a question of cash cost

hi all,

I just had a discussion with a major shareholder of fml and we both agree philosophically about cash costs - so to check that we aren't both mad I thought I would ask for opinions.

For this exercise lets say that pog is stuck at $1500 Aussie and all external factors are frozen in time - eg. no gfc's or the like.
Then -

Are not cash costs directly relative to development and exploration?


ie. in the case of focus - if your cash costs were under $800 or at least under the point where you were running the business at a profit and didn't have to rely on raisings -
in that case - would you not be wasting development and exploration potential?

So if at 'THIS' stage of a company's life - you absoutely won't want your cash costs to be below say $800.

So you would want your cash costs to tread that fine line - spend as much as you can and keep the costs up - but not so much that you have to always go to the market for more.
So always a delicate balance between expenditure and profit.

So if fml had cash costs of say $400 then they would be managing badly - and if they had cash costs of $200 then they would be managing very badly - under the current growth philosophy - "Expanding aggressively into a rising gold price".

And also - if gold were then to jump to say $3000 Aussie - you would actually want your cash costs to rise to say $2000 or more likely $2500 per oz - as you would be doing loads more exploration and development.

Then of course once you got to a certain size - if your company philosophy was to reward shareholders in say 4 years - as you neared that 4 year mark you would cut back on the exploration or development and then do a buyback or a cap. return or whatever.
Ok shoot.

Opinions?

tia

Pinto