Washington, D.C. (February 13, 2002) – The Gold Institute has clarified the preferred method by which companies should account for open pit mine development expenditures when reporting production costs using The Gold Institute Production Cost Standard. The clarification follows a review last year by a committee of financial executives from the gold mining industry.

To improve the reporting practices within the gold mining industry, the North American gold industry in 1996 adopted The Gold Institute Production Cost Standard, a uniform format for reporting production costs on a per-ounce basis. The purpose of the Standard is to provide analysts and other market observers with a means to make more-reliable financial comparisons of companies and their operations. The Standard was later revised in 1999, and a copy of the revised Standard can be found at www.goldinstitute.org/news/pr8nov99.html.

In announcing the 1999 revision of the Standard, the Institute indicated that it would later examine the use of "staged pit accounting" versus the more commonly used life-of-mine "deferred stripping accounting" to determine if further refinement of the Standard was required. A committee of financial executives from Institute member companies reviewed the issue and noted that the two methods could result in significant differences in reported cash costs, since staged pit amortization charges generally have been reported as non-cash charges.

The committee noted that while both methods were theoretically correct, "deferred stripping" is the more widely used method in the gold industry. Therefore, its adoption as the preferred method for reporting production costs will be the most effective means of achieving a greater degree of comparability within the industry. The use of a single uniform approach to account for stripping costs will help ensure objective comparability between companies and between operations. The committee also noted that companies employing alternative accounting methods, such as "staged pit accounting," should disclose the effect of these methods on per-ounce calculations. Adoption of "deferred stripping accounting" for fiscal 2002 reporting purposes is encouraged.

For Further Information Contact:

Mike DiRienzo
The Gold Institute
1112 16th Street, N.W., Suite 240
Washington, D.C. 20036
Tel: (202) 835-0185
Fax: (202) 835-0155
E-mail: info@goldinstitute.org