- Kinross Gold (KGC) -2.9% premarket after surprising investors yesterday in slashing its year-end 2013 gold reserves by 33% to 39.7M oz. - a massive decline, particularly since KGC used the same $1,200/oz. gold price in both years to calculate reserves.
- KGC wants to stick to high-margin ounces, so it calculated reserves uses a "fully-loaded costing methodology" that factors in costs for sustaining capital, waste management, and other work; the result is that millions of marginal ounces were dropped out of reserves.
- The irony is that KGC was the one senior gold company that was not expected to cut its year-end reserves, since it had used the conservative $1,200/oz. price to calculate reserves even before gold prices sank.