Monday, July 12, 2010

Cash costs or direct costs per tonne processed?

There's a question for you, metalheads. What's the best way of definining the costs of production for a mining company? Do you go for the much vaunted cash costs number normally pushed in front of your face by the company, or do you look at the amount of money it costs the miner to process a tonne of mineral and get all that yummy scrumptious metal out?

Here's an example, from Endeavour Silver ( This little chart compares the vaunted and reported cash cost per ounce of silver, net of credits, to the cost of processing 100kg of ore at the company ( reports that number per metric tonne, we do a simple 10X division to make the scale fit neatly on the chart).

Seems to me that when a company like trumpets its fabulous cuts in cash costs, all it's really saying is, "We were dumblucky and got more moolah for our byproducts". DYODD, dude.