UPDATE 2-Kinross Gold cuts reserves after mine plan review
Feb 12 (Reuters) - Kinross Gold Corp said on Wednesday that a "rigorous" review of its mine plans led to slashing its gold reserves by a third, even as the Canadian miner reported a narrower fourth-quarter net loss compared to the same period last year.
Kinross said its store of unmined gold stood at 39.7 million ounces of gold at the end of 2013, down 33 percent from 59.6 million ounces at the end of 2012. Analysts were not expecting the cut, since Kinross used a conservative price to estimate reserves a year ago.
The reduction reflects depletion through production, the divestiture of the Fruta del Norte project in Ecuador and the adoption of "fully loaded costing" on reserves, the Toronto-based company said.
Kinross' fully loaded costs, which it applied to operating sites, include operating costs, sustaining capital, mine waste management costs, and general and administrative expenses.
"The result is a reduction in proven and probable mineral reserves, primarily at Paracatu, but an increase in the value of our reserves, with higher grades and greater near-term cash flow expected at operations across the company," chief executive J. Paul Rollinson said in a statement.
Paracatu is Kinross' large gold mine in Brazil.
For the first time in years, miners around the world are telling their shareholders that reserves have significantly diminished, partly because of bullion's 28 percent price slide in 2013 and changes to focus on higher grade ore.
Although painful, reserve cuts are seen as helping nurse the gold-mining sector back to longer-term health by discouraging miners from seeking low-margin growth at the expense of profits. Reserves are considered the future source of production, cash flow and growth. Continued...