Hi All:Great discussion on this thread. Thanks everyone!Probably...

Hi All:

Great discussion on this thread. Thanks everyone!

Probably repeating what Timber7 already stated, but once again:
Cash costs = operating costs (mining, milling, etc)
Total costs = all costs per ounce (cash costs, amortization, corporate, exploration, etc).

RED does state the difference in its annual reports. For example, pg. 7 of the 2010 AnnRpt outlines elements of cash costs (totalling $351), and then notes: "Cash costs exclude depreciation, depletion and amortization, corporate general and administrative expense, exploration, interest, and feasibility costs." Total costs should drop somewhat over time.

As for dividends: Love them, and expect them from established firms, but juniors need cash flow as a buffer for unexpected costs, to explore (if value added), and upgrade or build additional plant. If a company starts a dividend, then can't pay temporarily due to unexpected costs, a more severe price drop likely occurs than if it didn't have a dividend. So, I say wait 2-3 years for cash flow to build up then pay a small (2%) dividend and increase over time.

Finally, quick scenario calculation to ease the pain of the current share downdraft. Scenario: 136m shares, 75k gold ounces, $650/ounce total cost, ave gold price of $1300/ounce (well below current price). Result is 36 cents per share in 2013, excluding profit from silver. Thus, forward P/E ratio of 4.2 (share=$1.50) or 5.6 (share=$2.00). Not too many shares stay low with that conservative scenario.

Silver revenue would increase EPS and reduce P/E ratio, but I haven't calculated that. See the BellPotter page in Timber7's post for their less conservative estimate of 60 cents per share in 2013.)

As always, please do your own research. I welcome corrections to my calculations and views.