(Reuters) – The Canadian gold mining company, Kinross Gold Corp, cuts its gold reserves by 33% after a “rigorous” review of mining plans and reduced Q4 net losses than the previous year’s Q4.
Kinross unmined gold reserves went down from 59.6 million ounces by the end of 2012 to 39.7 million ounces at 2013 review. This cut wasn’t expected by analysts. The gold mining company adopted “fully loaded costing” to estimate reserves.
Fully loaded costs applied by Kinross gold included operating costs of mines, mine waste costs, sustaining capital, and general and administrative expenses.
The results of this review were reduction of probable and proven mineral reserves, mainly at Paracatu mine in Brazil, and feasible depletion of Furta del Norte in Ecuador. However, this review resulted in an increase in the value of Kinross’ gold reserves. The company expects higher near-term cash flow due to focusing on higher grades.
This loss in Kinross’ gold reserve was mainly due to lower gold price, and it might regain its value if mining costs were lower or gold prices increased.
Kinross Gold faced $3.2 billion write-down a year earlier in 2 mines in South Africa. The Company reported $740 million net loss in the last quarter in 2013. $544.8 million were related to Maricunga gold mine in Chile. It lost $2.98 billion in the same period last year.
Kinross Gold Corp said it expects to produce from 2.5 million to 2.7 million ounces of gold and silver in 2014. It produced 2.6 million gold equivalent ounces in 2013. Kinross’ gold ounce production costs rose from $953 to $1,169 while gold price fell from $1,707 to $1,268 per ounce.