2014 Responsible Gold Mining and Value Distribution report

Responsible Gold Mining and Value

Distribution Report – 2013 data

Introducing the World Gold Council

• The gold industry’s market development organisation

• Recognised global authority on gold and its uses

• Active in stimulating and sustaining demand in the investment, jewellery,

central bank and technology sectors

• The Gold for Development programme focuses on gold’s role in

supporting socio-economic development

• Offices in London (head office), New York, Hong Kong, Singapore,

Shanghai, Tokyo, Mumbai and Chennai

World Gold Council | Responsible Gold Mining and Value Distribution | 22nd October 2014

World Gold Council members

20 member companies, representing the majority of global listed gold production


World Gold Council member projects


http://s3.amazonaws.com/goldmines.live.kiln.it/index.html

http://s3.amazonaws.com/goldmines.live.kiln.it/index.html

Responsible Gold Mining & Value Distribution reportObjectives

A report that quantifies the overall economic contribution made by leading

responsible gold mining companies. It analyses the value distributed to different

stakeholder groups – including employees, suppliers, governments, communities

and investors.

Why was it developed?

• To show how gold mining contributes to economic growth

and development

• To inform the debate about whether the benefits of mining

are fairly distributed.

• To promote co-operation and dialogue between key

stakeholders including government, communities, companies

and the investors who fund these companies.

• Update the insights generated by the first edition of the

report


Responsible Gold Mining & Value Distribution reportMethodology

• All gold-producing members of the World Gold Council invited to participate

• Companies provided information on payments (in-country and out-of-

country) and their recipients on an attributable basis

• Producing and non-producing operations included

• Data consolidated by country and globally

• Second edition – first edition published in October 2013

• Covers 15 companies with 147 operations in 26 countries, representing

24% of global gold output in 2013

• Report available in English, French and Spanish

“It is important to understand the distribution of economic benefits in mining, and this

report goes a long way towards that goal”

Scott Gilmore, Founder and CEO, Building Markets


What’s new

• Guidance Note on Expenditure Definition

• External commentaries

• Better accessibility


Guidance note on expenditure definitionsGeneral definitions

Attributable basis

All data should be provided on an attributable basis – i.e. the data should reflect the

share of the operation owned by the company.

Reporting boundaries

It is recommended that companies apply reporting boundaries by country. Companies

should specify the names of the operations that are included for each country.

Producing operations

A producing operation is one that has achieved commercial production and reported

revenue during the review period specified.

Non-producing operations

Non-producing operations include all activities, projects, operations and facilities not

associated with producing operations.

Number of employees and contractors

The number of employees and contractors at the end of the review period. This should

include all contractors, regardless of the length of tenure.

In-country

Payments made ‘in-country’ are those where the recipient is located in the same

country. Payments to commercial enterprises should be considered as ‘in-country’ if the

commercial enterprise is registered in the country for tax purposes.

In-country employees

In-country employees are those who are permanently based in the country of

operation. Payments to ‘In-country employees’ should exclude payments to expatriates

and others who are not permanently based in the country of operation.

Gold output

Total gross ounces of gold sold on an attributable basis. This should not include ‘gold

equivalent ounces’ for sales of other metals.

Revenue from gold sales

Revenue realised through gross sale of gold. This should not include any profits or loss

on hedging activities related to gold.

Total mineral revenue

Revenue realised through sale of gold and other metals and minerals, net of applicable

charges related to further refining, transportation and marketing charges. This excludes

dividends and interest received or royalties related to processing of minerals on behalf

of other companies.

Payment recipient category definitions

Payments to employees

Payments to employees, including all compensation (including wages and bonus payments,

redundancy and severance payments and leave encashment, whether paid out as cash or

share-based) and benefits. Consistent with the GRI Indicator Protocols Set Economic (EC) this

should include amounts paid to government institutions (employee taxes, levies and

unemployment funds) on behalf of employees. Payments should include capitalised expenditure

on employees and contractors. Payments to companies supplying contractors should not be

included (these will be included in payments to suppliers). Consistent with the GRI Indicator

Protocols Set Economic

(EC), total benefits “…include regular contributions (e.g. to pensions, insurance, company

vehicles, and private health), as well as other employee support such as housing, interest-free

loans, public transport assistance, educational grants, and redundancy payments. They do not

include training, costs of protective equipment, or other cost items directly related to the

employee’s job function”.

