Ann: Savannah Development and Exploration Update, page-11

That's not quite right. Those numbers assume you're paid 100% of the spot Cu price, which is never the case when it's produced as a by-product (i.e. only in a partially processed form) contained in a Ni concentrate. You need to account for that by applying an appropriate (discounted) payable factor.

More importantly (and more to the point), don't forget that the Cu (and Co) credits are not counted as Revenue items for Ni producers. The financial benefit of the Cu and Co by-products acts as an offset to the operating costs and are already factored into the budgeted cost metrics. That's why they are called credits rather than outright income.

By counting those credits as revenue items, you're effectively double-counting because the benefit is already embedded into lower costs than would have otherwise been budgeted without the benefit of those credits. It's all there in the recently released updated mine plan. Re-read Table 3 on p.4. Without the benefit of the by-product credits (AU$2.47/lb), Site All-in Costs (AIC) would have been AU$10.01/lb! The budgeted Base Case AIC of AU$7.54/lb is only achieved by already factoring in the benefit of the credits as an offset.

If you want better granularity of how it works, to prove it yourself (encouraged), jump down to p.32 of the pdf file (the Entech section) and look at how the anticipated Cash Cost of AU$5.82/lb was arrived (i.e. $4.95 + $1.84 + $1.50 less $2.47 by-product credits). Be sure to read the associated footnote 4 below. Looking further at the AIC metric, since we know it includes Cash Costs plus Capex and Royalties (footnote 5 same page), it means the $7.54/lb AIC already includes the benefit of the $2.47 by-product credits. Without this it would result in an anticipated AIC of $10.01/lb!

An increasing Cu spot price will act to place some downward offsetting pressure against the forecast operating costs, but not along the lines, or to the degree, that you suggest.