Cash costs of .88c/llb is very low and it will get lower this is...

Cash costs of .88c/llb is very low and it will get lower

this is smoke & mirrors

the higher the gold & silver price, the lower the copper cash costs

i better spell it out for fluxmaker

http://www.asx.com.au/asxpdf/20120928/pdf/4290x33b6md7m8.pdf

19,400t of copper produced
14,900oz of gold
1,220,000oz of silver

copper revenue @ $3.79/lb = $162M
gold revenue @ $1,770.00 oz = $26M
silver revenue @ $34.60oz = $42M
total revenue = $231M
total revenue, per presentation, $222M
free cash, pre tax, $79M
assume other costs, such as smelter, $9M

if the costs were simply $0.88/lb then the total opex would be $37,626,688 (i.e., 19,400 x 0.88 x 2204). the free cash flow would be $222m - $38M (cash costs) - $35M (capex) = $149M

but this is not the case

the fact is the free cash flow is $79M and not $149M

why?

because the gold & silver revenue is included in the calculation of the copper cash costs

the cash flow is worked out as follows:

total revenue $222M (include deduction for $9M smelter)
less CAPEX $35M
less copper cash costs $38M
less gold revenue $26M
less silver revenue $42M
equals free cash $81M (mistake somewhere, should be $79M)