Payments to suppliers

Payments to suppliers for goods and services, including rent and land-use fees, except to

government and communities. This should include procurement spend incurred as operating

expenses and in capital expenditure. Excludes all payments to government (including taxes),

payments to communities and community investments.

Payments to governments – royalties and land use payments

Payments to governments related to the right of the business to mine and retention of their

mining license, including mining, exploration and exploitation licenses.

Payments to governments – income and other corporate tax

Payments of taxes to governments on the basis of income; does not include dividend payments.

Payments to governments – employee taxes

Payments of taxes to governments related to employment, including employer-based taxes. All

employee-based taxes should be excluded (even if paid for by the company on the employee’s

behalf) as these are included in ‘Payments to Employees’.

Payments to governments – other

Payments of taxes to government related to procurement of goods and services, including

withholding taxes, import and fuel duties. Also includes indirect taxes (such as value-added tax)

where these are not repaid to the company over the review period. This also includes payments

of dividends to government, which are paid on the basis of ownership, rather than fiscal regime.

Payments to communities and community investments

Payments made to communities including community investments that may be either contractual

or discretionary. These payments may include payments related to infrastructure, health and

well-being, education and training, local environment, scholarships and donations. They may

also include donations to civil society organisations but should not include expenditure that is

primarily ‘advertising’ in nature. It should not include payments to suppliers of goods and services

for the functioning of the operation.

Payments to providers of capital

Payments to equity and debt holders, including dividends, interest and any fees and charges

related to provision (or availability) of the capital, including facility costs or costs paid on initial

raising of the capital. This does not include repayment of principal.


External commentaries from stakeholders

9World Gold Council | Responsible Gold Mining and Value Distribution | 22nd October 2014

Better accessibility

10World Gold Council | Responsible Gold Mining and Value Distribution Report | 22/10/2014

Suppliers are the biggest recipients of in-country

expenditure

In-country expenditure by recipient

“One of the interesting facts in the report is the relative level of payments to suppliers. …

In order to maximize mining’s contribution to development we need to focus on how these

payments to suppliers can benefit local business more and promote economic

diversification through the use of local content.”

Christopher Sheldon, Practice Manager, Extractive Industries, World Bank


Level of in-country expenditure has remained stable

83 80 79

20 2117

In-country

Out-of country

201320122009

• Variations of payment patterns along the mine

life-cycle responsible for short-term shifts in

expenditure patterns:

- Early stages, such as exploration and site

design and construction will typically see

higher out-of-country spend

- As gold mining operations become more

established, expenditure tends to move in-

country, e.g. by establishing local supply

chains and training the local workforce

Percentage of in-country v. out-of-country expenditure

(in % of total expenditure)

“It is vital to understand the mining life-cycle to fully understand the contribution that the

industry can make, as this will vary from case to case.”

Randall Oliphant, Executive Chairman, New Gold


Example of Country Profile

Case studies

highlight examples of

benefit footprint on

the ground

Analysis of

survey data

Gold’s

importance to the

economy

Macroeconomic

data


Case studies highlight the variety of work by gold

mining companies on the ground

SafetyEnvironment

Mine rehabilitation TrainingLocal entrepreneurship

Infrastructure

“It is important that governments have the capacity not only to oversee minerals

agreements, but also to develop a more holistic policy, incorporating distribution of benefits,

environmental protection and, most of all, community engagement.”

Glenn Gemerts, Chair, Intergovernmental Forum on Mining and Sustainable Development


To view the reports, please visit:

www.gold.org/gold-mining/economic-contribution/value-distribution

World Gold Council

10 Old Bailey, London EC4M 7NG

United Kingdom

T +44 20 7826 4700

F +44 20 7826 4799

W www.gold.org

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2014 Responsible Gold Mining and Value Distribution report

Investor Relations