The economics of investing in gold production are complex and mining is a long-term commitment. Gold is scarce and the vast majority of exploration activity by gold mining companies does not find commercially-viable quantities of gold. Once a suitable ore body is identified, it generally takes at least ten years to develop a large-scale gold mine. Better understanding of these life-cycle economics will allow all stakeholders to work together better to maximise mining operations’ development potential.
The World Gold Council worked with our Members to develop a Guidance Note on ‘All-In Costs’. These are metrics outside of the Generally Accepted Accounting Principles (GAAP), the standard international guidelines for financial accounting. They provide further transparency and greater consistency in the way that mining organisations report their costs. Gold-mining companies can use the metrics as part of their overall reporting disclosure. This can help all stakeholders in the mining value chain to better understand the impact of gold mining, its associated economics and the risk mitigation approaches employed. We review the Guidance Note periodically to ensure it continues to support consistency of application and in light of regulatory changes. In light of new accounting standards and to support further consistency of application, the World Gold Council, in November 2018, published an updated Guidance Note, which includes incremental enhancements.
Historically, one of the challenges in presenting expenditure data has been that different companies use different approaches to categorise their spending. The World Gold Council worked with our Member companies to develop a common Guidance Note on Expenditure Definitions, which has been issued as part of our work to develop consistent reporting approaches for the gold mining industry.
Large-scale gold-mining companies have also been at the forefront in the implementation of the EITI, a global standard for the mining and energy industries that promotes revenue transparency and accountability.
Under the EITI, companies in the extractive industries disclose their payments to government, while governments publish their receipts, opening up the process to the scrutiny of citizens and civil society.