Investopedia Flashcards
(23 cards)
An accrual accounting method used to allocate the cost of extracting natural resources like minerals and oil over time. It reflects the reduction of a product’s reserves.
Depletion
A method calculating depletion based on the actual quantity of resource units extracted. It involves estimating total recoverable units and assigning a proportionate cost to the units extracted in a period.
Cost Depletion
An accounting technique that enables companies to gradually expense resources of economic value over time. Depreciation relates to tangible assets, depletion to natural resources, and amortization to intangible assets.
Depreciation, Depletion, and Amortization (DD&A)
Direct costs attributable to the production of goods sold by a company. In mining, this includes expenses like labor, equipment, and raw materials.
Cost of Goods Sold (COGS)
Basic materials used in the production process. In mining, raw materials refer to the extracted minerals and ores that are processed into finished products.
Raw Materials
A contract in which the costs of fulfilling the agreement exceed the benefits received. In mining, this could occur if operational costs surpass the revenue from extracted resources.
Onerous Contract
The segment of the economy that involves the extraction of natural resources, including mining, agriculture, and forestry.
Primary Economic Sector
An industry dedicated to the location and extraction of metal and mineral reserves globally. It includes activities from exploration to processing of metals like gold, silver, and copper.
Metals and Mining Sector
A marketplace for buying and selling raw materials or primary products. Mining outputs like gold, silver, and coal are traded in these markets.
Commodity Market
Refers to the concentration of a valuable mineral within the ore. Higher grades indicate more valuable or richer ore, impacting the economic viability of mining operations.
Grade (of a Mine)
A colloquial term for large, established companies in traditional industries like mining, oil, and steel. These companies often have steady returns and are considered value stocks.
Big Uglies
An accounting method where a fixed percentage of gross income from a resource property is deducted to account for the reduction of a product’s reserves. This method is commonly used in the mining industry.
Percentage Depletion
The original cost of a property, adjusted for factors like depreciation and depletion. In mining, it’s used to determine the gain or loss upon the sale or disposal of mining property.
Adjusted Basis
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment. In mining, CapEx includes costs for exploration and development of mining sites.
Capital Expenditures (CapEx)
A financial metric that shows what percentage of a company’s revenue is left over after paying for variable costs of production, such as wages and raw materials. It’s crucial for assessing a mining company’s efficiency.
Operating Profit Margin
Also known as the acid-test ratio, it measures a company’s ability to meet its short-term obligations with its most liquid assets. In mining, it indicates financial stability.
Quick Ratio
A small company involved in the exploration and development of new mineral deposits. These companies are often high-risk investments due to their limited capital and lack of established mining operations.
Junior Mining Company
A large, well-capitalized company with established mining operations and a history of production. These companies are considered more stable investments compared to junior miners.
Major Mining Company
A marketplace for buying, selling, and trading raw or primary products. Mining outputs like gold, silver, and coal are traded in these markets.
Commodity Market
A country’s tendency to assert control over natural resources located within its borders, which can impact mining operations and investments.
Resource Nationalism
Criteria used to evaluate a company’s operations and performance on environmental stewardship, social responsibility, and governance practices. In mining, ESG factors are increasingly important for investors.
Environmental, Social, and Governance (ESG) Factors
The original cost of a property, adjusted for factors like depreciation and depletion. In mining, it’s used to determine the gain or loss upon the sale or disposal of mining property.
Adjusted Basis
A financial metric that shows what percentage of a company’s revenue is left over after paying for variable costs of production, such as wages and raw materials. It’s crucial for assessing a mining company’s efficiency.
Operating Profit Margin
