The Company is required to adopt the accounting standard IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine" effective January 1, 2013, as discussed in detail under "Recent Accounting Pronouncements" on page 34 of the MD&A. The adoption of IFRIC 20 will result in the capitalization of fewer stripping costs at the El Chanate mine retroactively to 2012. The estimated impact of this accounting standard will increase total cash costs reported in 2013, with a corresponding decrease in sustaining capital. The Company has therefore increased 2013 cash costs estimates to $550 to $600 per gold ounce, which includes amounts from prior periods, and decreased sustaining capital estimates to $8 to $12 million as provided in the table below. As this change relates solely to cost allocation, all-in cash cost estimates and budgeted cash flow streams have not been impacted by this new accounting standard.
2013 Operational Estimates (Revised)
2013 Operational Estimates(2) (March 25, 2013) Gold Production (ounces) Young-Davidson 120,000-140,000 El Chanate 70,000-80,000 Total Production 190,000-220,000 Cash Costs per Ounce Young-Davidson(3) $575-$675 El Chanate (revised) $550-$600 Total Cash Costs per Ounce (revised) $565-$645 All-in Cash Costs(1) Young-Davidson(3) $1,250-$1,350 El Chanate $900-$1,000 Total All-in Cash Costs per Ounce $1,100-$1,200 Capital Investment Program (US$000's) Young-Davidson Non-recurring Growth Capital Paste Backfill Plant $45,000-$50,000 Shaft and Mid-Shaft Loading and Crushing Facility $25,000-$30,000 Open Pit Mine Development $6,000-$8,000 Sustaining Capital(4) $59,000-$62,000 Total Capital Investment - Young Davidson $135,000-$150,000 El Chanate Non-recurring Growth Capital Southeast Open Pit Expansion $20,000-$25,000 Heap Leach Expansion $2,000-$3,000 Sustaining Capital(4) (revised) $8,000-$12,000 Total Capital Investment - El Chanate (revised) $30,000-$40,000 Total Capital Investment (revised) $165,000-$190,000 Depletion and Amortization (US$ per ounce) Young-Davidson $300-$310 El Chanate $245-$255 Total Depletion and Amortization $280-$290 Exploration (US$000's) Young-Davidson Up to $3,500 El Chanate Up to $3,500 Other Properties Up to $8,000 Total Exploration Up to $15,000 General and Administrative (US$000's)(5) Corporate G&A $25,000
1. All-in costs are defined as cash costs, sustaining capital, corporate general and administrative expense and exploration expense. 2. The following currency assumptions were used to forecast 2013 estimates: — 12.5:1 Mexican pesos to the US dollar — 1:1 Canadian dollars to the US dollar 3. Prior to commissioning the underground mine, cash costs are calculated on ounces produced from the open pit only. All underground costs are capitalized, and any revenue related to underground ounces sold is credited against capital. 4. Sustaining capital is defined as capital expenditures required to maintain current levels of production. 5. Does not include share-based compensation.
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