The DFS provided concentrate operating costs of US$ 282 per...

The DFS provided concentrate operating costs of US$ 282 per tonne. Total average yearly operating costs is 40,000 tonnes x $282 per tonne = US$ 11.28 million. This equates to $11,280,000/300,000t = US$ 37.60 per tonne of ore feed. The operating cost of $37.60 per tonne is comprised of three parts:

1) Mining Costs
2) Processing Costs
3) General and Administration Costs

The Processing Costs will be at least US$20 per tonne and G&A US$10 per tonne which leaves only $7.60 per tonne of mining costs. Accordingly total average mining costs are US$ 7.60 x 300,000 tonnes = $2.28 million. This total mine operating cost covers the 300,000 tonnes of ore feed and the 1,320,000 tonnes of low grade and waste (strip ratio of 4.4). Total mining cost per tonne of material mined is US$ 2,280,000/1,620,000 tonnes =$1.41 per tonne which is impossibly low - should be at least $5 per tonne. Accordingly, mining costs of low grade must have been treated as a capital cost - it's the only way the numbers stack up.