By Liezel Hill
Business Day (South Africa)
TORONTO — The gold-mining industry, which has underperformed the precious metal’s price for each of the past six years, is pledging to report costs more accurately as part of its efforts to win back investor confidence.
Barrick Gold Corporation and Goldcorp, the two biggest producers by market value, have begun reporting “all-in sustaining costs” for the first time. The new measure averaged $941 an ounce between the two companies in the fourth quarter. That’s 50% higher than the $626 average cash cost they disclosed in the preceding three months.
The largest gold companies are seeking to lure investors back to the $300bn industry after a string of money-losing multibillion-dollar takeovers and over-budget projects. Barrick and its competitors are vowing to focus on margins and to get a grip on soaring production costs, rather than boosting output.
Gold producers “have really done themselves a huge disservice by effectively walking around for the last 12 years promoting the gross margin as opposed to the net or the operating margin,” said Joseph Wickwire, the Boston-based manager of Fidelity Investments’ $2.9b n Select Gold Portfolio fund.