Reporting Guidance The World Gold Council (WGC) has published a Guidance Note on "all-in sustaining costs" and "all-in costs" metrics that gold mining companies can use in reporting their costs. WGC worked with its member companies to develop these non-GAAP reporting measures to provide further transparency into the costs associated with producing gold. The WGC Guidance Note defines "all-in sustaining costs" as an extension of existing "cash cost" metrics, which incorporate costs related to sustaining production. Its "all-in costs" include additional costs that reflect the varying costs of producing gold over the life-cycle of a mine. An "adjusted operating costs" sub-total of "all-in sustaining costs," reported in US$/gold oz sold, includes: on-site mining costs (on a sales basis); on-site general and administrative costs; royalties and production taxes; realized gains/losses on hedges due to operating costs; community costs related to current operations; permitting costs related to current operations; third-party smelting, refining, and transport costs; site-based noncash remuneration; stock-piles and/or product inventory write down; operational stripping costs; and by-product credits. Additional elements of "all-in sustaining costs" include: corporate general and administrative costs, including sharebased remuneration; reclamation and remediation of operating sites, including accretion and amortization; sustaining exploration and study costs; sustaining capital exploration; sustaining capitalized (Continued on p. 12) www.e-mj.com