6 months ago FML decided to exclude Royalties from "cash costs" to be in-line with the market. On top of that FML had a number of cost reduction initiatives that were to positively impact the cash operating costs in the Sept/Dec quarters.
Group cash costs were $1203 in the June quarterly that included royalties and this was before the much talked about effect of the cost reduction initiative.
Cash costs were at $1421 last quarter, however if FML reported cash costs like this time last year, cash costs would've hit a staggering $1607 an ounces. Incredible and there's no relief in sight.
If FML felt the need to exclude royalties out of C1 cash costs why don't they INCLUDE a C2 cash cost figure like other miners so punters can get a better feel for the real cost of mining.
As I asked 6 months ago, why didn't FML give production guidance for 2012/13FY? Well my punters, we can now see why!
"Focus has commenced commercial discussions with the royalty recipient with a view to reaching agreement on a revised basis of calculating the royalty or settling in full."
A settlement in full will be costly when you work out the approx $20m p/a in royalties agreement currently in place. More money.......
FML Price at posting:
3.2¢ Sentiment: None Disclosure: Held
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