Tomorrow's production has got to come from somewhere; so what is a reasonable price for gold that's still in the ground? My goal is not to provide the answer, but simply to highlight a metric that can help value investors sift through the rubble of mining stocks. Price-per-ounce can be used to compare them quickly. Simply divide market capitalization by the number of proven and probable reserves, and you've got your answer.

An example
With a current market value of $1.9 billion, IAMGOLD Corp (NYSE:IAG) has 11.3 million ounces of proven and probable reserves. With a little quick math we get $167 on a price per-ounce basis. In other words, buying IAMGOLD is the rough equivalent of paying $167 for an ounce of gold. Why the discount? Hypothetical gold bars are difficult to put your arms around. Calculating reserves requires a touch of art and science, so one professional geologist's numbers can vary greatly from the next. Many times, ore grade estimates are too optimistic, leading to higher costs. Mining at a loss is worse than having left the gold in the ground for a later date.

From six gold mines, IAMGOLD expects to produce between 875,000 and 950,000 ounces for 2013. Geographically balanced, IAMGOLD's assets are spread across numerous jurisdictions. North America represents 41%, Africa 33% and South America 26%. I should mention, $167 per ounce does not include IAMGOLD's $447 million cash equivalents nor $161 million worth of gold bullion. 

Before we get in too deep
"Proven and probable mineral reserves" (P+P) are the economically mineable part of an indicated mineral resource demonstrated by at least a preliminary feasibility study. Reserve numbers fluctuate up and down, just like a stock. For example, if P+P was calculated using $1,300 gold and the current price is lower, a percentage of the reserves may no longer be profitable to mine (decreasing reserve numbers). Likewise, if the price of gold was higher than $1,300 per-ounce the reserve numbers could increase.

Alacer Gold (TSX:ASR) trades on the Toronto Stock Exchange. Owning the stock in Canadian dollars makes sense -- a little fiat diversification never hurt anybody. Most discount brokers will handle currency conversions for a negligible fee. Alacer has a fully diluted market value of $835 million with 5.3 million P+P ounces. Quick math shows Alacer is selling for roughly $158 on a per-ounce basis. Not including $268 million cash, on the books as of June 30. 

Is that cheap? Only time will prove, but I can show you a chart:

Source: Alacer Gold

The image shows Alacer's 80% owned Copler, currently one of the lowest all-in cash cost gold mines in the world. Practically a stone's throw away from a new 150 megawatt hydroelectric dam, reliable power should not be a factor that prevents Alacer from reaching its 2013 production goal of 192,000 ounces. Geographically speaking, Copler is located on the Tethyan Gold Belt in Turkey, currently Europe's largest gold producing country. 

Eldorado Gold (NYSE:EGO) has a market value of $4.83 billion. Assuming gold prices of $1,250, geologists expect it to have 25.8 million P+P ounces. Shares of Eldorado Gold can be purchased for the equity-equivalent of $187 per ounce.

Reserve numbers break down into ten unique resources: Kisladag and Skouries are the largest, representing about 25% of the total (167 Mt at 0.88 g/t). Eastern Dragon and Efemcukuru (say what?) are two of Eldorado's smallest gold deposits, but very high-grade at 10-11 g/t. Regardless of mine type, open-pit or underground, always rank "grams per ton" as one of the most important characteristics for comparing resource quality. Keep in mind, gold grades will typically decrease as the deposit expands in size. 

Gold Fields Limited (NYSE:GFI) is weighing in at just above $53 per ounce ($3.3 billion divided by 62 million P+P gold ounces). Since the 1990's, Gold Fields has invested over $2.4 billion into its Ghana operations. It has been the largest taxpayer in the country four years in a row, paying over $250 million to the government last year to earn its title. Regarding Ghana's political risk, remember that old saying: Never bite the hand that feeds you (does that still apply in Mexico?). 

In a business world that offers things like QE, massive leverage, and negative real interest rates, is $200 or less for an ounce of gold "reserves" a compelling opportunity?

Price per ounce of reserves
Looking at all gold miners through the same lens can shed light on many other important variables that require further research. As a rule of thumb, if a mining stock looks relatively cheap using this metric it's almost always for good reasons. There may be risks to uncover surrounding financing, development, environment, operations, and politics (they can be easily overlooked).