Why Definitions Matter

Every year, mining companies publish operational results with metrics like AISC, production, and reserves. These numbers look straightforward. They appear in neatly formatted tables, reported to the decimal point. But underneath those precise numbers lie definitions that vary enormously between companies and sometimes change within the same company over time.

This is not a minor technical issue. It is the single biggest source of error in mining company analysis. When you compare Company A's AISC of $1,100 per ounce to Company B's AISC of $1,200 per ounce, you are almost certainly not comparing like with like unless you have read both companies' definitions carefully.

AISC is the most prominent example of the definition problem because it is the most widely compared metric and the one with the most variation. The World Gold Council published guidance in 2013 on what AISC should include, but the guidance is not binding, and companies interpret it differently.

Common areas of divergence include the treatment of corporate general and administrative costs, where some companies allocate corporate G&A fully while others include only a portion. Exploration spending is sometimes included, sometimes excluded. Lease payments under IFRS 16 accounting standards, introduced in 2019, created a new source of variation as companies chose different implementation approaches.

Sustaining versus growth capital classification is the largest source of variation. A brownfield expansion near an existing mine might be classified as sustaining capital by one company (because it maintains the operation's production profile) and growth capital by another (because it adds new capacity). This single decision can swing AISC by $50 to $150 per ounce for a gold miner.

The result is that AISC comparisons between companies, without adjusting for definition differences, can be misleading. A company that appears to have higher costs might simply be more inclusive in its AISC definition.

Even more dangerous than cross-company definition differences are changes within the same company over time. When a company changes its AISC methodology, the year-over-year comparison breaks. A company might report AISC of $1,100 one year and $1,050 the next, suggesting a genuine cost improvement. But if the company also changed its definition to exclude a cost category, the improvement is partly or wholly a reporting artefact, not an operational achievement.

These changes happen more often than most investors realize. Companies adopt new accounting standards, change their allocation methods, reclassify capital expenditure categories, or alter how they calculate by-product credits. Each change, individually, might be disclosed in a footnote. But the headline AISC number is the one that makes it into analyst reports and screening tools.

The same problem affects production figures. A company that switches from reporting attributable production to 100% consolidated production will show a production increase that has nothing to do with operational improvement. It is purely an accounting change in how joint venture production is reported.

ProveMines addresses this problem by tracking the definition of every metric for every company for every year. When we collect data, we record not just the number but also the definition name, the reporting basis, the currency, and the unit.

When any of these attributes change year over year, the change is detected and flagged as a potential break. A break does not mean the data is wrong. It means the comparison between the two years requires caution because the methodology changed.

For example, if a gold company reports AISC of $1,100 in 2023 using a definition that includes corporate G&A and AISC of $1,050 in 2024 using a definition that excludes corporate G&A, ProveMines will flag this as a definition change. The year-over-year percentage change will still be calculated, but users will see that the comparison is affected by a methodology change.

This is different from simply showing that a number went up or down. It adds the context of whether the change is operationally meaningful or potentially driven by a reporting change. In a world where every screening tool shows year-over-year changes without this context, this distinction matters enormously.

The practical implication is clear: never compare mining metrics between companies, or across years within the same company, without understanding the definitions. When you see a surprising change, whether positive or negative, the first question should be whether the methodology changed.

ProveMines is built around this principle. Every number has a source. Every definition is tracked. Every change is detected. The goal is not just to show what changed, but to help you understand whether the change is real.