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A Look at Kinross Gold’s Reserves and Resources Update

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Mar. 13 2019, Published 11:01 a.m. ET

Reserve replacement

Gold miners (GDX) (GDXJ) face the problem of compensating for every ounce they take out of the ground. While mines have finite lives, the companies operating them do not, so it’s important to look at miners’ estimates for their reserves and resources and the assumptions they use to calculate them.

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Reserves and resources update

Kinross Gold (KGC) has maintained its gold price assumption of $1,200 per ounce for estimating reserves and $1,400 per ounce for estimating resources since 2011. Kinross’s reserves were 1.5% lower YoY (year-over-year) at 25.5 million ounces at the end of 2018. The addition of ~1.9 million ounces of mineral reserves from Fort Knox Gilmore and ~343,000 ounces from exploration mostly offset the decline during the year.

Silver reserves, on the other hand, increased 1.3 million ounces in 2018 to 53.9 million ounces as of the end of 2018. The increase was mainly the result of additions at Kupol.

Kinross’s mineral resources at the end of 2018 were 27.8 million ounces compared to 29.6 million ounces at the end of 2017. This reduction in resources was mainly the result of the conversion of 1.9 million ounces of resources from Fort Knox to mineral reserves.

Other miners’ reserves

The reserves of Kinross’s peers (NUGT) (RING) have also been declining. Newmont Mining (NEM) reported reserves of 65.4 million ounces in 2018, 4.5% lower than in 2017.

Agnico Eagle Mines’ (AEM) reserves increased 7% to 22 million ounces in 2018. The company’s reserve grade also improved 8%. Barrick Gold (GOLD) reported mineral reserves of 64.5 million ounces at the end of 2018, a decline of 3.4% YoY.

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