Preliminary interpretation of new guidance on cost metrics of World Gold Council

At the end of June 2013,the World Gold Council published a Guidance Note on "all-in sustaining costs" and "all-in costs" metrics,which develops a new concept of "all-in sustaining costs" and the new metric of "all-in costs"."All-in sustaining costs" refer to all sustaining costs related to existing operations."All-in costs" include all-in sustaining costs and all-in non-sustaining costs.The new metric includes the capital expenditure ("capex") in profits & losses one-off when occurs,whereas the cost accounting of Chinese gold mining companies capitalizes the capex when occurs and charges the related depreciation into profits &losses annually.The article analyses the new metric,compares it with current cost accounting of Chinese gold mining companies and concludes that the major difference is the different treatment of capex.The preliminary opinion is that Chinese gold mining companies had better not adopt the new Guidance Note.