questions to management

A couple of days ago I sent an email to PEM to clarify parts of the March Quarterly. One of the questions was about “by-product credits”. The following is the response received from…..
Paul Marinko
Company Secretary &
Group General Counsel

I haven’t asked Paul if this could be relayed; however I’m sure he wouldn’t mind as the information below was published in the March Quarterly report…… and some of you may find it interesting as I did.
(I must say that I was impressed by the quick response from PEM ….)
Luck
Q


BY-PRODUCT CREDITS: By-product credits are the amount the Company receives for silver and lead net of the associated treatment charges freight and handling. The Company records its cost of producing a pound of zinc, but as we also produce lead and silver from the same ore that we produce zinc and we need to recognize these receipts. Therefore, in accordance with standard industry practice and accounting standards, we record these receipts as a credit against the costs of production of zinc. The reason for the increase in by-product credits simply comes down to the amount of lead and silver we produce, the grade at which we produce those to metals and the price we get for those two commodities. In the March quarter, you will see that we produced approximately 42% more silver and 33% more lead than in the December quarter. You will also note that we were mining lead at a grade of 4.7% in the March quarter as opposed to a grade of 3.2% in the December quarter (an improvement of almost 47%) and silver at 50.3 g/t in the march quarter against a December quarter of 32.7g/t (an improvement of almost 54%), which together results in a numerically higher by-product credit and therefore a lower cost to production of zinc. This has also been assisted by more favourable treatment charges for lead for the 2009 calendar year, as outlined in previous releases.