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It should also be noted that the mining industry is in early stages of defining an industry-wide standard on the reporting of "all-in cash costs" hence, the definition adopted by the mining industry may differ from the Company's current definition. The Company may modify the calculation of its "all-in cash cost" to conform to the industry's standard once it is known.
Management uses all-in cash cost per ounce produced to evaluate current operating performance and for planning and forecasting of future periods. Management believes that the presentation of this new measure is useful for the investor because it allows investors to view results in a manner similar to the method used by management.
Operating Cash Cost per Ounce Produced and Total Production Cost per Ounce Produced can be reconciled as follows: Year ended Fourth Quarter December 31, December 31Unaudited($ millions, unless otherwise specified) 2012 2011 2012 2011 ----------------- ----------------Centerra:Cost of sales, as reported $ 387.5 $ 382.3 $ 165.2 $ 104.1 Less: Non-cash component 142.2 98.4 91.1 30.3 ----------------- ----------------Cost of sales, cash component $ 245.3 $ 283.9 $ 74.1 $ 73.8Adjust for: Refining fees & by-product credits (1.2) (3.3) (0.7) (0.3) Regional office administration 21.0 21.3 5.6 5.9 Mining Standby Costs 4.6 0.2 - - Non-operating costs 32.6 (14.1) 15.2 - Inventory movement (45.7) 34.4 (15.3) 11.9 ----------------- ----------------Operating cash cost $ 256.7 $ 322.4 $ 78.9 $ 91.3 Depreciation, depletion, amortization and accretion 142.6 99.3 91.2 30.5 Inventory movement - non-cash 43.0 19.5 48.7 2.5 ----------------- ----------------Total production cost $ 442.3 $ 441.1 $ 218.8 $ 124.3Ounces poured (000) 387.1 642.4 219.3 151.6Operating cash cost per ounce produced $ 663 $ 502 $ 360 $ 603Total production cost per ounce produced $ 1,143 $ 687 $ 998 $ 820Kumtor:Cost of sales, as reported $ 311.1 $ 332.6 $ 137.3 $ 96.9 Less: Non-cash component 121.1 88.3 80.1 29.1 ----------------- ----------------Cost of sales, cash component $ 190.0 $ 244.3 $ 57.2 $ 67.7Adjust for: Refining fees & by-product credits (1.0) (3.3) (0.6) (0.3) Regional office administration 15.5 15.3 4.2 4.1 Mining Standby Costs 4.6 - - - Non-operating costs 32.6 (14.1) 15.2 - Inventory movement (35.2) 39.1 (11.4) 8.9 ----------------- ----------------Operating cash cost $ 206.5 $ 281.3 $ 64.6 $ 80.4 Depreciation, depletion, amortization and accretion 121.4 88.9 80.1 29.2 Inventory movement - non-cash 42.6 22.0 48.8 2.5 ----------------- ----------------Total production cost $ 370.5 $ 392.2 $ 193.5 $ 112.1Ounces poured (000) 315.2 583.2 189.4 138.7Operating cash cost per ounce produced $ 655 $ 482 $ 341 $ 580Total production cost per ounce produced $ 960 $ 673 $ 491 $ 808Boroo:Cost of sales, as reported $ 76.4 $ 49.7 $ 27.9 $ 7.2 Less: Non-cash component 21.1 10.1 11.0 1.1 ----------------- ----------------Cost of sales, cash component $ 55.3 $ 39.6 $ 16.9 $ 6.1Adjust for: Refining fees & by-product credits (0.2) (0.1) (0.1) - Regional office administration 5.5 6.0 1.5 1.8 Mining Standby Costs 0.2 - Non-operating costs - - Inventory movement (10.5) (4.7) (4.0) 3.0 ----------------- ----------------Operating cash cost $ 50.2 $ 41.1 $ 14.3 $ 10.9 Depreciation, depletion, amortization and accretion 21.2 10.4 11.1 1.3 Inventory movement - non-cash 0.4 (2.5) (0.1) - ----------------- ----------------Total production cost $ 71.8 $ 49.0 $ 25.3 $ 12.2Ounces poured (000) 71.8 59.2 29.9 12.9Operating cash cost per ounce produced $ 699 $ 694 $ 479 $ 849Total production cost per ounce produced $ 1,033 $ 828 $ 793 $ 951
