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GOLD MINING INDUSTRY ADOPTS STANDARD FOR REPORTING PRODUCTION COSTS

WASHINGTON, May 9 /PRNewswire/ -- In an effort to conform reporting practices within the gold mining industry, the industry has adopted a uniform format for reporting production costs on a per-ounce basis. The adoption of this standard by the industry will allow the financial community and individual investors to make meaningful comparisons of gold mining companies and their separate operations.

"The thrust of this effort is to provide sufficient information in a uniform format which will allow investors, analysts and others to make financial comparisons of companies and their operating properties," said Wayne Murdy, Senior Vice President and Chief Financial Officer of Newmont Gold Company. "We are not dictating accounting policies or practices for individual companies, we are establishing a reporting standard which producers may voluntarily adopt."

This production costs standard was developed under the aegis of the industry association, the Gold Institute, by a committee of senior financial executives representing 14 leading North American gold producers and chaired by Mr. Murdy. The standard, which appears below, was approved by the Board of Directors of the Gold Institute at its annual meeting in Los Cabos, Mexico last month.

"Several firms have already used the standard in preparing their 1995 annual reports," said Gold Institute President John Lutley. "It is our expectation that many others will incorporate this standard in the preparation of their 1996 financials."

In developing the standard, the committee vetted its standard with outside industry experts. The comments and views of industry analysts and national accounting firms were taken into consideration.

The committee is also studying how the industry could improve standards for resource reporting. "The objective is for industry to develop and adopt definitions and guidelines for reporting ore reserves, mineralized material and other exploration information in a consistent, internationally accepted and understandable manner," said Murdy. "Working with the regulatory community and other international organizations, we hope to be able to adopt adequate definitions and guidelines for the reporting of the quantity and quality of mineralization in a deposit for application throughout the gold mining industry.

The Gold Institute is a non-profit international association of miners, refiners, bullion suppliers and manufacturers of gold products.
 Gold Institute Production Cost Standard
 Per ounce
 of Gold (1)
 Direct mining expenses (2) $XXX
 Stripping and mine development
 adjustments (3) XXX
 Third-party smelting, refining
 and transportation costs XXX
 By-product credits (4) (XXX)
 Other XXX
 Cash Operating Costs XXX
 Royalties (5) XXX
 Production taxes (6)
 Total Cash Costs XXX
 Depreciation (7) XXX
 Depletion/amortization (8) XXX
 Reclamation and mine closure (9) XXX
 Total Production Costs $XXX


(1) Per ounce of gold produced or sold in accordance with each company's own reporting practices.

(2) Direct mining expenses include all expenditures incurred at the site, including inventory changes, site specific corporate charges (e.g. insurance, computer services, etc.) and in-mine drilling expenditures that are production related (e.g. in-fill drilling, grade control, etc.). Exploration expenditures are not included in direct mining expenses.

In case of a joint venture or partnership, management or overhead fees charged by that operation's operator, that are in addition to site-specific corporate charges, should be included in each company's mine-site cash expenditures.

(3) These adjustments include normalization of stripping costs at open-pit operations and normalization of costs associated with developing and accessing new production areas in underground operations, Footnote disclosure of the total amount of these adjustments is encouraged.

(4) Information with respect to by-product credits, on an operation-by-operation basis, should be disclosed in each company's external reporting documents.

(5) Information with respect to royalties, on an operation-by-operation basis, should be disclosed in each company's external reporting documents.

(6) Includes Nevada net proceeds tax, South Dakota severance tax and similar taxes. Ontario and British Columbia provincial mining taxes are considered to be forms of income taxes rather than property taxes, and as such should not be included in production cost calculations.

(7) Treatment of capital lease payments should follow the normal accounting practice of being excluded from cash costs but included in noncash costs as part depreciation expense.

(8) Additional footnotes may be required to disclose what amounts have been included or excluded in the calculations (e.g. includes purchase accounting adjustments, but excludes SFAS 109 tax accounting adjustments).

(9) Includes costs of final site reclamation which are accrued on a units-of-production basis over the life of an operation. To the extent that an operation elects to perform a portion of this final reclamation concurrently with active mining, these costs also should be included in noncash production costs.

(10) Only line item in excess of 5% of total costs need be separately disclosed. All other items may be grouped and reported as "other."

(11) A reconciliation of production cost information to the income statement should be provided.

(12) Disclosure of production costs on an operation-by-operation basis is encouraged.
 -0- 5/9/96


/CONTACT: Elizabeth Reinhardt of the Gold Institute, 202-835-0185/

CO: Gold Institute ST: District of Columbia IN: MNG SU:

KS-SL -- DCTH004 -- 1417 05/09/96 08:01 EDT
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Publication:PR Newswire
Date:May 9, 1996
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