Gold miners (GDX) (SGDM) face the problem of compensating for every ounce they take out of the ground. While mines have finite lives, the companies operating them don’t. Therefore, investors should look at how miners are trying to replace and grow their reserves. Investors should look at the assumptions used to calculate the reserves.
Newmont Mining (NEM) reported reserves of 65.4 million ounces for 2018—4.5% lower compared to 2017. While the company added 6.7 million ounces of reserves, which was ahead of its own target, negative revisions of 3.6 million ounces and the depletion of 6.1 million ounces more than offset the increase.
The major reserve additions include:
- the first-time declaration of 2.2 million equity ounces from the Yanacocha Sulfides project
- 8 million ounces each at Tanami and Cripple Creek & Vector
- 6 million ounces at Ahafo Open Pits
- 5 million ounces at Carlin Underground
- 4 million equity ounces at Turquoise Ridge
Newmont Mining’s average reserve grade increased 4% to 1.19 grams per ton. The increase was mainly due to higher grade additions at Yanacocha Sulfides, Tanami, and Carlin Underground.
The company’s gold resources increased to 55 million ounces—up 14% YoY (year-over-year).
Other miners’ reserves
Kinross Gold’s (KGC) reserves fell 1.5% YoY in 2018 to 25.5 million ounces.
Agnico Eagle Mines’ (AEM) reserves increased 7% YoY to 22 million ounces in 2018. The company’s reserve grade also rose 8%.