MMN macmin silver ltd

the real per oz production cost of twin hills

  1. 568 Posts.
    "FIN. JOIN ROSTRUM & POST ON RHG'S THREAD .MMN TO SERIOUS FOR YOU"

    Nicholg20 says I'm not serious enough to qualify to post on the MMN board, his latest contribution last night being:

    "SILVER $21.83 &HEADING NORTH . MMN&MMNO GO GO GO !!!!!!"

    I think he'd also like to disqualify insubstantial shareholders, un-positive shareholders, and those who haven't visited the mine-site.

    Once again, placing the Dec Qtrly Activities report beside the Dec Cashflow statement can yield an idea. In this case, an idea of what the actual production costs for an oz of silver are to Macmin, at 7-9 mths into its production history.
    I have estimated that the average production cost per oz of silver for months October, November and December is $54.70 / oz
    This is just the production cost, it does not include
    - the Administration cost, which would add $14.30 / oz
    - the development cost, which would add $0.36 / oz
    - the cost of interest and finance, which would add $9.76 / oz
    - it's unfair to add exploration cost I suppose, but eventually surely also this would have to be weighed in. What else is going to pay for exploration except silver production? Dont answer.
    - If included, exploration would add $7.80 / oz
    - some admin and operating costs are reimbursable, presumably as tax rebates or deductions while the co. runs at a loss?
    - this would subtract $4.72 from cost per oz
    So additional to production cost of $54.70 / oz of silver, you have another combined sum of $27.50 of cost per oz of silver, if it is considered that way.

    Here's how.

    From the Dec31 2007 Activities Qtrly published on 16 Jan, you'll find on page 1 under silver production and sales,
    "Silver production increased significantly during the quarter to approximately
    46,000oz"

    From the Dec31 Qtrly Cashflow Report published 30 Jan, you'll find on page 1, under cash flows relating to operating activities,
    item line 1.2, payments for commissioning and production (c) $2,516,000
    You'll see that the amount does include commissioning costs, but remember that this report is for months 7, 8, 9 after first production began at end of March 2007.

    They point out in the activities Qtrly that the performance improved for the month of Dec, after ramp up in late November to continuous shifts running the electro-winning plant. So for the month of Dec alone they report production of 37,000 ozs contained silver ( cf 46,000 ozs for the whole qtr!)
    What would be the production cost per oz if this latest rate can be sustained for the next quarter?
    37,000 X 3 = 111,000 ozs.
    Assume same production cost of $2,516,000
    Production cost per oz of silver produced would be:
    $2,516,000 / 111,000 ozs = $22.67 / oz Ag.
    Again, this only uses amounts itemed under production cost, and excludes costs of admin, development, interest & finance, and exploration.
    So far I can only estimate that they are getting $12.33 / oz from sales to customers.
    Costs from labour and power would have gone up from the ramp to continous shifts, but cannot be included.
    Costs may go up or down in future, and can't be estimated yet. Costs up from increased labour and power, the crushing and screening guy, operation of merrill crowe circuits, and so on. Costs down from maturation of commissioning.

    But as best I can see this is the best Macmin can come up with so far - $22.67 / oz in production and ongoing commissioning costs alone. It's the actual cost that I read per oz of SIlver production at this stage, and 11 months into production. It's not a Macmin forecast based on their projected rate of production and rate of cost.
 
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