co-o operations update - very good long term, page-13

Legume

"The C3 cost can be deceptive if you start including costs incurred this FY but the benefit will be derived in subsequent years."

That may be true in some cases but not in others. It really depends on the honesty of the those doing the depreciation recording. In accounting there is considerable scope to fudge the books - ie incur the outlays in year but only recognise them against income in some future year/s so as to state a higher level of current profits. That is why one looks at the cashflow statement to see if there are obvious anomalies.

In particular when doing exploration or tunneling this can be an issue. My view is that a lot of underground development should be expensed against current income rather than future income because the tunnels are used to access ore at a particular location and to access more ore the tunnel needs to be extended.

I think the recent reporting by SLR has been pretty honest in relation to costs, but I do not get the same feeling about MML.

If MML's ore reserve modelling continues to be shown as overstated, then they will incur a lot higher costs than what has been anticipated.

loki